Chubb: No Duty to Defend Texas Subway Franchise in Killing Case

ACE American Insurance Company (Chubb) says it has no duty to defend a Texas Subway franchise sued by the family of a former worker killed on site by an ex-boyfriend.

In a complaint for declaratory relief filed in the US District Court Western District of Texas, the insurance company claims it has no duty to defend or indemnify the Subway franchise for a suit involving injuries from a dispute which has been transported into the place of employment from the injured employee’s private or domestic life.

Marisela Cadena was employed by River Sub as a store manager at a San Antonio Subway restaurant in 2020. On February 16, 2020, Cadena’s ex-boyfriend kidnapped Cadena at gunpoint and took her to a field for several hours.

Caden reported her ex-boyfriend to the police, sought protection from the authorities via a restraining/protective order, and requested a transfer from River Sub’s district manager, Sergio Martinez. According to lawsuit against River Sub, Martinez was apparently aware of the prior kidnapping but not did transfer Cadena to a different store location.

On Feb. 28, 2020, Cadena’s ex-boyfriend entered the restaurant and shot Cadena multiple times resulting in her death. Cadena’s family, the Lermas, asserted premise liability, negligent activity, and gross negligence causes of action against River Sub contending that River Sub was responsible for Cadena’s death.

In February 2023, the Lermas and River Sub proceeded with an arbitration hearing in San Antonio. Last month, arbitrator Carlos R. Cortez issued an award to the Lermas totaling $2,970,000. The arbitrator determined that there was evidence that Martinez may have demanded an inappropriate quid pro quo before he would agree to transfer Cadena. Arbitrator Cortez determined Munoz bore the overwhelming percentage of responsibility for Cadena’s death and also determined that River Sub shares at least 1% responsibility for Cadena’s death.

The arbitrator awarded the Lermas for past and future loss of companionship and past and future mental anguish and also awarded Cadena’s estate damages for conscious pain and suffering and mental anguish.

River Sub sought indemnity from Chubb, which issued the franchise an occupational accident insurance policy that was in effect at the time of the killing. The policy contains an amendment that excludes coverage for an act of a third person intended to injure the Covered Person because of personal reasons; and mental trauma and mental, nervous, emotional or psychological conditions or disorders. Another exclusion includes a personal animosity exception bars compensation for injuries resulting from a private or domestic dispute transported into the injured employee’s place of employment.

In its complaint, Chubb said Cadena “was a victim of domestic abuse, and her death was part of a pattern of threats and violence by her ex-boyfriend because of personal reasons and not as an employee or because of her employment.” Therefore, Chubb claims any judgment against River Sub entered in the underlying proceedings is not covered.

Martinez’s failure to transfer Cadena to a different store location due to an inappropriate quid pro quo is not covered under an exclusion barring coverage for sexual harassment or coercion, Chubb argues. Additionally, the company states that any past and future loss of consortium and mental anguish damages awarded to the Lermas are excluded by the language in the policy’s employer indemnity coverage rider and exclusion.

The Lermas are currently seeking entry of judgment in the underlying proceeding confirming the award.