Capitol Specialty Ins. Corp. v. JBC Entm’t Holdings, Inc.
(Wash. Ct. App. Dec. 10, 2012)
In a matter of first impression, a Washington Appellate Court recently held that a firearm exclusion unambiguously precluded coverage for negligent hiring and supervision claims related to a shooting at the insured’s nightclub.
The insured, JBC Entertainment Holdings, Inc., operates a nightclub in Seattle, Washington. In 2010, an unknown person fired a gun at the nightclub, injuring a patron. The patron sued the nightclub and one of its employees, asserting causes of action for negligent hiring, training, and supervision, as well as negligent failure to provide adequate security. The nightclub tendered its defense and indemnity to its commercial general liability insurer, which filed a declaratory judgment action to determine whether the policy’s firearm exclusion barred coverage for the patron’s claim.
The policy’s firearm exclusion bars coverage for injury or damage that
arises out of, relates to, is based upon, or attributable to the use of a firearm(s).
The insured argued that the patron’s claims for negligent hiring, training, supervision, and security alleged a concurrent and independent cause of his injuries and, therefore, fell outside the firearm exclusion. The court rejected the argument, finding that the patron’s claims of pre-assault negligence depended entirely on the shooting and, as a result, fell within the scope of the firearm exclusion. Interestingly, however, the court noted that a duty to defend may extend where an insured’s liability arises from its post-assault negligence.
The court also rejected the insurer’s argument that the exclusion was ambiguous because an average purchaser could fairly conclude that it applied only if the insured itself used a firearm in connection with its business. The court stated that, even if it were inclined to look beyond the exclusion’s plain language, the policy used “clarifying” language to limit the scope of several other policy exclusions. This, the court found, suggested that an insured would read the exclusion literally, i.e., not to limit its application to the use of a firearm by or on behalf of an insured.