Insurers lose ruling in bar assault case


Insurers are obligated to defend a bar in a situation where a woman was first given suspicious drinks, then assaulted, despite an assault exclusion in its coverage, said a federal appeals court Thursday, in affirming a lower court ruling.

The 11th U.S. Circuit Court of Appeals in Atlanta held in Houston Specialty Insurance Co., Scottsdale Insurance Co. v. The Five Places in Co., Annalee Hunter the insurers must provide a defense in the case because of the injury sustained by the drinks that were given before the assault.

The Five Paces Inn in Atlanta had a commercial general policy issued by Houston-based Houston Specialty that provided general liability and liquor liability limits of $1 million per occurrence, but excluded coverage for any injury involving an assault, which was subject to a $25,000 sublimit, according to the ruling.

The umbrella policy issued by Nationwide Mutual Insurance Co. unit Scottsdale Insurance Co. included the same provisions.

In 2016, Ms. Hunter, who had remained in the bar at about 2 a.m. after it was cleared of patrons, including her friends, was given a drink by a bartender and a “blue shot,” at least one of which rendered her defenseless, and led to her assault and rape by a bartender, according to the ruling.

The insurers filed suit in U.S. District Court in Atlanta, seeking a declaration they had neither a duty to indemnify nor defend the case. The district court dismissed as premature the portion of the insurers’ complaint dealing with the duty to indemnify, and also dismissed their portion of their complaint dealing with the duty to defend, ruling “the allegations on the fact of the underlying lawsuit set forth a claim of potential coverage,” said the appeals court ruling.

The insurers appealed the latter determination.    A unanimous three-judge appeals court panel unanimously affirmed the lower court’s ruling.

“If Hunter’s suit against Five Paces alleges injuries ‘arising out of’ assault or battery (or sexual assault) then Houston and Scottsdale are correct that the lower sublimit (or the sexual assault exclusion) applies,” the ruling said.

However, “Hunter was injured the moment she consumed an incapacitating beverage, regardless of any subsequent assault by a Five Paces bartender,” the ruling said.

“After all, the Houston policy states that the company is responsible for paying ‘damages because of “injury”’ to which this insurance applies if liability for such ‘injury is imposed on the insured by reason of the selling, serving or furnishing of any alcoholic beverage.’”

The insurers “cannot escape this fact merely because Hunter had the misfortune of being assaulted in the same bar that served her the incapacitating drink,’ said the panel, in affirming the lower court’s ruling the insurers have a duty to defend the bar.

Attorneys in the case could not be reached for comment.

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