994 F.2d 105 (2nd Cir. 1993), 1409, United Nat. Ins. Co. v. Waterfront New York Realty Corp.

Docket Nº:1409, Docket 92-9350.
Citation:994 F.2d 105
Party Name:UNITED NATIONAL INSURANCE CO., Plaintiff-Appellant, v. WATERFRONT NEW YORK REALTY CORPORATION; William M. Weaver; William M. Weaver Trust; Coleman P. Burke; Adreas M. Rickenbach; Atone E. Schraft; Loring D. Bolger; Bulgroup Properties; Chalet Suiss International, Inc.; C.A. Kalman; James A. Newman; John C. Wist; Karl-Adam Bonnier; Francis P. Lang;
Case Date:June 02, 1993
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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994 F.2d 105 (2nd Cir. 1993)

UNITED NATIONAL INSURANCE CO., Plaintiff-Appellant,

v.

WATERFRONT NEW YORK REALTY CORPORATION; William M. Weaver;

William M. Weaver Trust; Coleman P. Burke; Adreas M.

Rickenbach; Atone E. Schraft; Loring D. Bolger; Bulgroup

Properties; Chalet Suiss International, Inc.; C.A. Kalman;

James A. Newman; John C. Wist; Karl-Adam Bonnier;

Francis P. Lang; Maag Finance Ltd.; Atone E. Schraft;

Tuckerman Ltd.; U.S. Friends Investment Corp. (Panama),

doing business as Waterfront N.Y., and The Tunnel, Inc.,

also known as The Tunnel; Eli-Ben Dayan; Jonata Dayan,

Defendants-Appellees,

Lourdes Ortiz, Defendant.

No. 1409, Docket 92-9350.

United States Court of Appeals, Second Circuit

June 2, 1993

Argued April 20, 1993.

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Sheryl E. Katz, New York City (Carolyn Karp Schwartz, Richard E. Lerner, Wilson, Elser, Moskowitz, Edelman & Dicker, of counsel), for plaintiff-appellant.

Warren A. Herland, New York City (Michelle J. France, Jones Hirsch Connors & Bull, of counsel), for defendants-appellees.

Before: PRATT and JACOBS, Circuit Judges, and KNAPP, Senior District Judge. [*]

JACOBS, Circuit Judge:

United National Insurance Co. ("UNI") appeals from a judgment of the United States District Court for the Southern District of New York (Lowe, J.), declaring that it must defend and indemnify defendants-appellees Waterfront New York Realty Corp. ("Waterfront") and The Tunnel, Inc. under a liability insurance policy. The insured premises were operated as a nightclub known as The Tunnel. 1 The underlying tort claim was asserted by defendant Lourdes Ortiz, a patron of The Tunnel, who was raped and sodomized in the bathroom of the nightclub. After Ms. Ortiz sued Waterfront and The Tunnel, Inc. in state court, UNI filed the present action for a declaratory judgment that the policy's exclusion for assault and battery excluded coverage for Ms. Ortiz's claim. Upon cross-motions for summary judgment, the district court held that the assault and battery exclusion does not encompass rape and sodomy and that the policy affords coverage. We reverse.

BACKGROUND

On July 17, 1988, Ms. Ortiz was sexually assaulted by an unidentified armed man while she was using the women's bathroom at The Tunnel. Ms. Ortiz thereafter filed a complaint in state court against, inter alia, Waterfront and The Tunnel, Inc. in which she alleged that she was "accosted, attacked, assaulted, sodomized, raped and placed in fear of deadly bodily harm" while on The Tunnel's premises. For a first cause of action, Ms. Ortiz alleged that the defendants in that suit were liable to her in negligence because the women's and men's bathrooms were open to and used by both sexes and that this practice was known to employees of The Tunnel. For a second cause of action, Ms. Ortiz alleged that the defendants were liable to her because they violated various

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sections of the Administrative Code and Building Code of The City of New York. Ms. Ortiz sought $80 million in damages for the resulting physical and emotional harm.

UNI had issued a liability policy to The Tunnel, Inc., the nightclub operator, and its landlord, Waterfront, for the period from July 16, 1988 to July 16, 1989. The policy includes an assault and battery exclusion for:

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.

The policy also contains a sexual molestation exclusion which provides that coverage does not apply:

To bodily injury arising out of alleged and/or actual "sexual abuse" of or "sexual molestation" of a person not having attained the age of sixteen (16) years. The terms "sexual abuse" and "sexual molestation" include, but are not limited to physical sex acts, nudity, touching, assault and battery.

UNI agreed to defend Waterfront and The Tunnel, Inc. in Ms. Ortiz's state court action, but did so under a reservation of rights. UNI then began the present action against the insureds and Ms. Ortiz, seeking a declaration that it owed no duty of defense or indemnification. UNI brought a motion for summary judgment and Waterfront cross-moved. The sole issue...

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