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Scottsdale Insurance Co. v. GS Thadius LLC

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

July 2, 2018

Scottsdale Insurance Company, Plaintiff,
v.
GS Thadius LLC d/b/a The Bar, NEM Inc., d/b/a Sandy Monkey, William J. Muse, Sharon Cumbie, and Christine Michelle Acosta, as Personal Representative of the Estate of Michael Jason Dunn, Defendants.

          OPINION AND ORDER

          A. Marvin Quattlebaum, Jr., United States District Judge

         Before 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 28 U.S.C. § 2201 against defendants GS Thadius, LLC d/b/a The Bar (“The Bar”), NEM, Inc. d/b/a/ Sandy Monkey (“Sandy Monkey”), William J. Muse (“Muse”), Sharon Cumbie (“Cumbie”), and Christine Michelle Acosta, as Personal Representative of the Estate of Michael Jason Dunn (“the Estate”) (collectively, the “Defendants”) for the purposes of determining whether the Assault and/or Battery exclusions of two insurance policies issued to The Bar and the Sandy Monkey respectively, preclude coverage for the Estate's claims in connection with a lawsuit filed in the Court of Common Pleas for Horry County brought by the Estate on July 21, 2017 (“Underlying Lawsuit”). The Court's jurisdiction is based on 28 U.S.C. § 1332 because there is diversity of citizenship among the parties and the amount in controversy exceeds the sum of $75, 000. (ECF No. 1 at ¶ 9.)

         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 that 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., 477 U.S. 242, 255 (1986). The moving party has the burden of proving that summary judgment is appropriate.

         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, 477 U.S. 317 (1986). A litigant “cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another.” Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985). Therefore, “[m]ere unsupported speculation . . . is not enough to defeat a summary judgment motion.” Ennis v. National Ass'n of Bus. & Educ. Radio, Inc., 53 F.3d 55, 62 (4th Cir. 1995).

         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. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). If no material factual disputes remain, then summary judgment should be granted against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party bears the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Thus, at the summary judgment phase, “[t]he pertinent inquiry is whether there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Variety Stores, Inc. v. Wal-Mart Stores, Inc., No. 17-1503, 2018 WL 1916320, at *3 (4th Cir. Apr. 24, 2018)(internal citation and quotation marks omitted). “[W]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, disposition by summary judgment is appropriate.” Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 119 (4th Cir.1996).

         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., 815 F.Supp. 165, 166-67 (D.S.C. 1993) Accordingly, the “Court must rule on each motion independently, deciding in each instance whether the moving party has met its burden under Rule 56.” Id.

         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, 88 F.3d 255, 256 (4th Cir. 1996)(citing 28 U.S.C. § 2201(a)). Federal courts frequently use federal declaratory judgment actions to resolve “disputes over liability insurance coverage, even in advance of judgment against the insured on the underlying claim for which coverage is sought.” Auto-Owners Ins. Co. v. Madison at Park W. Prop. Owners Ass'n, Inc., 834 F.Supp.2d 437, 442-43 (D.S.C. 2011)(internal citations and quotations omitted).

         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, 88 F.3d 255, 256 (4th Cir. 1996)(internal citations and quotations omitted). The Court must also consider whether the declaratory judgment controversy can be better settled in the pending state court action, as well as the general principles of federalism, efficiency and comity when making its discretionary decision whether to entertain the declaratory judgment action. Id. at 256-267. After carefully considering the factors above, the Court finds it appropriate to issue a declaratory judgment relative to the narrow coverage issues presented.

         ANALYSIS

         The Court first sets forth the relevant policy language and exclusion language as it pertains to the ...


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