Friday, March 7, 2014

Ninth Circuit Holds Extrinsic Facts Triggered Duty to Defend


In its recent decision in Burlington Ins. Co. v. CHWC, Inc., 2014 U.S. App. LEXIS 3941 (9th Cir. Mar. 3, 2014), the United States Court of Appeals for the Ninth Circuit, applying California law, had occasion to consider an insured’s obligation to consider extrinsic facts in determining a duty to defend.

The underlying incident in Burlington involved injuries allegedly suffered by the plaintiff when forcibly removed by bouncers from the insured nightclub, Crazy Horse.  Claimant’s original lawsuit contained a cause of action for assault and battery for the alleged incident, as well as causes of action for negligent hiring and premises liability.  Crazy Horse’s insurer, Burlington, was provided copies of the pleadings as well as police reports concerning the incident.  The initial police reports were consistent with an assault and battery.  A supplemental report, however, indicated that while claimant was being removed from the club, he became defiant and began to resist removal.   One of the witnesses interviewed in the supplemental report stated that during this period of heightened tension, the claimant backed into a stool and fell down and that this is what may have caused his injuries.

Based on these facts, in particular the allegations in the complaint alleging that plaintiff’s injuries resulted solely from an assault and battery, Burlington denied coverage to Crazy Horse pursuant to its policy’s assault and battery exclusion.  Burlington later received summary judgment in its favor from a California federal district court.  The lower court held that due to the assault and battery exclusion, and the allegations in the underlying complaint, “there was never a possibility of coverage.”

On appeal, however, the Ninth Circuit held that the reference in the police report to the claimant falling on a stool raised the possibility that his injuries were not solely the result of an assault and battery.  Citing to the seminal California decision in Gray v. Zurich Ins. Co., 419 P.2d 168, 176 (Cal. 1966) concerning an insurer’s duty to consider extrinsic facts in determining the duty to defend, the court noted that while some aspects of the police reports substantiated an assault and battery, “some of the witness statements provided to Burlington stated that [claimant] was injured when he tried to sit down on a stool, lost his footing, and hit his head on the wall.”  This version of event, explained the court, if truly the cause of claimant’s injuries, would not fall within the assault and battery exclusion. 

Thus, explained the court, notwithstanding the actual allegations in the pleadings, and notwithstanding the witness statements in the police reports suggesting that claimant was injured solely as a result of force applied by the Crazy Horse bouncers, the extrinsic facts at least raised the possibility of coverage, which was sufficient to trigger a duty to defend.  As the court explained:

Although as originally pleaded [claimant’s] negligence claim was predicated on the theory that he had been assaulted, the extrinsic facts available to Burlington revealed the possibility that [claimant] could amend his negligence claim to allege theories of liability that would fall outside the assault-or-battery exclusion. Under well-settled California law, that possibility was enough to trigger Burlington's duty to defend.

7 comments :

  1. If a person becomes aggressive after they have been asked to leave a private business establishment and sustains injuries because of his/her aggressive nature, that person (in my opinion) should be responsible for any injuries sustained, financially and otherwise. If the bouncers ejecting him from the club used excessive force and the injuries were caused by that excessive force, then the claimant may have a shot, but a long shot because even then he/she would have to prove that 1. excessive force was used and 2. those injuries were caused by that excessive force. And even then, he/she was in the wrong for starting the incident anyways so it's really a tough sell.

    ReplyDelete
  2. Thank you for mentioning the differences made to insurance. I have been looking for that information for ages. This site was very helpful.
    http://www.graberins.net/Commercial_Insurance_Everett_WA.html

    ReplyDelete
  3. This is the sort of thing that almost soars over my head. I am trying to better grasp the concepts of the business world and insurance that goes hand in hand with it, it is just hard sometimes. Thank you for the read, it was very informative.
    Cynthia | http://www.1stchoiceinsurance.com/services

    ReplyDelete
  4. Easily and quickly send the application for a free automobile
    insurance
    quotation utilizing our own easy to use internet site. To be a purchaser, you can
    enjoy our own suite connected with customer support varieties almost all from the regional real estate agent.

    ReplyDelete
  5. With the way the world is headed, we can't afford to not have insurance. It amazes me that many people go without it. I've known quite a few people who risk it and end up getting in wrecks and ruin their pocket books.
    Feruccio
    http://www.corpsure.net.au/commercial-insurance/

    ReplyDelete
  6. just sheck these lines !!Just wanted to share my experience here. This is a well strategy for investing the amount as i invest with the dealer
    Private Funds Direct as i am very satisfied with their benefits!

    ReplyDelete
  7. I really enjoyed the article. It proved to be Very helpful to me and I am sure to all the commenters here! It's always nice when you can not only be informed, but also entertained! I'm sure you had fun writing this article.
    auto insurance

    ReplyDelete