August 21, 2019
In Adams v. Certain Underwriters at Lloyds of London (Lloyds), et al, Adams, brought a negligence suit again Lights on Broadway and Eric Galloway (Galloway) for allegedly causing the death of Adams’ son, Willis, who was shot and killed outside a nightclub while assisting Galloway with throwing a party. Adams and Galloway entered into a Section 537.065 Agreement and thereafter, judgment was entered against Galloway and Lights on Broadway in the amount of $5 million. Adams next brought a garnishment claim against Lloyds, the insurance company of Lights on Broadway, seeking to collect on the judgment. Following a bench trial, the Garnishment Court entered its judgment on various claims and crossclaims of the parties, from which all parties appealed.
The fourth and final amended petition filed by Adams claimed negligence on the part of Galloway and Lights on Broadway which caused the shooting death of her son. The fourth amended petition claimed that Lights on Broadway and the related business entities responsible for throwing a party were negligent in that they had a duty to provide security for the party and failed to do so in a reasonable manner. Exclusions in the Lloyds policy included expected or intended injury and assault or battery. Lloyds refused to settle for the $1 million policy limit also reserving all other defenses they may discover in connection with additional information provided. Lloyds in the meantime filed a declaratory judgment action in Federal Court to determine their obligations under the policy with respect to plaintiff’s claims.
The State Court negligence trial consisted of expert testimony offered by plaintiff as well as affidavits from Galloway and other witnesses. Following evidence and argument, the trial court entered judgment against both Galloway and Lights on Broadway finding them jointly and severally liable for negligently causing the death of Willis, and awarding plaintiff $5 million in damages. No written findings of fact or conclusions of law were made by the trial court.
The trial court determined that Lloyds had a duty to defend Galloway and Lights on Broadway from plaintiff’s negligence claim. The trial court’s finding on that point was affirmed by the Missouri Court of Appeals, Eastern District. As to the assault and battery exclusion in the Lloyds policy the record did not reveal definitively whether the decedent was the victim of an assault or battery. The petition claims that Willis was shot when an unknown individual “recklessly fired stray bullets” into the crowd outside the nightclub party that took place. The trial court had determined that a ruling for plaintiff was made because it found that even if an assault and battery had occurred, Galloway and Lights on Broadways’ negligence was a covered concurrent proximate cause of Willis’ injury. The Appellate Court determined that to be a correct ruling.
There was also an issue of whether Adams claim should be barred based on the trial court interpretation and application of the Classification Limitation in the Policy which essentially provided that the insurance does not apply to bodily injury arising out of operations or premises which are not classified or shown on the CGL coverage part declarations, its endorsements or supplements. Two mistakes the garnishment court made were determined to be that the shooting did not occur at the Pulse Nightclub but rather outside of the Pulse Nightclub in a parking lot shared by two other businesses. Secondly, the plain language of the policy does not limit coverage only to injuries that occur at or on covered premises but rather, the policy states it “does not apply to bodily injury arising out of those operations or premises which are not classified or shown on the CGL coverage part declarations”. The Garnishment Court did not consider whether the fatal injury to Willis arose out of the operations or premises classified or shown on the CGL Coverage Declaration. The judgment revealed that the Garnishment Courts’ denial of plaintiff’s claim was due to the Garnishment Court concluding that Galloway was promoting a party that night as the agent of a different business. The Appellate Court determined there was an issue of whether the Garnishment Court was at liberty to decide if Galloway was acting on behalf of another business such that Lights on Broadway would not be liable for his negligence and concluded the trial court was not at liberty to make that decision.
The Eastern District affirmed the Garnishment Courts’ finding that Lloyds had a duty to defend Lights on Broadway from plaintiff’s negligence suit. The court reversed the trial courts’ judgment finding no payment was due to Adams under the policy because the Garnishment Court erroneously found Lights on Broadway not to be liable for the death, contrary to a finding necessarily reached in the underlying tort case. Lloyds’ failure to defend constituted a breach of contract. Though the underlying judgment against Galloway and Lights on Broadway was for $5 million, the policy limits coverage for personal injury is $1 million. Therefore, Lloyds’ liability to plaintiff is for the $1 million policy limit. The Appellate Court reversed the Garnishment Courts granting of summary judgment on the bad faith failure to defend and remanded that portion of the case for further proceedings. The Appellate Court could not say that the undisputed facts conclusively established that Lloyds acted in bad faith in refusing to defend Galloway and Lights on Broadway. The court also determined that whether the death was a result of assault and battery is immaterial since even if it were, the concurrent proximate cause rule applies and the injury is still covered under the policy. The Eastern District Court of Appeals remanded the case to the Garnishment Court for resolution of all claims and issues remaining unresolved by the appeal.