OPINION
This lawsuit arises out of a barroom fistfight between two patrons of the Señor Buckets nightclub (Buckets). Plaintiff-appellee, Sherri Barth (Barth) was injured at Buckets when another patron, Sheryl Martinez (Martinez), hit Barth in the nose. Alleging negligence, Barth sued defendants-appellants, Buckets and James Coleman (Coleman), who was the manager of Buckets, for the injuries and damages she suffered at the hands of Martinez. Following a bench trial, the district court granted Barth judgment against Coleman and Buckets, jointly and severally, in the amount of $5000, plus costs. In addition, the district court granted declarаtory judgment in favor of the Evans-ton Insurance Company (Evanston), an intervening party in Barth’s lawsuit against Coleman and Buckets. The court declared that the insurance policy that Evanston issued to Buckets did not provide coverage for Barth’s damages. Coleman and Buckets appeal both judgments of the district court. On appeal, we address the following two issues: (1) Whether the district court erred when it refused to allocate a percentage of fault to Martinez and Barth, and (2) whether the district court erred by issuing a declaratory judgment holding that the insurance policy issued by Evanston to Buckets did not cover the damages sustained by Barth. We review this case pursuant to SCRA 1986, 12-102(A)(1) (Repl.Pamp.1992). We reverse both judgments of the district court and remand for proceedings consistent with this opinion.
I.
The altercation forming the basis of this lawsuit took place on February 3,1989, while Barth was at Buckets. Barth and another group of patrons at the nightclub engaged in a verbal confrontation. Barth reported the incident to Coleman when the confrontation intensified. Coleman assured a worried Barth that she should not be alarmed and that he would monitor the situation. Coleman, however, took no action to control the situation or to prevent escalation of the confrontation between the parties. Martinez, a member of the group that had confronted Barth, punched Barth in the nose. Barth sustained injuries as a result of her altercation with Martinez.
Several months after the incident, Barth brought suit against Buckets and Coleman. In an amended complaint, Barth alleged that Buckets had breached its duty of care to keep the premises reasonably safe. Barth also alleged that Coleman had been negligent by failing to notify the police department of the altercation when it began and by failing “to otherwise stop or control the incident.” After trial, the district court found that Coleman’s negligence in failing to monitor the situation or prevent the incident from escalating was a proximate cause of Barth’s injuries and that Coleman was acting within the scope of his employment at all times material to the lawsuit. As a result, the district court found that Coleman and Buckets were jointly and severally liable for Barth’s injuries in the amount of $5000, and entered judgment accordingly.
The second issue in this case pertains to an insurance contract between Evanston and Buckets. Shortly before the incident between Barth and Martinez occurred, Coleman met with Tina Marie Milligan (Milligan) to acquire a policy of premises liability insurance for Buckets. Coleman specifically asked Milligan, who was employed by the GDA Insurance Agency (GDA), to obtain premises liability insurance that would cover assaults and batteries occurring between customers on Buckets’s premises. After trying unsuccessfully to procure insurance from three different New Mexico insurance carriers, Milligan contacted the ADCO General Corporation (ADCO), a surplus lines broker located in Colorado and New Mexico. Pursuant to ADCO’s request, Milligan sent an executed insurance application to ADCO, which, in turn, forwarded the application to Evanston. Evanston, a surplus lines insurer, authorized ADCO to issue a premises liability insurance policy to Buckets. Liability arising from assaults and batteries and liability for negligent hiring and supervision in con-, nection with assaults and batteries was excluded from the coverage.
Following notification from Bаrth that she intended to sue, Coleman had GDA send a notice of claim to ADCO. After receiving the notice, Evanston denied that the claim was covered and intervened in Barth’s action against Coleman and Buckets. Following trial on this matter, the district court found and concluded that the insurance policy issued by Evanston to Buckets excluded coverage for negligent supervision that resulted in assault and battery. Based upon its conclusion that Barth’s damages arose from negligent supervision resulting in an assault and battery, the district court concluded that Barth’s injuries were not covered under the insurance policy. Consequently, the district court granted declaratory judgment in Evanston’s favor and awarded court costs. Coleman and Buckets appeal from the district court’s judgment in favor of Barth and its judgment in favor of Evanston.
II. .
We begin by addressing whether the district court erred when it awarded Barth damages of $5000 against Coleman and Buckets, jointly and severally, without allocating a percentage of fault to Martinez and Barth. Coleman and Buckets first contend that the district court erred by failing to allocate a percentage of fault to Martinez, who committed an intentional tort when she hit Barth in the nose. In essence, Coleman and Buckets assert that the principles of comparative negligence and the policy underlying the doctrine require that Martinez be allocated a percentage of fault for causing injury to Barth. We agree.
In the recent case of Reichert v. Atler,
In Reichert,
[T]he proprietor of a place of business who holds it out to the public for entry for his business purposes, [while not an insurer against personal injuries inflicted upon patrons by third persons,] is subject to liability to guests who are upon the premises and who are injured by the harmful acts of third persons if, by the exercise of reasonable care, the proprietor could have discovеred that such acts were being done or about to be done, and could have protected [the injured guest or patron from] ... injury by controlling the conduct of the other patron.
Coca v. Arceo,
In Reichert, we rejected cases from other jurisdictions refusing to apportion fault between the negligent defendants and intentional tortfeasors under the principle that “[negligent tortfeasors should not be allowed to reduce their fault by the intentional.fault of another that they had a duty to prevent.” Kansas State Bank & Trust Co. v. Specialized Transportation Services, Inc.,
If you find that the [owner] [operator] of the [place of business] breached [his] [her] [its] duty to use ordinary care to keep the premises safe for use by the visitor, you may compare this breach of duty with the conduct of the third person(s) who actually caused the injury to the plaintiffis) and apportion fault accordingly. In apportioning this fault, you should consider that the [owner’s] [operator’s] duty to protect visitors arises from the likelihood that a third party will injure a visitor and, as the risk of danger increases, the amount of care to be exercised by thе [owner] [operator] also increases. Therefore, the proportionate fault of the [owner]’[operator] is not necessarily reduced by the increasingly wrongful conduct of the third party.
Reichert,
Today, we reaffirm the principles discussed in Reichert. The district court’s judgment holding Coleman and Buckets solely liable for Barth’s damages must be reversed. In the instant case, Coleman and Buckets clearly breached their duty to protect Barth from injury caused by other patrons. Coleman and Buckets failed to take any action designed to control the conduct of the individuals confronting Barth or to otherwise protect Barth from injury after repeatedly being appraised of the impending confrontation. However, imposing full liability on Buckets and Coleman for Barth’s damages, when Martinez was the actual cause of Barth’s injuries, would be inconsistent with holding tortfeasors responsible only for their percentage of fault. We hold that Buckets’s and Coleman’s liability for the injuries sustained by Barth must be reduced by the percentage of fault attributable to Martinez.
Coleman and Buckets also argue that the judgment should be reducеd in proportion to Barth’s fault. Our review of the record indicates that the district court made no ruling on the comparative negligence of Barth. If Barth’s fault contributed to her injuries, the liability of Buckets and Coleman should be offset by her percentage of fault. See NMSA 1978, § 41-3A-1(B) (Repl.Pamp.1989) (“[A]ny defendant who establishes that the fault of another is a proximate cause of a plaintiffs injury shall be liable only for that portion of the total dollar amount awarded as damages to the plaintiff that is equal to the ratio of such defendant’s fault to the total fault attributed tо all persons, including plaintiffs, defendants and persons not party to the action.”); Scott,
III.
We next address whether the district court erred when it concluded that Barth’s injuries were not covered under the insurance policy issued by Evanston to Buckets. Evanston issued an “Owners, Landlords & Tenants Liability Insurance” policy to Buckets prior to the time that Barth was injured at the nightclub. The liability policy contained an assault and battery exclusion that stated:
[T]he insurance does not apply to bodily injury or property damage arising out of assault and battery or out of any act or omission in connection with the prevention or suppression of such acts, whether caused by or at the instigation or direction of the insured, his employees, patrons or any other person.
The district court concluded that this clause was effective to exclude coverage for the damages sustained by Barth and granted declaratory judgment in Evanston’s favor.
On appeal, Buckets argues that the district court erred when it decided that coverage for Barth’s damages was excluded under the liability policy. Buckets maintains that Coleman, acting on Buckets’s behalf, specifically told Milligan that he wanted insurance that would cover assault and battery incidents between patrons. However, the policy issued by Evanston, by excluding coverage for assault and battery, failed to conform to the requested coverage. In essence, Buckets asserts that the policy should be deemed to cover Barth’s damages notwithstanding the exclusion because the policy issued by Evans-ton did not conform to the coverage Coleman requested.
When deciding whether an exclusionary clause is effective to nullify сoverage under an insurance policy, we give consideration to the reasonable expectations of the insured. Knowles v. United Servs. Auto. Ass’n,
The doctrine of reasonable expectations is not restriсted to those cases in which the policy language is at issue. See IN A Life Ins. Co. v. Brundin,
In the instant case, the parties transacted to purchase and sell surplus lines insurance. Surplus lines insurance is insurance placed with a qualified foreign insurer not otherwise authorized to sell insurance in New Mexico. See NMSA 1978, § 59A-14-KA) (Repl. Pamp.1992). Surplus lines insurance will be sold to an insured if the particular amount or type of insurance sought to be purchased “cannot be obtained from insurers authorized to do business in this state.” NMSA 1978, § 59A-14-3(C) (Repl.Pamp.1992). This type of insurance is sold through a series of intermediaries acting between the prospective insured and the ultimate insurer. In each transaction, the surplus lines insurance must be procured through a licensed surplus lines broker. Section 59A-14-3(A). Another intermediary usually involved in the transaction is the producing broker, who deals directly with the prospective insured. NMSA 1978, § 59A-14-2(C) (Repl.Pamp.1992).
With regard to the particular transaction in this case, the sale of liability insurance from Evanston to Buckets took place through a series of intermediaries, as contemplated by the statutes regulating the sale of surplus lines insurance. Coleman originally contacted Milligan, who, as an employee of GDA, functioned as the producing broker. Coleman told Milligan that he wanted to buy premises liability insurance for Buckets covering assault and battery incidents between patrons on Buckets’s premises. Milligan, after unsuccessfully attempting to place the risk with several insurance carriers authorized to write insurance in New Mexico, contacted ADCO, a surplus lines broker with an office in Colorado and a resident office in New Mexico. ADCO, which represented Evanston and other surplus lines carriers, requested GDA, through Milligan, to obtain a completed and executed application for general liability insurance. Milligan completed the application, which requested only premises operation insurance, and forwarded the application to ADCO. ADCO, in turn, forwarded the application to Evanston, which then issued Buckets a policy of premises liability insurance that excluded coverage fоr liability arising from assaults and batteries.
Throughout this transaction, Coleman was left uninformed about the nature of what he was purchasing, how the policy was being procured, and which company he was purchasing the policy from. Milligan testified that she never told Coleman that he was purchasing surplus lines insurance, never explained what surplus lines insurance was, never discussed the risks associated with purchasing such insurance, and never revealed how the surplus lines system worked. Milligan testified that she never explained to Coleman the distinct roles that GDA, ADCO, and Evanston plаyed in the procurement of Buckets’s insurance policy. Milligan also testified that she did not receive the policy before the Barth incident and that there was no realistic way for Coleman to receive information about the contents of the insurance policy prior to the incident. In addition, Richard Thomas, president of ADCO, testified, and our examination of the record confirms, that Evanston was not clearly identified as the insurer on the policy issued to Buckets, despite statutory requirements that the surplus lines broker promptly deliver to the insured the рolicy or other evidence of insurance setting forth, among other things, “the name and address of the surplus lines insurer.” 1 See NMSA1978, § 59A-14-14(A) (Repl.Pamp.1992).
Not surprisingly, Coleman testified that he saw no distinction between Milligan, GDA, ADCO, and Evanston. Coleman testified that he had no notice that the policy contained an assault and battery exclusion prior to the fight between Barth and Martinez. Coleman’s testimony revealed that he did all that he thought he had to do to procure insurance covering assaults and batteries between patrons when he communicated to Milligan the type of insurance that he nеeded.
We believe that the particular insurance transaction in this case gave rise to a reasonable expectation that the policy issued by Evanston would conform to the insurance that Coleman had requested. The insured’s expectations were in large degree created by the intermediaries involved in the transaction. See Collister,
The legislature has declared that one purpose for regulating surplus lines brokers and surplus lines insurers is to “protect[] insureds and persons seeking insurance in this state.” Section 59A-14-1(C)(1). In light of the legislature’s purpose to protect the insured, and because Buckets had a reasonable expectation of coverage under the facts of this ease, Evanston must assume responsibility for inadequate insurance coverage resulting from miscommunieations mаde between intermediaries during the process of selling insurance to the insured. Cf. Sparks v. St. Paul Ins. Co.,
We note that the district court found that GDA and Milligan acted as agents for Buckets in procuring the policy of insurance from Evanston and concluded that “[a]ny information conveyed by Coleman to Milligan or GDA is not imputed to Evanston.” Thus, under the district court’s findings and conclusions, Buckets would bear the loss for the miseommunications made between GDA and ADCO.
We are troubled by the district court’s conсlusion that Coleman’s communications to GDA about the type of insurance he wanted to buy were not imputable to Evanston. Milligan and GDA together functioned as the producing broker in the transaction between Coleman and Evanston. We find no New Mexico statute or ease that decides whether a producing broker in a surplus lines insurance transaction is considered the agent of the insurer or the insured. The rule under general principles of insurance law is that an insurance broker represents the insured. 16 John A. Appleman & Jean Appleman, Insurance Law and Practice § 8725, at 333 (Rev. Vol.1981); Keeton, supra § 2.5(b)(3), at 83. Nonetheless, some cases support the opposite conclusion. See, e.g., Tiner v. Aetna Life Ins. Co.,
The relationships between insurance companies and sales representatives in regard to the authority to contract on behalf of insurers have been established in a multitude of patterns that often cannot be accurately described or characterized by the terms that are generally used to define relationships in agency law. Thus, a fundamental error can result in some instances when a concept from agency law is applied to a disputed insurance transaction as if it were a universally applicable general proposition. In general, considerable skepticism should be applied to any assertion that a particular result in an insurance dispute is warranted by the law that governs agency relationships.
Keeton, supra § 2.5(b), at 81. We find substantial evidence in the record to support the district court’s finding that GDA and Milligan were, in some sense, agents for Buckets. We conclude, however, that this finding is not conclusive on whether Buckets should bear responsibility for the miseommunications made during the transaction in this case.
GDA performed an ambiguous, if not dual, role in the distribution of insurance from Evanston to Buckets. See Appleman, supra § 8725, at 338-34 (recognizing that an intermediary may at different times represent the applicant for insurance and at other times act for the insurer); American Fire & Indem. Co. v. Lancaster,
Under the facts of this case, GDA functioned in some respects as an agent for Evanston. We hold that the district court erred when it concluded that the coverage information conveyed by Coleman to Milligan and GDA was not imputed to Evanston, and that coverage for Barth’s injuries was therefore excluded. We reverse the district court’s declaratory judgment concluding that the insurance policy issued by Evanston to Buckets did not provide coverage for Barth’s damages. We remand this ease for proceedings consistent with this opinion.
IT IS SO ORDERED.
Notes
. The only reference to Evanston on the Certificate of Insurance issued by ADCO to Buckets is the typed name "Evanston” in a box reserved for listing the “Company or Underwriter.” No full company name, address, or phone number for Evanston was listed.