Defining “Clear Liability”: Insurer’s Duty to Initiate Settlement Negotiations in Negligent Security Claims

Introduction

Case Name: Kinsale Insurance Company v. Pride of St. Lucie Lodge 1189, Inc.
Court: United States Court of Appeals for the Eleventh Circuit
Date: April 18, 2025
Citation: No. 22-12675 (11th Cir.)

This appeal arises out of a tragic shooting that occurred on March 2, 2015, in the dark rear parking lot of a private fraternal club—the Pride of St. Lucie Lodge 1189. Two groups of female patrons had fought inside the Lodge and were expelled by volunteer security guards. Ten to fifteen minutes later, a second fight broke out in the parking lot and culminated in a fatal headshot to Tanya Oliver. Oliver lingered in critical condition for over a year before succumbing to her injuries. The Lodge’s insurer, Kinsale Insurance Company (“Kinsale”), declined to tender its $50,000 assault-and-battery sublimit until eight months after receiving notice and only days after suit was filed. The Lodge and Oliver’s Estate sued Kinsale for common-law bad faith under Florida law.

The district court granted summary judgment for Kinsale, holding there was no “clear liability” that would have triggered an insurer’s affirmative duty to initiate settlement negotiations. On appeal, the Eleventh Circuit majority reversed and remanded, concluding that a jury could reasonably find the Lodge’s liability obvious—thus obligating Kinsale to begin settlement talks pre-suit. This commentary examines the new legal principle clarified by the court, surveys how Florida and related authorities have treated “clear liability” in the insurance bad-faith context, and analyzes the potential impact of this decision on future negligent security claims and insurer conduct.

Summary of the Judgment

Facts: On March 2, 2015, two groups of women fought inside the Lodge, were separated and expelled through different doors, then immediately re-engaged in the unlit rear parking lot. Within minutes, two assailants returned in a vehicle and shot Tanya Oliver in the head.
Insurance Coverage:
- Kinsale: $1 million general liability policy with a $50,000 assault-and-battery sublimit.
- Mount Vernon Fire Ins. Co.: Liquor liability policy with an absolute firearms exclusion.
Procedural History:
- March–December 2015: Kinsale investigates post-shooting; learns of the severity of injuries and that a security lapse may have occurred.
- August 2016: Oliver’s Estate sues the Lodge for negligent security; suit served on Kinsale Aug. 12. Kinsale tenders $50,000 on Aug. 18; tender rejected.
- 2019: State-court jury awards Oliver’s Estate $3.348 million against the Lodge.
- 2021: Kinsale seeks declaratory relief in federal district court; Lodge and Estate counterclaim for bad faith.
- 2022: District court grants summary judgment to Kinsale, finding no “clear liability.”
- 2025: Eleventh Circuit reverses and remands for a jury determination under Florida’s “totality of the circumstances” test.
Holding: Viewing all evidence in the Lodge’s and Estate’s favor, a reasonable jury could find that (a) liability was obvious under Florida premises-liability law and (b) the injuries were catastrophic, triggering Kinsale’s affirmative duty to initiate settlement negotiations before suit. The grant of summary judgment was therefore improper.

Analysis

Precedents Cited

Florida law imposes on insurers “the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his own business.” Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783, 785 (Fla. 1980). Under Florida’s “totality of the circumstances” approach, bad faith is typically for a jury to decide. Vest v. Travelers Ins. Co., 753 So. 2d 1270, 1275 (Fla. 2000).

A key Florida District Court of Appeal case is Powell v. Prudential Property & Casualty Ins. Co., 584 So. 2d 12 (Fla. 3d DCA 1991). Powell held that when “liability is clear, and injuries so serious that a judgment in excess of the policy limits is likely,” an insurer has an affirmative duty to initiate settlement negotiations—even in the absence of a demand. Id. at 14. Subsequent Florida intermediate appellate decisions, e.g., Goheagan v. American Vehicle Ins. Co., 107 So. 3d 433, 439 (Fla. 4th DCA 2012), and treatises such as Appleman on Insurance Law & Practice § 4711, use “clear” and its synonym “obvious” interchangeably in this context.

Eleventh Circuit cases applying Powell’s standard include American Builders Ins. Co. v. S.-Owners Ins. Co., 71 F.4th 847 (11th Cir. 2023), and Ilias v. USAA Gen. Indem. Co., 61 F.4th 1338 (11th Cir. 2023). Both reaffirm that catastrophic injuries plus clear liability create a “ticking financial time bomb” that may support a bad faith inference if the insurer unreasonably delays settlement talks.

Legal Reasoning

The Eleventh Circuit majority applied Florida’s summary-judgment de novo standard, viewing all factual disputes in favor of the Lodge and the Estate. It found sufficient evidence on each element of Powell’s test:

Clear Liability: Under Florida premises-liability law, a proprietor owes a duty of reasonable care to all patrons within a “foreseeable zone of risk,” which includes nearby parking lots used in connection with operations. Shelburne v. Holiday Inns, Inc., 576 So. 2d 322 (Fla. 4th DCA 1991); Hall v. Billy Jack’s, Inc., 458 So. 2d 760 (Fla. 1984). Here, two violent groups were expelled into the dark, unmonitored parking lot where a second fight erupted unimpeded and quickly escalated to a shooting.
Catastrophic Injuries: By December 2015, Kinsale knew Oliver had been shot in the forehead, remained comatose in the ICU, and faced permanent, severe disabilities—facts drawn from local news accounts and police and investigation reports.
Judgment Likely in Excess of Policy Limits: The $50,000 sublimit was dwarfed by medical expenses, lost earning capacity, and the eventual jury award of $3.348 million.
Delay in Settlement Negotiations: Kinsale knowingly waited eight months after first learning of the shooting—and until six days after suit was filed—to tender its policy limit.
Potential Inference of Bad Faith: Under Florida law, a jury may infer that delay in settlement negotiations was “willful and without reasonable cause” when liability is obvious and stakes are high. Powell, 584 So. 2d at 14; Goheagan, 107 So. 3d at 439.

Impact

The Eleventh Circuit’s decision clarifies that in Florida negligent security cases—where violent incidents begin on the premises and quickly spill into adjacent, unmonitored areas—an insurer may be put on notice of “clear liability” without a formal demand. Insurers writing liability policies with low assault-and-battery sublimits should take particular note:

Expanded Scope of “Clear Liability”: Courts will look to whether the insured’s operational failures foreseeably produced serious harm in a proximate zone of risk—including parking lots and exits.
Broader Duty to Initiate Talks: Even without a claimant’s demand, an insurer must consider early tender of sublimits when the facts mirror those of this case—violent brawls, security lapses, and catastrophic injuries.
Jury Determination Under Totality Test: Bad faith remains a fact-driven inquiry. Insurers should document investigations diligently and offer policy limits promptly where liability appears “obvious” to avoid “ticking time bomb” exposure.

On the claimant side, plaintiffs in premises-liability actions may press bad faith arguments even absent pre-suit demands, relying on the “clear liability” principle to demonstrate insurer misconduct.

Complex Concepts Simplified

Negligent Security: The legal theory that a property owner or operator (like a bar or club) can be liable if it fails to provide reasonable security measures to protect patrons from foreseeable harm.
Foreseeable Zone of Risk: The area around a business where patrons are known or likely to go (e.g., parking lots, sidewalks). The proprietor’s duty of care extends into that zone.
Assault & Battery Sublimit: A cap within a general liability policy that limits the insurer’s maximum payout for claims arising specifically from assaults or batteries.
Duty to Initiate Settlement Negotiations: Under Florida law, when an insurer knows that its insured’s liability is “clear” (i.e., obvious) and injuries are so severe that excess judgment is likely, the insurer must proactively engage the claimant to settle within policy limits—even absent a formal demand.
Totality of the Circumstances: A fact-intensive standard requiring courts or juries to weigh all relevant factors—investigation diligence, communications, knowledge of liability and damages—when evaluating an insurer’s good-faith conduct.

Conclusion

Kinsale v. Pride of St. Lucie Lodge underscores a pivotal development in Florida bad faith jurisprudence: an insurer’s duty to initiate settlement negotiations can arise without a claimant’s demand when liability is “clear” and injuries catastrophic. The Eleventh Circuit’s reversal of summary judgment reaffirms that this determination is a jury question under Florida’s “totality of the circumstances” test. Going forward, insurers must be especially vigilant in premises-liability and negligent security cases where violent episodes on insured property foreseeably breach into unmonitored adjacencies. Prompt, documented investigations and, when appropriate, early policy-limit tenders can mean the difference between good faith compliance and exposure to bad faith damages far exceeding policy limits.