Scottsdale Ins. Co. v. Bitgood

SCOTTSDALE INSURANCE COMPANY, Plaintiff,

v.WAYNE BITGOOD and THE GORDON GREENE POST NO. 27 OF THE AMERICAN LEGION, Defendants.

C.A. No. 10-430 ML

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND

Dated: September 6, 2011

MEMORANDUM AND ORDER

Plaintiff, Scottsdale Insurance Company ("Scottsdale") moves for summary judgment in this declaratory judgment action seeking a declaration from this Court concerning its rights and obligations pursuant to an insurance contract issued to Defendant, The Gordon Greene Post No. 27 of the American Legion ("the Post"). Specifically, Scottsdale petitions this Court for a judgment finding that Scottsdale does not have a duty to defend or indemnify the Post in a state court negligence action. For the reasons stated herein, Scottsdale's motion for summary judgment is granted.

I. Standard of Review– Summary Judgment

Summary judgment is appropriate only "if the movant shows 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). An issue is "genuine" if the pertinent evidence is such that a rational factfinder could resolve the issue in favor of either party, and a fact is "material" if it "has the capacity tosway the outcome of the litigation under the applicable law." National Amusements. Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir. 1995).

The moving party bears the burden of showing the Court that no genuine issue of material fact exists. Id The Court views all facts and draws all reasonable inferences in the light most favorable to the nonmoving party. Id. Fed. R. Civ. P. 56 "requires the parties to submit admissible evidence in supporting and opposing motions for summary judgment." Feliciano v. Rhode Island, 160 F.3d 780, 787 (1st Cir. 1998).¹

II. Background

On February 4, 2009, Defendant Wayne Bitgood ("Bitgood") visited the Post in Hope Valley, Rhode Island. At some point an altercation arose inside the Post between Bitgood and Ryan Gardiner ("Gardiner"). During the altercation, Bitgood brandished a knife; Gardiner however grabbed the knife from Bitgood's grasp and tossed it aside. After tossing the knife aside, Gardiner "kick[ed] and punch[ed]" Bitgood in the abdomen and head area. Scottsdale's Statement of Undisputed Facts at ¶ 24. Eventually, patrons in the Post disengaged the combatants. Gardiner then left the bar and "dr[o]ve off." Id. at ¶ 20. Bitgood informed patrons that he was "okay just bleeding from his lip." Id. at ¶ 24. At some point after Gardiner left the Post, Bitgood went outside. Thereafter, an individual came "running" into the Post imploring someone to "get [Bitgood] back in the building, [and] lock the doors because [Gardiner] justpulled in the parking lot." Id. Upon his return to the Post's parking lot, Gardiner approached Bitgood, "hit" him, and when Bitgood "fell" to the ground, Gardiner kicked him "at least five times." Id. at ¶ 33.

At some point the Hopkington, Rhode Island Police were dispatched to the Post.² Upon arrival, a Hopkington police officer observed Bitgood lying on the ground outside the Post. Bitgood was conscious, but he was bleeding from the mouth. Bitgood sustained serious injuries and was transported by ambulance to Kent County Hospital.

Bitgood has filed a lawsuit in state court against the Post for injuries he sustained as a result of the altercation. Scottsdale insures the Post pursuant to a commercial liability insurance policy. The policy provides in pertinent part:

SECTION I – COVERAGES

COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY 1. Insuring Agreement

a. 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. . . .

Scottsdale Statement of Undisputed Facts at ¶ 40; Scottsdale Exhibit B (capitals in original). The policy also includes an assault and/or battery exclusion which reads as follows:

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

ASSAULT AND/OR BATTERY EXCLUSION

This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART

ERRORS AND OMISSIONS COVERAGE PART

LIQUOR LIABILITY COVERAGE PART

The following exclusion is added to the Exclusions section:

This insurance does not apply to 'injury,' 'bodily injury,' 'property damage,'

'error or omission,' or 'personal and advertising injury,' arising from:

1. Assault and/or Battery committed by any insured, any employee/ 'employee' of any insured, or any other person;

2. The failure to suppress or prevent Assault and/or Battery by any person in 1 above;

3. The selling, serving or furnishing of alcoholic beverages which results in an Assault and/or Battery.

4. The negligent;

a. Employment;

b. Investigation;

c. Supervision;

d. Reporting to the proper authorities, or failure to report; or

e. Retention

of a person for whom any insured is or ever was legally responsible and whose conduct would be excluded by paragraphs 1., 2., or 3. above.

Id. (capitals in original).

III. Analysis

Scottsdale argues that it does not have a duty to defend and indemnify the Post because the assault and battery exclusion bars coverage for Bitgood's injuries. Bitgood counters, however, that because the underlying complaint alleges only negligence, Scottsdale has a duty to defend. Bitgood argues that the assault and battery exclusion does not exclude coverage for injuries arising out of negligent training. Bitgood also contends that the exclusion language is ambiguous; thus, he argues the language must be strictly construed against Scottsdale.

Under Rhode Island law, in general, the duty to defend an insured is determined by applying the pleadings test. American Commerce Insurance Co. v. Porto, 811 A.2d 1185 (R.I. 2002).

That test requires the trial court to look at the allegations contained in the complaint, and if the pleadings recite facts bringing the injury complained of within the coverage of the insurance policy, the insurer must defend irrespective of the insured's ultimate liability to the plaintiff. That duty, when blindly applied, may ... result in the defense of groundless, false or fraudulent suits, but the insurer is duty bound nonetheless.

Id. at 1191 (emphasis added) (internal quotation marks and citation omitted); see also Flori v. Allstate Insurance Co., 120 R.I. 511, 513, 388 A.3d 25, 26 (1978) ("if the complaint discloses a statement of facts bringing the case potentially within the risk coverage of the policy the insurer will be duty-bound to defend irrespective of whether the plaintiff[] in the tort action can or will ultimately prevail"). If the allegations, however, fall outside the policy coverage, the insurer has no duty to defend. Craven v. Metropolitan Property and Casualty Insurance Co., 693 A.2d 1022 (R.I. 1997). The pleadings test "determines an insurer's duty to defend even if the known facts conflict with the facts alleged in the third-party complaint." Flori, 120 R.I. at 514, 388 A.2d at 26; see also Thomas v. American Universal Insurance Co., 80 R.I. 129, 134, 93 A.2d 309, 312 (1952) ("[f]acts made known before the action is tried or during the process of litigation do not alter [the] rule"). Any doubts concerning the adequacy of the pleadings to encompass an occurrence within the scope of the policy must be resolved in favor of the insured. Allstate Insurance Co. v. Russo, 641 A.2d 1304 (R.I. 1994).

In the state court complaint Bitgood alleges that on or about February 4, 2009, while on the Post's premises he "was injured as a result of the negligence of the defendant, its employees and/or agents." State Court Complaint; Scottsdale Exhibit A at ¶ 4. The allegation of negligence against the Post is wholly conclusory. The complaint does not contain any facts to determine the contours of the claim. The Court is cognizant of the principles of the pleadingstest and its direction that the Court only look to the allegations in the complaint in determining an insurer's duty to defend. In analyzing a duty to defend, however, "a court may inquire into the underlying facts to avoid permitting the pleading strategies, whims, and vagaries of third party claimants to control the rights of parties to an insurance contract." Winnacunnet Cooperative School District v. National Union Fire Insurance Co. of Pittsburgh PA, 84 F.3d 32, 35-36 (1st Cir. 1996) (internal quotation marks and citation omitted). This Court finds it appropriate in this matter to look beyond the one conclusory allegation in the complaint in this instance. Id.; Cf. Mount Vernon Fire Insurance Co. v. Stagehands. Inc., 636 F. Supp. 2d 143, 147 (D.R.I. 2009) ("where extrinsic evidence establishes that the ultimate question of coverage can be determined as a matter of law on undisputed facts, [there is] no reason to prevent an insurer from seeking summary adjudication that no potential for liability exists and thus that it has no duty to defend") (internal quotation marks and citation omitted).

It is undisputed that Bitgood was injured as a result of the assault by Gardiner. Bitgood, however, argues that the Post was negligent in its training of its employees which led to the altercation causing his injuries. Bitgood contends that the police were not called in response to the first altercation inside the Post. Bitgood also argues that after the incident the Hopkinton Licensing Board ordered "the staff of the [Post] to undergo mandatory retraining."³ Defendant's Memorandum of Law in Support of His Objection to the Plaintiff's Motion for Summary Judgment at 2. Bitgood concludes that the because the insurance policy does not contain an exclusion for "negligent training," Scottsdale has a duty to defend the ...