Document Version:ADMIRAL
Email_To:
Email_From:
Underwriter_of_Record:Bernstein, Tammy
Fax_No:(312) 621-0262
Line_of_Business:CLM
Model_Document:LT1
Subject_Line:CLAIM CORRESPONDENCE - KAPPA SIGMA FRATERNITY(C161486)
Receipient_Common_Name:KAPPA SIGMA FRATERNITY
Key:C161486
Insured Name:KAPPA SIGMA FRATERNITY
Current Date:03/16/2015
Policy_ref:CA000005381-13
Claimant_Name:NOLAN BURCH
Super_Name:Susan Kruse, CCLA
Loss_Date:11/12/2014
/ Admiral Insurance Company (A Berkley Company)Mt. Laurel Corporate Park
1000 Howard Blvd., Suite 300, P.O. Box 5430
Mt. Laurel, NJ 08054
Phone: 856-429-9200
Fax: 856-429-8611
April 6, 2015
Mr. Mitchell Wilson
KAPPA SIGMA FRATERNITY
1601 SCOTTSVILLE ROAD
CHARLOTTESVILLE, VA 22905
Via Email:
CERTIFIED
RETURN RECIEPT REQUESTED
Re:Insured:Kappa Sigma Fraternity
Claimant:Nolan Burch
D/E:11/12/14
Admiral File:C161486
Dear Mr. Wilson;
Admiral Insurance Company acknowledges receipt of the captioned incident involving the death of Nolan Burch, a pledge of the Gamma Pi Chapter of Kappa Sigma Fraternity at the University of West Virginia. The incident involves the chapter’s “Little/Big” event. Reports indicate that earlier in the evening of Mr. Burch’s death, pledges were blindfolded and taken out of the chapter house to an off sight rental property for the event. Jordan Hankins was the “Grand Master” for the pledges at the event. Richard Schwartz was Nolan Burch’s big brother.
At the time of the incident, the Charter of Gamma Pi had been revoked, was not recognized by the National Fraternity and therefore was not in good standing. Despite the revocation, Gamma Pi went forward with the event.
Richard Schwartz and Jordan Hankins have since been charged with hazing, and conspiracy to commit hazing. The criminal complaint states Richard Schwartz provided alcohol to Nolan Burch.
Since the local chapter may now be disbanded, please provide a copy of this letter to the officers and members of the local chapter at the time of the incident, or in the alternative, please provide us with the current addresses of those chapter officers, Mr. Schwartz and Mr. Hankins.
While no claim has been made, for the reasons stated in this letter, Admiral Insurance Company will handle this matter under a Reservation of Rights.
Admiral Insurance Company issued Commercial General Liability Policy #CA000005381-13, effective 10/01/2014 to 10/01/2015. The policy was written with a $1,000,000 per occurrence, $2,000,000 aggregate per location, and a $20,000,000 general aggregate all locations. The policy also contains a Self-Insured Retention of $100,000 which is eroded by expense.
In the event a claim is made, Admiral takes this opportunity to discuss certain coverage issues that are presented by this incident.
The policy states in the Insuring Agreement, Section I:
SECTION I – COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1.Insuring Agreement
a.We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result. But:
(1)The amount we will pay for damages is limited as described in Section III – Limits Of Insurance; and
(2)Our right and duty to defend ends when we have used up the applicable limit of insurance in the payment of judgments or settlements under Coverages A or B or medical expenses under Coverage C.
No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments – Coverages A and B.
The policy contains definitions including, but not limited to, the following:
SECTION V – DEFINITIONS
3."Bodily injury" means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.
13."Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
The policy contains Exclusions including but not limited to the following, that may apply to this claim:
2.Exclusions
This insurance does not apply to:
a.Expected Or Intended Injury
"Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property.
The policy contains the following endorsement:
self-insured retention endorsement
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
This insurance is subject to the following additional provisions. In the event of conflict with any provision elsewhere in the coverage form, the provisions of this endorsement will control the application of insurance to which the coverage applies.
1.Our total liability for all damages will not exceed the limits of liability as stated in the Declarations and will apply in excess of the insured’s self-insured retention (the “Retained Limit”). “Retained Limit” is the amount shown below, which you are obligated to pay, and only includes damages otherwise payable under this policy.
If the “Retained Limit” is subject to an annual aggregate, the aggregate amount shall be payable by the insured even if the policy is terminated prior to the expiration.
Retained Limit: / $ / Annual Aggregate-Other than Products and Completed Operations$ / Annual Aggregate-Products and Completed Operations
$ / Annual Aggregate-Products and Completed Operations/Other than Products and Completed Operations - Combined
$ / 100,000 / Per Occurrence-Other than Products and Completed Operations
$ / Included / Per Occurrence-Products and Completed Operations
2.Expenses incurred under the SUPPLEMENTARY PAYMENTS provisions of this policy are:
X / Included in the “Retained Limit”,payable by you in addition to the “Retained Limit”.
3.We have the right in all cases, at our expense, to assume charge of the defense and /or settlement of any claim where we reasonably determine the settlement value or verdict potential exceeds your “Retained Limit”, and, upon written request from us, you will tender such portion of the remaining “Retained Limit” as we may deem necessary to complete the settlement of such claim. Should you refuse to contribute toward that settlement and require us to continue with trial court proceedings or appeals, then we will, from the date of your refusal to settle, be relieved of any obligation hereunder to pay an amount of ultimate net loss greater than the amount we would have paid if you had agreed to the settlement. Further, we will not be obligated to pay, or contribute to, any loss expenses, legal expenses or attorneys fees related to such trial court proceedings or appeals.
Should your “Retained Limit” be exhausted by payment of damages and expenses, we will assume charge of the defense and settlement of any covered claim. We, at our discretion, can substitute counsel of our choosing to continue with your defense, or, can continue with counsel originally retained by you, but at hourly rates commensurate with our panel counsel and according to our written Billing Practices and Procedures for Claim Litigation.
To the extent a claim is made, Admiral Insurance Company’s limits apply in excess of the insured’s $100,000 self-insured retentionwhich is eroded by indemnity and expense.
The policy contains the following amendatory endorsement:
AMENDMENT TO WHO IS AN INSURED – AMENDATORY ENDORSEMENT
It is agreed that SECTION II - WHO IS AN INSURED paragraph 2. is amended to include the following:
(e)Fraternity chapters and colonies that are recognized by and in good standing with the first Named Insured and are in compliance with the Code of Conduct of the first Named Insured.
(f)Alumni Control Boards, Alumni Advisory boards, Alumni Associations, Alumni Corporations, Alumni Chapters, Board of Advisors, Board of Governors, Executive Counsel, and Parent Clubs formally recognized by the Named Insured but only while performing duties related to the conduct of the Named Insured’s operations and only while in compliance with the Code of Conduct of the first Named Insured.
(g)House corporations, householding corporations, chapter education foundations and house associations, which have been recognized by the Named Insured and whose primary purpose is providing undergraduate member housing but only while performing duties related to the provision of such housing and only while in compliance with the Code of Conduct of the first Named Insured;
It is further agreed that the following will be provided to the Named Insured by the above entities:
i.certificate of good standing issued by the state of their incorporation.
ii. copy of their filed Form 990 or equivalent.
iii. proof of payment of the annual registration fee paid to the Named Insured.
iv. certify in writing that each resident is contracted separately with the house corporation, house
holding corporation, chapter education foundations or house associations.
v. completed a House Corporation Recognition application
vi. list of Trustees, Officers and Directors of whom all must be members of Kappa Sigma Fraternity
in good standing.
vii. copy of their current By-Laws and Articles of Incorporation.
viii. acknowledged and signed receipt and understanding of the Kappa Sigma Fraternity “Code of Conduct”.
(h)Officers, Directors, Trustees, Partners, Coordinators, Custodians, Committee Members, Council Members, Volunteers, Housemothers, Resident Advisors, Faculty Advisors, Fraternity members, and Member Candidates (Pledges) of those entities listed in (e.), (f.) and (g.) above, but only while performing duties related to the conduct of the Named Insured’s operations (or in the case of (g.) in the provision of housing to undergraduate fraternity members) and only while in compliance with the Code of Conduct of the
Named Insured.
“Code of Conduct” means the written rules, regulations, or policies regarding certain individual and collective action and conduct formally adopted and distributed from time to time by the Executive Board of the National Fraternity and attached to and made part of this policy.
“Violation” of “Code of Conduct” of the Named Insured will be determined by mutual agreement of Admiral and the executive board of the National Fraternity that some breach of the Code of Conduct has occurred. However, the resulting impact on coverage and any Self Insured Retention under this policy is the sole responsibility and discretion of Admiral.
The Kappa Sigma Fraternity Code of Conduct states:
Each member of Kappa Sigma Fraternity is responsible for seeing that he:
***
- Obeys the laws, rules and regulations of his country, state or province, city and county, and college or university;
- Understand and abides by the Constitution, by-Laws and Rules of Kappa Sigma Fraternity, including the Standards of Conduct, the acts and resolutions of Grand Conclaves and his chapter’s by-law; and
- Does not engage in, permit or tolerate hazing, or the unlawful use of alcohol or possession of controlled substances.
Mr. Schwartz and Mr. Hankins have been charged with hazing and conspiracy to commit hazing. Mr. Schwartz is also alleged to have provided Mr. Burch with alcohol. Should a claim be made against these individuals, there may be no coverage for Mr. Schwartz and Mr. Hankins under the policy issued by Admiral Insurance Company to Kappa Sigma Fraternity because they were not in compliance with the Code of Conduct, and therefore may not be an insured pursuant to the cited endorsement.
The local chapter’s charter had been revoked prior to the night of the event/occurrence. Since the chapter was not recognized by Kappa Sigma Fraternity, the chapter was not in good standing at the time of the occurrence, nor was the chapter in compliance with the Code of Conduct of Kappa Sigma Fraternity, the local chapter may not be an insured pursuant to the cited endorsement, should a claim be made against the chapter.
Therefore, Admiral Insurance Company reserves its right to disclaim coverage to the local chapter, Mr. Schwartz and Mr. Burch.
The policy contains the following endorsement that amends the “Other Insurance” language in Section IV.
OTHER INSURANCE
It is agreed that SECTION IV-COMMERCIAL GENERAL LIABILITY CONDITIONS paragraph 4. Other Insurance is deleted in its entirety and replaced by the following:
This insurance is primary with respect to homeowners insurance maintained by a volunteer, employee, director or officer who is judged by us to have had no direct involvement in the covered loss.
2This insurance is excess over all other valid and collectible insurance available to the insured for a loss we cover under this policy.
3.We will have no duty under this insurance to defend any claim or "suit" that any other insurer has a duty to defend. If no other insurer defends, we will undertake to do so, but we will be entitled to the insured's rights against all those other insurers.
To the extent any members are involved in this incident, those member should place their or their parents’ homeowner’s insurance companies, or any other insurance they may have available, on notice to protect their interests.
The policy contains the following exclusion:
HAZING, SEXUAL OR PHYSICAL ABUSE OR MOLESTATION EXCLUSION
It is agreed this insurance does not apply to "bodily injury", "property damage" or "personal and advertising injury" arising out of hazing, sexual abuse, physical abuse or molestation committed by any insured.
This exclusion applies only to insureds who participate in or direct others to participate in the hazing, sexual abuse, physical abuse, or molestation.
Mr. Schwartz and Mr. Hankins were charged with hazing and conspiracy to commit hazing. Based on the information gathered to date, this would indicate Mr. Schwartz, Mr. Hankins and the local chapterparticipated in or directed others to participate in the hazing of pledges. Therefore, Admiral Insurance Company reserves its right to disclaim coverage to Mr. Schwartz, Mr. Hankins and the local chapter should hazing be alleged in any claim.
The local chapter, Mr. Schwartz and Mr. Hankin and those individuals involved in the incident may find it advisable to consult with its/their own attorneys, at its/their own expense, regarding the defense of the claims that may be asserted and are potentially not covered by the Admiral policy.
In sum, Admiral Insurance Company reserves its rights to disclaim coverage to the local chapter, Mr. Schwartz and Mr. Hankins, for the reasons stated in this letter.
In submitting this reservation of rights, Admiral continues to reserve all of its rights and defenses in every respect under the terms, conditions and provisions of the Admiral policy, as well as all rights and defenses that may be available at law or in equity. Any action taken by should not be construed as a waiver of any of those rights and defenses. Admiral further reserves the right to modify or amend its coverage position and to assert defenses based upon any policy provisions whether or not specifically mentioned herein.
If you have any questions regarding this letter, please do not hesitate to contact me.
Sincerely,
Susan Kruse, CCLAClaims Superintendent
Copy: / TERRY WINKLER
SWETT & CRAWFORD OF ILLINOIS, INC.
1 NORTH FRANKLIN ST.
SUITE 1400
CHICAGO, IL 60606
Mr. Mitchell Wilson
KAPPA SIGMA FRATERNITY
1601 SCOTTSVILLE ROAD
CHARLOTTESVILLE, VA 22905
Chad Gebhardt-Director of Financial Operations
C/O KAPPA SIGMA FRATERNITY
1601 SCOTTSVILLE ROAD
CHARLOTTESVILLE, VA 22905
Mr. Chris Cooley Esq
Gray & Prouty
2945 Mcmillan Ave Ste 136
San Luis Obispo, CA 93401
Via Email:
Jason Fuiman Esq-General Counsel
O'Dwyer & Bernstien LLP
Paul O'Dwyer Way
52 Duane Street, Fifth Floor
New York, NY 10007
Jody Wender
EMCAS
Via Email
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