Objective memorandum · 90 minutes
Predict whether an insurer must defend its insured when the complaint alleges both an intentional battery and negligent supervision. You have 90 minutes. To: Associate. Use the File and the Library only, then compare your draft with the rubric and the model answer below.
To: Associate. From: Callum Ferris, Partner. Re: Blue Heron Tavern and Lakeshore Mutual Insurance Co. Our client, Blue Heron Tavern, has been sued by a patron who was injured by a bouncer. Lakeshore has refused to defend, citing the policy's exclusion for injury expected or intended by the insured. Please write an objective memorandum predicting (1) how Franklin decides whether an insurer has a duty to defend, and (2) whether Lakeshore must defend Blue Heron here. Use only the Library.
Count I alleges that on June 10, Blue Heron's employee Mark Doyle struck plaintiff Eli Sandoval in the face with a closed fist without provocation, causing a broken jaw. Count II alleges that Blue Heron was negligent in hiring, training, and supervising Doyle, who had two earlier complaints from patrons about aggressive behavior, and that this negligence caused Sandoval's injury. The complaint seeks $180,000.
Lakeshore will defend any suit seeking damages because of bodily injury caused by an occurrence. Exclusion 6: This insurance does not apply to bodily injury expected or intended from the standpoint of the insured. Definitions: 'Insured' includes the tavern and its employees.
Lakeshore's letter says: Because the complaint alleges an intentional punch, the injury was expected or intended and Exclusion 6 applies. We will not defend. Blue Heron's owner tells us Doyle says Sandoval swung first.
An insurer's duty to defend is determined by comparing the allegations of the complaint with the policy. If any allegation is potentially within coverage, the insurer must defend, even if the claims are groundless or the insured may ultimately win. The duty to defend is broader than the duty to indemnify. Doubts about coverage are resolved in favor of the insured.
A complaint alleged that a farm worker intentionally struck a delivery driver and that the farm negligently supervised the worker. The insurer relied on an exclusion for intended injury. Held: the insurer had to defend the entire suit. The exclusion applies to injury expected or intended from the standpoint of the insured, and the negligent supervision claim rested on the employer's own conduct, not on any intent by the employer. Where a complaint contains any claim potentially covered, the insurer must defend all claims, and may not rely on facts outside the complaint to refuse a defense.
An insurer that wrongfully refuses to defend is liable for the insured's reasonable defense costs and is bound by any reasonable settlement or judgment entered against the insured.
Graders score a response against these criteria, and every one of them depends on using only the facts in the File and only the rules in the Library, so treat the list as a check for your draft after the first pass and again before you stop writing.
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