QBE Insurance Corporation v. Walters, J. , 2016 Pa. Super. 205 ( 2016 )

J-A14004-16
2016 Pa. Super. 205
QBE INSURANCE CORPORATION IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
JALIL WALTERS AND RASHEEDA CARTER
OK CAFE, INC. AND DONALD BOWERS,
SR.
Appellants No. 1797 MDA 2015
Appeal from the Order Entered October 1, 2015
In the Court of Common Pleas of Dauphin County
Civil Division at No(s): 2014-CV-06735-CV
BEFORE: BOWES, OTT AND PLATT,* JJ.
OPINION BY BOWES, J.: FILED SEPTEMBER 09, 2016
Jalil Walters and his wife Rasheeda Carter, OK Café, Inc. and Donald
Bowers, Sr. (collectively “Insureds”),1 appeal from the trial court’s grant of
summary judgment in favor of QBE Insurance Corporation (“QBE”) and its
corresponding denial of their motion for summary judgment in this
declaratory judgment action. The issue involves the applicability of an
exclusion in a commercial general liability policy. We affirm.
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1
We recognize that Mr. Walters and Ms. Carter are not named insureds on
the insurance policy at issue herein, but include them under this umbrella for
ease of discussion.
* Retired Senior Judge assigned to the Superior Court.
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OK Café, Inc. operates Jazzland Bar (“Jazzland”), located in Steelton,
Pennsylvania. Mr. Bowers owns OK Café. OK Café and Mr. Bowers
(collectively “OK Café”) purchased a general liability policy from QBE. That
policy provides coverage for “bodily injury” and “property damage” occurring
in the course of OK Café’s operations at Jazzland, as well as “personal and
advertising injuries,” as those terms are defined by the policy. Coverage
under the policy is subject to certain exclusions, one of which, the Assault
and Battery exclusion, is at issue herein.
The facts underlying this dispute are as follows. On September 9,
2011, Mr. Walters and three friends were patrons of Jazzland. As they
exited the bar, Eric Chambers confronted Mr. Walters regarding an earlier
slight by Mr. Walters. Mr. Chambers brandished a firearm during the
altercation, but the situation was diffused without further violence. Mr.
Chambers returned to the bar, and Mr. Walters and his friends continued to
their vehicle. Jazzland security personnel, including the head of security,
witnessed the incident.
Upon realizing they were heading in the wrong direction, Mr. Walters
and his friends reversed course. Their path led them back to the entrance to
Jazzland just as Mr. Chambers and the head of security were exiting the
building. A second dispute arose. Sometime during this encounter, Mr.
Chambers drew and fired his weapon, striking Mr. Walters in the stomach
and arm.
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Mr. Walters and Ms. Carter commenced a negligence action against OK
Café and Mr. Bowers (the “underlying complaint”). They alleged that OK
Café was aware that patrons brought firearms into Jazzland, and that the
surrounding area was a high crime neighborhood. Consequently, OK Café
had undertaken security precautions to ensure the safety of its customers.
Mr. Walters pled that OK Café employed security personnel charged with
using a hand-held metal detector on patrons as they entered Jazzland. Mr.
Walters averred that OK Café was negligent in allowing Mr. Chambers to
enter and exit the bar while armed, and in failing to ensure Mr. Walters’
safety. In addition, the complaint asserted that OK Café failed to properly
employ, train, and supervise its employees regarding the safety of its
patrons, or take sufficient precautions or issue warnings to protect Mr.
Walters from Mr. Chambers. Ms. Carter asserted a claim for loss of
consortium.
Following initiation of the underlying suit, OK Café requested that QBE
defend and indemnify it in the lawsuit. QBE, believing that coverage was
excluded based upon an “assault and battery” exclusion contained in the
policy, instituted the instant declaratory judgment action against Mr.
Walters, Ms. Carter, OK Café, and Mr. Bowers to adjudicate its obligations
under the policy. Subsequently, the parties filed cross-motions for summary
judgment. The court entered summary judgment in favor of QBE, and
denied the same as to the Insureds. Insureds filed a timely appeal, and
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complied with an order to file a Rule 1925(b) concise statement of matters
complained of on appeal. The trial court issued its Rule 1925(a) opinion,
and this matter is now ready for our consideration.
The Insureds present one issue for our review:
Whether the trial court erred in finding that QBE is not obligated
to defend and indemnify OK Café and Bowers on the claims
found in the underlying complaint pursuant to the terms of the
assault and battery exclusion because those claims, which are
limited to claims of negligence against the underlying defendants
for the negligent provision of security, allege direct causation of
the alleged injuries and do not fall within the assault and battery
exclusion of the policy?
Appellant’s brief at 4.
Our scope of review of an order granting summary judgment is
plenary. Gilbert v. Synagro Cent., LLC, 131 A.3d 1, 10 (Pa. 2015). Our
standard of review is that “the trial court’s order will be reversed only where
it is established that the court committed an error of law or clearly abused
its discretion.” Id. In addition,
[s]ummary judgment is appropriate only in those cases where
the record clearly demonstrates that there is no genuine issue of
material fact and that the moving party is entitled to judgment
as a matter of law. The reviewing court must view the record in
the light most favorable to the nonmoving party, resolving all
doubts as to the existence of a genuine issue of material fact
against the moving party. When the facts are so clear that the
reasonable minds cannot differ, a trial court may property enter
summary judgment.
Id.
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The proper construction of an insurance policy is resolved as a matter
of law in a declaratory judgment action. Erie Ins. Exchange v. Lobenthal,
114 A.3d 832, 836 (Pa.Super. 2015) (citation omitted). Thus, as with all
questions of law, our scope of review is de novo and our standard of review
is plenary. Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286, 290
(Pa. 2007). “The Declaratory Judgments Act may be invoked to interpret
the obligations of the parties under an insurance contract, including the
question of whether an insurer has a duty to defend and/or a duty to
indemnify a party making a claim under the policy.” Lobenthal, supra at
836.
Certain principles inform our review. When an insured who has been
sued requests coverage under an insurance policy, the insurer is required to
accept all of the allegations contained in the third party’s complaint as true
and provide a defense if there is a possibility that the injury alleged could fall
within the scope of the policy. Selective Way Ins. Co. v. Hosp. Group
Services, Inc., 119 A.3d 1035, 1046 (Pa.Super. 2015) (en banc). To
determine whether an insurer is obligated to defend and potentially
indemnify a party, we review the factual allegations contained in the
underlying complaint against the insured. Baumhammers, supra at 291.
Generally, exclusionary clauses are strictly construed against the insurer and
in favor of the insured. Swarner v. Mutual Ben. Group, 72 A.3d 641, 645
(Pa.Super. 2013).
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Furthermore, our courts recognize that “the duty to defend is broader
than the duty to indemnify.” Kvaerner Metals Div. Of Kvaerner U.S.,
Inc. v. Commercial Union Ins., 908 A.2d 888, 896 n.7 (Pa. 2006). The
insurer “may not justifiably refuse to defend a claim against its insured
unless it is clear from an examination of the allegations in the complaint and
the language of the policy that the claim does not potentially come within
the coverage of the policy.” Selective, supra at 1046. This duty “is not
limited to meritorious actions; it even extends to actions that are
groundless, false, or fraudulent [so] long as there exists the possibility that
the allegations implicate coverage.” Id. The duty “persists until an insurer
can limit the claims such that coverage is impossible.” Id.
Finally, an insurance company’s duty to indemnify an insured “flows
from a determination that the complaint triggers coverage.” Id. However,
the duty to indemnify “arises only when the insured is determined to be
liable for damages within the coverage of the policy.” Id. Hence, the duty
to indemnify arises only after an insurance company has been found to have
a duty to defend.
Insureds argue that the allegations leveled against OK Café fall within
the insurance policy’s general liability coverage and are not subject to the
assault and battery exclusion. In the underlying complaint, Mr. Walters and
Ms. Carter alleged negligence in the hiring, training, and supervision of
employees, as well as its performance of security checks, its failure to warn
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of dangerous conditions, and in its response to such conditions inside and
outside the premises. Insureds contend that, since the underlying complaint
averred that negligence was allegedly a direct cause of the injury to Mr.
Walters, the assault and battery exclusion does not apply. Hence, their
position is that QBE owes them both a duty to defend and to indemnify, and
the trial court erred in granting summary judgment in QBE’s favor.
The assault and battery exclusionary clause provides, in pertinent
part:
EXCLUSION – ASSAULT AND BATTERY
This endorsement modifies insurance provided under the
following:
COMMERCIAL GENERAL LIABILITY COVERAGE FORM
PRODUCTS/COMPLETE OPERATIONS COVERAGE FORM
LIQUOR LIABILITY COVERAGE FORM
***
2. Exclusions
This insurance does not apply to:
Assault and Battery
(1) “Bodily injury,” “property damage,” “injury” or “personal
and advertising injury” arising from the following:
(a) “assault and battery” or any act or omission in
connection with the prevention or suppression of such
acts; or
(b) harmful or offensive contact between or among two
or more persons; or
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(c) apprehension of harmful or offensive contact
between or among two or more persons; or
(d) threats by words or deeds.
(2) This exclusion applies regardless of the degree of
culpability or intent and without regard to:
(a) whether the acts alleged to be by or at the
instruction or at the direction of the insured, his
officers, “employees,” agents or servants; or by any
other person lawfully or otherwise on, at or near the
premises owned or occupied by the insured; or by any
other person;
(b) the alleged failure of the insured or his officers,
“employees,” agents or servants in the hiring,
supervision, retention or control of any person,
whether or not an officer, “employee,” agent or servant
of the insured;
(c) the alleged failure of the insured or his officers,
“employees,” agents or servants to attempt to prevent,
bar or halt any such conduct.
(3) This exclusions also applies to any claims by any other
person, firm or organization, asserting rights derived from
or contingent upon any person asserting a claim excluded
under subparagraph (2)(a), (b), or (c) above;
specifically [loss of consortium].
***
“Assault and Battery” means:
(a) actual or threatened assault or battery whether
caused by or at the instigation or direction of any
insured, his “employees,” patrons or any other
persons; or
(b) the failure of any insured or anyone else for whom
any insured is legally responsible to prevent or
suppress assault; or
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(c) battery; or
(d) the negligent:
i. employment;
ii. investigation;
iii. supervision;
iv. training;
v. retention
of a person for whom any insured is or ever was legally
responsible and whose conduct is described in (a),
(b), (c) and (d) above.
(e) the alleged failure of the insured or his officers,
“employees,” agents or servants to attempt to prevent,
bar or halt any such conduct.
(f) “Assault and Battery” includes, but is not limited to,
sexual assault and battery.
This endorsement also applies to any claims by any other
person, firm or organization, asserting rights derived from or
contingent upon any person asserting a claim excluded under
subparagraphs (a), (b), (c), (d), (e), and (f) above;
specifically excluding from coverage claims for:
(1) emotional distress or loss of society, services, consortium
and/or income; or
(2) reimbursement for expenses (including but not limited to
medical expenses, hospital expenses and wages) paid or
incurred by such other person, firm or organization; or
(3) any obligation to share damages with or repay someone
who must pay damages because of the injury.
Commercial General Liability Policy SIM100722-11, 2/3/11, Exclusion –
Assault and Battery, at 1-2.
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Insureds contend that allegations that OK Café’s negligence was a
direct cause of Mr. Walters’ injuries take it outside the assault and battery
exclusion. They assert that OK Café’s negligence was directly and
proximately related to Mr. Walters’ injuries, apart from the assault
attributable to Mr. Chambers. In addition, they maintain that it is irrelevant
whether Mr. Walters’ injuries also “arose from” an intentional tort as the
policy does not expressly exclude coverage for separate, additional legal
causes of injury.
In support of their position, the Insureds rely primarily on QBE
Insurance Corp. v. M&S Landis Corp., 915 A.2d 1222 (Pa.Super. 2007)
(“Landis”). Landis involved allegations that a nightclub’s employees
negligently caused the death of a patron when they forcibly evicted him from
the premises. The victim perished after nightclub staff attempted to restrain
him by laying on top of him, thus restricting his ability to breathe. The
victim’s personal representative filed a complaint asserting that the
decedent’s death was the “direct and proximate result of the negligence and
carelessness of [the club and its employees].” Landis, 915 A.2d at 1224.
The complaint also alleged negligence in the nightclub’s hiring, training, and
supervision of its staff. Id. The defendants sought coverage under a
general liability insurance policy it had purchases from QBE. Id. QBE filed a
declaratory judgment action seeking a judgment that it had no duty to
defend or indemnify defendants. The parties filed cross-motions for
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summary judgment, and the trial court granted summary judgment in favor
of the insurer. Id. Landis appealed.
On appeal, the defendants in Landis assailed, inter alia, the trial
court’s determination that the conduct alleged in the complaint was excluded
from coverage based on the clear and unambiguous language contained in
the insurer’s assault and battery exclusion. Id. That language read, in
relevant part, as follows:
A. This insurance does not apply to actions and proceedings to
recover damages for “bodily injury”, “property damage” or
“personal and advertising injury” arising from the following
and the Company is under no duty to defend or to indemnify
an insured in any action or proceeding alleging such
damages:
1. Assault and Battery or any act or omission in
connection with the prevention or suppression of such
acts;
***
B. This exclusion applies regardless of the degree of culpability
or intent and without regard to :
1. Whether the acts are alleged to be by or at the
instruction or at the direction of the insured, his
officers, employees, agents or servants; or by any
other person lawfully or otherwise on, at or near the
premises owned or occupied by the insured; or by any
other person;
2. The alleged failure of the insured or his officers,
employees, agents or servants in the hiring,
supervision, retention or control of any person,
whether or not an officer, employee, agent or servant
of the insured;
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3. The alleged failure of the insured or his officers,
employees, agents or servants to attempt to prevent,
bar or halt any such conduct.
Id. at 1228 (emphasis added). This Court found that the factual allegation
in the underlying complaint sounded in negligence, and that decedent’s
death did not “arise from” an assault and battery, but rather, arose from the
negligence of appellants. We concluded that the negligent conduct
complained of was not excluded by the assault and battery provision, and
therefore, QBE was obligated to defend against the claims. Id. at 1229-
1230.
Insureds argue that Landis compels us to find that QBE owes them a
duty to defend and a duty to indemnify since their complaint sets forth
allegations that are “remarkably similar” to the allegations found in Landis,
including an averment that OK Café’s negligence was a direct cause of Mr.
Walter’s injuries. Appellant’s brief at 19-20. Although the policy herein also
contains the “arising from” language in the assault and battery provision,
they represent that the exclusion at issue here is identical to the exclusion
at issue in Landis. See Appellant’s brief at 17, 18, 28. We disagree.
The Landis decision turned on the specific “arising from” language
contained in that policy. Apparently, however, the policy did not contain the
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extensive definition of “assault and battery” included in the instant policy,2
which is determinative given the facts at hand. Insureds do not discuss this
definition in their brief, nor do they argue how this Court should interpret
the exclusion’s definition of “assault and battery” to support their position.
As the holding in Landis relied on an abbreviated version of the assault and
battery exclusion, even granting that portion is identical to a portion of the
policy herein, it does not control our disposition.
Insureds’ policy contains a comprehensive and expansive definition of
“assault and battery.” It defines an insured’s failure to prevent or suppress
an assault or battery as an “assault and battery.” In addition, the exclusion
explicitly encompasses the negligent employment, investigation, supervision,
training, and retention of “a person for whom any insured is or ever was
legally responsible and whose conduct is described” as “actual or threatened
assault or battery whether caused by or at the instigation of any insured, his
‘employees,’ patrons or any other persons.” Liability Policy, supra, at 2.
Thus, as defined by the terms of the policy, “assault and battery” includes
negligent conduct on the part of the insured or its employees that directly
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2
Upon review of QBE Insurance Corp. v. M&S Landis Corp., 915 A.2d
1222 (Pa.Super. 2007) and the record, it is unclear whether the policy
involved in Landis contained the definition of “assault and battery” included
in the policy here. However, since the language was not included in our
analysis of the issue in Landis, it did not have a bearing on the resolution of
that dispute. As we find that language conclusive in this case, Landis does
not control our disposition.
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harms another person, whether through negligent failure to prevent an
assault, negligence related to an actual or threatened assault, or negligence
resulting in battery. Essentially, the policy places negligent conduct
contributing to an assault and battery under the “arising from” umbrella
enunciated in Landis. Hence, such conduct is excluded from coverage.
Even assuming OK Café breached its duty to Mr. Walters in negligently
conducting its security operations, the clear and unambiguous language of
the assault and battery provision excludes coverage in this regard. In
granting summary judgment on behalf of QBE, the trial court noted that the
subject policy “specifically precludes recovery for bodily injury from an
assault and battery or any act or omission in connection with the prevention
or suppression of such acts[.]” Trial Court Opinion, 12/14/15, at
unnumbered 5. It specifies that the policy applies “regardless of the alleged
failure of the insured or its employees to attempt to prevent, bar, or halt any
such conduct.”3 Id. Finally, the court acknowledged that “assault and
battery,” as defined by the policy, included “the failure of any insured to
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3
Insureds challenge the trial court’s reasoning in this regard by claiming
they did not allege that OK Café failed to attempt to prevent, bar, or halt the
assault, but rather did attempt it, and did so poorly. Appellant’s brief at 29.
Based on our decision in this matter, we find this to be a distinction without
a difference. Whether OK Café was negligent for failing to suppress the
assault on Mr. Walters, or failing to meet the requisite standard of care
required to suppress the assault, the terms of the exclusion preclude
coverage.
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prevent or suppress an assault as well as the negligent hiring, employment,
supervision, and training of any employee or agent who failed to prevent an
assault from occurring.” Id. (emphasis added).
The myriad allegations presented in the underlying complaint fall
within the scope of the definition of “assault and battery” contained in the
exclusion, and thus, there is no duty to defend or indemnify. After reviewing
the record in the light most favorable to the Insureds, we distinguish no
genuine issue of material fact, and therefore we discern no abuse of
discretion or error of law in the trial court’s grant of summary judgment in
favor of QBE.
Order affirmed.
Judge Ott joins the opinion.
Judge Platt concurs in the result.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/9/2016
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