DocketNumber: Civil Action No.: 4:18-cv-00099-AMQ
Citation Numbers: 328 F. Supp. 3d 527
Filed Date: 7/2/2018
Status: Precedential
Modified Date: 7/25/2022
A. Marvin Quattlebaum, Jr., United States District Judge *529Before this Court is the Motion for Summary Judgment of Defendant Christie Michelle Acosta, as Personal Representative of the Estate of Michael Jason Dunn ("the Estate") (ECF No. 13), Plaintiff Scottsdale Insurance Company ("Scottsdale")'s Motion for Summary Judgment (ECF No. 72), and Scottsdale's Motion to Strike Third Defense or Alternative Motion for Partial Summary Judgment (ECF No. 75.) The Court held a hearing on these motions on May 22, 2018, and has considered the arguments of the parties, as well as the briefing submitted and the entire record in this case. For the reasons set forth herein, this Court DENIES the Estate's Motion for Summary Judgment (ECF No. 13), GRANTS Scottsdale's Motion for Summary Judgment (ECF No. 72), and finds as MOOT Scottsdale's Motion to Strike Third Defense of Alternative Motion for Partial Summary Judgment (ECF No. 75.)
FACTUAL AND PROCEDURAL BACKGROUND
The motions before the Court arise out of a declaratory judgment action commenced by Scottsdale pursuant to
The Underlying Lawsuit alleges that Michael Jason Dunn ("Decedent" or "Estate's Decedent") sustained injuries when he was run over by an SUV driven by Janelle Castillo ("Castillo") after being knocked unconscious during a brawl that occurred in the parking lot of the Sandy Monkey. (ECF No. 1-3 at ¶¶ 11-12.) According to the Underlying Lawsuit, Castillo had been drinking heavily at two or more bars prior to the incident. (ECF No. 1-3 at ¶¶ 13-14.) According to the declaratory action complaint, Scottsdale is providing a defense to The Bar, the Sandy Monkey, Muse, and Cumbie in the Underlying Lawsuit under a reservation of rights. (ECF No. 1 at ¶ 19.) Scottsdale issued the policies of both The Bar and the Sandy Monkey for commercial general liability ("CGL") and liquor liability coverage, subject to the terms, conditions, limitations and exclusions of the Policies. (ECF No. 1 at ¶ 20.) An Assault and/or Battery Exclusion applies to both Policies' general liability coverage parts and liquor liability coverage parts. (ECF No. 1 at ¶¶ 23-24.) Scottsdale contends that coverage in this case is excluded under the CGL coverage parts of The Bar Policy and the Sandy Monkey Policy pursuant to the Liquor Liability Exclusions, and further contends *530that coverage is excluded under the CGL coverage parts and liquor liability coverage parts of The Bar policy and the Sandy Monkey Policy pursuant to the Assault and/or Battery Exclusions (ECF No. 1 at ¶¶ 29-30.) Accordingly, Scottsdale seeks a declaration that it has no defense or indemnity obligation to Defendants under the respective Policies. (ECF No. 1 at ¶ 31.) Scottsdale also contends that the claims and damages are precluded under the Policies' punitive or exemplary damages exclusions (ECF No. 1 at ¶ 32.)
The Estate moves for summary judgment on the grounds that the incident underlying the declaratory judgment action falls within the insuring agreement, meaning that the Assault and/or Battery Exclusions do not preclude coverage. (ECF No. 13-1.) The Estate, therefore, contends this declaratory judgment action is subject to dismissal. In what is effectively a mirror image motion, Scottsdale also moves for summary judgment, maintaining that the undisputed material facts demonstrate that the Underlying Lawsuit arose out of an assault and/or battery as those terms are used in the respective policies. (ECF No. 72.) Thus, Scottsdale contends it is entitled to a declaration that the alleged damages in the Underlying Lawsuit are excluded from coverage, and, therefore, Scottsdale does not have any defense or indemnity obligations with respect to the suit. (ECF No. 72 at 1.) In sum, both Scottsdale and the Estate contend there are no genuine issues of material fact and ask this Court to determine, as a matter of law, whether (or not) Scottsdale has a duty to defend or indemnify Defendants in the Underlying Lawsuit.
Scottsdale also moves to strike the Third Defense of Defendants the Sandy Monkey, Muse and Cumbie asserted in their answer to the complaint, or alternatively, for partial summary judgment, on the ground that these Defendants have not offered any facts to support an affirmative defense of waiver on the part of Scottsdale. (ECF No. 75.) Replies and responses have been filed and the Court has thoroughly considered them in reaching its conclusions as set forth herein.
STANDARDS OF REVIEW
Summary Judgment:
A court shall grant summary judgment if the moving party shows that there is no genuine dispute as to any material fact and the party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). In deciding whether a genuine issue of material fact exists, the evidence of the non-moving party is to be believed and all justifiable inferences must be drawn in his favor. See Anderson v. Liberty Lobby, Inc. ,
Once the moving party makes this showing, however, the opposing party may not rest upon mere allegations or denials, but rather must, by affidavits or other means permitted by the Rule, set forth specific facts showing that there is a genuine issue for trial. See Fed.R.Civ.P. 56 ; see also Celotex Corp. v. Catrett ,
Further, at the summary judgment stage, the judge is not to weigh the evidence, but rather determine if there is a genuine issue of material fact.
*531Anderson v. Liberty Lobby, Inc. ,
Both the Estate Scottsdale are seeking summary judgment. Thus, they both assert that there are no genuine issues of material fact in dispute. In ruling on cross-motions for summary judgment, the Court must apply the same standard as it does for individual summary judgment motions. Creech v. N.D.T. Indus., Inc. ,
Declaratory Judgment:
The Federal Declaratory Judgment Act provides this Court with significant discretionary power to "declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." Centennial Life Ins. Co. v. Poston ,
The Fourth Circuit has explained that a declaratory judgment action is appropriate: (1) "when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue," and (2) "when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding." Centennial Life Ins. Co. v. Poston ,
ANALYSIS
The Court first sets forth the relevant policy language and exclusion language as it pertains to the instant motion for summary judgment.
Applicable Policy Language:
A. Scottsdale Insurance Company Policy to Named Insured GS Thadius, LLC c/o The Bar, Policy Number CPS2567688, Policy Period from 10/18/2016 to 10/18/2017 ("The Bar Policy").
The Bar Policy states in relevant part:
*532Commercial General Liability Coverage Form ... We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result....
This insurance applies to "bodily injury" and "property damage" only if: (1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory;" (2) The "bodily injury" or "property damage" occurs during the policy period; and (3) Prior to the policy period, no insured listed under Paragraph 1. of Section II-Who Is An Insured and no "employee" authorized by you to give or receive notice of an "occurrence" or claim, knew that the "bodily injury" or "property damage" had occurred, in whole or in part ... (ECF No. 1-1 at 15-16.)
The Liquor Liability Coverage Form provides as follows:
We will pay those sums that the insured becomes legally obligated to pay as damages because of "injury" to which this insurance applies if liability for such "injury" is imposed on the insured by reason of the selling, serving or furnishing of any alcoholic beverage. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "injury" to which this insurance does not apply. We may, at our discretion, investigate any "injury" and settle any claim or "suit" that may result. (ECF No. 1-1 at 54.)
An "Assault and/or Battery Exclusion" also applies to the policy, specifically modifying the CGL coverage part and the Liquor Liability coverage part such that:
This insurance does not apply to "injury," "bodily injury," "property damage," "error or omission" or "personal and advertising injury" arising from: 1. Assault and/or Battery committed by any insured, any employee/"employee" of any insured, or any other person; 2. The attempt or failure to suppress or prevent Assault and/or Battery by any person in 1. above; 3. The selling, serving or furnishing of alcoholic beverages which results in an Assault and/or Battery ... (ECF No. 1-1 at 36.)
B. Scottsdale Insurance Company Policy to Named Insured NEM, Inc., Sandy Monkey Policy Number CPS2399002, Policy Period from March 28, 2016 through March 28, 2017 ("Sandy Monkey Policy").
The Sandy Monkey Policy states in relevant part:
Commercial General Liability Form ... We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result ...
This insurance applies to "bodily injury" and "property damage" only if: (1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory;" The *533"bodily injury" or "property damage" occurs during the policy period; and (3) Prior to the policy period, no insured listed under Paragraph 1. of Section II-Who Is An Insured and no "employee" authorized by you to give or receive notice of an "occurrence" or claim, knew that the "bodily injury" or "property damage" had occurred, in whole or in part ... (ECF No. 1-2 at 13.)
The Liquor Liability Coverage Form provides as follows:
We will pay those sums that the insured becomes legally obligated to pay as damages because of "injury" to which this insurance applies if liability for such "injury" is imposed on the insured by reason of the selling, serving or furnishing of any alcoholic beverage. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "injury" to which this insurance does not apply. We may, at our discretion, investigate any "injury" and settle any claim or "suit" that may result. (ECF No. 1-2 at 29.)
An "Assault and/or Battery Exclusion" also applies to the policy, specifically modifying the CGL coverage part and the liquor liability coverage part such that:
This insurance does not apply to "injury," "bodily injury," "property damage," "error or omission" or "personal and advertising injury" arising from: 1. Assault and/or Battery committed by any insured, any employee/"employee" of any insured, or any other person; 2. The attempt or failure to suppress or prevent Assault and/or Battery by any person in 1. above; 3. The selling, serving or furnishing of alcoholic beverages which results in an Assault and/or Battery.
The parties agree that South Carolina law applies to the substantive insurance questions at issue in this dispute.
Legal Standard for Construction of Insurance Policies:
Under South Carolina law, insurance policies are subject to the general rules of contract construction. B.L.G. Enters., Inc. v. First Fin. Ins. Co.,
Application of Applicable Law to the Policies:
Under South Carolina law, an insurer is responsible for providing a legal *534defense on any underlying substantive claim that creates the possibility of coverage under an insurance policy. Union Ins. Co. v. Soleil Grp., Inc. , No. 2:07-CV-3995-PMD,
Based on these principles, the Court has carefully considered the underlying complaint. The complaint alleges that "a dispute arose inside The Sandy Monkey which led to a fight ... which escalated into a brawl" in the parking lot of the Sandy Monkey. (ECF No. 1-3 at ¶ 10.) It further alleges that "Decedent tried to be a peacemaker between the participants of the fight" and "in the process, he was rendered unconscious by one of the combatants and lay motionless in the parking lot." (ECF No. 1-3 at ¶ 11.) Defendant Castillo was allegedly sitting in her SUV during the fight when one of the fight participants, her boyfriend or male acquaintance, got into her car. (ECF No. 1-3 at ¶ 12.) Allegedly intoxicated after having consumed "large quantities of alcoholic beverages" at Defendants' bars, "she then drove off, running over the Decedent's head, causing great bodily harm which ultimately led to his death." (ECF No. 1-3 at ¶¶ 12-13.) The complaint alleges various causes of action against the bar Defendants and Castillo sounding in wrongful death, survival, dram shop liability, and gross negligence, among other claims.
With the underlying complaint in focus, the Court turns to the instant motions which center around a single question-what is the meaning of "arising from" in the Assault and/or Battery Exclusion of the respective Policies. The Policies specifically states that the insurance does not apply to "injury" or "bodily injury" arising from "Assault and/or Battery committed by any insured, any employee/ "employee" of any insured, or any other person." (ECF No. 1-1 at 36; ECF No. 1-2 at 43.) The term "arising from" is not defined in the respective Policies. Thus, where a term is not defined in an insurance policy, "the term should be defined according to the usual understanding of the term's significance to the ordinary person." State Farm Fire & Cas. Co. v. Barrett ,
The Supreme Court of South Carolina has considered the substantially similar phrase "arising out of" and noted that it may be interpreted in many ways. McPherson By & Through McPherson v. Michigan Mut. Ins. Co. ,
Here, Scottsdale has a duty to defend in the Underlying Lawsuit, unless the Policies' Assault and/or Battery Exclusions apply. Scottsdale contends that it has no duty to defend because the allegations and damages in the underlying suit are excluded from coverage by the Policies' Assault and/or Battery Exclusions. (ECF No. 72 at 1.) Scottsdale maintains that it is clear that the Decedent's death arose from an assault and battery within the meaning of the exclusions, i.e., the brawl that rendered him unconscious and put him in a position where Ms. Castillo could have run over him in the parking lot. (ECF No. 72-1 at 13, 15-16.) Just as vigorously, the Estate argues that the death was proximately caused by Ms. Castillo running over the Decedent in her intoxicated state which was caused by the act of the bars overserving her liquor. (ECF No. 13-1 at 7-8.) The Estate further claims that there is no evidence in the record to support an assertion that the impact between Ms. Castillo's vehicle and the Decedent was an "assault and battery," as Ms. Castillo was not indicted intentional assault and battery.
Scottsdale suggests that the South Carolina Supreme Court's decision in South CarolinaFarm Bureau Mutual Insurance Company v. Durham controls in this case. Durham , however, discusses, but does not ultimately resolve the question of coverage "where the loss is the result of multiple causes." S.C. Farm Bureau Mut. Ins. Co. v. Durham ,
The Court takes note of the "but for" analysis described in Durham , but finds the cases of Canopius US Insurance Company v. Middleton and Scottsdale Insurance Company v. Moonshine Saloon, LLC, interpreting assault and battery exclusions in light of South Carolina law, most similar to the instant matter. See Canopius US Ins., Inc. v. Middleton ,
An issue of intent was also raised in Scottsdale Ins. Co. v. Moonshine Saloon, LLC , which also involved a declaratory judgment action brought by an insurer concerning a shooting at a bar. Ultimately, the court considered the chain of events as set forth in by the record and the undisputed fact that the shooter fired the gun in reaction to being chased out of the saloon following an altercation. The court concluded that where the shooter "unintentionally struck decedent when firing 'randomly' at the side of the Saloon, the causal link between the assault and decedent's death is immediate and direct ... therefore the court finds that decedent's death 'arose from' the assault within the meaning of the Policy." Scottsdale Ins. Co. v. Moonshine Saloon, LLC ,
In view of these cases, this Court must look at the relationship between the assault and battery and the ultimate injury of the Decedent. In light of the Policies' language, the Court cannot just proceed as though the brawl never happened. Thus, the Court returns to the underlying complaint itself to evaluate whether there is an "immediate and direct" link between the initial assault and the subsequent act of Ms. Castillo in running over the decedent with her vehicle. The complaint alleges that Ms. Castillo was driving off and away from the fight once her boyfriend, who had been a direct participant in the fight, entered her vehicle. (ECF No. 1-3 at ¶ 10-12.) In this light, the injury to Decedent was "caused by" him being knocked unconscious by the fight and Ms. Castillo's act of running over the decedent as she fled from the fight, at the direction of her male companion who was in the fight. (ECF No. 13-2 at 2.) Ms. Castillo's alleged conduct is neither isolated nor independent from the Decedent being knocked unconscious. Instead, the relationship between the assault and battery and the ultimate injury, based on the record before the Court, was immediate and direct. It, therefore, arose from the assault and battery as contemplated under the policy exclusion.
The Court finds the South Carolina Court of Appeals decision in Sphere Drake InsuranceCompany v. Litchfield , instructive. Sphere Drake Ins. Co. v. Litchfield ,
The Court has identified a case from another district which, although not binding, is on all-fours with the scenario presented in this case. In Burlington Insurance Company v. Cesar Salmoran d/b/a Mambo's Night Club ,
*538Burlington Ins. Co. v. De La Puente ,
Based on the above, the Court finds Scottsdale is entitled to summary judgment against Defendants. The allegations and alleged damages in the Underlying Lawsuit are excluded from coverage by the Policies' Assault and/or Battery Exclusions which apply to the CGL and Liquor Liability forms. Accordingly, Scottsdale does not have any defense obligations to any party in connection with the Underlying Lawsuit. The undisputed evidence shows that an assault or battery occurred in this case and that the Decedent was injured in connection with the event. The complaint itself acknowledges that Castillo was involved, in some way, in the bar fight and altercation that took place. The chain of events is immediate and direct in that regard.
The Court has carefully considered the Estate's Motion which maintains that the Decedent's death did not "arise out of" and was not "caused by" an assault or battery, but was instead the result of the Decedent being "run over by a drunken driver to whom Scottsdale's policyholders had been [serving] alcoholic beverages." (ECF No 13-1 at 13.) As has been fully analyzed above, the proper analysis for this Court in determining the applicability of the exclusions in the relevant insurance policies must take into account the initial bar fight in the sequence of events. It is important to note that this analysis is not for the purposes of determining "legal liability," as it might pertain to the Underlying Lawsuit. It is possible that Defendants have legal liability in that action. The Court takes no position on that issue. The analysis here is for the purposes of determining Scottsdale's potential obligations under the policies. (ECF No. 13-1 at 9.) "Although the injuries may have been caused by the negligent acts of the defendant, that does not necessarily mean that they did not arise out of an assault and/or battery." Catlin Specialty Ins. Grp. v. RFB, Inc., No. CV 2:16-3135-RMG,
Having found that Scottsdale has no duty to defend, it also necessarily finds that it has no duty to indemnify Defendants. See Penn-Am. Ins. Co. v. Coffey ,
The events which underlie the matter before the Court are most unfortunate indeed. However, as noted above, the Court is not deciding liability for the underlying action in state court. It is only considering the coverage obligations under the Policies. In doing so, this Court is "limited to the interpretation of the contract made by the parties, regardless of its wisdom or folly, apparent unreasonableness, or failure *539of the parties to guard their rights carefully." Sphere Drake Ins. Co. v. Litchfield ,
CONCLUSION
For the reasons stated above, the Estate's Motion for Summary Judgment (ECF No. 13) is DENIED; and Plaintiff Scottsdale's Motion for Summary Judgment (ECF No. 72) is GRANTED. For the reasons stated above, the court declares that, under the terms of the Policy, Scottsdale has no duty to defend and no duty to indemnify the Defendants in the Underlying Lawsuit. Accordingly, the Court need not rule on Scottsdale's Motion to Strike the Third Defense or Alternative Motion for Partial Summary Judgment regarding Sandy Monkey's waiver defense and the adequacy of Scottsdale's reservation of rights letter. That Motion is now MOOT.
IT IS SO DECLARED AND ORDERED.
Scottsdale does not seem to be adopting the position that the Assault and/or Battery exclusion applies based on Ms. Castillo's conduct or state of mind. It is clear to the Court that Scottsdale's position is instead that the original brawl referenced in the complaint was a "but for" cause of the Decedent's death. (ECF No. 79 at 6.) "An assault is an attempt or offer, with force or violence, to inflict bodily harm on another or engage in some offensive conduct," and a battery is "the actual infliction of any unlawful, unauthorized violence on the person of another, irrespective of its degree." Mellen v. Lane ,