Certain Underwriters At Lloyd's London v. Butler

Certain Underwriters at Lloyd's London,subscribing to Policy TCN051814, Plaintiffs, v. Sarah Butler, Willie Butler, and Shakila Green, Defendants.

Civil Action No.: 1:16-cv-00975-JMC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA AIKEN DIVISION

February 13, 2017

ORDER AND OPINION

Before the court is a motion for summary judgment filed by Plaintiffs, Certain Underwriters at Lloyd's London, subscribing to Policy TCN051814 ("Plaintiffs"). (ECF No. 19.) For the reasons that follow, the court DENIES the motion.¹

I. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

On February 26, 2016, Defendant Shakila Green commenced suit against Defendants Sarah Butler and Willie Butler (together, the "Butlers") and against Round Two, an adult night club business, by filing a complaint against them in the Court of Common Pleas for Aiken County, South Carolina. (See ECF No. 1-1.)² In her complaint, Green alleges that, in August 2013, she wasa guest at Round Two, which was operated by the Butlers, when she was shot in both of her legs, which caused permanent damage. (Id. at 1.) Green asserts one cause of action, alleging that the Butlers and Round Two were negligent for failing to properly secure the area by performing security checks for weapons as guests entered the business, failing to properly check the identification of guests, and failing to maintain proper control of the area. (Id. at 2.) Green asserts that these failures resulted in her injuries, and she seeks actual and punitive damages. (Id.)

Plaintiffs subscribed to a commercial property insurance policy, specifically Policy TNC051814 (the "Policy"), that was issued to the Butlers and covered the period in which the events underlying Green's complaint occurred. (See ECF No. 1-2.)³ The Policy covered premises located in Graniteville, South Carolina, in which a sports bar was operated (id. at 16, 44-45), and included coverage as follows:

We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply.

(Id. at 57.) The Policy contained the following exclusions from coverage:

This insurance does not apply to any claim and/or cause of action arising from:

1. An assault and/or battery regardless of culpability or intent; or

2. A physical altercation; or

3. Any act or failure to act to prevent or suppress such assault and/or battery or physical altercation.

The above applies whether caused by the insured, an employee, a patron, or any other person; and whether or not the acts occurred at the premises owned leased, rented or occupied by the insured.

This exclusion also applies to any claim and/or cause of action seeking:

. . . .

4. Damages arising out of allegations of negligent hiring, placement, training or supervision, or to any act, error, or omission relating to such assault and/or battery or physical altercation.

5. Damages arising out of failure to provide proper security or safe premises to any person subject to any assault and/or battery or physical altercation.

We are under no duty to defend an insured in any "suit" alleging such damages arising out of any assault and/or battery or physical altercation of any nature whatsoever.

. . . .

. . . . This insurance does not apply to a claim of or indemnification for punitive or exemplary damages. If a suit shall have been brought against you for a claim within the coverage provided under the policy, seeking both compensatory and punitive or exemplary damages, then we will afford a defense for such action. We shall not have an obligation to pay for any costs, interest, or damages attributable to punitive or exemplary damages.

(Id. at 55-56.)

On March 28, 2016, Plaintiffs filed a complaint in this court (ECF No. 1.) Plaintiffs seek a declaration that the Policy does not provide coverage to the Butlers for the claim Green alleged in her state-court complaint because Green's claim "arise[s] out of the assault and battery and [is] excluded from coverage by . . . the Policy, [and, a]ccordingly, [Plaintiffs] have no duty to defend and/or indemnify the Butlers." (Id. at 4.) Plaintiffs also seek a declaration that, under the terms of the Policy, "they have no obligation to provide for any punitive or exemplary damages" arising from Green's complaint against the Butlers. (Id. at 5.)

After being served with the complaint and summons on April 1, 2016 (see ECF Nos. 7, 8, 9, 10, 11), Defendants failed to file an answer within the allotted time, see Fed. R. Civ. P. 12(a), and, upon Plaintiffs' requests supported by affidavits, the clerk's office entered defaults against Defendants on June 28, 2016 (see ECF Nos. 15, 16, 17, 18); see also Fed. R. Civ. P. 55(a).

On June 29, 2016, Plaintiffs filed the instant motion for summary judgment, pursuant to Fed. R. Civ. P. 56. (ECF No. 19.) Plaintiffs contend that, because Defendants have failed to answer or otherwise appear in this action, there are no genuine disputes of fact and that the plain and unambiguous terms of the Policy's exclusion of coverage related to assault and battery entitle them to a declaratory judgment that the Policy excludes coverage for the damage claimed in Green's state-court complaint against the Butlers. (See id.) Defendants have not opposed or otherwise responded to the motion for summary judgment and have not appeared in this matter.

II. LEGAL STANDARD

Summary judgment is appropriate when the materials in the record show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "[I]n ruling on a motion for summary judgment, 'the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.'" Tolan v. Cotton, ___ U.S. ___, 134 S. Ct. 1861, 1863 (2014) (per curiam) (brackets omitted) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party," and a fact is material if it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248.

The party seeking summary judgment shoulders the initial burden of demonstrating to the court that there is no genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this threshold demonstration, the non-moving party, tosurvive the motion for summary judgment, may not rest on the allegations averred in its pleadings. Rather, the non-moving party must demonstrate that specific, material facts exist which give rise to a genuine issue. See id. at 324. When "a party . . . fails to properly address another party's assertion of fact . . . the court may . . . consider the fact undisputed for purposes of the motion" and "grant summary judgment if the motion and supporting materials—including the facts considered undisputed—show that the movant is entitled to it." Fed. R. Civ. P. 56(e).

III. ANALYSIS

Because Defendants have not properly addressed Plaintiffs' assertions of fact and because those assertions are supported by materials in the record, the court concludes that the facts asserted by Plaintiffs are undisputed for purposes of the instant motion. See Fed. R. Civ. P. 56(e). There is no dispute that Green's complaint alleges that the Butlers are liable to her in damages arising from her being shot, which she alleges was caused by the Butlers' negligence in failing to properly secure the nightclub area, failing to implement security measures (such as checking identification and checking for weapons), and failing to maintain control of the area. (See ECF No. 1-1 at 1-2.) There is also no dispute that the Policy excludes coverage for a claim or cause of action for an assault or battery, regardless of who committed the assault or battery or where it occurred. (See ECF No. 1-2 at 55-56.) It also excludes coverage for a claim or cause of action arising from any act or failure to act to prevent an assault or battery, including allegations of any act, error, or omission relating to such assault or battery and any allegation of failure to provide proper security or safe premises to any person subject to any assault or battery. (Id.)

"Under South Carolina law, an insurer's duty to defend is determined by the allegations of the underlying complaint." Darwin Nat'l Assurance Co. v. Matthews & Megna LLC, 36 F. Supp. 3d 636, 655 (D.S.C. 2014) (citing Ellett Bros., Inc. v. U.S. Fid. & Guar Co., 275 F.3d 384-387-88(4th Cir. 2001)); see also Union Ins. Co. v. Soleil Grp., Inc., 465 F. Supp. 2d 567, 572 (D.S.C. 2006); R.A. Earnhardt Textile Mach. Div., Inc. v. S.C. Ins. Co., 282 S.E.2d 856, 857 (S.C. 1981). "The complaint is construed liberally, with all doubts resolved in favor of the insured." Darwin, 36 F. Supp. 3d at 655 (citing Union Ins. Co., 465 F. Supp. 2d at 572-73). "'If the underlying complaint creates a possibility of coverage under an insurance policy, the insurer is obligated to defend.'" Id. (quoting Union Ins. Co., 465 F. Supp. 2d at 573); see also Isle of Palms Pest Control Co. v. Monticello Ins. Co., 459 S.E.2d 318, 319 (S.C. 1994); Gordon-Gallup Realtors, Inc. v. Cincinnati Ins. Co., 265 S.E.2d 38, 40 (S.C. 1980). However, "[i]f the facts alleged in the underlying complaint 'fail to bring the case within the policy coverage, the insurer is free of the obligation to defend.'" Union Ins. Co., 465 F. Supp. 2d at 57 (quoting R.A. Earnhardt, 282 S.E.2d at 857).

Although South Carolina law is clear that an insurer's duty to defend depends upon the allegations contained in the underlying complaint, it is less clear on whether an insurer's duty to indemnify is...