The U.S. Court of Appeals for the Eleventh Circuit has agreed with an insurance company that it had no obligation to pay any part of a $3.5 million settlement reached by its insured, a bar, with a Florida college student who alleged that the bar had served her alcohol although she was underage, which led to her being sexually assaulted.
The plaintiff in this case, then a 17-year-old student at the University of Miami, alleged that she was at Mr. Moe’s, a bar in Coconut Grove operated by Moheb Inc., with a group of other students who also were under the legal drinking age. According to the plaintiff, Moheb’s employees provided alcoholic beverages to the plaintiff and the other students without requesting or verifying proof of legal drinking age.
The plaintiff asserted that she became so intoxicated that she was unable to fend off older male students who took her to a university dormitory, where she was sexually assaulted.
The plaintiff sued Moheb for negligence. Moheb then sought a defense from its insurer, Hudson Specialty Insurance Company, which had issued Moheb a liquor liability insurance policy.
After receiving notice of the plaintiff’s suit, Hudson denied Moheb insurance coverage based, in part, on the assault and battery exclusion in its policy.
The plaintiff and Moheb entered into a settlement under which Moheb admitted liability and agreed to the entry of a $3.5 million judgment against itself. Moheb assigned its right against Hudson to the plaintiff, and the plaintiff, in turn, agreed not to execute on the judgment.
The plaintiff then sued Hudson, seeking a declaration that Hudson was liable for the amount of the policy limit, damages, and attorneys’ fees.
The U.S. District Court for the Southern District of Florida concluded that Hudson had no duty to defend and, accordingly, granted summary judgment in Hudson’s favor.
The plaintiff appealed to the Eleventh Circuit.
The Hudson Policy
The Hudson policy provided coverage for liability:
imposed upon the insured by reason of selling, serving or giving of any alcoholic beverage at or from the insured premises.
It also provided:
This insurance does not apply to claims arising out of an assault and/or battery, whether caused by or at the instigation of, or at the direction of, or omission by, the insured, and/or his employees.
The Eleventh Circuit’s Decision
The circuit court affirmed.
In its decision, the circuit court explained that the Hudson policy excluded “claims arising out of an assault and/or battery.”
The plaintiff’s complaint, the circuit court observed, specifically alleged a connection between her intoxication, which had resulted from a Moheb employee’s negligent distribution of alcoholic beverages, and the sexual assault. Therefore, the circuit court ruled, the district court had correctly concluded that the exclusion’s language “undeniably” captured the actions and omissions alleged by the plaintiff.
The circuit court was not persuaded by the plaintiff’s argument that she was entitled to coverage under the concurrent cause doctrine, reasoning that because she had alleged a causal connection between her intoxication and the sexual assault, the concurrent cause doctrine was inapposite.
Finally, it rejected the plaintiff’s contention that the efficient proximate cause doctrine led to coverage because the sexual assault, a harm excluded under the policy, had been caused by her intoxication, a harm covered under the policy. The policy covered only one peril, the circuit court concluded – liability related to the sale and distribution of alcohol – and affording coverage in this case would render the exclusion clause “a nullity.”
The case is Doe v. Hudson Specialty Ins. Co., No. 17-11642 (11th Cir. Jan. 12, 2018).