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Insurers Battle in DJ Action Stemming from Assault at NFL Game (CA)

December 15, 2016

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We don't often report on California cases, but <em><a href="">First Mercury Insurance Company v Great Divide Insurance Company</a></em> presents an interesting insurance coverage dispute over defense costs and indemnity pertaining to a serious assault at a 49ers game.  Specifically, the insurers are battling over the cost of defending the San Francisco 49ers against a suit brought by two men who were assaulted at a game, with First Mercury contending that Great Divide has flouted the California court’s previous duty to defend finding.
In October 2014, San Francisco 49ers season-ticket holders Amish and Kiran Patel were at Levi’s Stadium for a game.  The brothers went to the restroom, where one of them “nudged” the shoulder of the gentleman ahead of him to alert him to an available urinal, which resulted in the Patels being on the receiving end of a savage beating from the man and his friends.  The Patels sued the team, the stadium, and the stadium security company, Elite, for negligently failing to screen people entering the stadium and failing to kick out people who were problematically drunk.
The 49ers soon requested defense and indemnity from First Mercury, Elite's insurer, citing its status as an additional insured pursuant to the Elite service agreement.  First Mercury accepted the request; however, it now seeks to share the costs with Great Divide, which insures the 49ers and Levi’s Stadium.
First Mercury commenced a declaratory judgment action, and Great Divide filed a motion to dismiss.  The U.S. District Court for the Northern District of California, San Jose Division denied Great Divide’s motion to dismiss, ruling that the underlying case over the assault might shift at least some liability away from First Mercury’s client, Elite Services, which handles security at the stadium, to the stadium and team, suggesting Great Divide should have to assist in the defense.
This week, both insurers moved for summary judgment.  First Mercury contends that Great Divide has continued to shirk its obligation to share in the cost of defending the brothers’ lawsuit, despite the District Court’s finding that the team and stadium might be held partially responsible for the incident, and that such a refusal to defend is bad faith.  On the other hand, in its own motion for summary judgment, Great Divide pointed out that the District Court’s order denying dismissal was an interlocutory order, not a final judgment, thus First Mercury’s claim that it’s acting in bad faith must fail.
At a glance, we presume the 49ers' primary argument against Elite's insurer is:  "If Elite's responsibility as stadium security doesn't cover this type of assault, then what does it cover?"
Alas, it appears that the 49ers uncertain "defense strategy" extends both on the field and off.  (They are 1-12 on the season, fresh off a loss to the much maligned Jets.)  Thanks to Hillary Ladov for her contribution to this post.  Please email <a href="">Brian Gibbons</a> with any questions.

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