Georgia Court Emphasizes Employer Exclusions Must Arise Through Work

In BOJ of WNC, LLC d/b/a Bojangles Famous Chicken N Biscuits v. Westfield National Ins. Co., No. CV 122-124, 2025 WL 1953116 (S.D. Ga. July 16, 2025), the court determined that an employer's liability exclusion and other provisions in the insured restaurant’s commercial liability umbrella policy did not preclude coverage for the underlying claims. Those claims against the restaurant arose out of an alleged incident in which a manager “forcibly raped[ ] and engaged in other illegal and inappropriate sexual misconduct against” the underlying plaintiff, who was a minor at the time. Id. at *2. The underlying complaint also alleged that other employees knew of the incident as well as similar acts committed by the same manager against other victims. Id. The insurer relied on three exclusions in denying its duty to pay for the resulting settlement.  

First, the “Employer's Liability” exclusion precluded coverage for injuries “arising out of and in the course of . . . employment.” Id. at 9. The court rejected this exclusion because, under Georgia law, injury only arises out of employment “when there is apparent to the rational mind, upon consideration of all the circumstances, a causal connection between the conditions under which the work is required to be performed and the resulting injury.” Id. The court noted that the incident fell within coverage because it “certainly occurred in the course of her employment, as she was at work and engaged in a work-related duty - cleaning the restrooms - when the injuries occurred,” but there was no requisite causal connection to establish a basis for the exclusion.  

Second, the “Workers' Compensation” exclusion precluded coverage for “[a]ny obligation of the insured under a workers' compensation . . . law or any similar law.” Under Georgia law, however, this exclusion, like the previous one, “turns on whether [the victim’s] injuries ‘arise out of’ her employment.” Id. at 10. Accordingly, it failed for the same reasons.  

Third, the “Employment-Related Practices” exclusion precluded coverage for “[e]mployment-related practices, policies, acts or omissions.” Specifically, the insurer argued the injuries arose out of its managers’ failure to report sexual harassment. The court disagreed, citing the insured’s characterization of the incident as “personal and unconnected to Plaintiff's business.” Id. at 11. The court also noted that, to the extent it was ambiguous, George law required a ruling in favor of the insured and cited several other district court opinions in which sexual assault was not determined to fall within the enumerated “practices, policies, acts or omissions” of the exclusion. Id. at 12.