Trendinista: Waco incident underscores need for adequate liability coverage

Promising a combination of food, drink and fun, “ultimate sports lodge” Twin Peaks seems an unlikely place to host rival biker gangs whose members were ready to rumble. But that didn’t prevent the late May gun battle that resulted in nine deaths at the chain’s Waco, TX, unit. Horrific as these shootings were, their economic impact on the restaurant’s owner should encourage other operators to check the fine print on their liability insurance policies and franchise agreements, pronto.

The justice system in Waco is struggling to process the 170 bikers arrested in the wake of the shootout. Bail for most of the detainees was initially set at $1 million each. It’s going to be difficult for officials to figure out who shot whom and then prove it in court.

Punishment has come much quicker for Dallas-based Peaktastic Beverge LLC, owner of the Waco Twin Peaks unit. The franchise has been revoked and the restaurant has been permanently shuttered.

The neighbors aren’t happy, either. Don Carlos Mexican Restaurant, which shares a parking lot with Twin Peaks, had to close for three days in the wake of the shootings and suffered physical damage to its building. It claims Peaktastic was asking for trouble.

“Twin Peaks didn’t just add gas to the fire, it threw the match,” Tony Buzzbee, lead counsel for the plaintiff, told NBC News. “Inviting armed rival gangs to a place where alcohol is served is not only unwise, it is reckless. All of the neighboring businesses are damaged, and Twin Peaks needs to be held accountable.”

Don Carlos Mexican Restaurant is suing for gross negligence, seeking $1 million in punitive damages. Its lawsuit may be the first of many Peaktastic Beverage could face as a result of this incident, even though no guests, employees or bystanders were caught in the crossfire. If you have ever wondered why you might want to structure your restaurant business as an LLC (limited liability company)—thus protecting your personal assets—consider this a prime example.

How much liability insurance your restaurant should carry is a consideration, too. This event illustrates how even one patron’s unruly behavior can wind up having a huge financial impact on a restaurant operator.

Bar fights and push-and-shove tussles are more likely than motorcycle shootouts, of course, but be aware of what the law has to say about a restaurant’s liability when one occurs. Whoever loses the fight isn’t going to like it and is likely to blame the owner for letting it happen. In Texas, the state Supreme Court says the operator may indeed be liable in these circumstances.

“When a patron gets injured in a bar fight, the owner may be found negligent and forced to pay damages under the legal doctrine of premises liability,” says Joe Thomas of Houston-based Food & Beverage Insurance Agency. “This doctrine states that the owner must foresee the level of risk to patrons, legally known as invitees, and take precautions to minimize that risk. If the place gets customers who are prone to engage in violent behavior, or it is in a part of town where there is more assault and battery, owners need to make sure that their patrons are protected since the inherent risk of a bar fight is greater.”

What to do? Bigger and better bouncers won’t cut it.

“Bar and restaurant insurance that covers general liability as well as assault and battery and liquor liability is the best way for owners to stay solvent in the event that fighting breaks out in their place of business,” advises Thomas.

The lesson from Twin Peaks Waco is that your restaurant may be more exposed than you or even your insurance agent can imagine. Be sure to bring up this topic the next time you review insurance policies with your agent or attorney.

Contact Bob Krummert: [email protected]