March 30, 2013

Fraternities worse than Animal House fail to pay for casualties


The restricted overage is of dubious benefit to chapters and their members, said Jeffrey Stempel, who teaches insurance law at the William S. Boyd School of Law at the University of Nevada, Las Vegas and reviewed the Lambda policy.

"This strikes me as being perilously close to saying we cover you unless you're bad," Stempel said.

Liberty Corporate argued that the events at "211" weren't covered because they violated Lambda policies, including rules barring kegs, underage drinking and public access to alcohol, and requiring professional security at parties.

"It's terrible when someone is injured, but it doesn't mean we should be held liable" if the national fraternity isn't negligent, said Jon Pavey, former chairman of James R. Favor.

A federal judge in Greensboro, N.C., agreed, ruling in August that Liberty need not provide coverage for the chapter or members. Since the chapter has virtually no assets, the decision meant Mynhardt couldn't collect damages from it even if he won his case, said Joseph Williford, the chapter's lawyer.

Mynhardt appealed the ruling. He reached settlements with half a dozen students, including Cassady, who were covered under their parents' homeowners' insurance. Mynhardt, who Williford said was seeking as much as $20 million, collected less than $2 million from the parents' policies.

Tapping the parents' insurance "is particularly distasteful when the national fraternity requires every single member to contribute to the purchase of liability insurance that is very unlikely ever to pay out a dime," said Richard Pinto, Cassady's lawyer.

According to court records, Mynhardt dismissed his appeal after the insurer, Liberty, agreed to a confidential settlement. Liberty's lawyer, Nolan Burkhouse, acknowledged it made a five- figure payment before declining further comment.

"It's a horrible, horrible result," said Petty, who declined to comment on the settlement amounts.

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