Cases involving tragic and unusual facts are de rigueur in the world of coverage.  This is how I explain to my students why they read about so much misery in coverage cases – when things go right, there is no need for insurance.   By definition, at the heart of every coverage case, is something that went awry.

Tragic and unusual facts were on display in Great Lakes Insurance v. 1 Bank of Eufaula, No. 18-055 (E.D. Okla. Aug. 5, 2019).  The court described them like this: “[O]n January 21, 2016, while Julie Huff was a business invitee at the Bank [of Eufaula], an armed robber entered the Bank. He shot and killed the Bank’s president and then shot a teller who resisted his demand for money. He then took Mrs. Huff hostage at gunpoint. The robber ordered Mrs. Huff to drive him in a stolen vehicle and forced her to take him several miles as he sat in the passenger seat with a gun pointed at her. Law enforcement chasing the stolen vehicle were informed that Mrs. Huff was a hostage. After law enforcement stopped the vehicle, Mrs. Huff ran, but the robber caught up to her, put his arm around her neck and used her as a  human shield.  Law enforcement and the robber exchanged fire, during which law enforcement bullets struck Mrs. Huff approximately nine (9) times.”

The Huffs filed suit against the Bank, alleging that they owed a duty to Mrs. Huff, as a business invitee, and failed to follow industry standards to protect its customers from such a foreseeable situation.  Great Lakes insurance undertook the bank’s defense, under a general liability policy, pursuant to a reservation of rights.  Great Lakes filed an action seeking a declaration that it owed no duty to defend or indemnify the bank for the Huff action.  At issue before the court were cross motions for summary judgment.

First the court found that there was no “occurrence” as there was no accident: “The injuries to the Huffs at issue in the state court action were caused by the bank robber shooting and killing the Bank president, shooting the Bank teller, taking Mrs. Huff hostage at gunpoint, and using her as a human shield.  These were all acts that constitute battery. Acts that are intended to and do, in fact, cause offensive contact constitute the intentional tort of battery and are not ‘an accident.  Mrs. Huff's injuries were not caused by an ‘occurrence’ under the Policy.” 

I can certainly see policyholders taking issue with this conclusion since the bank did not shoot the Bank president or Bank teller or take Mrs. Huff hostage at gunpoint.  The Bank is alleged to have failed to follow industry standards to protect its customers from such a foreseeable situation.

The court also concluded that coverage was precluded by an Assault or Battery Exclusion: “The ‘assault’ or ‘battery’ exclusion is not ambiguous on its face. The Bank argues, however, that it is ambiguous because it ‘fails to distinguish and determine what, if any, effect the intentional or negligent nature of an act has on its terms.’ The Bank argues further that ‘[w]here intentionality is not present in the acts resulting in Ms. Huff’s injuries, this ambiguity should be construed in favor of the insured Bank.’  The court does not agree that there is any ambiguity. The Policy clearly excludes coverage for any claims ‘arising out of assault or battery, or out of any act or omission in connection with assault or battery, or with the prevention or suppression of an assault or battery’ and any claims ‘arising out of charges or allegations of negligent hiring, training, placement or supervision with respect [thereto].’  Mrs. Huff's injuries clearly were caused by the intentional battery by the bank robber and by the intentional acts of law enforcement trying to prevent or suppress the bank robber from further intentional battery. To the extent that the Bank could be found negligent for not hiring enough security to prevent such an event, that is also excluded. To the extent that the Bank could also be found negligent for having too many entrances, that does not change the fact that Mrs. Huff's injuries were caused by an assault and battery, coverage for which is excluded under the Policy. Accordingly, as the Policy excludes coverage for the Huffs' claims, Great Lakes has no duty to defend or indemnify the Bank.”