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Gun Clubs Seeking Insurance Coverage in Lawsuits Filed Against Them: Knowing the Coverage Options

Many shooting ranges across the country were established decades before modern environmental and land use laws came on the books. As a result of decades of outward urban and suburban growth, once-rural shooting ranges are now neighbors to residential and commercial developments. As these different use types come into contact more often, shooting ranges increasingly find themselves in legal conflicts with neighbors, concerned citizens, and local governments regarding their long-established uses. When these challenges initially arise, typical issues include nuisance claims (related to noise and safety concerns of nearby neighbors), heavy metal contamination and waste storage issues from lead shot and spent projectiles (which may implicate state and federal hazardous waste and toxic tort laws), water pollution and wetland damage issues (which may implicate the Clean Water Act and other state water quality laws), and alleged violations of local development and zoning codes. Some lawsuits seek damages while others seek to shut down a range or seriously alter its operations.

Most ranges or clubs are community-run, nonprofit organization with limited resources. Once a range or club finds itself in the cross hairs of neighbors, cities, counties, or state and federal agencies, the legal costs can be devastating. Fortunately, most ranges or clubs have insurance to protect them. Although the availability of insurance is often misunderstood or overlooked, locating current and historical insurance policies can literally mean the survival of a range. Of further complication, when suits are initiated against shooting ranges, a second suit may need to be commenced against the range's insurance provider in order to secure defense and indemnification under the applicable policies.

Due to the complex land use, environmental and public safety issues associated with these types of disputes, and because of the complicated web of government agency, citizen group, and insurance company involvement, litigation costs in shooting range suits can be astronomical. And because shooting ranges are typically non-profit or low-profit entities, the failure to understand your rights and tools through which you can defend them can be financially crippling.

Despite the potentially enormous costs associated with defending such a suit, currently and formerly applicable comprehensive general liability (CGL) insurance policies may cover some or all of the cost of any judgment or settlement. Standard CGL policies held by shooting ranges cover potential liability from personal injuries and property damage caused to other persons or the government (by failing to comply with local, state or federal environmental laws). These policies are usually triggered by the occurrence of an act or omission by the policyholder during the course of the policy period. 58 Am. Jur. Proof of Facts 3d 213 (Originally published in 2000) (Some policies require that all claims must be filed during the course of policy period, while the majority of policies only require that the act or omission giving rise to potential liability occurred during the coverage period). An occurrence is likely to include "continuous or repeated exposure to conditions" and is thus not limited to discrete acts only. This is an important distinction for shooting ranges facing suit for continuous noise, heavy metal and water pollution challenges. Further, most policies require that the "occurrence" giving to rise to liability was "neither expected nor intended" by the policyholder. The meaning of this language depends on the jurisdiction. Some jurisdictions require a willful act by the policyholder in order to disqualify an act from coverage. Other jurisdictions are willing to disqualify an occurrence from coverage if a reasonable person in the position of the insured could have anticipated the resulting property damage.

If the occurrence leading to potential liability was unexpected, unintentional and within the policy period, most CGL insurance policies provide that the insurance company "shall have the right and duty to defend any suit against [the insured] seeking damages on account of ... property damage...." Id. Thus, once a shooting range is sued for property damage or failure to comply with environmental laws, and that "damage" creates a potential of liability under the policy, the insurance company's duty to defend the policyholder is triggered. Further, under most CGL policies, insurance companies must also indemnify a policyholder (i.e. pay the litigation defense costs incurred).

Despite the apparent clarity of the duty to defend and indemnify, these rights are often qualified and challenged by the insurance companies as outside the scope of coverage. One of the largest hurdles to obtaining insurance coverage under most modern policies is the "pollution exclusion" clause. Beginning in the 1970s, insurance companies began to realize the enormous expense associated with potential environmental liability. As such, they began inserting pollution exclusion clauses into standard CGL policies. These provisions were not interpreted by the courts as strictly as the insurance companies had hoped, so in the mid-1980s, absolute pollution exclusion provisions became commonplace in CGL policies. 49 Am. Jur. Trials 1 (Originally published in 1994). These provisions have had the effect of limiting CGL coverage for environmental insurance claims. Nonetheless, despite these limitations, shooting ranges covered by more recent policies that contain absolute pollution exclusion clauses may still be covered for nuisance and wetland damage suits.

Moreover, because absolute exclusion clauses were not commonplace in CGL policies until the mid-1980s, gun ranges that held CGL policies prior to this time may still be able to obtain insurance defense and indemnification for environmental liabilities, including those related to environmental pollution, that occurred during these older policy periods. Thus, it is very important that gun ranges look to both former and current insurance policies for potential insulation from liability.

Recently, Chenoweth Law Group has helped two Northwest shooting ranges navigate this complex regulatory and insurance web. In 2010, after being sued for Clean Water Act and hazardous waste storage (RCRA) violations in an underlying suit, Chenoweth Law Group successfully represented Douglas Ridge Rifle Club (Eagle Creek, Oregon) in a suit against its insurance company after the insurance company refused to defend the club under CGL policies purchased between 1956 and 1980. In rejecting the insurance company's attempts to avoid coverage, the federal district court in Portland held that because the violations alleged against the range were covered by the Club's relevant insurance policies, the insurance company had a duty to defend the environmental contamination and public nuisance claims brought against the Club. Therefore, the insurance company had breached its contract by refusing to defend and indemnify the Club. This opinion can be found here.

Currently, Chenoweth Law Group is defending the Kitsap Rifle and Revolver Club (Bremerton, Washington) in an appeal to the Washington Court of Appeals. In this case, the circuit court enjoined the operation of the Club as a nuisance, finding the Club in violation of the county's development and critical areas code, including violations related to wetlands, berm construction, and stream management. Chenoweth Law Group is also representing the Club against two insurance carriers in the federal district court of the Western District of Washington (Case No. 3:11-cv-05021-BHS). The Kitsap Rifle and Revolver Club held insurance policies with one carrier from 1993 through 2006, and with another from 2006 through 2011. Both insurance carriers have denied coverage under the Club's CGL policies, and have thus been sued for breach of contract. Although no opinion has been issued in the insurance coverage case, the insurance companies agreed to defend the Kitsap Rifle and Revolver Club through trial, and complimented Chenoweth Law Group's attorneys for their defense in the underlying case.

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