“Designated Products” Exclusion Precluded Coverage of Claims in Personal Injury Lawsuit over a Tree Stand

A federal district court in Pennsylvania has ruled that a “designated products” exclusion in a commercial general liability insurance policy precluded coverage of claims brought against the insured for a product manufactured by a company before the insured had acquired certain of the manufacturer’s assets. 

The Case

Daniel Webb alleged that he was injured during a hunting trip in 2010 when he fell from a tree while using a tree stand manufactured in approximately 2003 by Lone Wolf Manufacturing, Inc. Webb and his wife filed a personal injury lawsuit against Oak Leaf Outdoors, Inc., which had acquired rights to the tree stand in 2006 by assignment from Weaver Enterprises after Weaver had purchased some of Lone Wolf’s assets.  Weaver did not purchase any of Lone Wolf’s stock, nor did it assume any of Lone Wolf’s liabilities.

Oak Leaf tendered the defense of the action to its CGL insurance carrier, Liberty Surplus Insurance Corporation. Liberty initially agreed to defend and indemnify Oak Leaf, but reserved theright to deny coverage.

Liberty later sought a declaratory judgment that it was not required to defend or indemnify Oak Leaf because of the policy’s “designated products” exclusion, which pertained to all items sold before 7/13/06. Under the exclusion, there was no coverage for bodily injury arising from “your products.”  The term “your products” was defined to include “a person or organization whose business or assets you have acquired.” 

For its part, Oak Leaf argued that language in the exclusion meant that a product only became “your product” when the entirety of an entity’s business or assets were acquired, and that Oak Leaf had not acquired all of Lone Wolf’s assets.

The parties moved for summary judgment.

The Court’s Decision

The court granted Liberty’s motion for summary judgment, finding that coverage was precluded by the policy’s “designated products” exclusion.

In its decision, the court found that in the context of the full language of the policy, the exclusion was not ambiguous. The excluded designated products were “[a]ll items sold prior to 7/13/06, [including] all orders for portable tree stands and related products received and shipped prior to 7/13/06.” The court added that because Oak Leaf had acquired Lone Wolf’s tree stand business, and because the tree stand had been shipped before 2006, the exclusion barred coverage, regardless of the full extent of the corporate transactions. The court further supported its conclusion by noting that if the exclusion did not apply to Lone Wolf tree stands, there would be no point to it: Oak Leaf did not exist until July 13, 2006 and could not have shipped any items, tree stands or otherwise, before that date.

The case is Webb v. Oak Leaf Outdoors, Nos. 11-2456, 13-6261 (E.D. Pa. March 27, 2015).