SD court settles Howard case

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HOWARD — The South Dakota Supreme Court ruled Wednesday that an insurance company does not have to pay a former co-owner of a restaurant and bowling alley in Howard after the other co-owner intentionally burned down the business.

The ruling arose from a September 2008 fire that destroyed Whiskey Flow Dining and Minor Alley. Whiskey Flow co-owners Gary and Ila Fedderson, who are husband and wife, made a $1 million claim to their insurance company, Columbia Insurance Group, as a result of the fire, which the company rejected after Gary Fedderson was convicted of conspiracy to commit arson and insurance fraud.

Ila Fedderson sued Columbia, claiming she was an “innocent insured” and her husband’s actions did not void her share of the policy. Third Circuit Judge Tim Tucker rejected the claim, which she appealed to the Supreme Court.

The Supreme Court affirmed Tucker’s ruling and found Gary Fedderson’s actions voided the insurance policy.

The Supreme Court found Columbia’s policy with the Feddersons used the phrase “any insured,” as opposed to “the insured,” in its provision regarding fraud and whose actions will void the policy.

“The insurance contract explicitly voided the policy if ‘any insured’ misrepresented a material fact or committed fraud relating to the policy,” the ruling says. “This language is unambiguous.”

When that language is used, the ruling says, “there is no coverage for an innocent co-insured’s claim when another co-insured engaged in wrongdoing.”

Gary Fedderson was sentenced to five years in prison in August 2009 in connection with the fire.

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