Insurers must provide coverage in hotel shower video case

Four insurers must provide coverage to a hotel and its management company in connection with a lawsuit filed by a woman who was filmed nude by an employee while showering, a federal appeals court ruled Thursday in affirming a lower court ruling. 

An employee of the Hampton Inn-Albany in Albany, New York, secretly made the video in 2015 and then circulated it, according to the ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Citizens Insurance Co. of America, Massachusetts Bay Insurance Co., Westfield Insurance Co. v. Banyan Tree Management LLC, Albany Downtown Hotel Partners LLC,  Jane Doe, Starr Indemnity & Liability Insurance Co.

Citizens Insurance and Massachusetts Bay are units of Hanover Insurance Group. 

The guest sued Albany-based Albany Downtown Hotel Partners and Torrance, California-based hotel management company Banyan Tree Management for negligence, premises liability and vicarious liability in state court in Georgia.

Banyan and Albany subsequently sought coverage from the insurers, which denied the claim, primarily arguing the complaint did not include allegations of “personal and advertising injury” arising out of Albany’s’ “legitimate business” and that their policy exclusions precluded coverage. 

In subsequent coverage litigation, the U.S. District Court in Atlanta ruled in Banyan Tree and Albany’s favor and was affirmed by a three-judge appeals court panel in a strongly worded opinion. 

“Georgia law makes clear that ambiguities are to be resolved in favor of the insured,” but the insurers “failed to even make a showing of ambiguity, let alone definitively establish that the Underlying Complaint falls outside their policies or that an exclusion precludes coverage,” the ruling said. 

 “Notably, we find unpersuasive their arguments that the hotel guest’s right to privacy was not violated, and that the recording did not arise out of Banyan and Albany’s business.

“While filming a showering guest is clearly not a ‘legitimate’ hotel practice, when a hotel employee – who would not have had access to the room but for his authority – places the camera in the bathroom and circulates the video, the injury undoubtedly imputes to the hotel.”

Attorneys in the case did not respond to requests for comment.