Zalma on Insurance
Education • Business
Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
Interested? Want to learn more about the community?
January 18, 2023
NO DUTY TO DEFEND

NEITHER BATTERY NOR FAILURE TO REMOVE INTOXICATED PATRON IS AN OCCURRENCE

Barry Zalma

Read the full article at https://lnkd.in/g6qM7UCj and see the full video at https://lnkd.in/gmkAMpUy and at https://lnkd.in/gefWVnqw and at https://zalma.com/blog plus more than 4400 posts.

In Crum & Forster Specialty Insurance Company v. Spike’s Pub & Grub, d/b/a Vincint Von Hart LLC, and Devin Elliott, No. 3:21-CV-1722-NJR, United States District Court, S.D. Illinois (January 4, 2023) Plaintiff Crum & Forster Specialty Insurance Company (“CFSIC”) sought an order declaring that it owes no duty to defend or indemnify Defendant Spike’s Pub & Grub, d/b/a Vincint Von Hart LLC (“Spike’s”), in a case pending in the Circuit Court of St. Clair County, Illinois.

BACKGROUND

Devin Elliott (“Elliott”) sued Spike’s Public House, LLC, d/b/a Spike’s Pub & Grub (the “Underlying Action”). In the Underlying Action, Elliott alleges that on March 18, 2021, Spike’s sold or gave alcoholic beverages to Corey Lyell, causing Lyell’s intoxication. While intoxicated, and as a result of his intoxication, Lyell attacked Elliott and stabbed him multiple times, inflicting severe injury upon Elliott.

Elliott alleged Spike’s was negligent under Illinois law for failing to keep security personnel on the premises, failing to remove intoxicated persons from its premises, failing to protect Elliott from reasonably foreseeable criminal activities committed by its patrons, and failing to establish procedures to maintain the safety of its invitees. Elliott also claimed Spike’s otherwise was careless and negligent in providing adequate security; alleged a claim against Spike’s under Illinois’s Dram Shop Act; and a claim for battery against Lyell.

AVAILABLE INSURANCE

Spike’s was insured under a Commercial General Liability policy issued by CFSIC (“the Policy”). The Policy had limits of liability of $1,000,000 Each Occurrence and a $2,000,000 General Aggregate limit. Spike’s sought coverage under the Policy for the claims asserted against it in the Underlying Action. CFSIC, however, advised Spike’s in writing that it owed no obligation to defend or indemnify Spike’s based on the terms of the Policy.

CFSIC filed a Complaint for Declaratory Judgment seeking a declaration that it has no duty to defend or indemnify Spike’s under the Policy. Both Spike’s and Elliott failed to answer the Complaint, and the Clerk of Court entered default pursuant to Federal Rule of Civil Procedure 55(a) as to both Defendants on July 22, 2022. CFSIC then moved for Default Judgment.

LEGAL STANDARD

Rule 55(a) requires the clerk to enter default when a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend and that failure is shown by affidavit or otherwise.

DISCUSSION

In Illinois, like every other state, an insurance policy is a contract and the general rules governing the interpretation of other types of contracts also govern the interpretation of insurance policies.

A duty to defend arises if the allegations in the complaint fall within or potentially within the coverage of the policy. This is known as the “eight corners” rule: the court compares the four corners of the underlying complaint with the four corners of the insurance policy to determine whether facts alleged in the underlying complaint fall within or potentially within coverage. If they do, the insurer has a duty to defend.

Coverage Under CFSIC’s Policy

CFSIC first argued that no coverage exists for the allegations against Spike’s in the Underlying Complaint because the bodily injury alleged in the Underlying Complaint was not caused by an “occurrence” as that term is defined under Coverage A of the Policy.

By their default, Elliott and Spike’s have failed to dispute CFSIC’s contention that the Policy offers no coverage because the Underlying Complaint does not allege bodily injury or property damage from an “occurrence” as that term is defined in the Policy-i.e., an accident. Accordingly, the Court finds CFSIC is entitled to default judgment as to Count I of the Complaint for Declaratory Judgment.

Total Liquor Liability Exclusion

CFSIC alternatively argues that, even if the complaint contains sufficient allegations to support coverage, the Policy contains an exclusion that bars coverage. The Total Liquor Liability Exclusion of Coverage A of the Policy provides there is no coverage for “Bodily injury” or “property damage” for which any insured may be held liable by reason of:

Causing or contributing to the intoxication of any person;

The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or

Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.”

CFSIC argues that the allegations in the Underlying Complaint fall squarely within the scope of the Policy’s Total Liquor Liability Exclusion. Thus, even if the Policy afforded coverage for the bodily injury alleged by Elliott under Coverage A, coverage would be precluded by operation of the exclusion.

Because the Total Liquor Liability Exclusion applies to bar any coverage provided by the Policy, CFSIC was entitled to default judgment as to Count II of the Complaint for Declaratory Judgment. CFSIC owed no duty to defend Spike’s in the Underlying Action.

Indemnification

CFSIC also asked the Court to declare that it has no duty to indemnify Spike’s. It is well established that the duty to indemnify is narrower than the duty to defend.

Because the Underlying Action remains pending in St. Clair County determining whether CFSIC has a duty to indemnify would require the USDC to adjudicate facts in the Underlying Action. Therefore, the Court denied that portion of CFSIC’s motion without prejudice.

ZALMA OPINION

Although the duty to defend is greater than the duty to indemnify, even when the USDC concluded that CFSIC owed no duty to defend, it refused to rule on the duty to indemnify because the trial of the underlying action might – if a miracle occurs – find a cause for the stabbing that is not excluded, as unlikely as that may be. CFSIC should, therefore, monitor the underlying case to protect its rights and to avoid collusion between the plaintiffs and the insured defendants.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://lnkd.in/gfFKUaT(c) 2023 Barry Zalma & ClaimSchool, Inc.

Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.

Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma

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 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. He is available at http://www.zalma.com and [email protected]

Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at 
Zalma on Insurance

Insurance, insurance claims, insurance law, and insurance fraud .
By Barry Zalma

. Go to 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 Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-libraryf.

Go to substack at https://lnkd.in/gEEnV7Dd Consider subscribing to my publications at substack at https://lnkd.in/gEEnV7Dd

Barry Zalma, Esq., CFE is available at http://www.zalma.com and [email protected]

Go to the Insurance Claims Library – https://lnkd.in/gWVSBde
Support Excellence in Claims Handling

By Barry Zalma  ·  Launched 2 years ago

A series of writings and/or videos to help understand insurance, insurance claims, and becoming an insurance claims professional and who need to provide or receive competent and Excellence in Claims Handling.

00:09:30
Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
September 26, 2025
No Way Out After Murder Conviction

Intentionally Shooting a Woman With A Rifle is Murder

Post 5196

See the full video at and at and at https://zalma.com/blog and more than 5150 posts.

You Plead Guilty You Must Accept the Sentence

In Commonwealth Of Pennsylvania v. Mark D. Redfield, No. 20 WDA 2025, No. J-S24010-25, Superior Court of Pennsylvania (September 19, 2025) the appellate court reviewed the case of Mark D. Redfield, who pleaded guilty to third-degree murder for killing April Dunkle with malice using a rifle.

Affirmation of Sentence:

The sentencing court’s judgment was affirmed, and jurisdiction was relinquished, concluding no abuse of discretion occurred.

Reasonable Inference on Trigger Pulling:

The sentencing court reasonably inferred from the guilty plea facts that the appellant pulled the trigger causing the victim’s death, an inference supported by the record and consistent with the plea.

Guilty Plea Facts:

The appellant admitted during the plea hearing...

00:07:16
placeholder
September 25, 2025
Prelitigation Communications Privileged

The Judicial Proceedings Privilege
Post 5196

Posted on September 25, 2025 by Barry Zalma

See the full video at and at

Judicial Proceeding Privilege Limits Litigation

In David Camp, and Laura Beth Waller v. Professional Employee Services, d/b/a Insurance Branch, and Brendan Cassity, CIVIL No. 24-3568 (RJL), United States District Court, District of Columbia (September 22, 2025) a defamation lawsuit filed by David Camp and Laura Beth Waller against Insurance Branch and Brendon Cassity alleging libel based on statements made in a letter accusing them of mishandling funds and demanding refunds and investigations.

The court examined whether the judicial proceedings privilege applieD to bar the defamation claims.

Case background:

Plaintiffs Camp and Waller, executives of NOSSCR and its Foundation, sued defendants Insurance Branch and Cassity over a letter alleging financial misconduct and demanding refunds and audits. The letter ...

00:07:56
placeholder
September 24, 2025
Untrue Application for Insurance Voids Policy

Misrepresentation or Concealment of a Material Fact Supports Rescission

Post 5195

Don’t Lie to Your Insurance Company

See the full video at and at https://rumble.com/v6zefq8-untrue-application-for-insurance-voids-policy.html and at https://zalma.com/blog plus more than 5150 posts.

In Imani Page v. Progressive Marathon Insurance Company, No. 370765, Court of Appeals of Michigan (September 22, 2025) because defendant successfully established fraud in the procurement, and requested rescission, the Court of Appeals concluded that the Defendant was entitled to rescind the policy and declare it void ab initio.

FACTS

Plaintiff's Application:

Plaintiff applied for an insurance policy with the defendant, indicating that the primary use of her SUV would be for "Pleasure/Personal" purposes.

Misrepresentation:

Plaintiff misrepresented that she would not use the SUV for food delivery, but records show she was compensated for delivering food.

Accident:

Plaintiff's SUV was involved in an accident on August ...

00:07:48
September 09, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime.

How Elderly Doctors Fund their ...

placeholder
September 08, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime.

How Elderly Doctors Fund their ...

placeholder
September 03, 2025

Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit

© 2025 Barry Zalma, Esq., CFE

When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.

On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...

post photo preview
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals