Insurers are Loathe to Insure Bars for Assault or Battery
Insurance is a risk transfer device. However, insurers are not necessarily willing to take on all risks faced by an insured. Because bars are often faced with unruly patrons who have consumed enough alcohol to suppress their normal reluctance to enter into physical disputes insurers will often exclude from the coverage provided any injuries caused by an assault or a battery.
In Nicole Pickett, on behalf of the Estate Of Roger Waddell Pickett, II v. Moore’s Lounge (also known as Bill And Ruth’s) and James D. Corley, Jr., and Emro, Inc. v. Northfield Insurance Company, Third-Party Defendant-Respondent, and Petrocci Agency, LLC, Docket No. A-2330-17T2, Superior Court Of New Jersey Appellate Division (August 25, 2020) the New Jersey Appellate Division was required to interpret the assault-or-battery exclusion in a tavern’s commercial general liability policy. In excluding damage claims “arising out of any act of ‘assault’ or ‘battery’ committed by any person,” the exclusion expressly encompasses claims “arising out of . . . any act or omission in connection with the prevention or suppression of such ‘assault’ or ‘battery.’”
FACTS
The estate of Roger Pickett, a tavern patron, sued the tavern owner, EMRO, Inc., for damages after a tavern invitee fatally shot Pickett following a verbal argument. The estate alleged EMRO negligently permitted the shooter to enter the tavern armed, remain there, and then intentionally shoot Pickett. EMRO and its insurance producer, whom EMRO sued for failing to procure adequate coverage, settled with the estate. Then, EMRO sought indemnification from its insurer, Northfield Insurance Co., for its settlement share and defense costs. In denying coverage, Northfield invoked the assault-or-battery exclusion. Then followed EMRO’s action against Northfield, the court’s summary judgment dismissal, and the present appeal
Early on New Year’s Day, Pickett and James D. Corley got into an argument in Moore’s Lounge in Jersey City. As Pickett turned to walk away, Corley shot him three times, killing him. Corley was convicted of aggravated manslaughter and is incarcerated.
EMRO sought a defense and indemnification from Northfield. EMRO had provided Northfield with a notice of claim shortly after the shooting. As it did in response to the notice, Northfield invoked the policy’s assault-or-battery exclusion and denied EMRO’s request for coverage.
Along with its answer to the estate’s complaint, EMRO filed its third-party complaint against Northfield for coverage. EMRO also sued its “agent/broker” for damages caused by its negligence and breach of promise to procure adequate coverage.
In their settlement with the estate, EMRO and the insurance producer agreed to pay $50,000 and $100,000 respectively. The settlement expressly provided that Northfield was not a party to the settlement, and EMRO reserved its rights to proceed against it. EMRO thereafter moved for summary judgment against Northfield, seeking indemnification of its $50,000 settlement, plus $45,251.77 in defense fees and costs. Northfield cross-moved for summary judgment.
In granting summary judgment to Northfield, the trial court held that the assault-or-battery exclusion barred EMRO’s claim, because the estate sought damages for bodily injury arising out of Corley’s assault or battery of Pickett, and the estate’s negligence-based claims referred to, as the policy stated, “any act or omission in connection with the prevention or suppression of such ‘assault’ or ‘battery.’”
As the record discloses no genuine issue of material fact, the Appellate Division’s resolution of that question will determine whether Northfield was entitled to summary judgment.
ANALYSIS
If the plain language of the policy is unambiguous, the court will not engage in a strained construction to support the imposition of liability or write a better policy for the insured than the one purchased.
The assault-or-battery exclusion bars claims against the insured for bodily injury that arise out of an assault or battery. The estate alleged that Corley intentionally shot Pickett. The estate thereby alleged a “battery,” because the policy defines “battery” as an “intentional, reckless or offensive . . . use of force against, a person without his . . . consent that inflicts some injury.”
The exclusion of claims arising out of an assault or battery expressly “includ[es] any act or omission in connection with the prevention or suppression of such ‘assault’ or ‘battery.’” Thus, the exclusion plainly encompasses negligent acts or omissions that fail to prevent or suppress the assault or battery.
The Pickett estate did not alternatively allege that Corley negligently shot Pickett and his conviction eliminated the claim of negligence. The bar’s alleged negligence was connected only with an assault or battery.
The assault-or-battery exclusion in EMRO’s policy with Northfield precluded EMRO’s claim for indemnification of its defense costs and its share of the settlement paid to the estate.
ZALMA OPINION
Coverage for claims of assault and battery are available in the marketplace. However, the cost is usually impossible for a tavern to pay. That is why bars and taverns hire security personnel – bouncers – to prevent the occurrence like occurred in this case. The liability of the tavern was sufficient for it, and others, to pay some damages to the estate. However, there was clearly and unambiguously an exclusion preventing coverage for defense or indemnity caused by the intentional shooting of Mr. Pickett.
© 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.
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