Barnes & Thornburg Client Wins on Appeal in Coverage Dispute

On May 22, 2026, a three-judge panel dismissed an appeal brought by Northfield Insurance against the client for lack of jurisdiction. In a published opinion, the panel held that Northfield’s suit is not subject to immediate appeal because the ruling in the trial court, which dismissed Northfield’s request for a ruling that it had no obligation to defend the client, was neither an injunction nor akin to an injunction. 

“Because ‘we are obligated to address jurisdictional questions sua sponte,’ we instructed the parties to address in detail whether we can hear this appeal,” U.S. Circuit Judge Gerald Bard Tjoflat wrote in the unanimous opinion. “We cannot.” 

The coverage dispute arose from a lawsuit brought by J.G., a young woman who sued the motel under the Trafficking Victims Protection Reauthorization Act, or TVPRA, in 2020. Northfield provided the motel operator with a defense subject to a reservation of rights, but filed the instant action in August 2023, seeking a declaration that it owes no coverage for the suit. The insurer argued that the underlying claims did not constitute covered personal and advertising injury and that coverage was barred or limited by the policy’s abuse or molestation exclusion and assault or battery exclusion.

In September 2024, U.S. District Judge Sarah E. Geraghty held that the policy exclusions did not preclude Northfield’s defense obligation, dismissing the suit as it related to the insurer’s duty to defend. Judge Geraghty also held that Northfield’s duty to indemnify claim was not ripe at that time and stayed the case pending resolution of the underlying suit.

In July 2025, a Georgia federal jury awarded $40 million to J.G. — $10 million in compensatory damages and $30 million in punitive damages — in what was believed to be a first of its kind verdict in Georgia.

During oral arguments in January 2026, the panel suggested that the court may not have jurisdiction to examine Judge Geraghty’s partial dismissal of the suit because the ruling was not an affirmative injunction that qualified for interlocutory review. In its May 22, 2026, opinion, the panel said that to have the injunctive effect necessary for appeal, an order must include a clear and understandable directive, be enforceable by the court’s contempt power and award some or all the substantive relief sought.

“This case reflects a fundamental misunderstanding of the declaratory judgment action, [and] allowing an insurer to sue for a declaration that it owes no duty to defend in an underlying action while simultaneously defending that underlying action creates problems that cannot stand,” Judge Tjoflat wrote. "If the District Court gave Northfield what it was looking for, chaos would have ensued."

The win made headlines in the Daily Report and Law360.

The Barnes & Thornburg team is led by partner Chris Daniels and includes associate Alexis Daenecke.