An auto insurer for a security business has no duty to indemnify a jury verdict exceeding $20 million over a fatal shooting involving one of the company's guards, an Oregon federal court ruled, finding the guard's acts were "wholly independent" of his use of a company patrol car.

Granting summary judgment on Monday to Progressive unit Artisan and Truckers Casualty Co., U.S. District Judge Adrienne Nelson analyzed the meaning of "arising out of" in the at-issue policy. It specifically covered bodily injury and property damage, "other than" punitive or exemplary damages, "for which an insured becomes legally responsible because of an accident arising out of the ownership, maintenance or use of [the] insured auto."

She then pointed to the Oregon Supreme Court's 1977 opinion in Oakridge Community Ambulance Service Inc. v. U.S. Fidelity & Guaranty Co. and related court decisions that followed.

"Together, Oakridge and its progeny suggest that the ordinary meaning of 'arising out of' denotes a causal connection that is tighter than simple but-for causation, but looser than proximate causation, which comports with the dictionary definition of 'arising' as 'originating from,'" Judge Nelson determined. "Thus, for an injury to 'arise out' of the use or ownership of an insured vehicle does not require the vehicle to be a direct cause of the injury, but it must have some consequential relationship."

But in the present case, the jury specifically held Cornerstone Security Group and the guard, Logan Gimbel, liable for Gimbel's fatal shooting of Freddy Nelson Jr. and his discharge of pepper spray into Nelson's vehicle, Judge Nelson found.

Thus, she said, such actions "were not the consequence of insureds' use or ownership of the insured patrol car; instead, they were caused by Gimbel's actions wholly independent of the patrol car's use."

According to court filings, the coverage dispute centers on the wrongful death lawsuit that Nelson's wife, Kari, and a representative of his estate filed in October 2021 in state court against Matthew Cady, Jeffrey James and TJ Lathrom, who together did business as Cornerstone.

The shooting occurred in May 2021, when Gimbel parked his patrol car perpendicularly to the Nelsons, preventing them from leaving their parking spot. Gimbel then exited his vehicle, pepper-sprayed the pair through a cracked window, and then fatally shot Freddy Nelson as Nelson tried to drive away.

"These facts were introduced at trial in both Gimbel's criminal prosecution and the underlying Nelson lawsuit, in the form of both testimony and video evidence," Monday's decision states, adding that Gimbel was found guilty of second degree murder and other crimes in May 2023.

Artisan, meanwhile, kicked off the present coverage litigation in January 2023. The insurer had also sought to avoid covering a separate civil lawsuit stemming from the shooting, but that lawsuit was later dismissed "for want of prosecution," court records show. Artisan further included TMT Development Co. LLC and D. Park Corp. as defendants, which allegedly hired Cornerstone. TMT and Park were later dismissed from the coverage litigation following the court's entry of default against them in March 2023.

By September 2024, the Nelson civil suit went to trial, and a jury awarded $10 million in noneconomic damages and $625,000 in punitive damages each to Kari Nelson and the Nelson estate.

On Monday, Judge Nelson first noted that per her prior September 2024 decision regarding Artisan's duty to defend, the Nelson lawsuit contains two sets of allegations: how Gimbel approached and interacted with the Nelsons before releasing pepper spray, and those relating to Gimbel's alleged false arrest and imprisonment of the Nelsons.

In that prior decision, Judge Nelson ruled that because that latter set of allegations "are more closely related to the use of a vehicle," Artisan therefore had a duty to defend the underlying Nelson lawsuit.

But before trial, the Nelson plaintiffs had voluntarily dismissed their false arrest and imprisonment claim, and Cornerstone stipulated that it was liable for the negligence of its employees, including Gimbel.

"Going into trial, it was therefore already established that Gimbel had recklessly pepper-sprayed the Nelsons, that he had recklessly caused the death of Mr. Nelson, and that Cornerstone was liable in negligence for these actions," Judge Nelson continued Monday.

As for the duty to indemnify, Judge Nelson ultimately determined that the jury found Cornerstone and Gimbel liable for the fatal shooting and his use of pepper spray.

The insured patrol car, meanwhile, "'had no consequential relationship' to Gimbel's decision to pepper spray and shoot the Nelsons after parking the patrol car nearby," she concluded.

Artisan is represented by Thomas Lether and Eric J. Neal of the Lether Law Group.

Matthew Cady, Jeffrey James, TJ Lathrom, Kari Nelson and the representative of the Nelson estate are represented by Michael E. Farnell of Paternoster Farnell & Grein LLP and by Thomas D'Amore and Benjamin J. Turner of the D'Amore Law Group PC.

Logan Gimbel is represented by Andrew T. Burns and Chester D. Hill of Cosgrave Vergeer Kester LLP.

The case is Artisan and Truckers Casualty Co. v. TMT Development Co. LLC et al., case number 3:23-cv-00014, in the U.S. District Court for the District of Oregon.