The opening sentence of the court’s decision in Nationwide Gen Ins. Co. v. Hope, No. 21-930 (N.D. Ala. June 12, 2023): “David Hope ran a firearms business out of his garage.”  So, you can easily see where this coverage case is going.

Not exactly. The court continues: “Cecil Keith Chapman went to Hope’s house to pick up a firearm that Hope received from a third party for Chapman. When Chapman arrived at Hope’s house, Hope’s dog bit him and caused injuries.”

So it’s a firearms-turned-dog bite coverage case.  An embarrassment of riches.

While the specific facts here are unique, I included the case as the general coverage scenario is one with seeming applicability to other cases. 

Chapman sued Hope for his injuries.  Nationwide in turn sued Hope seeking a declaration that it owed no coverage to him for defense or indemnity under three policies – one covering his personal residence, one on another residence and a personal umbrella policy. 

Nationwide argued that no coverage was owed on the basis that all three policies excluded coverage for bodily injury arising out of or connection with a business conducted at the insured location.  The policies defined “business,” but the court did not focus on the specifics of the definition in reaching its decision.    

Chapman (presumably there was an assignment of policy rights) argued that the business exclusion did not apply because he did not pay Hope for brokering the forearm that he was at the house to pick up.  Chapman and Hope were friends and Chapman was a frequent customer.

The competing arguments were as follows:
 
“According to Nationwide, the dog bite had to arise out of Hope’s business because ‘but for’ the business, Chapman would not have been at Hope’s house when the dog bit him. Even though Chapman didn’t pay for the service this time, Nationwide points to evidence that Hope often waived the brokerage fee for acquaintances and regular customers. And Chapman had purchased silencers from Hope and used Hope’s brokerage services, so Nationwide argues Hope could have been anticipating future business with Chapman by waiving the fee. Plus, regardless of Chapman not paying Hope for the transfer, Hope still provided a service associated with his business as a firearms manufacturer and broker that led to the incident. Thus, Nationwide says the injuries arose out of and were connected to Hopes business.”

“Chapman disagrees. He claims there is no evidence Hope’s transfer of the firearm was causally related to any prior purchase Chapman made or to any potential future business transaction. Instead, Chapman points to his testimony and to the Hope’s testimony to establish that the transfer of the firearm arose out of the social relationship between the two, not Mr. Hope's business.”

The court sided with Nationwide:

“Chapman’s presence at the Hope’s house arose out of, and was connected to, David Hope's firearms business. Chapman would not have been at Hope’s house but for his need to pick up a gun that David Hope helped broker—a business service that Hope provided and paid taxes on. True, Chapman did not pay Hope for this brokerage service, but Chapman had paid Hope before, and Hope often waived the small brokerage fee for repeat customers. This is typical, good business practice. And because the incident was connected to Hope’s business, it is excluded from coverage.”