Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 1 FILED United States Court of UNITED STATES COURT OF APPEALS Appeals Tenth Circuit FOR THE TENTH CIRCUIT _________________________________ July 15, 2024
Christopher M. Wolpert ALEJANDRA JUAREZ, Clerk of Court
Plaintiff - Appellant,
v. No. 23-4101 (D.C. No. 2:22-CV-00740-RJS) HUDSON SPECIALTY INSURANCE (D. Utah) COMPANY,
Defendant - Appellee. _________________________________
ORDER AND JUDGMENT * _________________________________
Before PHILLIPS, KELLY, and MORITZ, Circuit Judges. _________________________________
Alejandra Juarez was punched in the parking lot of a nightclub (owned
and operated by Quantum Ultra Lounge, Inc.) by a male assailant who had been
overserved alcohol. Juarez sued Quantum in state court under Utah’s dramshop
statute, which in certain circumstances establishes liability for injuries caused
by the distribution of alcohol. After Quantum tendered its defense to its insurer,
Hudson Specialty Insurance Co., Hudson refused to defend, relying on a policy
endorsement excluding coverage for claims “arising out of” assault and battery.
* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 2
Though Juarez’s claim against Quantum had asserted a violation of Utah’s
dramshop statute, Hudson maintained that the dramshop claim was one “arising
out of” an assault and battery. To protect itself from execution of an
unfavorable judgment in Juarez’s lawsuit, Quantum assigned to Juarez its
contract claims against Hudson for Hudson’s refusing to defend Quantum
against Juarez’s lawsuit.
Then, proceeding as Quantum’s assignee, Juarez filed a second state-
court suit, this time asserting against Hudson her assigned contract claims from
Quantum. Juarez asserted that Hudson had breached its contractual duties to
Quantum by refusing to defend Quantum against Juarez’s state-court dramshop
claim. After removing the case to federal district court, Hudson moved to
dismiss Juarez’s assigned contract claims. Guided by Utah’s broad construction
of “arising out of” in insurance policies, the district court held that Hudson’s
policy excluded any claim sharing a causal relationship or nexus with an assault
or battery, including Juarez’s dramshop claim. Because Juarez’s dramshop
claim was premised on the underlying assault and battery, the court ruled that
Juarez had failed to allege a plausible claim for relief and granted Hudson’s
motion to dismiss. In doing so, the court likewise rejected Juarez’s assertion
that the policy’s assault-and-battery exclusion applied exclusively to Quantum
and its employees. Juarez appealed. Exercising jurisdiction under 28 U.S.C.
§ 1291, we affirm.
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BACKGROUND
I. Factual Background
The facts below are drawn from the complaint in this action, which facts
we take as true at the motion-to-dismiss stage. See Mayfield v. Bethards,
826 F.3d 1252, 1255 (10th Cir. 2016).
A. The Assault and Battery
In 2017, Juarez attended a Quantum-owned nightclub with female friends
in Salt Lake City, Utah. While there, Juarez and her friends were verbally and
physically harassed by a visibly intoxicated patron, Rocky Manatau. Despite
the women reporting this to the nightclub’s manager, the nightclub did not
remove Manatau and continued to serve him alcohol. So Juarez and her friends
left, but Manatau followed them out of the nightclub and into the parking lot.
There, he struck Juarez in the face with his fist, causing extensive facial and
dental injuries and necessitating multiple reconstructive surgeries.
B. The Insurance Policy
In 2017, Quantum had a liquor-liability insurance policy with Hudson.
The policy covers Quantum as the “insured” and the nightclub as the “insured
premises” for liability arising from “the selling, serving or giving of any
alcoholic beverage at or from the insured premises.” 1 App. vol. I, at 8 ¶ 19.a.
1 Quantum held a general liability insurance policy with a different carrier, United Specialty Insurance Co., that excluded coverage for liquor liability. Quantum settled a declaratory judgment action with United Specialty, (footnote continued) 3 Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 4
The policy requires Hudson “to defend any suit against the insured seeking
such damages.” Id. at ¶ 19.b. But, pertinent here, the policy also contains an
“Assault & Battery Exclusion – Absolute” (A&B Exclusion), which reads as
follows:
This insurance does not apply to claims arising out of an assault and/or battery, whether caused by or at the instigation of, or at the direction of, or omission by, the insured, and/or his employees.
Id. at 42 ¶ 6.
C. The State-Court Complaint and Tendered Defense
In her first state-court lawsuit, Juarez sued Quantum in Utah alleging
claims for negligence, negligent hiring and retention, and violation of Utah’s
dramshop statute, Utah Code Ann. § 32B-15-201. The state court later
dismissed Juarez’s two negligence claims as preempted by the dramshop
statute. 2 See Gilger v. Hernandez, 997 P.2d 305, 310 (Utah 2000) (concluding
that in Utah, “the common law of negligence is preempted insofar as it may
impose liability for acts that the Dramshop Act reaches”).
Juarez’s complaint alleged that “[d]espite [Manatau’s] visibly and
apparently intoxicated condition” the nightclub continued to serve him alcohol
agreeing that United Specialty had no duty to defend or indemnify Quantum for liquor-related liability. 2 So Juarez’s sole remaining claim against Quantum was statutory and not based on common-law negligence. This makes her case different than others cited in her brief which allege negligence-based claims, like Desrosiers v. Hudson Specialty Ins. Co., 438 F. App’x 629, 631 (9th Cir. 2011). 4 Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 5
and that “[a]s a direct and proximate result of serving intoxicating alcoholic
products to Rocky Manatau, [Juarez] was severely injured, suffering economic
and non-economic damages.” App. vol. I, at 54 ¶ 38, 55 ¶ 44.
Quantum tendered defense of Juarez’s lawsuit to Hudson. But Hudson
refused to defend, relying on the liquor-liability policy’s A&B Exclusion.
Ahead of mediation with Juarez, Quantum emailed Hudson requesting its
participation in the mediation and cautioning that “[i]f Hudson maintains its
denial of coverage and does not participate in the mediation, Quantum has the
right under Utah law to take steps to limit its potential exposure.” Id. at 11
¶ 25. Hudson maintained its position that it had no duty to defend Quantum
because Juarez’s claim fit squarely within the A&B Exclusion. Despite another
round of emails between Quantum and Hudson, Hudson remained adamant in
its position. During mediation, believing that Hudson’s denial left it
defenseless against a potentially large judgment, Quantum agreed to a consent
judgment with Juarez as described below.
D. The Consent Judgment
The consent judgment between Quantum and Juarez achieved three
things: (1) entry of judgment against Quantum for the statutory maximum
($1,000,000) for violating Utah’s dramshop statute; 3 (2) Juarez’s agreement not
to execute the judgment against Quantum; and (3) Quantum’s assignment of its
3 Utah Code Ann. § 32B-15-301(2) limits the amount recoverable by a prevailing plaintiff to $1,000,000. 5 Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 6
contractual rights against Hudson to Juarez. The consent judgment also noted
Quantum’s belief that it had suffered damages and attorneys’ fees due to
Hudson’s refusal to defend and indemnify.
II. Procedural History
In her second lawsuit, Juarez sued Hudson in Utah state court, asserting
three contract claims assigned to her by Quantum: (1) breach of contract;
(2) tortious breach of the implied covenant of good faith and fair
dealing/breach of fiduciary duty; and (3) coverage by estoppel. Juarez attached
the insurance policy to her complaint. Hudson removed the case to federal
district court and moved to dismiss Juarez’s claims under Federal Rule of Civil
Procedure 12(b)(6).
This appeal primarily challenges the federal district court’s ruling that
Juarez’s contract claims against Hudson did not state plausible claims for
relief, because the A&B Exclusion defeated coverage of Juarez’s dramshop
claim against Quantum. That being so, Hudson had no duty to defend Quantum.
In the district court, Hudson maintained that the A&B Exclusion
“unambiguously barred coverage” of Juarez’s dramshop claim and that even
“accepting the facts pled in the complaint as true, Juarez ha[d] not met her
burden to show that the underlying [dramshop] claim[] w[as] covered by the
policy.” App. vol. II, at 46. So Hudson argued that it was “under no obligation
to defend or indemnify” Quantum—meaning that Quantum (and Juarez as
assignee) had no valid contract claims. Id. Juarez disagreed, arguing that the
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exclusion was limited to assaults and batteries committed by Quantum and its
employees, or alternatively was ambiguous on that point. So, in Juarez’s view,
her claim was at least “potentially covered” by the policy, which meant that
Hudson had breached its duty to defend Quantum. Id.
After considering the parties’ written and oral arguments, the court ruled
from the bench that Juarez’s assigned contract claims against Hudson were
implausible on their face because Juarez’s dramshop claim “fell squarely within
the [A&B Exclusion],” so Hudson could deny coverage and not defend Juarez’s
suit against Quantum. Id. at 50. The court reasoned that “[t]he pleaded facts
taken as true show that Juarez’s [assigned] claims cannot succeed because the
[A&B Exclusion] bar[s] coverage for the underlying [dramshop] claim[] in the
state case. Id. “[A]nd because Juarez’s [assigned] claims . . . are based on
Hudson’s unlawful denial of coverage in the state case and the pleaded facts
show Hudson properly denied coverage,” the court ruled that “Juarez is unable
to maintain her [assigned] claims.” Id. at 52. On this basis, the court granted
Hudson’s motion to dismiss Juarez’s assigned contract claims and entered
judgment in its favor.
Juarez timely appealed.
STANDARD OF REVIEW AND APPLICABLE LAW
We review de novo a district court’s grant of a Rule 12(b)(6) motion to
dismiss. E.W. v. Health Net Life Ins. Co., 86 F.4th 1265, 1280 (10th Cir. 2023).
“To survive a motion to dismiss, a complaint must contain sufficient factual
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matter, accepted as true, ‘to state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)); accord Abdi v. Wray, 942 F.3d 1019,
1025 (10th Cir. 2019). “The plausibility standard is not akin to a probability
requirement, but it asks for more than a sheer possibility that a defendant has
acted unlawfully.” Iqbal, 556 U.S. at 678 (cleaned up).
In making our Rule 12(b)(6) assessment in this diversity suit, the parties
agree that we apply substantive Utah law. See Carolina Cas. Ins. Co. v.
Nanodetex Corp., 733 F.3d 1018, 1022 (10th Cir. 2013) (applying the state law
that both parties agreed governed).
Under Utah law we interpret insurance policies, like other contracts, to
ascertain and effectuate the parties’ intention as expressed by the plain
language of the policy. Headwaters Res., Inc. v. Illinois Union Ins. Co., 770
F.3d 885, 891 (10th Cir. 2014) (applying Utah law); S.W. Energy Corp. v.
Cont’l Ins. Co., 974 P.2d 1239, 1242 (Utah 1999). If the contract terms are
ambiguous, we construe those terms in favor of the insured. Dyno Nobel v.
Steadfast Ins. Co., 85 F.4th 1018, 1026 (10th Cir. 2023) (applying Utah law).
But we must be careful to avoid straining to create an ambiguity where none
exists. See Compton v. Houston Cas. Co., 393 P.3d 305, 310 (Utah 2017) (“An
ambiguity exists when a provision is capable of more than one reasonable
interpretation because of uncertain meanings of terms, missing terms, or other
facial deficiencies.” (internal quotation marks omitted)); Headwaters Res.,
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770 F.3d at 892 (“[I]t is important to remember, a policy provision is not
ambiguous simply because the parties ascribe different meanings to it according
to their own interests.”). After all, ambiguity exists only where the meaning is
genuinely uncertain after we give a “plausible and reasonable” construction “in
light of the language used.” S.W. Energy Corp., 974 P.2d at 1242 (citation
omitted). There is no ambiguity if we can ascertain the parties’ intention from
the plain language, and so we apply the policy language as written. BV
Jordanelle, LLC v. Old Republic Nat’l Title Ins. Co., 830 F.3d 1195, 1201 (10th
Cir. 2016) (applying Utah law).
DISCUSSION
One question underlies this appeal: Does the A&B Exclusion exclude
coverage of Juarez’s dramshop claim against Quantum? The district court
answered this question “yes,” holding that Hudson legally declined Quantum’s
tender of defense, because the A&B Exclusion eliminates any potential
coverage for Juarez’s dramshop claim. With no potential policy coverage
because of the A&B Exclusion, the court deemed Juarez’s assigned contract
claims against Hudson implausible. Contesting this, Juarez asserts (1) that the
district court erred by considering the policy exclusion’s applicability at the
motion-to-dismiss stage and (2) that the district court erred by not finding the
A&B Exclusion unambiguous in her favor, or alternatively, ambiguous. We
address Juarez’s arguments on appeal in turn.
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I. The district court did not err by considering the A&B Exclusion’s applicability to Juarez’s dramshop claim in ruling on Hudson’s motion to dismiss Juarez’s assigned contract claims.
Juarez alleges that the district court improperly reached the merits of her
assigned contract claims against Hudson at the motion-to-dismiss stage instead
of evaluating their plausibility. In Juarez’s view, the district court erred in
considering the applicability of the A&B Exclusion to her dramshop claim
because that analysis, she says, goes to the “merits.” Op. Br. at 20–21. We
disagree.
Underpinning Juarez’s assigned contract claims against Hudson is the
issue of whether the policy’s A&B Exclusion excused Hudson from its duty to
defend Quantum against Juarez’s dramshop claim. In her second lawsuit,
Juarez’s complaint against Hudson (alleging the three assigned contract claims)
cannot state a plausible claim for relief—the standard to survive a motion to
dismiss—if the A&B Exclusion excludes coverage of Juarez’s dramshop claim
against Quantum. And if the policy excludes coverage for Juarez’s dramshop
claim, Hudson would have justifiably denied Quantum’s tender of defense—
rendering Quantum’s (and Juarez’s by assignment) contract claims against
Hudson implausible. See Summerhaze Co. v. Fed. Deposit Ins. Corp., 332 P.3d
908, 921 (Utah 2014) (noting that an insurer may refuse to defend an insured
against a third-party action when “the underlying complaint shows on its face
that there is no potential for coverage” (citation omitted)).
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In Utah, Hudson, as the insurer, has a duty to defend claims that
potentially fall within the scope of the coverage provided. Equine Assisted
Growth & Learning Ass’n v. Carolina Cas. Ins. Co., 266 P.3d 733, 735–36
(Utah 2011). But Utah permits insurers “to limit or modify its obligations to
provide coverage through explicit exclusions,” provided that those exclusions
“clearly and unmistakably communicate[] to the insured the specific
circumstances under which the expected coverage will not be provided.”
Headwaters Res., 770 F.3d at 892 (citations omitted). The insured bears the
burden to allege a claim for relief potentially covered by the insurance policy.
See Wells Fargo Bank, N.A. v. Stewart Title Guar. Co., 55 F.4th 801, 808 n.10
(10th Cir. 2022) (applying Utah law). The burden then shifts to the insurer to
prove that an exclusion to coverage applies. LDS Hosp. v. Capitol Life Ins., 765
P.2d 857, 859–60 (Utah 1988).
To determine whether an insurance policy potentially covers the
insured’s claim and thus triggers the insurer’s duty to defend, Utah applies the
“eight corners” rule. 4 Banner Bank v. First Am. Title Ins. Co., 916 F.3d 1323,
1326 (10th Cir. 2019). “A court looks first to the policy language defining the
4 The duty to defend and duty to indemnify are distinct duties, with the duty to defend being broader. Banner Bank v. First Am. Title Ins. Co., 916 F.3d 1323, 1328 (10th Cir. 2019) (first citing Fire Ins. Exch. v. Est. of Therkelsen, 27 P.3d 555, 561 (Utah 2001); and then citing Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127, 133 (Utah 1997)). So if Hudson had no duty to defend it had no duty to indemnify. See id. (“If there was no duty to defend, there cannot be a duty to indemnify.”). 11 Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 12
scope of the duty to defend; it then looks to the face of the complaint and
determines if the terms either establish or eliminate a duty to defend.” Id.; see
Equine Assisted Growth, 266 P.3d at 737 (“If the language found within the
collective ‘eight corners’ of these documents clearly and unambiguously
indicates that a duty to defend does or does not exist, the analysis is
complete.”). The duty to defend depends on whether the facts as alleged in the
complaint, “if proved by the plaintiff at trial[,] would result in liability under
the policy.” Deseret Fed. Sav. & Loan Ass’n v. U.S. Fid. & Guar. Co., 714 P.2d
1143, 1147 (Utah 1986). “[E]ven if the allegations” in the complaint are
“groundless, false, or fraudulent,” if those facts taken as true “could result in
liability under the policy,” there is potential coverage for which the insurer
owes the insured a duty to defend. Id. What the insurer cannot do is “simply
say, ‘We don’t believe that the plaintiff can prove what [s]he is alleging,’”
because at the motion-to-dismiss stage we assume the plaintiff can prove what
she is alleging. Id. So instead we consider whether those allegations taken as
true “could result in liability under the policy.” Id. This inquiry brings us to the
eight-corners analysis, which is “a matter of contract interpretation” and
therefore a legal issue. Headwaters Res., 770 F.3d at 891; see Basic Rsch., LLC
v. Admiral Ins. Co., 297 P.3d 578, 579 (Utah 2013) (“[T]he interpretation of a
contract is a question of law.”).
Because the A&B Exclusion’s applicability to Juarez’s dramshop claim
against Quantum is dispositive of the plausibility of Juarez’s assigned contract
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claims against Hudson, the district court correctly focused on that exclusion.
By doing so, the district court did not err or improperly reach the merits, as
Juarez asserts. Indeed, only by first resolving whether the A&B Exclusion
applied to Juarez’s dramshop claim could the district court determine the
plausibility of Juarez’s assigned contract claims. That was the principal
question before it in ruling on Hudson’s motion to dismiss. We thus agree with
the district court that it needed to decide whether the A&B Exclusion applied to
Juarez’s dramshop claim.
II. The district court did not err in determining that the A&B Exclusion excludes coverage of Juarez’s dramshop claim, which makes Juarez’s contract claims against Hudson implausible.
Juarez maintains that even if the court could consider the applicability of
the A&B Exclusion to Juarez’s dramshop claim at the motion-to-dismiss stage,
it erroneously interpreted the exclusion.
In reviewing the district court’s decision de novo, we return to the words
of the A&B Exclusion:
This insurance does not apply to claims arising out of an assault and/or battery, whether caused by or at the instigation of, or at the direction of, or omission by, the insured, and/or his employees.
App. vol. I, at 42 ¶ 6.
Juarez advances three arguments against the district court’s ruling that
Hudson had no duty to defend based on the A&B Exclusion: (1) that her claims
against Quantum alleged a violation of Utah’s dramshop statute, not assault and
battery; (2) that the A&B Exclusion unambiguously applies to assaults and
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batteries committed by Quantum and its employees only, not by anyone else,
including patrons like Manatau; and (3) that, alternatively to the second
argument, the A&B Exclusion is ambiguous about whether it applies beyond
only Quantum and its employees, and so should be construed in favor of
coverage for Juarez’s dramshop claim against Quantum. Hudson responds that
the district court correctly ruled that the A&B Exclusion applied to Juarez’s
dramshop claim, because the exclusion indisputably and unambiguously
precludes coverage for claims “arising out of” assaults and batteries, including
those committed by club patrons like Manatau. Hudson has the better of the
argument.
A. The A&B Exclusion unambiguously denies coverage for any claim “arising out of” an assault or battery.
Utah courts broadly interpret “arising out of” as used in insurance
contracts. 5 Nat’l Farmers Union Prop. & Cas. Co. v. W. Cas. & Sur. Co.,
577 P.2d 961, 963 (Utah 1978) (“The term ‘arising out of’ is ordinarily
understood to mean originating from, incident to, or connected with the item in
question.”); see Utah Transit Auth. v. Greyhound Lines, Inc., 355 P.3d 947,
961–62 (Utah 2015) (discussing Utah’s “broad interpretation” of “‘arising out
of’ language in the insurance context”). Under that broad construction, Utah
5 Before the district court, Juarez “agree[d] that arising out of is broadly construed,” App. vol. II, at 26, and focused her argument instead on the second clause of the exclusion: “whether caused by or at the instigation of, or at the direction of, or omission by, the insured, and/or his employees,” App. vol. I, at 42 ¶ 6; see App. vol. II, at 20–21. 14 Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 15
courts don’t consider “arising out of” as requiring a “causal relationship
between the injury and the risk for which coverage is provided.” Nat’l Farmers
Union, 577 P.2d at 963 (stating that “[t]he phrase ‘arising out of’ is equated
with origination, growth, or flow from the event” and has “much broader
significance than ‘caused by’”). Rather, “arising out of” requires only that
“some nexus” exist between Juarez’s dramshop claim against Quantum and her
injuries. Meadow Valley Contractors, Inc. v. Transcon. Ins. Co., 27 P.3d 594,
597 (Utah Ct. App. 2001) (citing Nat’l Farmers Union, 577 P.2d at 963); see,
e.g., Gibbs M. Smith, Inc. v. U.S. Fid. & Guar. Co., 949 P.2d 337, 343 (Utah
1997) (ruling that “arising out of” as used in an insurance contract requires no
more than “a causal connection” between the property damaged and the
property covered by the policy). So here, this means that a “causal relationship”
or “some nexus” must have existed between Juarez’s dramshop claim and
Juarez’s injuries sustained from Manatau’s assault and battery.
Consistent with Utah courts’ broad reading of “arising out of” as used in
insurance contracts, we conclude that Juarez’s dramshop claim against
Quantum had a causal connection with or nexus to the injuries caused by
Manatau’s assault and battery. Indeed, Juarez’s complaint against Quantum
alleged: “As a direct and proximate result of serving intoxicating alcoholic
products to Rocky Manatau, [Juarez] was severely injured, suffering economic
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and non-economic damages.” 6 App. vol. I, at 55 ¶ 44 (emphasis added); see
also id. at 53 ¶ 30 (“[Manatau] followed [Juarez] out to [her] car, and then
struck [Juarez] in the face[.]”). This states an obvious point—that Juarez’s
injuries “originat[ed] from,” were “incident to,” or were “connected with” an
assault and battery. Nat’l Farmers Union, 577 P.2d at 963. Under Utah law’s
broad construction, Juarez’s injuries arose from an assault or battery. 7
6 Juarez has never contested that Manatau’s attack was an assault and battery. Hudson’s response brief states: “It is undisputed that the allegations in the underlying complaint are all based upon the allegations that a bar patron caused injuries to Ms. Juarez via assault and battery.” Resp. Br. at 12. In her reply, Juarez challenges the A&B Exclusion solely based on Manatau’s not being a Quantum employee, but she does not dispute that his actions constituted assault and battery. See generally Reply Br. We therefore accept that what happened in the parking lot was an assault and battery. 7 Our sibling circuits have likewise interpreted “arising out of” to capture any claim for relief that could not have accrued without the occurrence of an assault or battery. For instance, the Eleventh Circuit in Doe v. Hudson Specialty Insurance Co., considered the applicability of an exclusion similar to Hudson’s A&B Exclusion. 719 F. App’x 951, 952 (11th Cir. 2018). In that case, the plaintiff alleged that a nightclub had overserved her, leaving her vulnerable to sexual assault by another nightclub patron. Id. Interpreting Florida law, which construes “arising out of” as broadly as Utah law does, the circuit court affirmed the district court’s ruling that the assault-and-battery exclusion barred coverage of the plaintiff’s claims because her complaint “specifically allege[d] a connection between [her] intoxication, which resulted from a [nightclub] employee’s negligent distribution of alcoholic beverages, and the sexual assault.” Id. at 953. Based on the plaintiff’s allegations, the circuit court ruled that her claims were “undeniably capture[d]” by the assault-and-battery exclusion. Id.; see also, e.g., Burlington Ins. Co. v. De La Puente, 719 F. App’x 615, 618 (9th Cir. 2018) (rejecting plaintiffs’ argument that the nightclub’s negligence was a “distinct cause[]” of injury separate from the assault and battery); Archie v. Acceptance Indem. Co., 507 F. App’x 451, 454 (5th Cir. 2013) (reasoning that even if the plaintiff wasn’t the “intended target” of a nightclub shooting, his injuries “arose out of [the assailant’s] assault” and (footnote continued) 16 Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 17
Juarez’s complaint alleges a connection between the club overserving
Manatau and his assault and battery against her. See App. vol. I, at 55 ¶ 44. It
doesn’t matter that Juarez’s complaint premises her claims on an alleged
violation of Utah’s dramshop statute and avoids the words “assault” or
“battery.” Juarez has not explained how she could support a dramshop claim
against Quantum had Manatau not committed an assault and battery against her.
After all, Quantum is liable under Utah’s dramshop statute only if she was
injured because the nightclub overserved Manatau. See Utah Code Ann. § 32B-
15-201(b)(iii) (establishing liability for injury or damages that “result from the
intoxication of the individual who is provided the alcoholic product”). And
because Juarez would have no dramshop claim against Quantum for overserving
Manatau if not for the assault and battery, we conclude that Juarez’s claim
“arises out of” an assault and battery and thus that the A&B Exclusion applies
to her dramshop claim against Quantum.
therefore the insurance policy’s assault-and-battery exclusion applied to his claim); Mount Vernon Fire Ins. Co. v. Creative Hous. Ltd., 93 F.3d 63, 66 (2d Cir. 1996) (“Because [the plaintiff] would be unable to maintain claims for negligent supervision, maintenance, and control ‘but for’ the assault upon her, under New York law her claims are ‘based on’ assault and battery and therefore excluded from coverage under the insurance policy.”); Essex Inc. v. Michigan Skatelands, Inc., 38 F.3d 1215, 1215 (6th Cir. 1994) (unpublished table decision) (“Though Michigan Skatelands characterizes the three underlying claims against it as breach of contract and negligence claims, the underlying claims clearly arose out of tortious conduct.”); United Nat’l Ins. Co. v. Ent. Grp., Inc., 945 F.2d 210, 214 (7th Cir. 1991) (“The exclusion in [the insurer’s] policy . . . clearly states that there will be no coverage for claims arising from assault and battery, regardless of whether the injury results from the intentional acts or omissions (negligence) of the insured.”). 17 Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 18
B. The A&B Exclusion’s “whether caused by” clause does not limit the applicability of the exclusion to assaults and batteries committed only by Quantum and its employees.
Juarez next asserts that even if her claim arises out of an assault and
battery, the “whether caused by” clause in the A&B Exclusion—“whether
caused by or at the instigation of, or at the direction of, or omission by, the
insured, and/or his employees”—means that the exclusion applies only to
claims that arise from assaults or batteries committed by Quantum or its
employees. Op. Br. at 33–35. In her view, “whether” sets out a limited list of
“alternative conditions or possibilities” covered by the exclusion because
“whether” is a synonym for “if.” Id. at 34. Under this interpretation, Juarez
contends that what follows “whether caused by” is an exhaustive list of the
conditions that can trigger the A&B Exclusion. See id. at 33–35; Reply Br. at
6–7. And if Juarez is correct, then the A&B Exclusion could not apply to her
claim because Manatau was not Quantum’s employee.
We agree with the district court that Juarez’s interpretation misreads the
A&B Exclusion.
The A&B Exclusion appears under this heading: “Assault & Battery
Exclusion – Absolute.” App. vol. I, at 42; see, e.g., Quaid v. U.S. Healthcare,
Inc., 158 P.3d 525, 529 (Utah 2007) (looking to the applicable heading to aid in
interpreting an insurance policy exclusion). The policy then frames the
exclusion’s application under the “arising out of” language, which we’ve
established Utah courts construe broadly. See Discussion § II.A, supra.
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Together, this language signals to us an emphatic rejection of any coverage for
any claim related to an assault or battery. See Compton, 393 P.3d at 307
(emphasizing that the “first step” in interpreting an insurance policy is to
construe the contractual terms “to give effect to the intentions of the parties”
(citation omitted)). Given the word “absolute” in the heading and the broad
construction of the “arising out of” language, we disagree that the “whether
caused by” language creates the limiting principle that Juarez suggests. See In
re W. Ins. Co., 521 P.3d 851, 859 (Utah 2022) (“Under our caselaw a
reasonable interpretation is an interpretation that cannot be ruled out, after
considering the natural meaning of the words in the contract provision in
context of the contract as a whole, as one the parties could have reasonably
intended.” (quoting Brady v. Park, 455 P.3d 395, 408 (Utah 2019)); cf. United
Nat’l Ins. Co. v. Penuche’s Inc., 128 F.3d 28, 31 (1st Cir. 1997) (interpreting
an identical assault-and-battery exclusion and rejecting the argument that the
“whether” clause limited the exclusion’s applicability to assaults and batteries
caused by the insured or its employees). Rather, we read this language as
reinforcing to insureds that the A&B Exclusion also applies to Quantum and its
employees.
And so we reject Juarez’s assertion that the plain language of the A&B
Exclusion applies to claims arising out of assaults or batteries committed by
Quantum’s employees only.
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C. The A&B Exclusion is not ambiguous.
The plain and ordinary meaning of the A&B Exclusion’s language reveals
that the exclusion’s relevant language is not ambiguous. An insurance policy’s
language is ambiguous if it is reasonably and fairly susceptible of different
constructions. Compton, 393 P.3d at 310. Ambiguities in insurance-policy
language are construed against the insurance-company drafter. Dyno Nobel,
85 F.4th at 1026. But Utah law cautions courts to avoid straining to create an
ambiguity where none exists. Compton, 393 P.3d at 310; Headwaters Res.,
770 F.3d at 892. Indeed, ambiguity occurs only where the meaning is genuinely
uncertain after we give a “plausible and reasonable” construction “in light of
the language used.” S.W. Energy Corp., 947 P.2d at 1242. If we can ascertain
the parties’ intention from the plain language, we apply the policy language as
written. BV Jordanelle, 830 F.3d at 1201 (“[I]f the [policy] language is
unambiguous, the court ascertains the parties’ intentions based solely on the
[policy] language.”).
For the reasons we’ve already explained, we can ascertain the parties’
intent from the A&B Exclusion’s plain language, which precludes coverage for
Juarez’s dramshop claim against Quantum. Because we detect no ambiguity to
20 Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 21
construe in Juarez’s favor, Dyno Nobel, 85 F.4th at 1026, we reject her
alternative ambiguity-based arguments. 8
III. Because Hudson had no duty to defend or indemnify Quantum, Juarez’s contract claims against Hudson are implausible.
Having concluded that the A&B Exclusion unambiguously denies
coverage for any claim “arising out of” an assault or battery—whether that
assault or battery was committed by a Quantum employee or a customer or
8 Juarez builds her ambiguity argument on a Ninth Circuit case that examined an assault-and-battery exclusion identical to the one in Hudson’s policy. See Desrosiers v. Hudson Specialty Ins. Co., 438 F. App’x 629, 631 (9th Cir. 2011) (applying Oregon law). Under analogous facts, the plaintiff in Desrosiers argued that his negligence claim escaped the assault-and-battery exclusion because that claim pleaded an alternative theory for recovery, separate from his intentional tort claim. Id. The Ninth Circuit ruled, in an unpublished order, that “negligence allegations triggered [the insurer’s] duty to defend because the policy exception covers assault and battery, which are intentional torts, so the allegation that [the plaintiff’s] injuries were caused by [the club’s] negligence fall outside the scope of the policy’s exclusion.” Id. (citation omitted). In Juarez’s view, that the Ninth Circuit’s interpretation differed from the First Circuit’s in United National Insurance Co. v. Penuche’s Inc., 128 F.3d 28 (1st Cir. 1997), “support[s] a finding that the assault and battery exclusion of [Hudson’s] Policy ‘is unclear’ or ‘may be understood to have two or more plausible meanings.’” Op. Br. at 35, 39. We are unpersuaded. First, Desrosiers is unpublished and lacks any substantive analysis of the relevant exclusionary language that would “assist [us] in [our] disposition.” United States v. Engles, 779 F.3d 1161, 1162 n.1 (10th Cir. 2015). Indeed, unlike Penuche’s, the Desrosiers court didn’t engage with the policy language, or consider the precise meaning of “whether”—let alone interpret that language differently. Second, both Penuche’s and Desrosiers applied the assault-and- battery exclusion in favor of the insured. See Desrosiers, 438 F. App’x at 631; Penuche’s, 128 F.3d at 33. Third, Desrosiers’s holding—that the plaintiff’s negligence claim escaped the assault-and-battery exclusion, which applied to bar only “intentional torts”—is a minority position among the federal circuits. Supra n.7. In short, Juarez’s ambiguity arguments relying on Desrosiers are unconvincing. 21 Appellate Case: 23-4101 Document: 010111079092 Date Filed: 07/15/2024 Page: 22
anyone else—we conclude that Juarez’s dramshop claim falls under the A&B
Exclusion. Because this is so, Hudson had no duty to defend or indemnify
Quantum against Juarez’s dramshop claim. And if Hudson had no duty to
defend or indemnify Quantum, it did not breach the contract by declining to do
so. Thus, Quantum could not prevail on any contract claims against Hudson. So
we affirm the district court’s determination that Juarez’s contract claims
against Hudson (as Quantum’s assignee) are implausible.
CONCLUSION
For these reasons, we affirm the district court’s order granting Hudson’s
motion to dismiss.
Entered for the Court
Gregory A. Phillips Circuit Judge