Property Casualty Focus

In Cincinnati Specialty Underwriters Ins. Co. v. Mainline Priv. Sec., LLC, Civil Action No. CV 24-3871, the United States District Court for the Eastern District of Pennsylvania held that an assault and battery exclusion, which limited coverage to an aggregate of $250,000 that had already been exhausted, precluded coverage for two underlying lawsuits stemming from alleged assaults at two bars. The court also rejected the claimants’ argument that the policy’s coverage was illusory.

The coverage dispute arose out of two underlying lawsuits. The first was brought by Heather and John Pope against insureds Mainline Private Security, LLC (“Mainline”) and Mikey II, LLC d/b/a Tabu Lounge and Sports Bar (“Mikey II”), as well as a non-insured security guard. The Popes allege that Eric Pope was punched in the head without provocation by a security guard for Mainline who was working at Mikey II. The alleged attack resulted in Eric Pope’s death. The Popes brought claims for negligence, recklessness, and assault and battery.

The second lawsuit was brought by Rish Abhyankar, who alleged that another patron at a bar where Mainline provided security picked him up by his throat and slammed him headfirst onto the pavement. Mr. Abhyankar asserted claims for negligence and assault and battery against Mainline, the bar, and the alleged attacker.

Following these lawsuits, Cincinnati Specialty Underwriters Insurance Company (“CSU”) took the position that it had no obligation to defend because the allegations fell within the policy’s assault and battery exclusion. CSU filed a declaratory judgment action seeking a ruling that the exclusion applied and barred coverage because the policy’s $250,000 aggregate limit for assault and battery had already been exhausted.

CSU moved for summary judgment. In response, Mainline and the claimants argued that the negligence allegations were distinct from the alleged assaults and therefore fell outside the exclusion. They also argued that applying the exclusion would render the policy illusory.

The court first examined the language of the assault and battery exclusion, which barred coverage for “bodily injury . . . arising out of . . . [a]n actual or threatened assault or battery whether caused by or at the instigation or direction of any insured, their employees, patrons or any other person.” Under Pennsylvania law, the court explained, the phrase “arising out of” requires only “but-for” causation, meaning the injury must be causally connected to an assault or battery.

Applying that standard, the court found that the claimants’ injuries plainly arose out of assault and battery. The court noted that Eric Pope was allegedly “forcefully punched in the head, completely without provocation,” leading to his death, while Mr. Abhyankar alleged that he was picked up by his throat and slammed headfirst onto pavement. Accepting the allegations as true, the court concluded that both sets of injuries were causally connected to assaults.

The court also rejected the argument that the negligence claims were independent of the alleged assaults. The exclusion broadly barred coverage for claims based on an insured’s failure “to prevent or suppress assault or battery . . . ... The failure to provide an environment safe from assault or battery ... The failure to render or secure medical treatment or care necessitated by any assault or battery ... The negligent investigation or reporting or failure to report any assault or battery to proper authorities; or ... The negligent: a. Employment; b. Supervision; c. Training; d. Retention; of a person for whom any insured is or ever was legally responsible and whose conduct would be excluded by the ASSAULT OR BATTERY exclusion above.”

Based on the policy language and because the negligence allegations in the underlying complaints corresponded with these types of theories, the court held that they also fell squarely within the exclusion.

After reviewing the specific negligence allegations in the underlying complaints, the court concluded that each of the claimants’ theories of liability arose out of assault and battery. As a result, CSU’s coverage was limited to the policy’s $250,000 assault and battery limit. Because that amount had already been eroded by other claims, CSU had no remaining duty to defend or indemnify Mainline or Mikey II.

Finally, the court rejected the claimants’ argument that the policy was illusory. The court explained that coverage is not illusory merely because a policy contains a broad exclusion; rather, coverage is illusory only if the policy would not pay benefits under any reasonably expected set of circumstances. Although Mainline had paid roughly $300,000 in premiums while the assault and battery sublimit was $250,000, the court found that the policy still provided meaningful coverage. In particular, the policy provided up to $1 million in coverage for bodily injury arising from other bars at Mainline’s request, and the assault and battery exclusion did not bar coverage for other types of bodily injury or property damage claims.