Mount Vernon Fire Insurance Corp. v. Oxnard Hospitality Enterprise, Inc.

Roberta Busby (defendant) was a nightclub dancer who worked for Oxnard Hospitality Enterprise, Inc. (Oxnard) (defendant). After a shift one night, a patron threw a flammable liquid on Busby and lit her on fire. Busby sued Oxnard, claiming that its negligence had allowed the attack to occur. In that case, both parties agreed to have the court enter a judgment that Oxnard owed Busby $10 million. Oxnard then assigned (i.e., transferred) to Busby any rights that Oxnard had to insurance coverage for the incident from its own liability insurer, Mount Vernon Fire Insurance Corp. (the insurance company) (plaintiff). This assignment gave Busby a right to collect any insurance proceeds that the insurance company might owe to Oxnard for Busby’s negligence lawsuit. The insurance company filed a separate lawsuit in California state court, seeking a judicial declaration that the insurance company did not owe Oxnard, or Busby as Oxnard’s assignee, any insurance proceeds under Oxnard’s liability policy. The insurance company argued that Oxnard’s policy did not cover Busby’s judgment against Oxnard because the policy expressly excluded coverage for any claim against Oxnard that was based on an “assault or battery.” The policy defined a battery as “negligent or intentional physical contact with another without consent that results in physical or emotional injury.” Busby argued that this exclusion did not apply to her situation because it required “physical contact” and her attacker had not made body-to-body physical contact with her. The trial court ruled that the exclusion applied and prevented insurance coverage for Busby’s judgment against Oxnard. Busby appealed to the California Court of Appeal.