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James River Insurance Co. v. Blue ox Dance Hall, LLC

United States District Court, N.D. Oklahoma

May 31, 2017

JAMES RIVER INSURANCE CO., Plaintiff,
v.
BLUE OX DANCE HALL, LLC d/b/a Legend's Dance Hall & Saloon, LLC, Defendant.

          OPINION AND ORDER

          CLAIRE V. EACAN CJ UNITED STATES DISTRICT JUDGE.

         Now before the Court is Plaintiff James River Insurance Co.'s Motion for Partial Summary Judgment and Brief in Support (Dkt. # 52). James River Insurance Co. (James River) issued a commercial general liability policy to Blue Ox Dance Hall, LLC d/b/a Legend's Dance Hall & Saloon, LLC (Blue Ox), and the policy contains a limitation on coverage as to claims against Blue Ox arising out of assault and battery committed by Blue Ox's employees. James River argues that several lawsuits filed against Blue Ox by patrons alleging that they were assaulted by employees of Blue Ox are subject to the assault and battery limitation.

         I.

         On October 25, 2013, James River issued a liquor liability and commercial general liability policy to Blue Ox, with an effective date of October 25, 2013 to October 25, 2014. Dkt. # 52-1, at 1. The policy provides coverage for up to $1 million per occurrence and a $2 million aggregate limit. Id. at 3. The words “you” and “your” are used to refer to the Named Insured throughout the policy, and the policy provides the following description of who is considered an insured for a limited liability company such as Blue Ox:

         1. If you are designated in the Declaration as:

c. A limited liability company, you are an insured. Your members are also insureds, but only with respect to the conduct of your business. Your managers are insureds, but only with respect to their duties as your managers.

Id. at 14. In addition, “[a]ny organization you newly acquire or form, other than a partnership, joint venture or limited liability company, and over which you maintain ownership . . . will qualify as a Named Insured if there is no other similar insurance available to that organization.” Id. at 15. Under the policy, James River agreed to “pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury' or ‘property damage' to which this insurance applies.” Id. at 6. James River's duty to defend ends as to covered claims “when we have used up the applicable limit of insurance in the payment of judgments or settlements . . . .” Id. The policy also states that James River has no duty to defend when there is no coverage under the policy. Id. at 52.

         The policy contains an Assault and Battery Limits of Liability Endorsement (A&B Endorsement) significantly limiting coverage for claims of bodily injury or property damage “arising out of or in connection with” any of the following acts:

1. Assault or battery, whether or not caused or committed by or at the instructions of, or at the direction of or negligence of you, any insured, any person, or any causes whatsoever;
2. The failure by you, any insured or any person to suppress or prevent an assault or battery;
3. The failure to provide an environment safe from assault or battery, including but not limited to the failure to provide adequate security, or the failure to warn of the dangers of the environment which could contribute to assault or battery;
4. The negligent employment, investigation, hiring, supervision, training, or retention of any person;
5. The use of any force to protect persons or property whether or not the “bodily injury, ” “property damage” or “personal and advertising injury” was intended from the standpoint of the insured or committed by or at the direction of the insured;
6. The failure to render or secure medical treatment or care necessitated by any assault or battery.

Id. at 41. “Assault” includes “any threatened harmful or offensive contact between two or more persons, whether or not caused or committed by or at the instructions of, or at the direction of or negligence of” the Named Insured. Id. Battery is defined as “any harmful or offensive contact between two or more persons, whether or not caused or committed by or at the instructions of, or at the direction of or negligence of You, any insured, any person, or any causes whatsoever.” Id.

         The endorsement limits coverage for acts of assault and battery to $25, 000 per occurrence and $50, 000 in the aggregate. Id. The A&B Endorsement also contains a “Limits of Insurance” provision stating that any “claims expense” incurred by James River in investigating or adjusting a claim falling under the endorsement shall be applied to the $25, 000 or $50, 000 limitation. The Limits of Insurance “fix the most [James River] will pay regardless of the number of . . . Claims made or ‘suits' brought . . . .” Id. at 15.

         Michael Sanchez and John Jeffrey Peterson, Jr. filed a lawsuit in Tulsa County District Court alleging that they suffered personal injuries when they were removed from a bar operated by Blue Ox. Dkt. # 52-3. Sanchez and Peterson allege that John Sebastian Hoffman and Joshua Adolph Hanke “severely assaulted and injured them.” Id. at 2. They also allege that Jesse Paul Triplett, Jason Donovan Jensen, and Fred James Crapse, III were working as bouncers on September 6, 2014 when they negligently removed Sanchez and Peterson from the bar. Id. The plaintiffs claim that Blue Ox acted negligently by hiring untrained bouncers, and they also claim that Blue Ox failed to properly train or supervise its employees concerning the use of force. Id. at 2-3. In a second amended petition, Sanchez and Peterson assert negligence claims against Triplett, Crapse, Jensen, and Blue Ox, a civil assault claim against Blue Ox, Hoffman, and Hanke, a civil battery claim against Blue Ox, Hoffman, and Hanke, and an intentional infliction of emotional distress claim against Blue Ox, Hoffman, and Hanke. Id. at 4-6. The second amended petition contains no specific factual allegations describing the ...


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