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Flowers v. Max Specialty Ins. Co.

Flowers v. Max Specialty Ins. Co.

Case No. 
Opinion Date: 
Opinion Author: 
Per Curiam
Affirmed in Part, Reversed in Part

This is an insurance coverage case.

The policyholder is the owner of a bar in Huntington, West Virginia.  On February 21, 2010, an unknown man entered the bar and began firing a gun, striking and injuring three patrons.  Each of the three patrons sued the bar owner alleging negligence in failing to provide adequate security.  The insurer, Max Specialty, filed a complaint seeking a declaratory judgment regarding coverage.

The policy issued by Max Specialty is a general comprehensive liability policy with a $1,000,000 policy limit. The policy has language excluding coverage for claims involving assaults or batteries.  There is also a “limited assault or battery coverage endorsement” which purports to provide, at most, $25,000 in coverage for assault or battery incidents.

The trial court granted summary judgment in favor of Max Specialty, finding that the endorsement was controlling.  Thus, the $25,000 limit applied and this amount could be reduced by any costs of defending the litigation.  Moreover, the court concluded that after the $25,000 limit was exhausted, whether by settlements, judgments, or defense costs, Max Specialty no longer owed any duty to defend.


The Supreme Court addressed two basic issues.  First, does the policy provide coverage for the shooting incident that occurred in the bar and, if so, in what amount?  Second, when does the insurer’s duty to defend terminate?


West Virginia law regarding an insurer’s duty to defend and regarding policy interpretation is well-established.  Therefore, this case was appropriate for disposition by means of a per curiam opinion.

Longstanding law in West Virginia provides that “ambiguous terms in insurance contracts are to be strictly construed against the insurance company and in favor of the insured.”  See, e.g., Mylan Laboratories, Inc. v. American Motorist Ins. Co., 226 W.Va. 307 700 S.E.2d 518 (2010).  This principle guided the Supreme Court’s analysis of the two issues before it.

The first issue concerned the scope of the insurer’s duty to defend.  The Supreme Court rejected the defendant’s argument that its endorsement was a stand-alone agreement.  Instead, the endorsement had to be read in conjunction with the policy.  Importantly, the only language specifically addressing the duty to defend was found in the policy itself.  This language provided that the duty to defend would end only when the applicable limit of coverage was “used up…in the payment of judgments or settlements.”  Because the policy and endorsement were contradictory, at worst, and ambiguous, at best, the ambiguity had to be resolved in favor of the policyholder.  Therefore, the trial court’s ruling was reversed.  The duty to defend terminated only after the $25,000 policy limit was paid out for judgments or settlements, and not for defense costs.

The second issue was whether the available coverage was $25,000 under the endorsement or $1,000,000 under the comprehensive general liability policy.

The petitioners argued that from the standpoint of the policyholder, i.e., the bar owner, the shooting was a negligent act and not an intentional act.  Therefore, the shooting was an “occurrence” under the policy and the claims by the patrons were subject to the higher $1,000,000 policy limit.

The Supreme Court rejected this argument because the endorsement contained a broad definition of “battery.”  It included not only intentional acts, but also “any use of force against the person without his or her consent that entails some injury.”  Because the shooting incident was clearly a battery under the endorsement, the only coverage was provided by the endorsement.  For this reason, the $25,000 limit set forth in the endorsement was applicable.

Justice Ketchum wrote a concurring opinion noting that the petitioners had not specifically asserted error in the trial court’s ruling that coverage could be reduced by defense costs, including attorney fees.  Justice Ketchum found the policy provisions regarding reducing the limits to be “very contradictory, confusing and unambiguous.”  He concluded by saying that “[i]f petitioners had appealed this ruling, I believe we would have reversed the circuit judge” on this issue.


This case will not have a far-reaching impact.  However, it stands as a good reminder of the fact that ambiguities are always resolved in favor of the policyholder.  From a practical standpoint, this means that attorneys arguing for coverage should copiously review an insurance policy to determine if any ambiguities exist.  Appellate attorneys should also take Justice Ketchum’s concurrence to heart:  be sure to specifically raise any error that you wish to be heard.

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