Mr. Walters commenced a negligence action against OK Café and its owner, Donald Bowers, Sr., alleging that OK Café had been negligent in allowing Mr. Chambers to enter and exit the bar while armed and in failing to ensure Mr. Walters' safety. In addition, the complaint asserted that OK Café had failed to properly employ, train, and supervise its employees regarding the safety of its patrons, or take sufficient precautions or issue warnings to protect Mr. Walters from Mr. Chambers.

OK Café requested that QBE Insurance Corporation, which had issued it a CGL insurance policy, defend and indemnify it in the lawsuit. QBE, believing that coverage was excluded based on the “assault and battery” exclusion contained in its policy, instituted a declaratory judgment action against Mr. Walters, OK Café, and Mr. Bowers to adjudicate its obligations under the policy.

Subsequently, the parties filed cross-motions for summary judgment.

The trial court entered summary judgment in favor of QBE, and Mr. Walters, OK Café, and Mr. Bowers appealed.

The QBE Policy

The QBE policy provided:

EXCLUSION—ASSAULT AND BATTERY

This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE FORM

PRODUCTS/COMPLETE OPERATIONS COVERAGE FORM

LIQUOR LIABILITY COVERAGE FORM

* * *

2. Exclusions

This insurance does not apply to:

Assault and Battery

(1) “Bodily injury,” “property damage,” “injury” or “personal and advertising injury” arising from the following:

(a) “assault and battery” or any act or omission in connection with the prevention or suppression of such acts; or

(b) harmful or offensive contact between or among two or more persons; or

(c) apprehension of harmful or offensive contact between or among two or more persons; or

(d) threats by words or deeds.

(2) This exclusion applies regardless of the degree of culpability or intent and without regard to:

(a) whether the acts alleged to be by or at the instruction or at the direction of the insured, his officers, “employees,” agents or servants; or by any other person lawfully or otherwise on, at or near the premises owned or occupied by the insured; or by any other person;

(b) the alleged failure of the insured or his officers, “employees,” agents or servants in the hiring, supervision, retention or control of any person, whether or not an officer, “employee,” agent or servant of the insured;

(c) the alleged failure of the insured or his officers, “employees,” agents or servants to attempt to prevent, bar or halt any such conduct.

(3) This exclusions also applies to any claims by any other person, firm or organization, asserting rights derived from or contingent upon any person asserting a claim excluded under subparagraph (2)(a), (b), or (c) above; specifically [loss of consortium].

* * *

“Assault and Battery” means:

(a) actual or threatened assault or battery whether caused by or at the instigation or direction of any insured, his “employees,” patrons or any other persons; or

(b) the failure of any insured or anyone else for whom any insured is legally responsible to prevent or suppress assault; or

(c) battery; or

(d) the negligent:

i. employment;

ii. investigation;

iii. supervision;

iv. training;

v. retention

of a person for whom any insured is or ever was legally responsible and whose conduct is described in (a), (b), (c) and (d) above.

(e) the alleged failure of the insured or his officers, “employees,” agents or servants to attempt to prevent, bar or halt any such conduct.

(f) “Assault and Battery” includes, but is not limited to, sexual assault and battery.

This endorsement also applies to any claims by any other person, firm or organization, asserting rights derived from or contingent upon any person asserting a claim excluded under subparagraphs (a), (b), (c), (d), (e), and (f) above; specifically excluding from coverage claims for:

(1) emotional distress or loss of society, services, consortium and/or income; or

(2) reimbursement for expenses (including but not limited to medical expenses, hospital expenses and wages) paid or incurred by such other person, firm or organization; or

(3) any obligation to share damages with or repay someone who must pay damages because of the injury.

The appellate court affirmed.

In its decision, the appellate court ruled that “assault and battery” as defined in the policy included negligent conduct on the part of the insured or its employees that directly harmed another person, whether through negligent failure to prevent an assault, negligence related to an actual or threatened assault, or negligence resulting in battery. Hence, it ruled, such conduct was excluded from coverage.

The appellate court added that even assuming that OK Café had breached its duty to Mr. Walters in negligently conducting its security operations, the “clear and unambiguous language” of the assault and battery provision excluded coverage in this regard.

The appellate court concluded that the “myriad allegations presented in the underlying complaint” fell within the scope of the definition of “assault and battery” contained in the exclusion and, therefore, that there was no duty to defend or indemnify.

The case is QBE Ins. Corp. v. Walters, No. 1797 MDA 2015 (Penn. Super.Ct. Sept. 9, 2016).