Eleventh Circuit Affirms Coverage Denial in Policy Dispute

Fort Lauderdale Partner Bradley Fischer and Associate Perry Goodman recently won a decisive victory in the United States Court of Appeals for the Eleventh Circuit, which affirmed a Florida district court’s grant of summary judgment in favor of Hudson Specialty Insurance Company finding that coverage was precluded by an assault and battery exclusion contained in a liquor liability policy.

The insurance coverage action stems from an underlying claim by a University of Miami student who was sexually assaulted by two college football players in a dormitory after she became intoxicated at the insured’s bar in Coconut Grove, Florida.

Acknowledging that Florida courts broadly interpret the phrase “arising out of,” the Eleventh Circuit determined that the exclusion at issue — applicable to “claims arising out of an assault and/or battery” — undeniably captured the underlying claim, which asserted a connection between the insured’s alleged negligent distribution of alcoholic beverages and the resulting sexual assault. In light of the causal connection alleged between the claimant’s intoxication and the sexual assault, the court further held that the concurrent cause doctrine, which affords coverage only where a loss is due to multiple covered and uncovered independent (rather than dependent) causes of harm, was inapposite.

The court also declined to apply the efficient proximate cause doctrine pursuant to which coverage is provided where a covered peril (e.g. negligence) sets in motion an uncovered peril (e.g. assault). The court reasoned that application of the efficient proximate cause doctrine would render the assault and battery exclusion inoperative as alcohol is always antecedent to a claim under the subject policy, which only provides coverage for liability related to the sale and distribution of alcohol.

The decision will provide insurers with a valuable precedent for arguing against the application of the efficient cause doctrine to exclusions containing “arising out of” language.

Read the full opinion here.