The District Court for the Eastern District of New York ruled that a contracted security exclusion precluded an insurer's duty to defend when claims were made against a third-party security company and the insured. The case is Clear Blue Specialty Ins. Co. v. TFS NY, Inc., 2023 U.S. Dist. LEXIS 157665 (E.D.N.Y. 2023). 

A man filed a personal injury action against TFS NY (TFS) after he was assaulted by employees at a nightclub owned and operated by the company. He later amended his complaint to include the third-party company that provided security for the nightclub. TFS had purchased a CGL policy from Clear Blue Specialty Insurance (Clear Blue), which included a Third Party or Contracted Security exclusion. 

TFS and Clear Blue agreed on two key facts: that the Clear Blue policy was in effect at the time of the incident, and that Clear Blue would be obligated to defend TFS under an assault and battery endorsement. However, they differed on the application of the contracted security exclusion and whether it precluded coverage for the underlying suit because the complaint included allegations against the third-party security company.