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Appeal from the United States District Court For the Eastern District of Louisiana

William J. McAvey brought this diversity action against Chen-Horng Lee (Mr. Lee), his wife, Chin-Li Lee (Mrs. Lee), and Ming Chun, Inc. d/b/a Tomfort Lodge (“Ming Chun”) (collectively, “the insureds” or “the innkeepers”), and First Financial Insurance Company (“First Financial”), the insureds’ commercial liability insurer, for damages for personal injury to McAvey caused by the negligence of the insureds and their employees in failing to take reasonable precautions and to exercise proper vigilance for the safety and security of their hotel guests. McAvey alleged that he fractured his heel while chasing two unidentified robbers who had taken his wallet by force in his Tomfort Lodge motel room. He further averred that the criminals entered the motel and the hall outside his room without detection by the motel employees, tricked him into opening his door, committed the robbery, and escaped without being identified or detained, because of the defendants’ inadequate motel security and safety precautions and the negligence of the motel clerk in failing to exercise reasonable efforts to monitor and protect hotel guests against such dangers. At the close of the plaintiff’s case at trial, the district court entered a judgment as a matter of law (“JMOL”) dismissing the action against Mr. and Mrs. Lee. After completion of the trial, the jury returned a verdict in favor of McAvey, fixing damages and apportioning fault between him and the innkeepers. The district court rendered a judgment in McAvey’s favor against First Financial.

First Financial appealed, contending, inter alia, that its policy excluded coverage for bodily injuries arising from assault or battery; that all of McAvey’s injuries arose from a battery by the robbers; that the dismissal of the suit against two of First Financial’s insureds, Mr. and Mrs. Lee, and the plaintiff’s failure to properly serve the third insured, Ming Chun, effectively extinguished the plaintiff’s right to a direct action and judgment against the insurer; and that the district court erred in not instructing the jury to determine whether the fault of the unidentified criminals was a legal cause of McAvey’s injuries, and, if so, to apportion a share of the fault and liability to them.

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