Lambda argued that it had no day-to-day control over the Elon chapter and no role in organizing a party where its rules were broken. Its lawyers cited Lambda's extensive risk- management rules and said the national organization had previously sent delegates to brief members on them.
Judge Howard Manning dismissed Mynhardt's claims against Elon and the Lambda national in 2011, and his ruling was upheld on appeal last May. The fraternity hadn't assumed a "duty to protect" the chapter or its members, the appeals judges said.
"We want to encourage universities and Greek organizations to adopt policies to curb underage drinking and drinking-related injuries," the judges said. That "does not make a university or Greek organization an insurer of every student, member or guest."
Courts in 12 other states have issued similar rulings clearing nationals of liability for local wrongdoing, Lambda said in court documents.
Mynhardt's lawsuit still had life. Because Cassady had testified that the party was a fraternity event, a judge allowed him to pursue his case against the chapter itself. If Mynhardt were to win, he hoped to collect from Lambda's insurance company, which covered the chapters and individual members.
Instead, the national fraternity's insurer, Liberty Corporate Capital Ltd., sought to walk away from the tragedy. It filed suit, seeking permission not to cover the chapter or several members. Liberty is increasingly filing and winning such cases, court records show.
Lambda chapters and members can't choose their insurer. The fraternity requires them to buy insurance through James R. Favor & Co., a brokerage based in Aurora, Colo., that is owned by Lambda and other national organizations. Favor places the insurance with Liberty.
That coverage has narrowed in scope. In 1996, Lambda reduced coverage for chapters and members to "end the subsidization of inappropriate conduct," James R. Favor, the brokerage's late founder, said in a 2012 affidavit in Mynhardt's case. As a result, Lambda "has controlled its rising cost of insurance premiums."