United Specialty Ins. Co. v. Cole's Place, Inc.
936 F.3d 386
6th Cir.2019Background
- In 2015 a shooting at Cole’s Place nightclub in Louisville injured multiple patrons; six plaintiffs filed consolidated state-court tort suits against Cole’s Place alleging negligence, failure to provide adequate security, and outrageous conduct; some complaints called the incident an "attack."
- Cole’s Place had liability insurance with United Specialty Insurance Company (USIC); the policy contained an "Assault and Battery" exclusion (excluding claims "arising out of or resulting from" any actual, threatened, or alleged assault or battery) and a punitive-damages exclusion.
- USIC defended Cole’s Place under reservation of rights and filed a federal declaratory- judgment action seeking a declaration that it had no duty to defend or indemnify under those exclusions.
- The district court exercised Declaratory Judgment Act jurisdiction, ruled the assault-and-battery exclusion applied to the state suits (so USIC had no duty to defend or indemnify), and entered summary judgment for USIC; it also held the punitive-damages exclusion enforceable but did not rely on it as the primary ground.
- Cole’s Place appealed, contesting both the district court’s exercise of declaratory jurisdiction and the applicability of the assault-and-battery exclusion; a panel majority affirmed, while Judge White dissented on both jurisdiction and exclusion application.
Issues
| Issue | Plaintiff's Argument (Cole’s Place) | Defendant's Argument (USIC) | Held |
|---|---|---|---|
| Whether the district court abused its discretion in exercising jurisdiction under the Declaratory Judgment Act | DJA jurisdiction improper because state-court plaintiffs are not parties and factual issues (shooter’s intent) are pending in state court; federal judgment could interfere with state proceedings | DJA jurisdiction proper: declaratory action settles coverage dispute between insurer and insured, Kentucky law is clear, and no parallel state adjudication of coverage issues exists | Affirmed: district court did not abuse discretion; Grand Trunk factors balanced in favor of jurisdiction on these facts |
| Whether the assault-and-battery exclusion bars USIC’s duty to defend/indemnify | Exclusion does not clearly apply because complaints do not necessarily allege an intentional battery; factual disputes (identity/intent of shooter, Alford plea) preclude summary judgment | Exclusion applies because complaints allege an "assault/battery" (use of term "attack," violent/shooting facts) and the policy excludes claims "arising out of or resulting from" any actual, threatened, or alleged assault or battery | Affirmed: exclusion applies as a matter of Kentucky law; complaints allege battery and the failure-to-protect claims arise out of that battery, so no duty to defend or indemnify |
| Proper interpretive standard for "assault"/"battery" in the exclusion | Ambiguity favors insured; factual/intent questions require state-court resolution | Use legal definitions (battery requires intent/substantial certainty); policy excludes "alleged" battery so factual adjudication of intent is unnecessary for coverage analysis | Court applied legal definitions and concluded the complaints allege a battery (intent element met by alleged shooting in a crowd/"attack") |
| Whether claims for negligent failure to protect "arise out of or result from" the alleged battery | Such claims can be independent negligence claims not necessarily excluded | Kentucky law broadly construes "arising out of" to include claims causally related to excluded intentional torts, even when committed by third parties | Held: Kentucky precedent controls; failure-to-protect claims fall within the exclusion (they arise out of the alleged battery) |
Key Cases Cited
- Grand Trunk W. R.R. Co. v. Consol. Rail Corp., 746 F.2d 323 (6th Cir. 1984) (articulating five-factor test for DJA jurisdiction)
- Scottsdale Ins. Co. v. Flowers, 513 F.3d 546 (6th Cir. 2008) (applying Grand Trunk factors and deference to district courts on DJA jurisdiction)
- Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (Supreme Court: district courts have broad discretion to decline DJA relief)
- W. World Ins. Co. v. Hoey, 773 F.3d 755 (6th Cir. 2014) (upholding federal declaratory relief on coverage where issues suitable for federal resolution)
- Travelers Indem. Co. v. Bowling Green Prof’l Assocs., PLC, 495 F.3d 266 (6th Cir. 2007) (vacating exercise of DJA jurisdiction where state plaintiffs were not parties and factual/state-law issues counseled abstention)
- Bituminous Cas. Corp. v. J & L Lumber Co., Inc., 373 F.3d 807 (6th Cir. 2004) (disfavoring federal DJA jurisdiction when parallel state proceedings present important factual/state-law issues)
- James Graham Brown Found., Inc. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273 (Ky. 1991) (insured is entitled to defense if complaint contains any allegation that potentially falls within coverage)
- Graves v. Dairyland Ins. Grp., 538 S.W.2d 42 (Ky. 1976) (battery requires intent; substantial certainty of contact suffices)
- Vitale v. Henchey, 24 S.W.3d 651 (Ky. 2000) (battery defined as unlawful touching; intent is essential)