[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

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No. 20-10209

Non-Argument Calendar

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D.C. Docket No. 1:19-cv-03319-CAP

HOUSTON SPECIALTY INSURANCE COMPANY, 

SCOTTSDALE INSURANCE COMPANY, 

 Plaintiffs-Appellants,

versus

THE FIVE PACES INN CO., 

ANNALEE HUNTER,

 Defendants-Appellees.

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Appeal from the United States District Court

for the Northern District of Georgia

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(August 27, 2020)

Before MARTIN, ROSENBAUM, and GRANT, Circuit Judges.

PER CURIAM:

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This insurance dispute arises from a lawsuit filed by Annalee Hunter against 

Five Paces Inn, an Atlanta bar. After Hunter sued in the State Court of Fulton 

County, Georgia, Five Paces’s insurers brought a declaratory judgment action to 

clarify whether they had an obligation to defend and indemnify Five Paces. Hunter 

filed a motion to dismiss, which the district court granted. After de novo review, 

we affirm.

The background and procedural history are well-known to the parties and 

were recited at length by the district court. We provide only a brief summary of 

the most important facts here. On a summer night in 2016, Hunter and several 

female friends were enjoying themselves at Five Paces. Hunter was in the 

restroom when the bar began to close at approximately 2:00 a.m. The bar was 

cleared of patrons, including Hunter’s friends. When Hunter emerged from the 

restroom, a bartender offered her another drink. He gave her a drink and a “blue 

shot.” According to Hunter, one or both of these beverages rendered her 

defenseless, which led to a vicious assault by one of the bartenders. Hunter’s suit

names a bartender who she says “assaulted and raped” her “in unspeakable ways,” 

which caused “severe and permanent harm.” She sued Five Paces, alleging 

premises liability, negligence, and negligence per se.

At the time of the assault, Five Paces had two commercial liability insurance 

policies: a commercial general liability policy issued by Houston Specialty 

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Insurance Company and an umbrella policy issued by Scottsdale Insurance 

Company. The Houston policy has general liability and liquor liability limits of 

$1,000,000 per occurrence, but excludes from this coverage any injury “arising out 

of or resulting from” an assault, battery, or other harmful contact. Instead, assault 

and battery coverage is subject to a $25,000 sublimit. This limited assault and 

battery coverage excludes injuries “arising, directly or indirectly, out of sexual 

assault, abuse or molestation.” The Scottsdale policy is subject to “the same 

provisions, exclusions and limitations that are contained in the applicable 

‘controlling underlying insurance’”—here, the Houston policy. 

Houston and Scottsdale filed the present action seeking a declaration that 

they have neither a duty to indemnify nor a duty to defend. The district court 

dismissed as premature the portion of Houston and Scottsdale’s complaint dealing 

with the duty to indemnify. It further dismissed the portion of their complaint 

dealing with the duty to defend, ruling that “the allegations on the face of the 

underlying lawsuit set forth a claim of potential coverage.” Houston and 

Scottsdale now appeal the latter determination. An “insurer’s duty to defend is 

broader than its duty to indemnify,” so a declaration that neither company had a 

duty to defend Five Paces would necessarily relieve them of a duty to indemnify 

the bar. Shafe v. Am. States Ins. Co., 288 Ga. App. 315, 317 (2007).

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Because the insurance policies were delivered in Georgia, this case is 

controlled by Georgia insurance law. See Am. Family Life Assur. Co. of Columbus 

v. U.S. Fire Co., 885 F.2d 826, 830 (11th Cir. 1989). In Georgia, “whether an 

insurer has a duty to defend depends on the language of the policy as compared 

with the allegations of the complaint.” Hoover v. Maxum Indem. Co., 291 Ga. 402, 

407–08 (2012). The insurer has a duty to defend an action if “the facts as alleged 

in the complaint even arguably bring the occurrence within the policy’s coverage.” 

Id. at 408 (citation omitted). We describe the facts here as they are alleged in the 

complaint. 

As the district court said, this dispute is essentially about the meaning of the 

phrase “arising out of” in Houston’s policy. If Hunter’s suit against Five Paces 

alleges injuries “arising out of” assault or battery (or sexual assault), then Houston 

and Scottsdale are correct that the lower sublimit (or the sexual assault exclusion) 

applies.

In Georgia, insurance contracts are “liberally construed in favor of 

coverage.” Barrett v. Nat’l Union Fire Ins. Co. of Pittsburgh, 304 Ga. App. 314, 

320 (2010) (citation and internal punctuation omitted). Thus, when the phrase 

“arising out of” is found in an exclusionary clause of an insurance policy, Georgia 

courts interpret that phrase narrowly, “applying the ‘but for’ test traditionally used 

to determine cause-in-fact for tort claims.” Id. at 321. Like blanket exceptions and 

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exclusions, limitations on coverage, such as sublimits, are subject to the same 

narrowing construction. See Alley v. Great Am. Ins. Co., 160 Ga. App. 597, 600 

(1981).

Houston and Scottsdale are unable to show that assault or battery were “but 

for” causes of Five Paces’s potential liability. Hunter was injured the moment she 

consumed an incapacitating beverage, regardless of any subsequent assault by a 

Five Paces bartender. This point is clearer if we imagine that Hunter had been 

assaulted at a second bar. In that counterfactual, Five Paces would still potentially 

have liability because of its negligent service; it was the drink service itself that 

created that liability. After all, the Houston policy states that the company is 

responsible for paying “damages because of ‘injury’ to which this insurance

applies if liability for such ‘injury’ is imposed on the insured by reason of the 

selling, serving or furnishing of any alcoholic beverage.” Houston and Scottsdale 

cannot escape this fact merely because Hunter had the misfortune of being 

assaulted in the same bar that served her the incapacitating drink.

The insurance companies also argue that Five Paces’s service of drinks to 

Hunter constituted an assault under Georgia law. This argument, however, turns 

on just one possible interpretation of Hunter’s complaint—and not even the best 

interpretation. By the words of her complaint, Hunter does not allege that she was 

drugged or poisoned, but that she was served “unwholesome” drinks. The district 

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court analyzed that allegation, noting that while assault is an intentional tort, 

Hunter’s complaint says nothing directly about what the offending bartender

intended: “while the complaint can certainly be read to support the plaintiffs’ 

theory that [the bartender] purposefully drugged Hunter with the intent to rape her, 

it could also be read to allege that he took advantage of her incapacity—caused by 

his own negligence or that of a coworker—and assaulted her only after the 

opportunity presented itself.” We do not disagree. 

* * *

We are compelled to resolve doubt as to an insurer’s duty to defend in favor 

of the insured. See Penn-Am. Ins. Co. v. Disabled Am. Veterans, Inc., 268 Ga. 564, 

565 (1997). Here, there is at least enough doubt as to coverage to sustain that duty. 

This is not a suggestion, of course, that Houston or Scottsdale must necessarily 

indemnify Five Paces. But “[a]lthough an insurer need not indemnify an insured 

for a liability the insured incurs outside the terms of the insurance contract, an 

insurer must provide a defense against any complaint that, if successful, might 

potentially or arguably fall within the policy’s coverage.” Elan Pharm. Research 

Corp. v. Employers Ins. of Wausau, 144 F.3d 1372, 1375 (11th Cir. 1998)

(emphasis added). The judgment of the district court is therefore AFFIRMED.

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