A Markel Corp. unit is not obligated to defend a nightclub in litigation stemming from a shooting on its premises because of an assault and battery exclusion in its policy, says a federal appeals court, in a divided opinion that upholds a lower court ruling. In 2015, a gunman entered a Louisville, Kentucky, nightclub, Cole’s Place, and shot eight people, six of whom later filed suit against the nightclub in state court, arguing the club had failed to protect them from a foreseeable harm, according to Thursday’s ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati in United Specialty Insurance Co. v. Cole’s Place Inc. A man subsequently entered what the court said was in effect a guilty plea to assault, without admitting he was the shooter. The club’s insurer, United Specialty, a unit of Glen Allen, Virginia-based Markel Corp., filed suit in U.S. District Court in Paducah, Kentucky, seeking a declaratory judgment it was not obligated to defend or indemnify Coe’s Place in the state court litigation. The District Court ruled in the insurer’s favor, which was upheld by an appeals court panel in its 2-1 ruling. United’s policy provided coverage for bodily injury and property damage, with an exclusion for assault and battery. Under case law, “we cannot read the allegations in the state-court complaints as consistent with anything less than battery,” said the panel’s majority opinion. “Nowhere do the complainants suggest that the shooting was accidental or even reckless; indeed, three of them use the word ‘attack’ to describe the shooting,” the ruling said. “To defeat the summary judgment motion, Cole’s Place is required to demonstrate that the coverage question depends on disputed facts…It has not done so,” the opinion said. “Given that the state-court plaintiffs have alleged an underlying battery, the second part of the coverage inquiry is whether claims based on an alleged failure to protect constitute claims ‘arising out of or resulting from’ the battery. The answer is clearly yes,” said the ruling, in affirming the lower court. The dissenting opinion said, “Given the sparse allegations and limited known facts in the state case (United Specialty) has not met its burden to establish that the state-court complaints allege and involve only injuries arising from an assault or battery and that the exclusion thus applies.” Attorneys in the case could not be reached for comment. Last year, a state appeals court overturned a lower court ruling and held Scottsdale Insurance Co. was obligated to indemnify the owner of a nightclub site for the property’s $923,078 loss in value following a fatal nightclub shooting.
A US appeals court has upheld that insurance company United Specialty, a unit of Markel, did not have to defend or indemnify Kentucky nightclub Cole’s Place following a deadly shooting in 2015. The decision was based on an assault and battery exclusion in United Specialty's insurance policy, which covered bodily injury and property damage.