Insurer sues, aiming to avoid defending sex trafficking allegations

An insurer on Monday filed a lawsuit asking a U.S. district court to rule it does not have to defend a Georgia hotel company for allegations it knew a woman was being sex-trafficked at one of its hotels because the insurance policy does not list the defendant in that lawsuit as an insured party, among other reasons.

Farmington Hills, Michigan-based Atain Specialty Insurance Co. issued a general liability policy to Global Management and Investment Corp., which was not named as a defendant in a 2019 lawsuit filed by a woman who claims she was sex-trafficked at a Red Roof Inn in Smyrna, Georgia, owned by Varahi Hotel LLC, according to Atain Specialty Insurance Co. v. Varahi Hotel LLC, filed in the U.S. District Court for the Northern District of Georgia in Atlanta.

Varahi is attempting to access coverage under Global Management’s policy, which allows coverage for “all persons or organizations as required by written contract with the insured.” Yet, Atain in its suit claims that “no written contract or agreement exists between Global Management and Varahi,” thus barring coverage.

Atain is also asking for a declaratory judgment to not have to defend in Jane Doe 1 v. Red Roofs Inns, Varahi Hotel LLC, et al. because that lawsuit claims the hotel manager knew of the illegal sex trafficking on site and “physical-sexual abuse and criminal acts” exclusions in the general liability policy bar coverage of such allegations.

The insurer is also citing that the policy excludes coverage for bodily injury on any part of the premises that isn’t caused by an “occurrence,” excluding coverage for any “expected or intended” incident from the “standpoint of the insured.” 

The hotel company could not be reached for comment.