Face, Festivals & Concert Events, Inc. v. Scottsdale Insurance
2011 U.S. App. LEXIS 2810
| 8th Cir. | 2011Background
- FACE purchased a commercial general liability policy from Scottsdale covering May 1, 2006 to May 1, 2007, with a duty to defend against suits seeking covered damages for bodily injury caused by an occurrence.
- FACE promoted WE Fest in Minnesota and hired Eric Fanning to provide security for the 2006 event, which occurred August 3–5, 2006.
- D.D.N. sued FACE and Security Specialists, alleging negligent hiring, supervision, retention, negligent infliction of emotional distress, landowner’s negligence, and related theories.
- D.D.N. alleged that Fanning sexually assaulted her on the festival premises on August 5, 2006; FACE tendered defense to Scottsdale, which denied due to an assault and battery exclusion.
- During trial, the jury found Fanning committed a sexual battery against D.D.N. and FACE liable for negligent hiring; damages were $750,000 with FACE 42.5% at fault; FACE withdrew its indemnity claim but sought defense costs.
- The district court granted summary judgment for Scottsdale, holding that the assault exclusion precluded coverage; the court applied Minnesota law governing insured duties to defend and interpret policy terms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the assault and battery exclusion bar Scottsdale's defense obligation? | FACE argues exclusion applies only to assaults by insured/employee; potential coverage could exist if facts differ. | Scottsdale contends any potential liability is excluded, leaving no covered claim and no duty to defend. | No potential covered claim; exclusion defeats duty to defend. |
| Whether insurer had a duty to defend based on pleadings and potential coverage under Minnesota law. | FACE relies on Crum to argue insurer must defend if facts may bring the claim within coverage. | Scottsdale maintains no duty to defend absent a potential covered claim, especially given the exclusion. | Insurer had no duty to defend because no potential liability fell within policy coverage. |
Key Cases Cited
- Meadowbrook, Inc. v. Tower Ins. Co., 559 N.W.2d 411 (Minn. 1997) (duty to defend defined; burden on insured to show coverage; insurer bears burden to show exclusion applies)
- Travelers Indem. Co. v. Bloomington Steel & Supply Co., 718 N.W.2d 888 (Minn. 2006) (burden allocation for defense and indemnity; plain meaning governs)
- Jostens, Inc. v. Mission Ins. Co., 387 N.W.2d 161 (Minn. 1986) (duty to defend exists if any part of the claim is arguably within coverage)
- Garvis v. Emp'rs Mut. Cas. Co., 497 N.W.2d 254 (Minn. 1993) (insurer may not rely solely on pleadings if independent knowledge suggests coverage)
- Crum v. Anchor Casualty Co., 264 Minn. 378, 119 N.W.2d 703 (Minn. 1963) (insurer has duty to defend where actual facts reveal potential coverage despite pleadings)
- Bobich v. Oja, 258 Minn. 287, 104 N.W.2d 19 (Minn. 1960) (distinguishes cases with no potential covered liability from those with potential coverage)
- United Fire & Cas. Co. v. Maw, 510 N.W.2d 241 (Minn. Ct. App. 1994) (extrinsic evidence cannot construe unambiguous policy language)
- In re SRC Holding Corp., 545 F.3d 661 (8th Cir. 2008) (extrinsic evidence cannot be used to alter unambiguous policy terms)
- Donnay v. Boulware, 144 N.W.2d 711 (Minn. 1966) (no need to include if not directly cited; omitted here for relevance)