Court rules bar has no insurance coverage for battery and fatal shooting that occurred on premises where policy exclusions included assault and battery and firearms.

A recent case involving an Illinois bar is a good reminder that insurance coverage under regular commercial general liability policies generally excludes the types of injuries and harms that taverns, taprooms, bars, restaurants, and tasting rooms are likely to encounter vis-a-vis their patrons in their operations. 

In this case, a patron was injured and another shot and killed in a tavern’s connected parking lot by two other individuals that had previously been drinking inside the same tavern. The estate of the deceased patron and the injured patron sued the bar and the bar sought coverage under its commercial general liability policy (CGL policy). The insurance company denied the defense of the bar and coverage for the injuries on account of two separate exclusions that appeared in (and generally appear in most) the policy – one exclusion disclaimed coverage for assault and battery and the other for firearms.

The assault and battery exclusion stated:

“The coverage under this policy does not apply to any claim, suit, cost or expense arising out of assault and/or battery, or out of any act or omission in connection with the prevention or suppression of such acts, whether caused by or at the instigation or direction of any Insured or Insured’s employees, patrons or any other person. Nor does this insurance apply to any claim, suit, cost or expense arising out of the alleged negligence or other wrong doing in the hiring, training, placement, supervision or monitoring of others by the insured.” 

The firearms exclusion in the policy stated:

“This insurance does not apply to ‘bodily injury’, ‘property damage’, ‘personal injury’, ‘advertising injury’ or medical payments arising out of the existence, ownership, rental, maintenance, use, misuse or accidental discharge of firearms whether by any insured or insured employees, patron, tenant, guest or any other person, regardless of individual, circumstances or location.” 

The insurance company brought a declaratory action against the bar seeking a determination that the exclusions applied and that it owed no duty to defend or indemnify the liquor seller. The lower court found for the tavern and injured patrons who were defendants in the coverage action finding that the claims asserted by the defendants in their lawsuit against the bar “potentially” fell within coverage and entered judgement in excess of $1Million agains the insurer, the insurer appealed pointing out that the underlying complaint in the injury lawsuit specifically sought damages for injuries arising from the assault and battery and shooting. The appellate court agreed and in reversing found:

Here, the complaint alleged that Mr. Bettis “with intent to do bodily harm” attacked both Mr. Matthews—“by striking him in the face and body and fatally shooting him”—and Ms. Dangerfield—“by striking her in the face.” Mr. Matthews was murdered, and Ms. Dangerfield was seriously injured. The policy did not define “assault” or “battery” so we must afford them their ordinary meaning. Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352, 366 (2006). Assault is defined as “[t]he threat or use of force on another that causes that person to have a reasonable apprehension of imminent harmful or offensive contact; the act of putting another person in reasonable fear or apprehension of an immediate battery by means of an act amounting to an attempt or threat to commit a battery.” Black’s Law Dictionary (11th ed. 2019). Battery is defined as “[t]he nonconsensual touching of, or use of force against, the body of another with the intent to cause harmful or offensive contact.” Black’s Law Dictionary (11th ed. 2019). The allegations of underlying complaint, that Mr. Bettis intentionally hit both Ms. Dangerfield and Mr. Matthews and intentionally shot Mr. Matthews, are allegations of battery that fall under the policy’s exclusion. 

The appellate court also rejected an argument that coverage should apply because the underlying complaint alleged that the bar was negligent in that it’s security guards allowed the two men that allegedly assaulted the defendant patrons to consume their own alcohol and never called the police. The appellate court reasoned that while that may have been negligence, the result was still the battery/firearm discharge harm, so attempting to push back the notion of causation to achieve coverage was not a winning argument:

Finally, defendants argue that the underlying complaint “allege[d] negligent conduct on the part of Carolyn’s that does not relate to, or arise out of, any potential assault or battery.” Defendants specifically point this court to the allegations that “Carolyn’s security guards allowed Mr. Bettis and Mr. Jones to enter the premises in an ‘obviously intoxicated state’; allowed them to consume their own bottles of alcohol; and never called the police once they were asked to leave the premises.” Markel responds that these “negligent acts and omissions were alleged to have caused the attack that injured Ms. Dangerfield and killed Mr. Matthews” and that, “[t]herefore, the alleged negligence is inseparable from the assault and battery and the use of a firearm, and there is no coverage under the Policy regardless of how the causes of action were pleaded.” We agree.

Every allegation in the underlying complaint clearly arises out of the assault and battery of Ms. Dangerfield and Mr. Matthews, and the use of the firearm to kill Mr. Matthews. The “allegations” listed by defendants as not arising out of the assault and battery or the shooting, e.g., Carolyn’s negligently allowing Mr. Bettis and Mr. Jones to consume alcohol on the premises, are allegations that Carolyn’s breached their duty of care. However, to state their claim for negligence the underlying plaintiffs also had to allege the other three elements of negligence: duty, causation, and damages. Enadeghe v. Dahms, 2017 IL App (1st) 162170, ¶ 14. The complaint clearly stated that “[a]s a direct and proximate result of one of the aforesaid acts or omissions, or a combination thereof, [Ms.] Dangerfield suffered severe and permanent physical and emotional injuries and [Mr.] Matthews[] was shot and killed.” Put another way, Carolyn’s actions in permitting Mr. Bettis and Mr. Jones to drink on the premise caused the assault and battery and the use of the firearm to shoot Mr. Matthews. There would be no negligence claim without the assault, battery, and shooting and these endorsements specifically excluded coverage for “any claim” “arising out of” the use of a firearm or an assault and battery. 

The appellate court reversed the findings in favor of the injured patrons and the bar and ruled in favor of the insurance company.

You can read the opinion here.

What about dram shop insurance you say? Well, the issue with liquor liability – dram shop – insurance is that it normally has fairly low policy or state mandated award limits. So while a bar may have coverage under a dram shop policy, that policy or state mandated payout with limits of $50,000 or $100,000 (for instance, in Illinois, the draxsagahagaggm shop liability coverage is roughly 71k-81k in 2020) will not cover most injuries. Which is why a bar and injured patrons would work together to obtain coverage under a CGL policy with much higher limits. If the CGL carrier does not cover the injury, then the bar is on the hook for the amount.