United States District Court, D. South Carolina, Columbia Division
DHW PURCHASING GROUP, LLC dba Carolina Pour House and DANIEL WELLS, Plaintiffs,
HUB INTERNATIONAL MIDWEST LIMITED, KEENANSUGGS INSURANCE, ALL RISKS, LTD., and THE BURLINGTON INSURANCE COMPANY, Defendants.
OPINION AND ORDER ON MOTIONS TO DISMISS ECF NOS. 28,
CAMERON MCGOWAN CURRIE, Senior United States District Judge.
this action, Plaintiffs Daniel Wells (“Wells”)
and DHW Purchasing Group, LLC (“DHW”)
(collectively “Plaintiffs”) seek recovery for
claims arising from the purchase of insurance and subsequent
denial of coverage for two lawsuits. These lawsuits arose
from incidents at The Carolina Pour House (“Pour
House”), a business owned and operated by DHW.
Plaintiffs seek recovery from the insurer, The Burlington
Insurance Company (“TBIC”), as well as Hub
International Midwest Limited (“HUB”) and All
Risks, LTD (“All Risks”), entities involved in
the sale of the insurance policies.
Second Amended Complaint also purports to name a fourth
Defendant, KeenanSuggs Insurance, which is described as
“an independent South Carolina entity . . . until
August 1, 2016.” ECF No. 22 ¶¶ 3, 4.
Plaintiffs allege they purchased the policies at issue from
an agency operating under this name, with the first policy
taking effect in September 2014 followed by annual renewals
in September 2015 and October 2016. ECF No. 22 ¶¶
43, 49, 54, 55. No. such entity has been
served. Thus, only TBIC, All Risks, and HUB are
properly named or joined.
action is before the court on motions to dismiss filed by
TBIC, HUB, and All Risks, all of which have been fully
briefed. See ECF Nos. 28, 43, 46 (HUB's motion,
Plaintiffs' response, and HUB's reply); ECF Nos. 44,
51, 56 (TBIC's motion, Plaintiffs' response, and
TBIC's reply); ECF Nos. 47, 54, 55 (All Risks'
motion, Plaintiffs' response, and All Risks' reply).
For reasons set forth below, the motions are granted and the
action is dismissed as to all causes of action. Dismissal is
with prejudice as to the first through fourth and sixth
causes of action. Dismissal is without prejudice as to the
fifth (negligence) cause of action.
is the sole member of DHW. ECF No. 22 ¶¶ 1, 2. In
2014, DHW “purchased the assets of [an] establishment
known as the Pour House[, ]” a business “licensed
to serve alcoholic beverages.” Id. ¶ 14.
Acting on behalf of himself and DHW, Wells contacted an
insurance agency doing business as KeenanSuggs Insurance to
obtain insurance covering DHW”s operations including
the Pour House. Id. ¶¶ 15-17. Working
through All Risks, which Plaintiffs describe as a
“licensed insurance [b]roker” and
“specialty broker” (id. ¶¶ 6, 34), the
insurance agency obtained a commercial general liability
policy (“CGL Policy”) with a Liquor License
Endorsement (“Liquor Endorsement”) from TBIC.
Id. ¶¶ 15, 18, 43-45. HUB began operating
under the trade name KeenanSuggs Insurance on or about August
1, 2016, after an asset acquisition. See ECF No. 22 ¶ 5
(characterizing transaction as “purchase” of
Issuance and Renewals.
first TBIC policy (“First Policy”) took effect
September 5, 2014, and covered a one-year period
(“First Policy Period”). ECF No. 22 ¶¶
43-45. Plaintiffs began the renewal application process in
August 2015, and obtained a renewal policy covering the
period September 5, 2015, through September 5, 2016, which
was later extended into October 2016 (“Second Policy
Period”). Id. ¶¶ 49-54; see also ECF
No. 11-1 (copy of policy No. HGL0042121 covering period
September 5, 2015, to September 5, 2016 (“Second
Policy”)). The renewal process was initiated and
portions of the application were completed by agents working
for the entity or entities then doing business as KeenanSuggs
Insurance. ECF No. 22 ¶ 50. Plaintiffs'
insurance policy was first extended into October 2016 and
then renewed with the new policy covering from October 22,
2016, to October 22, 2017 (“Third Policy
Period”). Id. ¶ 55. This policy is
numbered 740BW37405 (“Third Policy”). ECF No.
11-2 at 1, 2.
incidents occurred at the Pour House during the Second and
Third Policy Periods that gave rise to lawsuits discussed
below. ECF No. 22 ¶¶ 63-68, 76-79; see also ECF No.
11-3 (Complaint in “Chisolm Lawsuit”); ECF No.
11-4 (Complaint in “Yarborough Lawsuit”)
(collectively “Underlying Lawsuits”).
April 2017, Ryan Chisolm filed a lawsuit against Wells, DHW,
and others alleging he was injured in an incident at the Pour
House in March 2017. ECF No. 22 ¶ 63; ECF No.
11-3. Plaintiffs characterize this lawsuit as
alleging Chisolm suffered injuries “when Wells, acting
as an agent and employee of DHW, negligently allowed
[Chisolm] to fall to the sidewalk after removing him from the
inside of the building during a disturbance.” ECF No.
22 ¶ 66; see also Id. ¶ 64 (characterizing
Chisolm Lawsuit as alleging “Wells was negligent in
releasing [Chisolm] not realizing that he was
Complaint in the Chisolm Lawsuit characterizes the incident
differently, alleging Chisolm witnessed an altercation in the
Pour House and was the victim of a missed swing by an unknown
male. ECF No. 11-3 ¶ 72. After these events, Wells and
other agents of DHW began pushing everyone outside the
establishment. Id. Chisolm alleges that, after he
was outside, Wells approached him from behind and placed
Chisolm in a chokehold that rendered Chisolm unconscious
after which Wells “threw [Chisolm's] body down,
” causing him substantial injuries. Id.
¶¶ 74-76. Chisolm pursues a negligence claim
“[a]gainst all Defendants” and multiple
intentional tort claims against Wells. Id.
2017, Matthew Yarbrough filed a lawsuit against Wells
(individually and as owner of DHW) and Michael Lawrence
seeking recovery for injuries sustained “when another
patron struck [Yarborough] on the premises during an
altercation” (“Yarborough Lawsuit”). ECF
No. 22 ¶¶ 76, 77; see also ECF No. 11-4 (Complaint
in Yarborough Lawsuit). The Complaint in the Yarborough
Lawsuit alleges the incident occurred on or about August 20,
2016, when Lawrence “physically assaulted [Yarborough]
by striking him in the face several times.” ECF No.
11-4 ¶¶ 8, 12. It alleges employees and agents of Pour
House failed or refused to intervene and that Lawrence was
acting as an agent and servant of Pour House. Id.
¶¶ 13, 16; see also Id. ¶ 9 (alleging
Lawrence was behind the bar serving drinks prior to the
incident). Yarborough seeks recovery under negligence and
intentional tort theories, as well as a statutory claim for
“dram shop liability” under S.C. Code §
tendered the defense of the Chisolm and Yarborough Lawsuits
to TBIC. ECF No. 22 ¶¶ 68, 79. TBIC denied coverage
of both by letters dated May 11, 2017, and August 14, 2017,
relying on similarly-worded Assault, Battery or Other
Physical Altercation Exclusions (collectively “A&B
Exclusion”) applicable to both the CGL Policies and
Liquor Endorsements. Id. ¶¶ 70, 73, 80,
83; see also ECF No. 11-1 at 41, 67 (Second Policy
exclusions); ECF No. 11-2 at 41, 67 (Third Policy
exclusions). Plaintiffs allege TBIC did not contact
Plaintiffs and either did not investigate or conducted only a
“sham investigation” before denying coverage. ECF
No. 22 at ¶¶ 71, 72, 81, 82; see also Id.
¶ 75 (characterizing denial of coverage of Chisolm
Lawsuit as arbitrary, capricious, a violation of the
insurance policy and public policy).
on Agency Expertise.
allege Wells “sought to purchase certain policies of
insurance, including General Liability and Liquor Liability
insurance policies.” ECF No. 22 ¶ 15. He was
referred by “[f]riends and acquaintances” to
KeenanSuggs Insurance, whose agents “undertook to
assist [Plaintiffs] in procuring policies of insurance to
protect them from all of the many hazards involved in the
business of selling alcoholic beverages.” Id.
¶¶ 16, 17. The agents of KeenanSuggs Insurance
“held themselves out to be independent insurance agents
representing Insurance Companies and brokers including
defendants [All Risks] and TBIC.” Id. ¶
18. They also “assured [Wells] that they . . . were
capable and able to provide the coverage that he needed for
his protection and the protection of his landlord[.]”
Id. ¶ 19; Id. ¶ 20 (both before
and after KeenanSuggs Insurance was “acquired by”
HUB, the insurance agency “held itself and its
employees out as having the requisite expertise to assist
Wells and DHW with their insurance needs”); see also
Id. ¶ 21 (alleging KeenanSuggs Insurance
represented its agents “‘listen to our clients to
understand their business goals and risks to design insurance
solutions for long-term success' and ‘[o]ur team
understands the risks you face and the products you need to
find the balance between price and protection of your family
initially and “at each renewal” Wells
“requested ‘full coverage' which he
understood to cover the complete spectrum of risks which DHW
would be exposed to in operating its business” and he
“understood and expected that he would be protected
from simple negligence that occurred and from reasonably
foreseeable risks including those that might customarily
occur in his business including injuries caused to patrons as
a result of negligence by the business or its
employees.” Id. ¶ 22 (also stating
Wells' “purpose in acquiring the policies of
insurance was to protect himself and the business from losses
that might occur in the ordinary course of business.”).
allege Wells “explained DHW's needs and wishes
fully to KeenanSuggs representatives each time he purchased
or renewed coverage.” Id. ¶ 24.
“When Wells purchased coverage, he explained that he
needed full coverage for both general and liquor liability
which would include dram shop type claims as well as claims
for physical injury on and about the premises.”
Id. ¶ 28. Plaintiffs allege on information and
belief that “KeenanSuggs representatives were aware of
this information and communicated the same to their
principals and agents defendants [All Risks] and
TBIC.” Id. ¶ 29. They also allege
“Wells knew that sometimes altercations could occur in
establishments where alcohol is sold and understood and
expected with the issuance of each policy that the policy
issued covered DHW and Pour House for that type of
occurrence.” Id. ¶ 30. Plaintiffs allege
Wells was “neither an experienced businessman or
purchaser of insurance” and all Defendants “were
aware of Wells['] status as a first-time business owner
as well as his youth and inexperience.” Id.
¶¶ 31, 32.
allege All Risks' website advertised the following
statement “[a]s agent of KeenanSuggs and [TBIC]”
Restaurants, bars, taverns, and nightclubs have more to worry
about than daily specials and what's on tap, such as
accidents in the kitchen and slips and falls from customers.
Over-served patrons who get behind the wheel present a liquor
liability. Fights among patrons or those with security
personnel account for numerous assault and battery claims.
Throw in a misguided dart, an unsuccessful mechanical bull
ride or a fall on the dance floor and the recipe for risk
increases. All Risks is a leading restaurant insurance
wholesale broker with specialists who can help you craft the
best coverage for your clients.
Id. ¶ 36 (emphasis added); Id. ¶
37 (alleging All Risks “advertised these precise
dangers on [its] website until 2018”).
assert the above-quoted statement on All Risks' website
demonstrates All Risks “recognized the risks”
articulated. Id. ¶ 37. While Plaintiffs suggest
they could have relied on the statement, they do not
expressly allege they did so or were even aware of it when
insurance was procured. See, e.g., Id. ¶ 51
(“Wells had information available to him, including
[All Risks'] website and assurance of the agents of all
of the defendants that the policy covered . . . against all
risks including personal injury to a party on the premises
because of contact with another individual.” (emphasis
added)); Id. ¶ 58 (asserting information on All
Risks' website “would lead any reasonable person to
believe that when the insurance agent procured restaurant bar
and nightclub coverage through [All Risks, ] . . . their
business was covered for risks including a situation where
there was a ‘fight among patrons or those with security
personnel.'” (emphasis added)). Plaintiffs also
allege Wells “asked and received assurances that he was
covered for all potential losses that [Plaintiffs] might
incur in their normal and reasonable operations.”
Id. ¶ 40.
allege all Defendants are both agents and principals of each
other, thus supporting imputation of knowledge, actions, or
inactions by each of them to all of them. E.g., ECF No. 22
¶ 33 (“As agents and principals of each other,
Defendants all had actual or imputed knowledge of Wells'
status and naivete in matters concerning insurance.”).
Beyond basic allegations KeenanSuggs Insurance and HUB acted
as independent insurance agents (albeit in different time
frames), All Risks' acted as broker, and TBIC acted as
insurer, Plaintiffs offer only conclusory allegations of
agency relationships. E.g., Id. ¶ 6 (describing
All Risks as “principal of KeenanSuggs and [HUB] and
agent of TBIC” (emphasis added)); Id. ¶
34 (alleging All Risks “as an agent of KeenanSuggs,
[HUB] and TBIC . . . represented itself as being a specialist
in ‘Restaurant Insurance including Bar, Tavern &
Nightclub” (emphasis added)); Id. ¶ 84
(alleging “KeenanSuggs dba HUB” acted “as
agent of KeenanSuggs and TBIC”); Id. ¶ 94
(seeking alternative ruling “TBIC's agents
KeenanSuggs, HUB and [All Risks] made representations that
bound TBIC”); Id. ¶ 96 (alleging All
Risks acted as “Principal and Agent of the other
defendants” in publishing its marketing materials).
motion under Federal Rule of Civil Procedure 12(b)(6) should
be granted only if, after accepting all well-pleaded
allegations in the complaint as true, it appears certain that
the plaintiff cannot prove any set of facts in support of its
claims that entitles it to relief. See Edwards v. City of
Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). Although
the court must take the facts in the light most favorable to
the plaintiff, it “need not accept the legal
conclusions [the plaintiff would draw] from the facts.”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.
2008) (quoting Eastern Shore Mkts., Inc. v. J.D. Assocs.
Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000)). The
court may also disregard any “unwarranted inferences,
unreasonable conclusions, or arguments.” Id.
Rule 12(b)(6) standard has often been expressed as precluding
dismissal unless it is certain that the plaintiff is not
entitled to relief under any legal theory that plausibly
could be suggested by the facts alleged. See Mylan Labs.,
Inc. v. Markari, 7 F.3d 1130, 1134 (4th Cir. 1993).
Nonetheless, the plaintiff must allege “enough facts to
state a claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)
(quoted in Giarratano, 521 F.3d at 302).
applying Rule 12(b)(6), the court also applies the relevant
pleading standard. Despite the liberal pleading standard of
Rule 8, a plaintiff in any civil action must include more
than mere conclusory statements in support of a claim.
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(court need only accept as true the complaint's factual
allegations, not its legal conclusions); see also
McCleary-Evans v. Maryland Dept. of Trans., 780 F.3d
582, 587 (4th Cir. 2015) (noting “Iqbal and Twombly
articulated a new requirement that a complaint must allege a
plausible claim for relief, thus rejecting a standard that
would allow a complaint to survive a motion to dismiss
whenever the pleadings left open the possibility that a
plaintiff might later establish some set of [undisclosed]
facts to support recovery.” (emphasis and alteration in
original, internal quotation marks omitted)); Walters v.
McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing
Robertson v. Sea Pines Real Estate Companies, Inc., 679
F.3d 278 (4th Cir. 2012) for proposition plaintiff need not
forecast evidence sufficient to prove the elements of a
claim, but must allege sufficient facts to establish those
Breach of Contract
their first cause of action, Plaintiffs allege Defendant(s)
breached contractual duties owed under a policy of insurance
by denying coverage of the Underlying Lawsuits. See ECF No.
22 ¶ 98 (alleging “Defendants . . . fail[ed] to
perform a contractual promise to honor the parties'
insurance policy” (emphasis added)). Defendants argue
this claim fails as a matter of law because the A&B
Exclusion clearly precludes coverage of claims asserted in
the Underlying Lawsuits. For reasons explained below, the
policies are subject to general rules of contract
construction” and policy language must be given
“its plain, ordinary and popular meaning.”
Diamond State Ins. Co. v. Homestead Indus., Inc.,
456 S.E.2d 912 (S.C. 1995). While “ambiguous or
conflicting terms . . . must be construed liberally in favor
of the insured, ” courts may not “torture the
meaning of policy language to extend or defeat coverage that
was never intended by the parties.” Id.
(holding trial court erred in construing policy to provide
coverage beyond the policy limits).
South Carolina law, “[i]nsurers have the right to limit
their liability and to impose conditions on their obligations
provided they are not in contravention of public policy or a
statutory prohibition.” B.L.G. Enter. v. First Fin.
Ins. Co.,514 S.E.2d 327, 330 (S.C. 1999). Applying this
principle, South Carolina courts have given effect to dram
shop liability and assault and battery exclusions.
Id. (rejecting argument dram shop exclusion made
coverage illusory and holding insurer had no duty to defend
claim that fell within that exclusion); Sphere Drake Ins.
Co. v. Litchfield,438 S.E.2d 275, 276 (S.C. Ct. App.
1993) (holding insurer had no duty to defend insured for
actions of its bouncers in removing patron following a
disturbance because policy excluded ...