FIFTH CIRCUIT CONCLUDES THAT INSURER HAD NO DUTY TO DEFEND CLAIM OF ASSAULT AGAINST INSURED
Recently, the Fifth Circuit Court of Appeals concluded that the insurer had no duty to defend its insured in a lawsuit based on an assault claim. In Semien v. The Burlington Ins. Co., No. 22-20195, 2022 WL 4990409 (5th Cir., Oct. 3, 2022, mem. op.), T&T Global Enterprises, Inc. (“T&T”) owned a gas station-convenience store. During a dispute between Semien, a customer, and Truong, the store's clerk, Truong left his post behind a glass-enclosed counter and hit Semien on the head with a metal pole. Consequently, Semien filed suit against T&T and Truong, asserting a claim off assault. In Semien's petition, he alleged that Truong acted negligently, intentionally and/or knowingly when he exited a safe and secure location behind a safe glass and committed an assault against an invitee Paul Semien, and at the time of the incident Truong was working in the course and scope of his employment with T&T.
T&T had a general commercial liability insurance policy issued by Burlington (the “Policy”). Although the Policy provided coverage for assault and battery, it excluded coverage for assault or battery “committed by any insured or agent of any insured.” The Policy defined “insured” to include T&T's employees, but “only for acts within the scope of their employment by [T&T] ….” As such, Burlington denied that it had a duty to defend or indemnify T&T and Truong.
Semien eventually settled his claims with T&T and Truong. As part of the settlement agreement, T&T and Truong assigned Semien “all rights they have jointly or separately to pursue claims and remedies under [their] insurance contract with The Burlington Company.” Semien then filed suit against Burlington, asserting a claim of breach of contract and alleging that Burlington failed to defend and indemnify its insureds for Semien's claims. In response, Burlington moved to dismiss Semien's complaint, arguing that the complaint failed to state a claim on which relief can be granted in light of the assault and battery exclusion. The district court granted Burlington’s motion to dismiss. Plaintiff appealed.
On appeal, the Fifth Circuit began its analysis by noting the relevant Texas law: “Under Texas law, an insurer's duty to defend arises when a third party sues the insured on allegations that, if taken as true, potentially state a cause of action within the terms of the policy. But, if the petition only alleges facts excluded by the policy, ... the insurer is not required to defend. When determining whether an insurer has a duty to defend its insured against a third-party lawsuit, Texas courts generally follow the eight-corners rule. Under this rule, courts determine whether an insurer has a duty to defend its insured by looking at the facts alleged within the four corners of the latest amended pleading upon which the insurer based its refusal to defend the action, and the language within the four corners of the relevant insurance policy.” Applying the rules, the Fifth Circuit concluded that the Policy excluded coverage for Semien's claims and that Burlington did not have a duty to defend T&T and Truong. The Fifth Circuit reasoned that Semien's allegations in his petition against T&T and Truong made clear that Truong was acting in the course of his employment at the time of the assault.