Opinion
Civil Action No. 01-30015-MAP
March 19, 2002
AMENDED REPORT AND RECOMMENDATION WITH REGARD TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (Docket No. 14) March 19, 2002
On February 23, 2000, Matthew McElhiney ("McElhiney") — a patron at the Fat Cat Bar Grill ("the Fat Cat"), a drinking establishment owned by Trocia Sons, Inc. — was assaulted by another patron, Shawndrell Jones ("Jones"). McElhiney has brought a negligence-based suit against Jones, the Fat Cat and two of its employees in state court. In the meantime, the Fat Cat's general liability insurer, Lloyds of London ("Plaintiff"), brings this declaratory judgment action against the Fat Cat and a "John Doe" employee as well as against McElhiney and Jones. In essence, Plaintiff seeks a declaration, pursuant to the Declaratory Judgment Act ("DJA"), 28 U.S.C. § 2201, that it has no duty to defend or indemnify the Fat Cat or its employees with respect to any of the state claims.
Plaintiff has moved for summary judgment and only one defendant, McElhiney, has filed an opposition. Plaintiff's motion has been referred to this court for a report and recommendation. See 28 U.S.C. § 636(b)(1). For the reasons stated below, the court will recommend that Plaintiff's motion for summary judgment be allowed.
Jones has not appeared in this case, and the Fat Cat defendants conceded at oral argument that they would not challenge Plaintiff's motion as they believe there is no coverage under Plaintiff's policy. Despite this concession, all parties agreed that McElhiney could oppose Plaintiff's motion as an interested party.
I. BACKGROUND
For purposes of Plaintiff's motion, the parties do not dispute the following facts. On February 23, 2000, an inebriated Jones accosted McElhiney as he approached the men's room. When McElhiney attempted to back away, two Fat Cat employees began yelling at him. Thereafter, McElhiney left the bar and stood directly outside, against the wall and within the employees' range of vision, waiting for his companions. While there, a friend of Jones assaulted McElhiney and threw him to the ground. Jones himself then kicked and hit McElhiney, all within direct view of the Fat Cat employees. McElhiney was taken by ambulance to Baystate Medical Center where he was treated for multiple injuries.
On May 9, 2000, McElhiney filed suit in Hampden County Superior Court. His complaint has five counts: a claim against Jones for assault and battery (Count I); two negligence claims directed at the Fat Cat employees (Counts II and III); a negligent supervision and hiring claim targeting the Fat Cat (Count IV); and a claim alleging that the Fat Cat violated the Massachusetts Dram Shop Act by negligently serving alcohol to Jones (Count V).
At the time of the incident, the Fat Cat was insured by Plaintiff under a general liability policy. That policy contains, inter alia, an assault and battery exclusion and a liquor liability exclusion. Plaintiff has denied coverage on all five of McElhiney's claims, determining they are each precluded under one or both of the exclusions. On January 22, 2001, Plaintiff brought the present declaratory judgment action and, in due course, filed the instant motion for summary judgment.
II. STANDARD OF REVIEW
A court may grant summary judgment pursuant to FED. R. CIV. P. 56(c) if "there is no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." Once the moving party has asserted that no genuine issue of material fact exists, the burden is on the opposing party to point to specific facts demonstrating that there is, indeed, a trial-worthy issue. National Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir. 1995). A "genuine" issue is one "that a reasonable jury could resolve . . . in favor of the nonmoving party." McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 315 (1st Cir. 1995). Accord United States v. One Parcel of Real Property, Great Harbor Neck, New Shoreham, R.I., 960 F.2d 200, 204 (1st Cir. 1992).
Not every genuine factual conflict, however, necessitates a trial. "`It is only when a disputed fact has the potential to change the outcome of the suit under the governing law if found favorably to the non-movant that the materiality hurdle is cleared.'" Parrilla-Burgos v. Hernandez-Rivera, 108 F.3d 445, 448 (1st Cir. 1997) (quoting Martinez v. Colon, 54 F.3d 980, 983- 84 (1st Cir. 1995)). At bottom, matters of law are for the court to decide at summary judgment. Blackie v. Maine, 75 F.3d 716, 721 (1st Cir. 1996).
III. DISCUSSION
The DJA gives a federal court the authority "[i]n a case of actual controversy within its jurisdiction" to "declare the rights and other legal relations of any interested party." 28 U.S.C. § 2201. Pursuant to the DJA, Plaintiff seeks a declaration that, because of the liquor liability and assault and battery exclusions, it has no duty to defend or indemnify the Fat Cat or its employees with respect to McElhiney's tort claims. The court will address each exclusion in turn.
The DJA "is mirrored by Fed.R.Civ.P. 57" and, as such, "[t]he statute and the rule are functionally equivalent." Ernst Young v. Depositors Economic Protection Corp., 45 F.3d 530, 534 n. 8 (1st Cir. 1995). Rule 57 provides that "[t]he procedure for obtaining a declaratory judgment pursuant to Title 28, U.S.C. § 2201 shall be in accordance with these rules."
A. THE Liquor Liability Exclusion
The liquor liability exclusion applies to those in the business of selling or serving alcoholic beverages. It excludes from coverage:
"Bodily injury" or "property damage" for which any insured may be held liable by reason of:
(1) Causing or contributing to the intoxication of any person;
(2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or
(3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.
(Docket No. 13 (Statement of Undisputed Facts) ¶ 5.) McElhiney acknowledges that his Dram Shop Act claim (Count V) is likely precluded by the liquor liability exclusion. (See Docket No. 20 (McElhiney's Brief) at 7.) The court agrees that the claim falls squarely within that exclusion, ( see id., Exhibit A (McElhiney's Complaint) ¶¶ 31 and 34 (alleging that "the Fat Cat . . . continued to serve alcoholic beverages to Jones after he was clearly inebriated and under the influence of alcohol" and, thereby, "violated the Dram Shop Act")), and, therefore, will recommending allowing Plaintiff's motion in that respect. Nonetheless, McElhiney argues that his negligent supervision and hiring claim (Count IV), at least, is not contingent on the Fat Cat's service of alcohol to Jones. Plaintiff, on the other hand, submits that all of McElhiney's remaining claims (Counts I through IV) are precluded by the assault and battery exclusion. The court, therefore, turns to that provision.
In this vein, the Fat Cat represented at oral argument, that there is a separate insurance policy arguably covering claims arising out of the negligent service of alcohol.
B. THE ASSAULT AND BATTERY EXCLUSION
In pertinent part, the assault and battery exclusion excludes from coverage "any and all claims arising out of any assault, battery, fight, altercation, misconduct or other similar incident or act of violence . . . including . . . claims of negligent, improper or non-existent supervision of employees, patrons or guests and negligence in failing to protect customers, patrons or guests." Thus, Plaintiff argues, if any of McElhiney's claims "aris [e] out of" Jones' violence, it need not defend or indemnify the Fat Cat with respect to those claims.
In full, the exclusion states as follows:
Notwithstanding anything contained herein to the contrary it is understood and agreed that this is policy excludes any and all claims arising out of any assault, battery, fight, altercation, misconduct or other similar incident or act of violence, whether caused by or at the instigation of, or at the direction of the insured, his/her employees, customers, patrons, guests or any cause whatsoever, including, but not limited to, claims of negligent or improper hiring practices, negligent, improper or non-existent supervision of employees, patrons, or guests and negligence in failing to protect customers, patrons or guests.
The question for the court is one of interpretation: which of McElhiney's remaining claims can be considered "arising out of" Jones' assault and battery or a "similar incident or act of violence"? Certainly, the assault and battery claim against Jones (Count I) is excluded. But what about McElhiney's negligence claims against the Fat Cat and it employees (Counts II through IV)?
McElhiney makes two arguments with respect to the applicability of the assault and battery exclusion to the remaining negligence claims. First, McElhiney asserts that the remaining claims do not arise out of the assault and battery which, McElhiney reasons, only serves as evidence of the negligence, not as the cause of it. Alternatively, McElhiney contends, the language of the policy is ambiguous, and therefore, must be construed against the drafter. See Preferred Mut. Ins. Co. v. Gamache, 686 N.E.2d 989, 990 (Mass. 1997); Liquor Liability Joint Underwriting Ass'n of Mass. v. Hermitage Ins. Co., 644 N.E.2d 964, 968 (Mass. 1995).
In the court's opinion, both of McElhiney's arguments are misplaced. With regard to his first argument — that the negligence claims somehow do not arise out of the assault and battery — McElhiney is drawing too fine a distinction between being harmed and being placed in harm's way. In this regard, the First Circuit's decision in Winnacunnet Co-op. Sch. Dist. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 84 F.3d 32 (1st Cir. 1996), is instructive.
In Winnacunnet, a school sought indemnification by its insurer for claims by parents alleging negligent supervision and hiring of a teacher who had colluded with students to have her husband murdered. Id. at 33. The First Circuit rejected the school's argument that assault and battery exclusions similar to the one at issue here did not apply because the claims did not "arise out of" the violence. Id. at 35. According to the court, the phrase "arising out of" is very broad, including more than mere causation; it can also mean "originating from," "growing out of" or "flowing from" Id. Focusing on the nature of the damages, the court observed "that all of the alleged damages . . . originate[d] from, or `ar[o]se out of,' the murder." Id. at 37 (emphasis in original; footnote omitted). Accordingly, the court concluded, the negligent hiring and supervision claims arose "entirely out of excluded acts" of violence and, as such, were themselves excluded. See id. at 38.
Although interpreting New Hampshire law, the First Circuit found that its holding was "consistent with cases in other jurisdictions . . . recognizing that an exclusion for a claim arising out of an assault also bars coverage for a claim that an insured negligently allowed an assault to occur." Id. (citing United Nat'l. Ins. Co. v. Entertainment Group, Inc., 945 F.2d 210, 213 (7th Cir. 1991) (applying Illinois law); Audubon Indem. Co. v. Patel, 811 F. Supp. 264, 265 (S.D. Tex. 1993) (applying Texas law); St. Paul Surplus Lines Ins. Co. v. 1401 Dixon's, Inc., 582 F. Supp. 865, 867-68 (E.D. Pa. 1984) (applying Pennsylvania law)). Massachusetts state courts, too, have enforced similarly worded policies to exclude related negligence claims. See, e.g., Mingo Corp. v. Essex Ins. Co., 1995 WL 283730, at *2 (Mass.App.Div. May 3, 1995); First Specialty Ins. Corp. v. Ringer, 1998 WL 1181994, at *1 (Mass.Sup.Ct. Jan. 13, 1998); First Fin. Ins. Co. v. LaRosa, 1996 WL 634217, at *2 (Mass.Sup.Ct. Oct. 24, 1996), aff'd, 726 N.E.2d 978 (Mass.App.Ct.), rev, denied, 733 N.E.2d 1066 (Mass. 2000). Indeed, just last month, the Massachusetts Appeals Court held, in an analogous case, that, where the source of personal injuries was an excluded assault and battery, a related negligence claim was also unambiguously excluded. See Peters v. United Nat'l Ins. Co., 762 N.E.2d 881, 884-85 (Mass.App.Ct. 2002). See also United Nat'l. Ins. Co. v. Parish, 717 N.E.2d 1016, 1018 (Mass.App.Ct. 1999) (similar).
Here, as in many of the above cases, all of McElhiney's injuries originate or flow from Jones' attack. (See McElhiney's Complaint ¶¶ 19, 22, 25, 29 and 35.) Thus, but for the assault and battery, McElhiney would have no claims for negligence as there would be no injury to him. In short, because McElhiney cannot prevail on his negligence claims without showing injuries from the assault and battery, the court believes that such claims "aris [e] out of" excluded acts.
As to McElhiney's second argument, the court does not find the exclusion ambiguous. Rather, the court's reading of the terms at issue is consistent with "what an objectively reasonable insured, reading the relevant policy language, would expect to be covered." Peters, 762 N.E.2d at 884 (quoting Hazen Paper Co. v. United States Fid. Guar. Co., 555 N.E.2d 576, 583 (Mass. 1990)).
IV. CONCLUSION
For the foregoing reasons, the court recommends that Plaintiff's motion for summary judgment (Docket No. 14) be ALLOWED.
The parties are advised that under the provisions of Rule 3(b) of the Rules for United States Magistrates in the United States District Court for the District of Massachusetts, any party who objects to these findings and recommendations must file a written objection with the Clerk of this Court within ten (10) days of the party's receipt of this Report and Recommendation. The written objection must specifically identify the portion of the proposed findings or recommendations to which objection is made and the basis for such objection. The parties are further advised that failure to comply with this rule shall preclude further appellate review by the Court of Appeals of the District Court order entered pursuant to this Report and Recommendation. See Keating v. Secretary of Health Human Services, 848 F.2d 271, 275 (1st Cir. 1988); United States v. Valencia-Copete, 792 F.2d 4, 6 (1st Cir. 1986); Scott v. Schweiker, 702 F.2d 13, 14 (1st Cir. 1983); United States v. Vega, 678 F.2d 376, 378-379 (1st Cir. 1982); Park Motor Mart, Inc. v. Ford Motor Co., 616 F.2d 603, 604 (1st Cir. 1980). See also Thomas v. Am, 474 U.S. 140, 154-55 (1985). A party may respond to another party's objections within ten (10) days after being served with a copy thereof.