Nautilus Ins. Co. v. Shawn Owens Inc.
Nautilus Ins. Co. v. Shawn Owens Inc.
Opinion of the Court
This is a declaratory judgment action brought by an insurance company against its insured, a bar, and the plaintiffs in an underlying wrongful death action, arising out of a stabbing incident that occurred near the bar. Nautilus Insurance Company seeks a declaration that it does not have a duty to defend or indemnify Owen's Café because of a policy exclusion for bodily injury that arises from an assault, battery, or physical altercation. Both Owen's Café and plaintiffs in the underlying case seek to characterize the complaint in that action so as to avoid the exclusion, primarily relying *875on QBE Insurance Corporation v. M & S Landis Corp. ,
I. Relevant Facts
Following the death of Thomas C. Ewing, his parents
Owen's presented the claim to Nautilus Insurance Company, which proceeded to defend Owen's against the underlying action under a reservation of rights. Nautilus now moves for Judgment on the Pleadings on the basis of the assault and battery exclusion mentioned above.
II. Controlling Legal Standard
"The proper construction of an insurance policy is resolved as a matter of law in a declaratory judgment action," QBE Ins. Corp. v. Walters ,
The terms of the insurance policy and the allegations in the underlying third party complaint are determinative. J.H. France Refractories Co. v. Allstate Ins. Co. ,
*876Selective Way Ins. Co. v. Hosp. Grp. Servs., Inc. ,
III. Analysis
Although the claim clearly falls with the policy's definition of "bodily injury," Nautilus argues that an exclusion for injuries arising out of an assault, battery, or physical altercation applies. The exclusion states,
Regardless of culpability or intent of any person, this insurance does not apply to 'bodily injury', 'property damage', 'personal and advertising injury' or medical payments arising out of any (1) actual or alleged assault or battery; (2) physical altercation; or (3) [a]ny act or omission in connection with the prevention or suppression of such acts, including the alleged failure to provide adequate security.
Assault and Battery Exclusion, Pl.'s Ex. 59, ECF No. 1-2. The exclusion applies regardless of whether such damages are caused by any "insured, employee, patron, or any other person," and so long as the damages occurred at any "premises owned or occupied by any insured."
Fairly read, the underlying complaint falls within the language of this exclusion. Notwithstanding skillful pleading by Ewing's counsel as to the role played by Owen's in causing this tragedy, by any objective measure the injuries leading to Ewing's death at least in part arose out of an assault, battery, or physical altercation. It strains credulity to assert otherwise, when the complaint expressly states that "Ewing was confronted by a visibly intoxicated Angelo Maldonado who stabbed him multiple times resulting in his death." (Ewing Compl. ¶ 26, Pl.'s Ex. 8, ECF No. 1-2.)
Defendants assert that the policy is ambiguous because of Nautilus's failure to include a definition of 'assault,' 'battery,' 'physical altercation,' or 'arise out of' in the policy. But those terms have both common meaning and legal definition. When challenged at oral argument to identify what further clarification would be necessary for a policyholder to comprehend the scope and applicability of the exclusion, defense counsel could only reply that "assault" and "battery" are legal terms of art. Yet to the extent that they are, such terms are defined by Pennsylvania law. Recently, my colleague Judge Savage applied Pennsylvania definitions of "Trafficking," "Rape," and "Simple Assault" in determining the applicability of this same exclusion to claims that a motel's employee allowed unlawful conduct to take place on its premises. Nautilus Ins. Co. v. Motel Mgmt. Servs., Inc., d/b/a Neshaminy Inn & E.B. ,
Owen's seeks to avoid the exclusion by arguing that the underlying complaint pleads the negligence of its employees as the moving force in causing Ewing's death, and that the structure of the complaint, combined with the lack of a specific definition of "arising out of" creates sufficient ambiguity to render the exclusion inapplicable. Defendants principally rely on QBE Ins. Corp. v. M & S Landis Corp. ,
Defendants contend that the underlying complaint here is analogous to the complaint in Landis . I agree, but that does not end the inquiry because the language in Nautilus' exclusion is materially different from the language of the exclusion in Landis. A later case involving the same carrier as in Landis, QBE Insurance, is instructive. The case arose several years after Landis, and QBE had in the meantime changed the wording of its exclusion, likely because of the deficiencies exposed by the Superior Court's analysis in Landis. The underlying dispute was a negligence action brought in part by a patron of a bar who was shot by another patron with whom he had a verbal confrontation earlier that night. QBE Insurance Corporation v. Walters ,
The Court based its decision that decision on the "extensive definition of 'assault and battery' " in QBE's revised policy exclusion, which included:
"negligent conduct on the part of the insured or its employees that directly harms another person, whether through negligent failure to prevent an assault, negligence related to an actual or threatened assault, or negligence resulting in battery."
Like the exclusion in Walters, the exclusion in this case is both broad in its scope and it specifically encompasses negligence claims, stating, "[t]his exclusion applies to *878[...] all causes of action arising out of any assault, battery, or physical altercation, including but not limited to, allegations of negligent hiring, placement, training, or supervision, or to any act , error, or omission relating to such an assault or battery, or physical altercation." Assault and Battery Exclusion, Pl.'s Ex. 59, ECF No. 1-2 (emphasis added). Here, the allegation that Owen's employees were negligent in failing to secure the bottle that started this unfortunate series of events, and in charging Maldonado with the task of retrieving it, can only be read as alleging conduct that is related to an "assault, battery, or physical altercation" that caused Ewing's death.
That conclusion is bolstered by the fact that members of this court and panels of the Pennsylvania Superior Court have consistently limited Landis to its facts when considering policy exclusions with more expansive language. See, e.g , Liberty Surplus Ins. Corp. v. McFaddens at Ballpark LLC ,
Accordingly, I reject Defendants' argument that the exclusion does not apply.
Defendants' second argument rests on an exception to an entirely separate exclusion in the policy. Specifically, in the second paragraph of the Coverages section, the policy lays out 16 separate exclusions. The first of them is one that excludes coverage for "Expected or Intended Injury," which is defined as bodily injury or property damage expected or intended from the standpoint of the insured. Section I: Coverage A § 2, Pl.'s Ex. 37, ECF No. 1-2. Following that definition is a limiting exception, which states, "This exclusion does not apply to 'bodily injury' resulting from the use of reasonable force to protect persons or property."
2. Exclusions
This insurance does not apply to:
a. Expected Or Intended Injury
"Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property.
I cannot agree. As graphically demonstrated by the policy excerpt above, the phrase "This exclusion," makes clear that the limitation following applies only to that specific exclusion. To hold otherwise would mean construing every exception to a particular exclusion as generally applicable throughout the policy. This would be an unreasonable interpretation of the language itself, and given the sheer volume of exceptions that arise in this section of the policy alone, see id. at 38-40 (containing a similarly-worded exception for every exclusion, running alphabetically from "a" through "p"), would render the policy incomprehensible.
In conclusion, when the broad language of the exclusion is applied to allegations in the underlying complaint, it is clear coverage does not exist. Nautilus' Motion for Judgment on the Pleadings must therefore be granted.
Mr. Ewing's parents are also named Defendants in this action, alongside Owen's Café and its employee, Shawn Szrankowski.
Reference
- Full Case Name
- NAUTILUS INSURANCE COMPANY v. SHAWN OWENS INC. t/a Owen's Café, Shawn Zrankowski, and Clare M. Ewing and Thomas F. Ewing as Co-Administrators of the Estate of Thomas C. Ewing
- Cited By
- 5 cases
- Status
- Published