Appeals Court Upholds Ruling Against Armory Studios in Insurance Case

Appeals Court Upholds Ruling Against Armory Studios in Insurance Case

SAN FRANCISCO — The Ninth Circuit federal appellate court yesterday ruled against Armory Studios LLC and owner Peter Acworth in their lawsuit against their former insurance company, Atain Specialty, affirming a lower court’s opinion that the insurer does not have a duty to provide coverage for litigation costs and settlements over 2015 lawsuits concerning allegations of HIV transmissions at the iconic San Francisco Armory building.

At the time of the alleged transmissions, Armory Studios LLC and Acworth owned the iconic San Francisco location associated with the Kink.com brand.

In an unpublished opinion yesterday, a Ninth Circuit panel upheld a 2019 summary ruling against Armory Studios and Acworth by District Judge James Donato, ruling that “the insurer's exclusion provision precludes coverage of injury resulting from sexual acts,” legal news site Law360 reported.

The Physical-Sexual Abuse Exclusion

Armory Studios and Acworth were targeted in a series of lawsuits in 2015 by performers who claimed to have contracted HIV while shooting scenes for a company called Cybernet Entertainment. Armory Studios and Acworth alleged Cybernet was a tenant who had rented the Armory as a location. The performers alleged “unsafe work conditions” that ”didn't mandate the use of condoms and required actors to engage in sexual acts with visitors touring the premises.”

Judge Donato’s 2019 ruling, upheld yesterday by the appeals court, stated that Atain was not obligated to cover the defense costs incurred by Armory Studios and Acworth during the Cybernet cases, due to their policy’s “physical-sexual abuse” exclusion.

"Here, the exclusion applies because the state court complaints asserted that Armory and Acworth were liable for the plaintiffs' contraction of HIV while plaintiffs were engaging in sexual acts at the direction of Armory and Acworth, among others," the panel wrote.

The panel also cited the “omissions clause,” precluding lawsuits “arising out of any sexual act that resulted from the omission of the insured, which covers the complaint allegations that Armory and Acworth failed to discover dangerous conditions caused by their tenants and failed to ensure their tenants were following required procedures.”

Unclear Role of Kink.com

The underlying lawsuits by the performers had accused Armory “of various forms of negligence and premises liability, alleging the studio failed to inspect performers for open cuts and sores or implement universal measures to prevent contact with blood or other infectious materials,” Law360 reported.

During a video conference hearing in July, the news site continued, “Armory and Acworth argued the insurance policy's exclusion provision doesn't apply to tenants who rented out the commercial space to film porn.”

U.S. Circuit Judge Richard C. Tallman showed some skepticism about the argument that Acworth and Armory Studios were merely landlords and not, in their Kink.com capacity, involved in the content production by Cybernet Entertainment.

"If he in fact were directing these sexual acts and causing injury and ordering actors to not use [condoms],” the judge asked, “why doesn't that directly fall into the exclusions under the policy of sexual acts caused by insurer?"

Yesterday’s decision also affirmed Donato's ruling that the insurance company cannot recover $500,000 it spent settling one case, “because it never made an express offer to Armory that it could assume its own defense.”

The case is Atain Specialty Insurance Co. v. Armory Studios LLC et al., case number 19-15745 and 19-15820, in the U.S. Court of Appeals for the Ninth Circuit.

Copyright © 2024 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Adult Web Hosting Service 'Midnight-Host' Launches

Midnight-Host, a new web hosting service designed specifically for adult websites, has launched.

ASN Lifestyle Magazine Joins Pineapple Support as Media Sponsor

ASN Lifestyle Magazine has joined the ranks of over 60 adult businesses and organizations committing funds and resources to Pineapple Support, partnering with the organization as a media sponsor.

Adult Industry Reacts to Trump Victory

On Tuesday, former President Donald Trump was reelected, defeating Vice President Kamala Harris to reclaim the office he lost four years ago.

Fetisfy Online Fetish Marketplace Launches

Fetisfy.com, an online marketplace for users to sell fetish items, has launched.

Pineapple Support Launches 'Spill the Tea, Colombia' Community Support Event Series

Pineapple Support has launched "Spill the Tea, Colombia," a monthly, in-person community support event for adult industry professionals.

Streamster Launches 'Tip2Peep' Camera-Switching Feature

Live-streaming software provider Streamster has launched Tip2Peep, a new feature that allows viewers to switch between multiple webcam viewing angles by tipping the creator.

Tyler Wu Guests on Chaturbate's 'Sex Tales' Podcast

Tyler Wu is the latest guest on Chaturbate’s “Sex Tales” podcast, hosted by Melissa Stratton and Vanniall on the company’s “Camming Life” YouTube channel.

Fleshy to Launch Interactive Cam Site 'Eromote'

Male pleasure brand Fleshy has announced that it will launch an interactive, bidirectional cam site next month called Eromote.

XBIZ LA Show Introduces New 'Crib Crawl' Feature

XBIZ is pleased to announce that the 2025 edition of its flagship conference, the XBIZ Show, will debut a brand-new feature: Crib Crawl, offering attendees the chance to meet and greet representatives from leading brands and organizations in dedicated suites at the host venue.

Pre-Nominations Now Open for 2025 TEAs

The pre-nomination period for the 2025 Trans Erotica Awards (TEAs) is now open.

Show More