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Founders Insurance Co. v. Hamilton

United States District Court, D. South Carolina, Orangeburg Division

June 1, 2015

Founders Insurance Company, Plaintiff,
v.
John Hamilton a/k/a Jim Hamilton, Individually and d/b/a Aces High Club, Aces High Club and Kenneth Weatherford, Defendants.

ORDER AND OPINION

J. MICHELLE CHILDS, District Judge.

Plaintiff Founders Insurance Company ("Plaintiff"), filed this declaratory judgment action against Defendants John Hamilton a/k/a Jim Hamilton, individually and d/b/a Aces High Club ("Hamilton"), and Aces High Club ("AHC") (collectively "Defendants") seeking a declaration by the court that a Liquor Liability Policy issued by Plaintiff and bearing policy number LLSC00270 ("Policy") does not provide coverage to Defendants, create an obligation to defend Defendants or create an obligation to indemnify Defendants with regard to the lawsuit styled Kenneth Weatherford vs. John Hamilton, Aces High Club, John Calvin Sikes, Fish Tales a/k/a JS Fish Tales pending in the Court of Common Pleas for Orangeburg County and bearing civil action number 2014-CP-38-00433 ("Underlying Lawsuit"). (ECF No. 1 at 1-2.)

This matter is before the court on Plaintiff's Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6) ("Rule 12(b)(6) motion") or Motion to Strike pursuant to Fed.R.Civ.P. 12(f) ("Rule 12(f) motion") on the basis that Hamilton's "Insurance Bad Faith/Agent Malpractice" allegations are not proper affirmative defenses to Plaintiff's claims and that Hamilton has failed to state facts sufficient to constitute a cause of action or counterclaim. (ECF No. 20.) For the reasons set forth below, the court DENIES Plaintiff's Rule 12(b)(6) motion and Rule 12(f) motion.

I. RELEVANT BACKGROUND TO THE PENDING MOTION

The facts as viewed in the light most favorable to Hamilton are as follows.

Defendants are involved in the Underlying Lawsuit that alleges their negligence in serving Oscar Melvin ("Melvin") excessive amounts of alcohol was the cause of an assault perpetrated by Melvin against Kenneth Weatherford ("Weatherford") at a different bar than AHC, which resulted in physical injury to Weatherford. (ECF No. 1 at 4 at ¶¶ 16-17.) Defendants claim they are insured and entitled to coverage under the Policy, and are entitled to have Plaintiff defend and indemnify them in regard to the Underlying Suit. (Id. at 4-5 ¶¶ 19-20.)

Plaintiff issued the Policy to Hamilton with effective dates of June 3, 2011, through June 3, 2012. (Id. at 5.) Plaintiff claims that coverage and any other benefits from the Policy are not available to Defendants in the Underlying Lawsuit under the Policy's clear and unambiguous terms, including Exclusion (k) "Assault and/or Battery." (Id. at 7-8 ¶¶ 29-31.) Exclusion (k) provides that the Policy does not apply to injuries arising from:

(1) [A]ssault and/or battery committed by any "insured", any "employee" of an "insured", or any other person; (2) The failure to suppress or prevent assault and/or battery by any person in subparagraph k. (1) above; (3) The selling, serving or famishing of alcoholic beverages which results in an assault and/or battery; or (4) The negligent: (a) Employment; (b) Investigation; (c) Supervision; (d) Reporting to the proper authorities, or failure to so repost; or (e) Retention of or by a person for whom any "insured" is or ever was legally responsible and whose conduct would be excluded by subparagraphs k. (1) through k. (3) above.

(Id. at 6 ¶ 24.)

In response to the allegations in the Complaint, Hamilton asserted an affirmative defense of "Insurance Bad Faith/Agent Malpractice" in his Answer to the Complaint on March 30, 2015, claiming that:

Hamilton specifically sought, to the knowledge of FIC through its agents, representatives, and employees, to obtain the subject policy to insure against the risks that are the subject of the Underlying Lawsuit, the same risks having been both assured to be and reasonably relied on by Hamilton to be covered by said policy through FIC's agents, representatives, and/or employees; and that failure of FIC to defend and indemnify Hamilton in the Underlying Lawsuit amounts to both bad faith on the part of FIC and agent malpractice on behalf of FIC's agents, representatives, and/or employees.

(ECF No. 16 at 5 ¶ 20.)

Plaintiff filed both a Rule 12(b)(6) motion and Rule 12(f) motion in opposition to Hamilton's affirmative defense ...


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