A homeowners insurer is asking a federal judge to keep it out of a sex trafficking lawsuit tied to a Nebraska strip club - and it has a stack of policy exclusions ready to go.
In a filing dated May 4, 2026 in the US District Court for the District of Nebraska, American Strategic Insurance Corp., known as ASIC, says it owes nothing - no defense, no payout - to Shane Harrington, his company MelTech, Inc., or the woman suing him under the pseudonym "Jane Doe, a victim of sex trafficking."
The underlying lawsuit is the kind that tends to make any personal lines underwriter pause. It alleges that, from July 2019 through January 2020, a then 15-year-old girl "endured repeated non-consensual sexual acts at the hands of her trafficker and his collaborators." It alleges that Harrington and MelTech owned and jointly did business as Paradise City, a strip club outside Elm Creek, in Buffalo County, Nebraska, and that they ran it as a joint venture with a co-defendant who operated the club. According to the filing, Harrington and MelTech served as landlord, "shared dancers," and shared revenue and control of the club. The claims against Harrington are brought under federal anti-trafficking statutes and include a conspiracy count tied to events said to have taken place on or around Halloween 2019. ASIC says the underlying complaint does not allege Harrington was present at those events or acted in any individual or personal capacity in connection with them.
That framing is exactly where the coverage fight lives.
ASIC points first to the policy's business exclusion, which knocks out claims "arising out of or in connection with… A 'business' engaged in by an 'insured' or conducted from an 'insured location'." Because every allegation against Harrington traces back to Paradise City, the insurer argues, the door closes there.
There is also a sexual abuse exclusion, which bars coverage for injury caused by an insured "inflicting, or directing another person to inflict… corporal punishment or sexual abuse," including "physical or mental harassment or assault of a sexual nature." And an illegal or criminal acts exclusion, which applies "regardless of whether the insured is charged with a crime."
Two more provisions get pulled in. The policy only covers losses tied to an "insured location" - and the strip club, ASIC notes, is not the Omaha, Nebraska residential property the homeowners policy was written for. And the insurer leans on the expected or intended injury exclusion, citing the underlying allegations that the defendants "acted in concert, intentionally," "knowingly conspired," and played "an active and knowing role in DOE's torture." Hard to call that an accident, ASIC argues.
The policy also "does not provide any coverage for punitive or exemplary damages, fines or penalties in any amount regardless of how they are imposed," including the cost of defending them. ASIC further says the policy was not issued to MelTech and that MelTech is not an insured under the policy.
For claims professionals, the filing is a useful case study in how a homeowners policy responds - or refuses to - when a personal lines insured is drawn into commercial-style litigation, and into civil sex trafficking suits brought under federal statutes.
The allegations described above come from court filings and have not been tested in court. No response has been filed, and no judge has ruled.
