An insurer's bid to escape its duty to defend a Georgia hotel against sex trafficking claims failed at the Eleventh Circuit on May 22, 2026.
Northfield Insurance Company covers North Brook Industries, which runs United Inn and Suites in Decatur, Georgia. In December 2020, a woman identified only as J.G. sued the hotel under a federal statute and Georgia common law, saying she was sex trafficked there by third parties between 2018 and 2019. Northfield agreed to defend North Brook under a reservation of rights. A jury sided with J.G. on July 11, 2025, and the hotel's renewed motion for judgment as a matter of law is still pending in the trial court.
The fight is over what the commercial policy actually covers. Coverage A obliges Northfield to pay sums the hotel becomes legally obligated to pay as damages for bodily injury and property damage, and to defend it against any suit seeking those damages. Coverage B says the same for personal and advertising injury.
Two endorsements cut into that coverage. The abuse or molestation endorsement strips coverage for injury arising out of any act of abuse or molestation by any person, including any act or omission in connection with preventing or suppressing it. The assault or battery endorsement caps payouts at $25,000 per offense and $50,000 in aggregate, and excludes injuries arising out of an assault or battery offense committed at the insured's direction or knowingly allowed to happen.
In August 2023, Northfield filed a declaratory judgment action in the Northern District of Georgia. It argued on three fronts that it owed no coverage: the trafficking claims weren't personal and advertising injury under Coverage B, the abuse or molestation endorsement killed coverage under both Coverages A and B, and the assault or battery endorsement either killed coverage or capped it.
The district court split the question. It found J.G.'s allegations fit within Coverages A and B and that the endorsements didn't unambiguously bar coverage, so Northfield owed a duty to defend. On indemnity, the court said the issue wasn't ripe because liability hadn't been decided yet, but it kept jurisdiction in case the question ripened later.
Northfield appealed, arguing the dismissal effectively functioned as an injunction forcing it to keep paying for the defense, and was therefore immediately appealable. The Eleventh Circuit disagreed. The panel said the order didn't meet the three-part test for the practical effect of an injunction. It wasn't a clear directive, wasn't enforceable through contempt, and didn't hand North Brook any substantive relief. The order simply announced what the contested policy provisions meant, the panel said. Appeal dismissed for lack of jurisdiction.
The court offered Northfield a roadmap forward: ask the district court for final judgment on the duty to defend under Rule 54(b), or amend the complaint to drop the indemnity count and then seek final judgment.
Judge Tjoflat went further in a concurrence. He said the case reflected a fundamental misunderstanding of the declaratory judgment action. Northfield never alleged North Brook actually disputed the policy's meaning, he noted, and the underlying suit had been pending for roughly two and a half years with Northfield defending the whole time.
He also warned of the procedural mess if the strategy had worked. The moment a court declared mid-case that Northfield owed no defense, the insurer would in theory be free to walk. The hotel would be left scrambling to find new lawyers or pay the existing ones, with delays unavoidable and a mistrial all but certain if the ruling landed during trial. A system built on fairness, notice, and justice should not allow that kind of fallout, he wrote.
For insurers, the takeaway is sharp. The window to appeal a coverage ruling while the underlying suit is still live is narrow. And defending under a reservation of rights while simultaneously suing to escape the defense is the kind of move that draws judicial fire.
