Appeals from the United States District Court for the
Northern District of Texas
STEWART, Chief Judge, and JOLLY and OWEN, Circuit Judges.
GRADY JOLLY, CIRCUIT JUDGE.
Deari, owner of Pastazios Pizza, Inc., lured
eighteen-year-old Jane Doe to his restaurant. Doe alleged
that Deari and his restaurant-yes, the insured restaurant
itself-plied Doe with alcohol despite her protests. Once Doe
was unconscious, Deari then drove her to a nearby hotel and
sexually assaulted her. This insurance-coverage case asks
whether Century Surety Company breached a contractual duty to
defend and indemnify Deari's restaurant in the underlying
state tort lawsuit brought by Jane Doe.
district court granted summary judgment in favor of Century,
applying the insurance policy's liquor-liability and
intentional-harm exclusions. Doe and the restaurant's
trustee now appeal. But because Doe and the trustee concede
that all of Doe's injuries arose out of or resulted from
the restaurant's criminal act of giving alcohol to a
minor, we hold that the policy's criminal-act exclusion
applies and bars all coverage claims. Thus, we affirm.
Doe's complaint in the underlying state-court litigation,
which concluded with a twenty-million dollar judgment in her
favor, alleged the following facts: In April 2011, Doe was an
eighteen-year-old high school graduate. She met with a man
named Dritan Kreka at a restaurant called Back 9 Sports Bar
& Grill ("Back 9"), to interview for a position
at Kreka's own restaurant and to discuss "other
possible networking opportunities."
9, Kreka introduced Doe to Ajredin Deari, who owned a nearby
restaurant called Pastazios Pizza, Inc.
("Pastazios"). Deari asked Doe how old she was, and
she informed him that she was eighteen years old. Deari
subsequently tried to order Doe an alcoholic beverage, but
Back 9's server "refused to bring the beverage
because [Doe] was underage." So Deari suggested that the
three of them should move the conversation to Pastazios.
Thus, the three of them drove from Back 9 to Pastazios.
the way, Deari stopped at a liquor store to purchase a bottle
of 80-proof liquor, Crown Royal Black. He took it with him to
Pastazios. Neither he nor Pastazios was licensed to serve
arriving at Pastazios, "Deari proceeded to walk inside
of Pastazios, grab a round of beers, and placed one of the
beers in front of [Doe] and encouraged her to drink it."
"Deari then went back inside Pastazios and came out with
a round of shots of Crown Royal Black that had been placed
into 2- ounce plastic salad dressing cups from Pastazios and
encouraged [Doe] to drink it."
complaint then alleges that, over the next few hours, Deari
and "Pastazios" "continued to encourage and
provide [Doe] with more and more alcoholic products from
within and owned by Pastazios, despite [Doe] telling them she
did not want anymore." Following two beers and three
2-ounce shots of Crown Royal Black, "things started
getting fuzzy" for Doe. "Pastazios then proceeded
to provide [Doe] with yet another 2-ounce shot of 80 proof
hard liquor." In total, Deari and "Pastazios"
gave Doe "5-6 shots of Crown Royal Black and 3
beers." Although Doe expressed "grave concerns
about her growing level of intoxication and her inability to
function normally, . . . [Doe] was effectively detained as a
direct result of being provided intoxicating products by
complaint alleges that "Pastazios" then
"allowed" Deari and Kreka to load the drunken Doe
into a car on Pastazios' property. Doe lost
consciousness. A urine test would later reveal that Doe had
been given a date-rape drug called Rohypnol. Doe regained
consciousness sometime later in a hotel room, only to find
that Deari was sexually assaulting her. During that
encounter, Deari infected Doe with herpes. Deari later
pleaded no-contest to the crime of aggravated assault.
2013, Doe sued Kreka, Deari, and Pastazios in Texas state
court. Against Kreka and Deari, Doe alleged a variety of
intentional torts. Against Pastazios, Doe alleged negligence,
gross negligence, Dram Shop liability, false imprisonment,
and premises liability. Against all three defendants, Doe
requested punitive damages.
Surety Company ("Century"), the insurer of
Pastazios, initially provided Pastazios a defense under a
Commercial General Liability Policy ("Policy"). A
few months later, however, Century withdrew its defense and
advised Pastazios that it had no duty to defend under the
Policy based on the factual allegations in Doe's
then filed this action in federal court, seeking a
declaratory judgment that it had no duty under the Policy to
defend or indemnify Pastazios.
2014, Pastazios filed for bankruptcy because it could no
longer afford to defend against Doe's lawsuit. The
bankruptcy court confirmed a plan of reorganization, creating
the Pastazios Pizza Inc. Creditor Trust
("Trust").Scott Seidel was appointed trustee
("Trustee"), and the Trust was assigned all of
Pastazios' causes of action, including those arising
under the Policy.
2015, back in state court, Doe won a bench-trial verdict
against Pastazios and Deari. The state-court judge entered
"Findings of Fact and Conclusions of Law," which
were drafted by Doe's attorneys with no objection from
Pastazios. The judgment held Pastazios and Deari jointly and
severally liable for over twenty million dollars. With
respect to Pastazios, the state court found the restaurant
liable for gross negligence, Dram Shop liability, and
"negligent" false imprisonment, and imposed
punitive damages. Despite Century's repeated offers to
fund an appeal, no appeal was filed.
obtaining her twenty-million-dollar state-court judgment, Doe
intervened in this declaratory-judgment action, as a judgment
creditor, to enforce Pastazios' rights under the Policy
by asserting several counterclaims against Century. Relevant
here, Doe and the Trustee asserted that Century breached its
duties under the Policy to defend and to indemnify Pastazios
with respect to the underlying suit brought by Doe.
parties moved for summary judgment. The district court
granted Century's motion, holding that Century had
neither a duty to defend nor a duty to indemnify Pastazios.
With respect to the duty to defend, the district court based
its denial of coverage on a finding that Doe's claim
against Pastazios was not covered because of two exclusions:
the liquor-liability and intentional-act exclusions.
Reasoning that the duty to defend is "broader" than
the duty to indemnify, the ...