Clear & Unambiguous Exclusion
Barry Zalma
Sep 13, 2023
Read the full article at https://lnkd.in/gHgSfdZ5 and see the full video at https://lnkd.in/gtbfjQHT and at https://lnkd.in/gYPhurz4 and at https://zalma.com/blog plus more than 4600 posts.
The insurer sued seeking a declaratory judgment that it need not defend or indemnify defendant TFS NY against a personal injury lawsuit pending in the New York Supreme Court, Kings County.
In Clear Blue Specialty Insurance Company v. TFS NY, INC. d/b/a Sugardaddy’s and Tywan Simmons, No. 22-CV-1915 (AMD) (SJB), United States District Court, E.D. New York (September 6, 2023) resolved the dispute.
BACKGROUND
The defendant owns and operates a nightclub. Between April 2019 and April 2020, the plaintiff insured the defendant under a Commercial General Liability insurance contract. Like any other insurance policy, this contract had exclusions. At issue in this case is the scope of a Sublimited Assault or Battery endorsement and a Third Party or Contracted Security exclusion-specifically, whether these provisions require the plaintiff to defend and indemnify the defendant against a lawsuit pending in New York state court.
The parties agreed that the insurance policy was in effect when the incident took place and that Mr. Simmons’s lawsuit triggers the plaintiff’s duty to defend under the Sublimited Assault or Battery endorsement, because the lawsuit includes negligence claims. They also agree that Castillo was “an outside security company” as defined by the insurance policy.
The policy provides, in part: “We have no duty to defend any insured against any claims or ‘suits’ seeking damages for ‘bodily injury’, ‘property damage’ … or ‘injury’ in regard to the matters covered by this exclusion (outside security services) and we have no duty to pay damages in regard to the matters covered by this exclusion”
DISCUSSION
The plaintiff argues that it has no duty to defend or indemnify against Mr. Simmons’s lawsuit, because it disclaimed liability over any “suit” “involving” “operations of any third party or contracted security services provider.” While the defendant agrees that the plaintiff is not liable for claims involving Castillo and does not have to indemnify the defendant for them, it nevertheless contends that the plaintiff must “defend the entire action” because the lawsuit includes claims against the defendant and its employees, who “are covered by [the] policy.”
Insurance Contracts Under New York Law
The duty to defend is contractual in nature. Accordingly, there is no duty to defend where the alleged basis for liability is not within the coverage of the policy.
The Plaintiff’s Duty to Defend
The defendant contends that the plaintiff owes a duty to defend because the exclusion is silent as to whether insurance would apply to separate and distinct claims of assault and battery that are made against the defendant and its employees. However, the plain language of the exclusion, which states repeatedly that it “does not apply to any . . . ‘suit’ . . . directly or indirectly based on, attributable to, arising out of, involving, resulting from or in any way related to the acts, omissions or operations of any third party or contracted security services provider.”
Mr. Simmons’s complaint alleges that he was “assaulted” and “sustain[ed] serious and severe injuries” “as a direct consequence and result of the acts of [all] the defendants.” Mr. Simmons’s “suit,” therefore, “involv[es]” a “contracted security services provider” and falls within the exclusion.
The complaint alleges that the altercation was the product of joint action of the defendant, its employees and Castillo, each of which is included in every cause of action. The plaintiff thus has no duty to defend.
Finally, even if there is no duty to defend on the facts alleged in Mr. Simmons’s complaint, there might still be a duty to indemnify the defendant if the state court dismisses the claims against Castillo or if the jury decides that the defendant’s employees were the only ones involved in Mr. Simmons’s assault. But at this time, the exclusion must be enforced, and the plaintiff has no duty to defend.
Duty to Indemnify
Developments in Mr. Simmons’s lawsuit may trigger a duty to indemnify. If that happens, the defendant may move to reopen the case. However, since the underlying suit is at the pleading stage, the plaintiff’s motion for summary judgment was granted as there is no duty to defend. The defendant may move to reopen on the issue of indemnification if the state court determines that Castillo played no part in Mr. Simmons’s assault.
ZALMA OPINION
Clear and unambiguous language in an exclusion will always be enforced. Since the suit alleged that the security service was involved in his assault, battery and injury the exclusion applied and there was no duty to defend. Since little evidence exists for the USDC to rule upon it left open the possibility – slim – that there might be a duty to indemnify. A Solomon-like decision that will not require the death of a baby nor the defense of the security company.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Follow me on LinkedIn: http://www.linkedin.com/comm/mynetwork/discovery-see-all...
Daily articles are published at https://zalma.substack.com.
Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; 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 – http://zalma.com/blog/insurance-claims-library/
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at https://lnkd.in/gfFKUaTf or at substack at https://lnkd.in/gcZKhG6g.
Go to Newsbreak.com https://lnkd.in/g8azKc34
Go to the Insurance Claims Library – https://lnkd.in/gYq44VM
Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105
See the full video at https://lnkd.in/gPa6Vpg8 and at https://lnkd.in/ghgiZNBN, and at https://zalma.com/blog plus more than 5100 posts.
Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.
In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.
BACKGROUND
Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....
Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104
Read the full article at https://lnkd.in/gbcTYSNa, see the full video at https://lnkd.in/ggmDyTnT and at https://lnkd.in/gZ-uZPh7, and at https://zalma.com/blog plus more than 5100 posts.
Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy
In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.
The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS
Parties Involved:
CAEA is insured by Associated Industries Insurance Company, Inc. ...
Exclusion Establishes that There is No Duty to Defend Off Site Injuries
Post 5103
Read the full article at https://lnkd.in/geje73Gh, see the full video at https://lnkd.in/gnQp4X-f and at https://lnkd.in/gPPrB47p, and at https://zalma.com/blog plus more than 5100 posts.
Attack by Vicious Dog Excluded
In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)
Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that
1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.
Presently before the Court are two ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.
This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone 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."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...