The U.S. District Court for the District of Massachusetts has determined that an insurer must defend a motel that is accused of benefiting from sex trafficking.
Lisa Ricchio alleges that she was kidnapped by Clark McLean on June 1, 2011. She contends that McLean brought her to the Shangri-La motel in Seekonk, Massachusetts, where he held her captive for several days. The motel is owned by Bijal, Inc and the defendants, Ashvin and Siva Patel, worked at and lived in the motel during Ricchio’s alleged captivity. Ricchio maintains that McLain repeatedly raped and abused her during her captivity and that he made clear to her that he intended to force her to work as a prostitute under his control. Further, she argues that the Patels and Bijal, Inc. knew that she was being held captive and profited from it.
Ricchio’s complaint alleges that McLean violated the Victims of Trafficking and Violence Protection Act of 2010 (TVPA) by performing various prohibited trafficking-related acts including knowingly transporting, harboring and obtaining Ricchio for labor or services by means of force and abuse. She also alleges that Bijal, Inc and the Patel’s violated the Trafficking Victims Protection Reauthorization Act of 2003 (TVRPA) by benefitting economically from McLean’s illegal actions at the motel, specifically the rent they received for the room.
The motel’s insurer, Peerless Indemnity Insurance Co., a subsidiary of Liberty Mutual Insurance Group, sought a declaration that it had no duty to defend or indemnify the several defendants in this case, and cited exclusions for criminal acts, that all of Ricchio’s claims arose out of false imprisonment and arise out of personal injury, and thus are barred by the criminal acts exclusion.
Ricchio argues that her personal injury was not caused by the false imprisonment but instead by the act of being trafficked for labor and sex.
The court noted that Ricchio listed six separate claims against the Patel’s, each a violation of the federal trafficking statutes, TVPA and TVRPA, and concluded that “the claims asserted are reasonably susceptible to a possibility of insurance liability” and “that Pearless has a duty to defend under the policy.”
The case is Ricchio v. Bijal, Inc., No. 15-13519-FDS, 2019 U.S. Dist. LEXIS 203132 (D. Mass. Nov. 22, 2019).
Editor’s Note: In 2018 the U.S. District Court in Pennsylvania ruled that a W.R. Berkley Corp. unit was not obligated to defend or indemnify a motel management company that was charged with negligence for failing to prevent human sex trafficking on its property. The court, in that case, said that “under Pennsylvania law, it is against public policy to insure against claims for intentional torts or criminal acts . . . Thus, the public policy precludes coverage.”
The facts in the two cases differ, though. In the 2018 case, the plaintiff argued that negligent conduct contributed to an assault and battery, and the court held that that negligent conduct would fall within the assault and battery exclusion. This second case is Nautilus Ins. Co. v. Motel Mgmt. Servs., 320 F. Supp. 3d 636 (E.D. Pa. 2018)