148 So. 3d 244
La. Ct. App.2014Background
- Plaintiff Jorge Espinosa was shot during a robbery in the Motel 6 parking lot and sued the motel owner/operator for negligence and premises-security failures; injuries included paralysis.
- Bayou Hospitality, LLC (owner) was insured by Century Surety Company under a CGL policy with an assault-and-battery exclusion and a reinstating endorsement limiting assault-and-battery coverage to $25,000 per occurrence (aggregate $50,000) and stating defense costs reduce limits.
- Century paid $25,000 toward defense; dispute arose whether the policy otherwise provides $1,000,000 coverage for premises-liability claims or whether all claims arising from the assault/battery are limited to the $25,000 endorsement.
- Trial court found an ambiguity (noting a stray reference in the endorsement to a non-existent provision) and awarded Bayou, Accor, and plaintiff coverage to $1,000,000 and defense costs; Century appealed.
- On de novo review the appellate court concluded the assault-and-battery exclusion is clear, the endorsement reinstates limited coverage for assault/battery and related claims (including failure-to-secure claims) up to $25,000, and Century’s duty to defend ended upon exhaustion of those limits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Century’s assault-and-battery exclusion bars coverage for premises-security/failure-to-warn claims arising from the shooting | Espinosa: failure-to-secure claims are distinct from the battery and thus covered by general $1,000,000 CGL limits | Century: the exclusion (and reinstating endorsement) applies to any claim "arising out of" assault or failure to prevent it, so such claims are limited to the $25,000 endorsement limit | Held: Claims arising out of the battery, including failure-to-secure or failure-to-warn theories, fall within the assault-and-battery exclusion and are reinstated only up to $25,000 per occurrence by the endorsement |
| Whether the endorsement’s stray reference to a non-existent Form 1701 provision creates an ambiguity that expands coverage to $1,000,000 | Espinosa/Bayou/Accor: the reference renders the endorsement ambiguous, so policy should be construed for broader coverage | Century: the stray reference is a drafting error and does not change the clear reinstatement of limited coverage | Held: The stray reference is inconsequential and does not create ambiguity; the endorsement’s intent to limit coverage to $25,000 controls |
| Whether Century had an ongoing duty to defend Bayou after paying defense expenses that exhausted the endorsement limits | Espinosa/Bayou: Century should continue defending under the $1,000,000 policy limits | Century: endorsement expressly ends duty to defend when its reinstated limits are exhausted through judgments, settlements, or expenses | Held: Century’s duty to defend ended when the reinstated endorsement limits were exhausted by defense costs/payments |
| Whether summary judgment was appropriate on coverage given the policy interpretation is a question of law | Espinosa: factual inferences and ambiguity preclude summary judgment in Century’s favor | Century: interpretation of clear policy language is a legal question suitable for summary judgment | Held: Coverage interpretation is legal; court reversed trial court’s $1,000,000 ruling and concluded the endorsement limits apply as a matter of law (remanded) |
Key Cases Cited
- Bernard v. Ellis, 111 So.3d 995 (La. 2012) (policy interpretation is ordinarily a legal question appropriate for summary judgment)
- Hickey v. Centenary Oyster House, 719 So.2d 421 (La. 1998) (assault-and-battery exclusions enforced)
- Ledbetter v. Concord General Corp., 665 So.2d 1166 (La. 1996) (insurers may limit coverage by endorsement consistent with law)
- Cadwallader v. Allstate Ins. Co., 848 So.2d 577 (La. 2003) (ambiguities construed against insurer but only when multiple reasonable interpretations exist)
- Alexander v. Barflies, Inc., 687 So.2d 603 (La. App. 4 Cir. 1997) (failure-to-secure claims are subsumed by assault-and-battery exclusion when injuries result from a battery)
- Washington v. Spurlock, 708 So.2d 1378 (La. App. 4 Cir. 1997) (same principle: injuries from battery preclude coverage for antecedent omissions except insofar as they relate to the battery)
- Proshee v. Shree, Inc., 893 So.2d 939 (La. App. 3 Cir. 2005) (assault-and-battery exclusion applied to bar coverage for shooting in parking lot; relied upon by trial court but distinguished here)
- Howell v. American Cas. Co. of Reading, PA, 691 So.2d 715 (La. App. 4 Cir. 1997) (duty to defend can end upon exhaustion of policy limits)
- Pareti v. Sentry Indemnity Co., 536 So.2d 417 (La. 1988) (insurer’s duty to defend ends when policy limit is exhausted)