Nautilus Ins. Co. v. JDW Inc.

OPINION AND ORDER

THERESA L. SPRINGMANN, JUDGE UNITED STATES DISTRICT COURT

This matter is before the Court on a Motion for Summary Judgment [ECF No. 19], filed by the Plaintiff, Nautilus Insurance Company, on February 7, 2019. Nautilus is a commercial general liability insurer for JDW Inc. d/b/a He Ain't Here Lounge, providing coverage for certain liabilities that may arise from operating the He Ain't Here Lounge (“Lounge”). JDW, Amy Collins, and other unidentified Lounge employees were sued by James Mick in Indiana state court after Mick was struck by a car in the Lounge's parking lot. As a result of Mick's lawsuit, Nautilus seeks a declaratory judgment that it has no duty to defend or indemnify JDW and Collins against any claims asserted by Mick in the underlying lawsuit. For the reasons below, Nautilus' Motion for Summary Judgment is GRANTED.

FACTUAL BACKGROUND

On December 3, 2017, Herbert Foust was at the Lounge. Mick 2d Am. Compl. 1-2, ¶¶ 1, 12-13, ECF No. 35-1. He was drinking alcohol and being served by Collins and two other Lounge employees. Id. at 2, ¶¶ 6-7, 12. At some point in the night, Foust became intoxicated. Id. at 2, ¶¶ 12. He was then forced to leave the Lounge and was escorted out of the building. Id. at 2,

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¶ 13. This was not Foust's first incident at the Lounge as he had apparently been barred from the establishment on a previous occasion. Id. at 2, ¶ 14. Once outside, Foust got into his car and attempted to exit the parking lot. Id. at 2, ¶ 9. In doing so, he struck James Mick-a pedestrian located outside the Lounge-twice with his car. Id. at 2, ¶¶ 8-11. Mick alleges that “the collisions described might have been due to Foust's intoxication.” Id. at 2, ¶ 15. As a result of this incident, Mick suffered serious injuries that required treatment. Id. at 3, ¶ 16.

After the incident, Lake Station Police Officer McCann arrived on scene and recounted his findings in a Probable Cause Affidavit. See McCann Aff., ECF No. 25-1. Officer McCann interviewed some witnesses who stated that Foust was removed from the Lounge after shouting racial slurs and other profanities. Id. at 2. The witnesses told Officer McCann that Foust got into his vehicle and struck Mick twice with his car. Id. One witness said that when hitting Mick with his car, Foust had “displac[ed] the concrete parking blocks” outside of the Lounge. Id. Officer McCann observed that two parking blocks were displaced and resting against the building. Id. at 1; see also Ex. C, ECF No. 25-1 (pictures of displaced parking blocks). Officer McCann also talked with Collins, who reported that Foust had drunk “two Twelve Ounce glasses of Coors Light and 1 shot of Jack Daniels, ” and that she asked Foust to leave once she learned he had been barred from the Lounge. McCann Aff. 2.

On January 19, 2018, Mick filed a complaint against JDW, Collins, and two unidentified Lounge employees (“Does 1-2”) in Indiana state court. Mick Compl. 1, ECF No. 1-1; see Mick v. JDW Inc., et al., No. 45D11-1801-CT-00013 (Ind. Super. Ct. filed Jan. 22, 2018). Since then, Mick amended his complaint twice to add additional claims and include Foust as a defendant. See Mick Am. Compl., ECF No. 20-1; Mick 2d Am. Compl. In his Second Amended Complaint-the operative complaint in the state court litigation-Mick asserted eight claims for

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relief: (1) statutory negligence under Indiana's dram shop act against JDW, Collins, and Does 1- 2; (2) common law negligence against JDW, Collins, and Does 1-2; (3) respondeat superior against JDW, Collins, and Does 1-2; (4) negligent hiring, training, and supervision against JDW, Collins, and Does 1-2; (5) negligence in failing to maintain its premises against JDW, Collins, and Does 1-2; (6) negligence against Foust; (7) punitive damages against Foust; and (8) failure to provide adequate protection/security to patrons against JDW, Collins, and Does 1-2. See Mick 2d Am. Compl. 3-11.

Nautilus was an insurer for JDW at the time Mick was injured outside of the Lounge. See Compl. 2-3, ¶¶ 5, 9, ECF No. 1. Nautilus issued a commercial general liability insurance policy to JDW (“Policy”), which provided coverage for liabilities that may arise out of owning and operating the Lounge. See Policy 10, ECF No. 1-2. Nautilus agreed to “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.” Id. at 11. The Policy also provides that Nautilus “will have the right and duty to defend the insured against any ‘suit' seeking those damages.” Id. The Policy covers “bodily injury” and “property damage” only if it “is caused by an ‘occurrence' that takes place in the ‘coverage territory.'” Id. An “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Id. at 25. In addition to liabilities arising from bodily injury and property damage, the Policy also covers certain “personal and advertising injury” liabilities as well as “medical expenses” that result from accidents. See Id. at 16, 18. The Policy limits Nautilus' coverage through specific exclusions, including, among other things, exclusions for liquor liability, aircraft, auto, and watercraft liability, assault and battery liability, and punitive damages. See Id. at 12-16, 27-38, 40-45, 52-53.

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Overall, Nautilus agrees under the Policy to pay $300, 000 for each covered occurrence, up to an aggregate limit of $600, 000. Id. at 10.

PROCEDURAL BACKGROUND

On May 11, 2018, Nautilus filed a Complaint for Declaratory Judgment [ECF No. 1], seeking a determination that it owed no duty to defend or indemnify JDW, Collins, and any Lounge employees against claims arising out of the December 3, 2017 incident. Nautilus alleges that three Policy exclusions preclude coverage of Mick's claims: (1) the Total Liquor Liability Exclusion; (2) the Unmanned Aircraft, Other than Unmanned Aircraft, Auto and Watercraft Exclusion; and (3) the All Assault or Battery Exclusion. Compl. 3-8, ¶¶ 12-18. Accordingly, it seeks a declaration that it owes no duty to defend or indemnify JDW, Collins, and any Lounge employees against Mick's lawsuit or any claims arising out of the December 3, 2017 incident based on exclusions in the Policy. See Id. at 9 (Claim for Relief).

On February 7, 2019, Nautilus filed its Motion for Summary Judgment [ECF No. 19] and a Memorandum supporting its motion [ECF No. 20]. On April 5, 2019, Mick responded by filing a Motion in Opposition [ECF No. 24], and JDW and Collins filed a joint Response opposing summary judgment [ECF No. 26]. Nautilus filed a Reply [ECF No. 28]. Then, on July 30, 2019, JDW and Collins filed a Motion for Leave to Supplement the Summary Judgment Record [ECF No. 31] with Mick's second amended complaint in the underlying lawsuit. They also filed a Motion to Reset Summary Judgment Briefing Schedule [ECF No. 32], which the Court granted. See ECF No. 34. Thereafter, Nautilus filed a Supplemental Memorandum supporting its motion [ECF No. 35], Mick filed a Supplemental Memorandum in Opposition [ECF No. 38], and Nautilus filed a Supplemental Reply [ECF No. 39]. JDW and Collins also filed a Supplemental

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Response opposing summary judgment [ECF No. 37], but they only requested that the Court incorporate their previous arguments.

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when the record before the Court establishes 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). “To survive summary judgment, the nonmoving party must establish some genuine issue for trial such that a reasonable jury could return a verdict in [their] favor.” Gordon v. FedEx Freight, Inc., 674 F.3d 769, 772-73 (7th Cir. 2012). Within this context, the Court must construe all facts and reasonable inferences from those facts in the light most favorable to the nonmoving party. Frakes v. Peoria Sch. Dist. No. 150, 872 F.3d 545, 550 (7th Cir. 2017). However, the nonmoving party “is only entitled to the benefit of inferences supported by admissible evidence, not those ‘supported by only speculation or conjecture.'” Grant v. Trs. of Ind. Univ., 870 F.3d 562, 568 (7th Cir. 2017) (quoting Nichols v. Michigan City Plant Plan. Dep't, 755 F.3d 594, 599 (7th Cir. 2014)). Likewise, irrelevant or unnecessary factual disputes do not preclude the entry of summary judgment. Carroll v. Lynch, 698 F.3d 561, 564 (7th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

ANALYSIS

In deciding issues of insurance coverage, the Court must apply Indiana law for contract interpretation. See Officer v. Chase Ins. Life & Annuity Co., 541 F.3d 713, 715 (7th Cir. 2008) (“When sitting in diversity, we must apply the substantive law of the state as we believe the highest court of that state would apply it.”). An insurance contract “is subject to the same rules of interpretation as are other contracts.” Morris v. Econ. Fire & Cas. Co., 848 N.E.2d 663, 666 (Ind. 2006) (quoting USA Life One Ins. Co. of Ind. v. Nuckolls, 682 N.E.2d 534, 537-38 (Ind. 1997)).

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In reviewing policy terms, the Court construes them “from the perspective of an ordinary policyholder of average intelligence.” Allgood v. Meridian Sec. Ins. Co., 836 N.E.2d 243, 246- 47 (Ind. 2005) (quoting Burkett v. Am. Fam. Ins. Grp., 737 N.E.2d 447, 452 (Ind.Ct.App. 2000)). When the contract language is clear and unambiguous, it should be given its plain meaning. Beam v. Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind. 2002). If, however, there is ambiguity in the insurance policy, the terms are to be interpreted...