A Los Angeles federal appeals court recently ruled in favor of an insurance company in a lawsuit arising out of a shooting at an Arcadia Dave & Buster’s. This insurance bad faith case was filed by Jayson Gonzaga, who sued a private security company for failing to adequately protect him while he was a patron at the entertainment venue.
Gonzaga’s lawsuit went to arbitration, and an arbitrator found that the security company, Capital Protection, Inc., acted negligently by failing to prevent a foreseeable shooting. Capital’s insurer, Burlington Insurance Company, denied coverage under the claim, which caused Capital to assign its insurance bad faith claim to Gonzaga.
Insurance Bad Faith Basics
An insurer can be held liable for wrongfully denying coverage under an insurance policy. These so-called “insurance bad faith” claims may result in significant penalties on an insurer and can be assigned to other parties. In this case, Capital assigned its insurance bad faith claim against Burlington to Gonzaga, allowing him to sue in Capital’s shoes.
Capital’s Insurance Policy
Gonzaga sued Burlington Insurance Company and lost because Capital’s insurance policy had an assault and battery exclusion. Specifically, the insurance policy excluded physical attacks and liability arising out of a failure to prevent an attack, such as security guard negligence.
“Capital was sued for its alleged negligence in failing to prevent or suppress the battery on Gonzaga,” the court wrote. “By its plain language,” coverage for such claims is expressly excluded under the Burlington policy’s assault or battery exclusion.”
Although Gonzaga pushed the fact that Capital likely expected such coverage given its $60,000 per year premium, the court refused to entertain such speculation in light of the clear language of the policy.
Case: Gonzaga v. Burlington Insurance Company. Court of Appeal, Second District, Division 7, California. April 3, 2014. 2014 WL 1327005. Los Angeles County Super. Ct. No. BC457448