Many bar fight coverage cases, under commercial general liability policies, go something like this. A patron gets the stuffing beat out of him by a bouncer or another patron. He or she (probably he) files suit against the bar. The bar seeks coverage under its general liability policy. The insurer says that no coverage is owed based on no “occurrence” and/or an “Assault and Battery” exclusion.

Everyone knows that the A&B exclusion is very broad – precluding coverage for assault and battery six ways from Sunday – including bodily injury caused by assault and battery, arising out of assault and battery, assault and battery in any way shape, shape or form, as well as various ways in which the bar failed to prevent the assault and battery. Everyone knows that the patron was injured by assault and battery. But it’s never that simple in the coverage case. Instead, the Assault and Battery exclusion, and the complaint, will be subjected to an autopsy to determine if there is any way possible, at least for purposes of a broad duty to defend standard, that something in the complaint falls outside of the A&B exclusion.

And while all this is going on, the bar owner is likely asking himself – how come my liability insurance policy doesn’t cover bar fights? Isn’t that, like, uh, the biggest risk that I face owning a bar?

This was the situation in Fall v. First Mercury Ins. Co., No. 16-1286 (D. Ariz. Dec. 2, 2016). Ibrahima Fall definitely chose the wrong woman to chat up just before 2 a.m. in a nightclub. She was the bouncer’s girlfriend. Before Fall could even respond he was violently attacked by the boyfriend and other security officers in the club and dumped on the sidewalk.

Fall was seriously injured and required surgery. He filed suit against the bar. The bar tendered the claim to its CGL insurer, First Mercury, which disclaimed coverage based on, among other things, an Assault and Battery exclusion. Fall and the bar reached a settlement for $250,000, along with an assignment of the bar’s insurance rights and an agreement not to execute on the bar.

Fall filed suit against First Mercury. At issue was the general liability policy’s Assault and Battery exclusion, which is so lengthy that you can’t hold your breath longer than it takes to read it. [That’s often a sign that an exclusion is pretty long]. The A&B exclusion provided as follows:

“Notwithstanding anything to the contrary contained within the policy or any endorsement attached thereto, it is agreed that this insurance shall not apply to any claim, demand or suit alleging damages arising out of an actual or alleged assault and battery, nor shall there be any duty or obligation under this insurance to defend any such claim, demand or suit. Assault and battery shall not be deemed to be an occurrence whether or not committed by or at your direction. This exclusion also applies to any claim, demand or suit seeking damages arising out of an actual or alleged assault and battery which claim, demand, or suit advocates any theory of liability, whether sounding in tort or in contract, including but not limited to contractual assumption of liability, negligent hiring, negligent training, or negligent supervision.”

Fall asserted lots of policy language-based arguments why the A&B exclusion, despite its breadth, did not apply. The court rejected them all. But then, just when it looked bleak for Fall, the court handed him a lifeline. Essentially, the court found it curious that the bar’s general liability policy contained an exclusion for assault and battery. The court explained:

“Despite these conclusions, Plaintiff's [Fall’s] final argument persuades the Court that summary judgment cannot be entered on this issue. Plaintiff asserts that Gin-Cor [the bar] had a reasonable expectation that it would be covered for a physical altercation between a patron and its bouncers who were trying to protect other patrons. Under the ‘reasonable expectations’ doctrine, Arizona courts will not enforce boilerplate provisions of an insurance contract when the insurer has reason to believe that the insured would not have agreed to those terms. Courts can consider the parties’ prior negotiations, the circumstances of the transaction, whether the term is ‘bizarre or oppressive,’ whether the term eviscerates the non-standard terms explicitly agreed to, and whether the term eliminates the dominant purpose of the transaction. The reasonable expectations doctrine requires more than the insured’s ‘fervent hope’ that coverage exists, and therefore only applies in certain limited circumstances. Those circumstances include when an insured does not receive full and adequate notice of a particular provision and the provision is unusual, unexpected, or emasculates apparent coverage.”

In providing this “reasonable expectations” fifth down to Fall, the court focused on whether the bar had notice of the A&B exclusion – although it did not address that the bar seemingly had notice of it because it was contained in the policy. In addition, is an Assault & Battery exclusion, when it was very likely contained in the general liability policy by way of endorsement, so-called “boilerplate.”

Putting all this aside, the court explained why summary judgment was not appropriate:

“This case presents a material issue of fact as to whether Gin-Cor had a reasonable expectation that it would be covered for the underlying event. Gin-Cor’s manager, Les Corieri, states in an affidavit that he has owned and operated ‘approximately forty to fifty’ nightclubs in his career. Corieri avers that ‘I have always insisted that the liability insurance for nightclubs I own cover claims and related circumstances like those alleged in [the underlying action].’ He states that Gin-Cor had no prior notice of the assault and battery exclusion, and, had it been notified, it ‘would have insisted on obtaining this coverage from [First Mercury] or from another carrier.’ Corieri adds that ‘[i]t has been my experience that . . . situations involving unruly and/or disorderly guests and patrons involved in physical altercations [] are a known risk of operating a nightclub, and therefore I would have required the liability insurer covering my nightclubs to provide coverage for these types of claims.’ This affidavit creates a question of fact as to whether Gin-Cor had notice of the assault and battery exclusion, an exclusion that, in this case, eliminated coverage that Corieri avows he expected to have. If it is true that Gin-Cor did not have notice of the exclusion, then First Mercury may have had reason to know that Gin-Cor did not agree to the exclusion. This evidence is sufficient to create an issue of fact that precludes summary judgment.”

Looking at the decision through a national lens, I think it is an anomaly and does not reflect proper application of the reasonable expectations doctrine. But, nonetheless, the reasoning could preclude some bars -- at least initially -- from being dumped on the sidewalk when seeking coverage for an altercation claim in the face of an A&B exclusion.