SAN FRANCISCO – It’s a classic case of “what we said is not what we meant.”
Seneca Insurance Company Inc. has sued Peter Acworth’s Cybernet Entertainment LLC and Kink Studios LLC in California federal district court, claiming the insurer’s omission of exclusionary declarations from a commercial liability policy doesn’t mean the exclusions didn’t exist.
At issue are the three lawsuits pending against the studios, brought by three performers who claim to have contracted HIV on movie sets in 2013. When the lawsuits were filed in mid-2015, Cybernet and Kink turned to Seneca for coverage under a liability policy that had been renewed annually since its initial issuance in 2009.
Seneca denied the claims, citing two exclusionary declarations: one for injury to cast and crew, and another for communicable diseases.
The problem? The injury to cast and crew exclusion was not included in the policy documentation the studios received. Instead, the studios’ policy included a declaration excluding “injury to volunteers.”
According to a Law360 report, “Seneca chalks that up to a clerical error, but insists the cast or crew stipulation was meant to be there.”
“To the extent the ‘injury to cast or crew exclusion’ was not included within the renewed Seneca policy actually delivered to the Cybernet named insureds … that failure was the result of an inadvertent and unilateral clerical error made in the physical assembly of the renewed Seneca policy by Seneca which failed to reflect and enact the intent of the contracting parties,” the insurer stated in court documents.
After uncovering the oversight, Seneca reversed its decision and began defending the studios, as the policy required. However, the insurer reserved the right to reverse the reversal pending further study.
In mid-November, Seneca acted on its reserved right and filed suit to extricate itself from the studios’ legal battles and reclaim funds the insurer already had invested in the studios’ defense. Even without the injury to cast and crew exclusion, the insurer noted, the communicable diseases exclusion would abrogate its coverage liability.
Seneca “will suffer and is suffering pecuniary loss and prejudice unless the renewed Seneca policy covering the period from April 30, 2013, to and including April 30, 2014, is reformed to include the Form BE-27 endorsement containing the ‘injury to cast or crew exclusion’ which Seneca intended to include within the renewed Seneca policy when it priced the premium for and approved issuance of the renewed Seneca policy,” the company noted in court documents.
Cybernet and Kink representatives did not respond to a request for comment by post time.
The case is Seneca Insurance Co. Inc. v. Cybernet Entertainment LLC et al.
