When One Customer Stabs Another There is No Coverage for the Bar

Oct 27, 2021

FACTUAL BACKGROUND

In January 2015, Soniat and Tribbit sued Funky 544 (not the assailants) in state district court for Orleans Parish, Louisiana, claiming that their injuries resulted from Funky 544’s negligence. The bar owner had a commercial general liability insurance policy with Houston Specialty Insurance Company. In July 2015, five months after Funky 544 notified it of the suit, Houston Specialty declined coverage.

Eventually, because of Funky’s default, the state court awarded the two plaintiffs almost $580,000 for pain and suffering and almost $55,000 for medical expenses. Funky 544 sued Houston Specialty claiming a breach of the insurer’s contractual and statutory duties. Houston Specialty moved for summary judgment on those claims, arguing an exclusion in the policy applied to Soniat and Tribbit’s claims. This exclusion applies to injuries caused by the use of firearms or other weapons:

The following is added to the Exclusion Section of the COMMERCIAL GENERAL LIABILITY COVERAGE FORM and the LIQUOR LIABILITY COVERAGE FORM:
This insurance does not apply to, “bodily injury,” “property damage,” “personal and advertising injury,” “injury” or medical expense arising out of firearms or weapons or out of any act or omission in connection with the prevention or suppression of firearms or weapons, including failure to warn, train or supervise, whether caused by or at the instigation or direction of the insured, his employees, patrons or any other person or failure to render aid and/or notify emergency personnel.

The policy defines “weapons” as “instruments of an offensive or defensive nature and include but are not limited to batons, bow or crossbow, arrows, knives, mace, stun guns, tasers, or swords.”

The district court concluded that this exclusion applied and granted summary judgment.

DISCUSSION

In Louisiana, an insurer must provide a defense whenever the pleadings against the insured disclose a possibility of liability under the policy. Insurance policies are interpreted according to their plain, ordinary and generally prevailing meaning, unless the words have acquired a technical meaning. It is only where a policy is interpreted unambiguously to exclude coverage that an insurer does not have a duty to defend.

The district court described the claims of negligence in state court as Funky 544’s failure to require patron identifications and, more generally, its failure to prevent underage drinking. Even so, an element of each of Soniat and Tribbit’s claims is that Funky 544’s negligence caused them to be injured by a knife.

An exclusion covering bodily injury arising out of assault and battery applies unless the injuries are separate and distinct from the physical altercation. The term in this exclusion of arising out of the use of weapons unambiguously provided that for coverage, an injury must be entirely separate from those relating to the use of weapons.

One helpful state court opinion involved a suit against a Louisiana bar and its insurer after the plaintiff was stabbed by another patron. Foquet v. Daiquiris & Creams of Mandeville, L.L.C., 49 So.3d 44, 45-46 (La. Ct. App. 2010).

Judgment for the insurer was affirmed based on an exclusion in the policy for “‘bodily injury,’ . . . arising out of or resulting from” the use of a weapon. Because the only injuries were related to the stabbing, the claims were based on plainly excluded conduct.

Here, every negligence claim in the state court suit derived from the stabbing. The policy’s weapons exclusion therefore applies.

ZALMA OPINION

Funky 544 got into trouble because they served a minor alcoholic beverages only to have the minor stab two customers of Funky 544. The language of the policy was clear, obvious and easily understood by anyone with a fourth grade education. A knife is defined by the policy as a weapon and injuries caused by a weapon are excluded. A clear and unambiguous exclusion must be enforced and although the two plaintiffs were seriously injured, their injuries were anticipated and excluded because it was a risk of liability of a bar no insurer would be willing to take.

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 54 years in the insurance business.

Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

He is available at http://www.zalma.com

and zalma@zalma.com. Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to training available at https://claimschool.com; articles at https://zalma.substack.com, the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at https://www.rumble.com/zalma ; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/ podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4

When One Customer Stabs Another There is No Coverage for the Bar