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An excess insurer is not obligated to provide coverage in connection with an attempted murder in a Florida hotel, said a federal court in granting the insurer summary judgment in a case that hinged on the definition of sublimit.
Polynesian Inn operates a hotel in Kissimmee, Florida, according to Tuesday’s ruling by the U.S. District Court in Orlando in StarStone National Insurance Co. v. Polynesian Inn LLC.
In April 2017, Zackery Ryan Ganoe and Andrew Bickford were guests at the hotel when they were attacked by a third party who murdered Mr. Ganoe and attempted to murder Mr. Bickford.
The assailant, who had cut the men’s throats, eventually pleaded no contest to first-degree murder with a weapon and attempted first-degree murder with a weapon and is serving a life sentence in prison, according to a news report.
Mr. Bickford made a claim for damages against Polynesian alleging it had failed to provide adequate security.
At the time of the attack, Polynesian had two insurance policies. A commercial general liability policy issued by Travelers Cos. Inc. unit Northfield Insurance Co. provided $1 million of liability coverage per occurrence, subject to a $2 million aggregate, but only $25,000 for a claim resulting from an assault or battery.
The inn also had an excess policy provided by Jersey City, New Jersey-based StarStone.
While neither Polynesian Inn nor StarStone disputed that Mr. Bickford’s claim was subject to the $25,000 limit for the assault claim under the Travelers policy, they disagreed as to how the StarStone policy applied, said the ruling.
StarStone contended the $25,000 limit for assault claims is a “sublimit of liability” and therefore its policy did not provide coverage for assault claims.
Polynesian contended the lower assault and battery limit is a stand-alone limit, not a sublimit, and therefore the StarStone policy provided coverage for any assault exceeding the $25,000 in coverage provided by the Northfield policy.
The District Court agreed with StarStone.
“The StarStone policy does not contain a definition of ‘sublimit’ or ‘sublimit of liability,’” it said. It said the Dallas-based International Risk Management Institute Inc. defines “sublimit” as “part of, rather than in addition to, the limit that would otherwise apply to the loss.”
Accordingly, said the court, it “concludes that, as matter of law, that the Northfield Policy’s $25,000 in coverage for bodily injury caused by an assault or battery offense is a ‘sublimit of liability’ as the term is used in the StarStone policy.
“As the parties do not dispute that Polynesian’s damages resulting from the attack on Bickford fall within this coverage, the StarStone policy does not provide coverage here.”
Rory Eric Jurman, a partner with the law firm of Hinshaw & Culbertson LLP in Fort Lauderdale, Florida, who represented StarStone, said in a statement, “This is a momentous victory for the insurance industry and our firm. It provides guidance as to a now common and hotly contested issue regarding the interpretation of sublimit coverage and it may impact substantially excess insurers’ potential liability and uncertainty where insurers needs to drop down to the sublimit coverage. This decision provides certainty in these unchartered waters.”
Polynesian Inn’s attorney did not respond to a request for comment.
Last week, a federal appeals court, in a divided opinion, upheld a lower court ruling and held a Markel Corp. unit was not obligated to defend a nightclub in litigation stemming from a shooting on its premises because of an assault and battery exclusion in its policy.
A Markel Corp. unit is not obligated to defend a nightclub in litigation stemming from a shooting on its premises because of an assault and battery exclusion in its policy, says a federal appeals court, in a divided opinion that upholds a lower court ruling.