CHARLES R. SIMPSON, III, Senior District Judge.
This matter is before the court on the motion of Defendant IKO, Inc. d/b/a The Back Door (hereinafter, "IKO") to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction. (DN 11). Plaintiff Capitol Specialty Insurance Corp. ("Capitol") has filed a response (DN 13), to which IKO has replied (DN 19). Fully briefed, the matter is now ripe for adjudication. For the reasons set forth below, the court will deny IKO's motion to dismiss (DN 11).
Capitol, an insurer, issued a commercial general liability insurance policy to IKO. The policy had a $1 million personal injury limit, and it was in effect from August 7, 2010 to August 7, 2011. Capitol has filed an action in this court invoking our diversity jurisdiction pursuant to 28 U.S.C. § 1332. Capitol seeks a declaration that the Assault or Battery Hazard Limited Coverage form contained in its policy with IKO (hereinafter, the "Assault Limitation"), which provides for a liability sub-limit of $25, 000, is the exclusive coverage limit available to IKO in a civil action filed against IKO in a Kentucky state court by Nicole Sancomb ("Sancomb"). Capitol also seeks a declaration that its duty to defend and indemnify IKO in the state court action will be extinguished upon the exhaustion of the Assault Limitation's liability sub-limit of $25, 000.
IKO owns The Back Door, a bar located in Louisville, Kentucky. Sancomb's complaint, filed in Jefferson County, Kentucky, Circuit Court, alleges that on August 15, 2010, while Sancomb was a patron at The Back Door, she was sexually assaulted on its premises by several of its patrons and third parties. Sancomb has asserted claims against IKO for negligence and seeks an unspecified amount of compensatory and punitive damages.
In this declaratory judgment action, Capitol argues that the Assault Limitation contained in its policy with IKO limits its duty to defend and indemnify IKO in the state court action to the extent of $25, 000, inclusive of attorney's fees and court costs. The Assault Limitation states:
Assault or Battery Hazard Limits of Insurance
$25, 000 is the most we will pay for the sum of all damages arising out of any one "event" and included in the "assault or battery hazard, " subject to the aggregate described below;
$25, 000 is the most we will pay for the sum of all damages included in the "assault or battery hazard" arising out of all "events" during the policy period.
(DN 1-2, p. 12). The policy defines several of the terms contained in the Assault Limitation:
"Assault or battery" means:
a. Assault, including sexual abuse, sexual assault, intimidation, sexual harassment, verbal abuse, and any threatened harmful or offensive contact between two or more persons, whether or not caused or committed by or at the instruction of, or at the direction of, or arising out of the negligence of you, any insured, any legal entity, or any causes whatsoever, regardless of fault or intent[.]
"Assault or battery ...