Topless bar demands full coverage

A New York adult club is suing its insurer after it refused to come to the bar’s defense

Topless bar demands full coverage

Insurance News

By Ryan Smith

A New York adult club says its insurer is responsible for covering legal costs as the club fights a lawsuit.

TFS NY Inc. is a Long Island, N.Y. topless bar that does business as Sugardaddy’s Gentlemen’s Club. The club is currently being sued by models who accuse it of publishing sexually explicit photos of them in its advertising without their permission.

The lawsuit was filed in January by eight models. They alleged that the club stole, altered and published photos of them without authorization in order to promote itself. The models’ lawsuit alleges that the club’s use of the photos is a violation of the Lanham trademark act as well as New York civil rights and trade law.

The club claims that its liability insurer, Houston Specialty Insurance Co., must cover all damages it might be obligated to pay in the suit. 

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Houston, however, has refused to assume the club’s defense or pay any judgment in the case. TFS responded to the refusal by taking the insurer to court.

“As a result of the refusal of Houston to assume the defense of TFS in the aforesaid action, TFS has been obliged to offer a defense of said action to avoid a default being taken against it,” the company said in a lawsuit filed in New York state court. TFS wants to recover the $25,000 it has spent on defense against the models’ lawsuit to date, along with attorneys’ fees and expenses.

But Houston has moved the suit to a federal court, arguing that the final payout would exceed $75,000 and that the dispute is interstate.

“While the complaint does not specifically quantify plaintiff’s damages, it asserts a claim against a policy of insurance issued by Houston that provides a limit of $1 million coverage, as well as $25,000 in defense costs and attorney’s fees incurred to date,” Houston said in a court filing.

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