You Just Got the Letter: Your Insurer Refused to Defend the Trafficking Case
If you own, operate, franchise, or insure a hotel and your inbox just opened a denial letter from your commercial general liability carrier refusing to defend a sex-trafficking claim, you are reading the right page. You have a problem that has been growing for a decade and that exploded into public view on May 15, 2026, when Red Roof Inns, Inc. and three of its affiliates filed a federal lawsuit in the U.S. District Court for the Southern District of Ohio against Liberty Mutual Fire Insurance Company. The complaint alleges breach of contract and bad faith. At stake: defense of 17 underlying lawsuits brought by alleged sex-trafficking victims across Ohio, Georgia, New Jersey, Nevada, and Los Angeles County.
Here is what we know about your situation, why it matters, and what we do about it.
For eight consecutive years, Liberty Mutual was Red Roof’s primary general liability carrier, writing eight commercial general liability policies from July 1, 2011 to July 1, 2019. During that time, Liberty Mutual agreed to defend more than 50 similar trafficking lawsuits against Red Roof and settled the claims of more than a dozen plaintiffs. Then it stopped. According to Red Roof’s complaint, Liberty Mutual now intends to arbitrarily deny coverage for new trafficking lawsuits without any valid basis.
This is not an isolated carrier dispute. It is a live, present-tense warning about how every major commercial insurer is positioning for the next wave of Trafficking Victims Protection Reauthorization Act claims, and the playbook they will use to deny coverage to the very insureds they spent a decade collecting premiums from.
We are The Manginello Law Firm, PLLC (Attorney911). We fight coverage denials, bad-faith insurance refusals, and the catastrophic premises-liability claims that drive them. Ralph Manginello has spent 27+ years in courtrooms including federal court. Lupe Peña is a former insurance-defense attorney who spent years inside the rooms where adjusters and their software decide how to deny, delay, and devalue cases exactly like yours; he now sits on your side of the table. Together we move fast, in English or Spanish, with one promise: no fee unless we win.
If you are staring at a denial letter right now, call 1-888-ATTY-911. The preservation letter goes out the day you call.
Why This Case Matters to Every Hotel Owner, Brand, and Operator
If you operate a hotel anywhere in the United States, this case matters to you, and here is why.
The TVPRA target is not just the trafficker. Under 18 U.S.C. § 1595(a), a survivor of sex trafficking may bring a civil action against “the perpetrator (or whoever knowingly benefits, or attempts or conspires to benefit, financially or by receiving anything of value from participation in a venture which that person knew or should have known has engaged in an act in violation of this chapter).” The hotelier who collects nightly room revenue from a room rented to a trafficker is squarely within the language of “knowingly benefits.” The survivors’ bar has spent the past decade learning how to plead around the franchisor/operator distinction and how to put hotels and brands into federal court.
The insurance industry knows the exposure is enormous. Travelers and hotel investors alike understand that trafficking litigation is now a recognized mass-tort category. Carriers have been quietly adjusting their CGL forms, adding exclusions, and reserving more aggressively. When the same carrier spent years defending and settling similar claims and then suddenly denies coverage, the shift is not random. It is a strategy.
The Red Roof complaint frames a public, judicial record of that shift. When Liberty Mutual defended and settled more than 50 trafficking claims under the same form policy from 2011 to 2019, it made a contemporaneous judgment about its coverage obligations. Its reversal is the kind of record-breaking change that triggers bad-faith exposure under Ohio law and under the law of nearly every state.
The same court already ordered Liberty to defend 11 substantively identical cases. When a court has already ruled that a carrier must defend under these facts, and the carrier refuses to back down on parallel cases, the carrier is litigating against its own earlier win, and that posture can be exploited in settlement.
Ohio Insurance Law and the Duty to Defend
Because this dispute sits in the Southern District of Ohio, Ohio law controls the underlying coverage question. The principles below are consistent with the law of most states and apply to your policy wherever it was issued.
The Duty to Defend Is Broader Than the Duty to Indemnify. Ohio courts, like courts in most jurisdictions, apply the “eight-corners rule” or “pleadings test.” The carrier’s duty to defend is measured by what appears in the underlying complaint, compared to what appears in the policy, without reference to facts outside those four corners. If any claim in the complaint is arguably or potentially within coverage, the carrier must defend the entire lawsuit.
“An insurer has an absolute duty to defend an action where the complaint contains an allegation in any one of its claims that could arguably be covered by the insurance policy.” — City of Sharonville v. American Employers Insurance Co. (Ohio)
Bad Faith for Arbitrary Denial. Ohio recognizes a tort claim for insurer bad faith when an insurer fails to exercise good faith in the processing of a claim without reasonable justification. Punitive damages are available where the plaintiff proves “actual malice” or “aggravated fraud.” A carrier that defended and settled 50+ similar claims under the same form policy and then reversed course without a change in the policy language has a serious problem on the bad-faith element.
The Historical-Course-of-Performance Argument. When a carrier has a long history of interpreting its own policy to provide a defense for a particular type of claim, that history is powerful evidence of the carrier’s own understanding of its obligations. A sudden, unexplained reversal, especially after the carrier has paid millions in settlements, exposes the carrier to both breach-of-contract and bad-faith damages.
Declaratory Judgment Act. Red Roof is also seeking a declaration under the federal Declaratory Judgment Act that Liberty must defend all 17 suits. Federal courts routinely entertain these coverage declaratory actions when the underlying tort suits are proceeding in parallel.
For more on the broader insurance-coverage framework, see our insurance claim practice area and our primer on what to do if your insurance claim is denied.
The Shell Game: Naming Every Defendant Correctly
Hotel and brand defendants operate through layered entities. Get the names wrong and your recovery target moves or vanishes.
Three Layers You Will Encounter.
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The Property Owner LLC. The single-asset LLC that holds the deed to the building. Frequently judgment-proof by design.
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The Operator / Franchisee. The LLC or corporation that actually runs the front desk, staffs the property, and collects the room revenue. Often a separate entity from the owner. This is the entity that the survivors’ pleadings typically target first.
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The Brand / Franchisor. The national brand on the sign. The Marriott Corporation, Hilton Worldwide, Wyndham, Choice, Red Roof, G6 Hospitality. The brand sits behind the franchise agreement, the brand standards manual, and the royalty stream. The franchisor/operator distinction is the central fight in nearly every TVPRA case.
Why Liberty Mutual’s Reversal Matters. When the same carrier spent years defending and settling cases against a particular defendant in the operator role, then suddenly refuses to defend the same defendant in the same role, the historical performance becomes powerful evidence of the carrier’s own interpretation of its obligations. We use this evidence aggressively in bad-faith litigation.
Naming the Right Insurer. Your CGL policy is only one of several possible coverages. Umbrella, excess, crime, and cyber policies may also respond depending on the allegations. We audit your full tower before filing.
The Insurance Adjuster Playbook (and Your Counter-Moves)
Insurance carriers handling TVPRA coverage have a recognizable playbook. We name the moves so you can recognize them when they come.
Move 1: The Reservation of Rights Letter. The carrier sends a letter saying it will defend you “subject to a full reservation of rights” while it investigates whether the policy actually covers the claim. This sounds cooperative but is the first step toward denial. Counter: do not accept a reservation of rights without independent counsel. You need a Cumis counsel (independent defense counsel paid by the carrier) in jurisdictions like California, or a written acknowledgment that no privileged information flows between the carrier’s counsel and any counsel you have hired independently.
Move 2: The Sudden Coverage Reinterpretation. The carrier defends and settles 50+ similar claims under the same form policy for a decade, then sends a letter asserting a “new interpretation” that excludes trafficking claims. Counter: the historical course of performance is powerful evidence. We subpoena the carrier’s own claim files, reservation-of-rights history, and coverage counsel memoranda from the prior decade. The carrier’s own words from 2015 will come back to haunt its 2026 position.
Move 3: The Exclusion Letter. The carrier cites an “assault and battery exclusion,” a “professional services exclusion,” or an “intentional acts exclusion.” Counter: TVPRA beneficiary liability is not the same as the underlying assault. The hotel did not commit the assault; it allegedly benefited from the venture. Most CGL forms do not exclude this kind of vicarious-beneficiary liability, and the historical-course-of-performance argument undermines the new exclusion reading.
Move 4: The Delay-and-Exhaust Defense. The carrier drags its feet, asks for endless documentation, and runs the policy period out hoping you settle the underlying case yourself. Counter: file a declaratory judgment action under the federal Declaratory Judgment Act to force coverage. Federal courts are not patient with carriers that have already lost the same coverage argument in the same district.
Move 5: The “Independent Counsel” Pressure. The carrier offers to provide a defense “through counsel of its choice” and quietly steers you toward lawyers who protect the carrier’s interests over yours. Counter: demand panel counsel transparency, and where the conflict is irreconcilable, insist on independent counsel at the carrier’s expense.
Move 6: The Bad-Fait Bluff. The carrier signals that any bad-faith claim will be litigated for years. Counter: bad-faith cases in Ohio and most jurisdictions are tried to juries who can award punitive damages. The carrier’s own claim history, when paired with the new denial, makes the bad-faith case unusually strong. Carriers settle bad-faith claims when the underlying conduct is indefensible.
For a deeper dive into insurance-adjuster tactics, watch our guide on what not to say to an insurance adjuster.
The First 72 Hours: Your Action Plan
If you are reading this because you just received a denial, here is what we do in the first 72 hours.
Hour 0 to 6. Call us at 1-888-ATTY-911. We offer a free 24/7 consultation. We need to see the policy, the reservation-of-rights letter, and the underlying complaint before we can advise on strategy.
Hour 6 to 24. We send litigation-hold letters to the property, the brand/franchisor, the operator, the insurer, and any third-party data vendor (CCTV provider, PMS vendor, key-card vendor). The letter demands preservation of every category of evidence named above.
Day 1 to 3. We file a declaratory judgment action if the carrier has not backed down. We request a status conference with the court to set a coverage briefing schedule. We contact the underlying plaintiffs’ counsel to coordinate the parallel tort-track discovery.
Day 3 to 7. We begin the historical-course-of-performance investigation. We subpoena the carrier’s claim files, reservation-of-rights history, and coverage memoranda from the prior decade.
Week 2 to 4. We open settlement channels once the carrier’s exposure is clear. Most coverage disputes of this magnitude resolve before trial once the historical record is on the table.
We have run this playbook many times. For more on the broader evidence-preservation and proof-building process, see our construction accident practice area.
Who We Are
We are The Manginello Law Firm, PLLC, doing business as Attorney911. Our tagline is Legal Emergency Lawyers. We are built for the moment a crisis lands, at 2 a.m. or in the middle of a board meeting, when the insurer says no, the records are about to vanish, and the family is asking questions.
Ralph P. Manginello is our Managing Partner. He has been licensed in Texas since November 6, 1998, more than 27 years, and is admitted to the U.S. District Court for the Southern District of Texas. He earned his J.D. from South Texas College of Law Houston in 1998 and his B.A. in Journalism & Public Relations from UT Austin. Before law school he was a journalist, and the instinct to find the story the other side is hiding has never left him. He is a member of the State Bar of Texas, the Houston Bar Association, the Harris County Criminal Lawyers Association, the Texas Trial Lawyers Association, NACDL, the Pro Bono College of the State Bar of Texas, and the Trial Lawyers Achievement Association Million Dollar Member recognition. He is rated Excellent on Avvo with a 5.0 client-review score. He speaks Spanish. You can read more about Ralph here.
Lupe Peña is our Associate Attorney. He is licensed in Texas since December 6, 2012, more than 13 years, and is admitted to the U.S. District Court for the Southern District of Texas. He earned his J.D. from South Texas College of Law Houston in 2012 and his B.B.A. in International Business from Saint Mary’s University in San Antonio. Before joining us, Lupe worked at a national insurance-defense firm where he learned, from the inside, how adjusters and their software value claims exactly like yours. He uses that knowledge for the injured and the wrongfully denied, not against them. He is a fluent Spanish speaker, conducts full consultations in Spanish without an interpreter, and is a third-generation Texan with family roots to the King Ranch. You can read more about Lupe here.
Together we run contingency: 33.33% before trial, 40% if the case goes to trial. We don’t get paid unless we win. Free consultation. 24/7 live staff, not an answering service. In business since July 18, 2001, more than 24 years. Aggregate recoveries of $50,000,000+. 4.9-star rating with 251+ Google reviews. English and Spanish.
We handle TVPRA coverage disputes, insurance bad-faith litigation, premises liability, catastrophic injury, and the full range of commercial and personal-injury cases across Texas and beyond. Our offices are in Houston, Austin, and the Beaumont/Golden Triangle area. We work with local counsel and pro hac vice where required. We do not travel out of state to try cases; we team with the right local firm to make sure your case is in the right courtroom with the right rules. Hablamos Español.
If you are an owner, operator, brand, franchisor, or insurer facing a TVPRA coverage fight, we want to hear from you today.
Call 1-888-ATTY-911. Free consultation. No fee unless we win. We move fast.
Past results depend on the facts of each case and do not guarantee future outcomes.