Montpelier US Insurance Co v. Hubbard et al

Filing 36

MEMORANDUM OPINION. Signed by Magistrate Judge T Michael Putnam on 3/6/15. (MRR)

FILED
2015 Mar-06 PM 04:02
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ALABAMA
EASTERN DIVISION
MONTPELIER US INSURANCE
CO.,

)
)
)
Plaintiff,
)
vs.
)
)
CHARLOTTE HUBBARD, as the
)
Personal Representative of the Estate )
of JARRED MICHAEL HUBBARD, )
deceased; CRYSTALL/STOVALL
)
ENTERPRISES LLC,
)
)
Defendants.
)

Case No.

1:13-cv-1956-TMP

MEMORANDUM OPINION
This matter is before the court on the motion for summary judgment filed
August 19, 2014, by plaintiff Montpelier US Insurance Company (AMUSIC@).
(Doc. 27). Defendant Charlotte Hubbard has filed a response in opposition to the
motion. (Doc. 29). 1 Plaintiff has filed a reply. (Doc. 31).

Having considered

all of the arguments and evidence submitted by the parties, the court finds that the
motion for summary judgment is due to be granted. The parties have consented to
the dispositive jurisdiction of the magistrate judge pursuant to 28 U.S.C. § 636(c).

1

The corporate defendant, Crystall/Stovall Enterprises LLC., has not filed any response.

SUMMARY JUDGMENT STANDARD
Under Federal Rule of Civil Procedure 56(a), summary judgment is proper Aif 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). The party asking for
summary judgment Aalways bears the initial responsibility of informing the district court
of the basis for its motion, and identifying those portions of >the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,=
which it believes demonstrate the absence of a genuine issue of material fact.@ Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting former Fed. R. Civ. P. 56(c)). The
movant can meet this burden by presenting evidence showing there is no dispute of
material fact, or by showing that the nonmoving party has failed to present evidence in
support of some element of its case on which it bears the ultimate burden of proof.
Celotex, 477 U.S. at 322-23. There is no requirement, however, Athat the moving party
support its motion with affidavits or other similar materials negating the opponent=s
claim.@ Id. at 323.
Once the moving party has met his burden, Rule 56 Arequires the nonmoving
party to go beyond the pleadings and by her own affidavits, or by the >depositions,
answers to interrogatories, and admissions of file,= designate >specific facts showing that
there is a genuine issue for trial.=@ Id. at 324 (quoting former Fed. R. Civ. P. 56(e)).

2

The nonmoving party need not present evidence in a form necessary for admission at
trial; however, he may not merely rest on his pleadings. Celotex, 477 U.S. at 324.
A[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after
adequate time for discovery and upon motion, against a party who fails to make a
showing sufficient to establish the existence of an element essential to that party=s case,
and on which that party will bear the burden of proof at trial.@ Id. at 322.
After the nonmoving party has properly responded to a proper motion for
summary judgment, the court must grant the motion if there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(a). The substantive law will identify which facts are material and which are
irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is
genuine Aif the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.@ Id. at 248. A[T]he judge=s function is not himself to weigh the
evidence and determine the truth of the matter but to determine whether there is a
genuine issue for trial.@
a verdict:

Id. at 249. His guide is the same standard necessary to direct

Awhether the evidence presents a sufficient disagreement to require

submission to a jury or whether it is so one-sided that one party must prevail as a matter
of law.@ Id. at 251-52; see also Bill Johnson=s Restaurants, Inc. v. N.L.R.B., 461 U.S.
731, 745 n.11 (1983). However, the nonmoving party Amust do more than show that

3

there is some metaphysical doubt as to the material facts.@ Matsushita Elec. Indus. Co.,
Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). If the evidence is merely
colorable, or is not significantly probative, summary judgment may be granted.
Anderson, 477 U.S. at 249 (citations omitted); accord Spence v. Zimmerman, 873 F.2d
256 (11th Cir. 1989). Furthermore, the court must Aview the evidence presented
through the prism of the substantive evidentiary burden,@ so there must be sufficient
evidence on which the jury could reasonably find for the plaintiff. Anderson, 477 U.S.
at 254; Cottle v. Storer Communication, Inc., 849 F.2d 570, 575 (11th Cir. 1988).
Nevertheless, credibility determinations, the weighing of evidence, and the drawing of
inferences from the facts are the function of the jury, and therefore the evidence of the
non-movant is to be believed and all justifiable inferences are to be drawn in his favor.
Anderson, 477 U.S. at 255. The non-movant need not be given the benefit of every
inference but only of every reasonable inference. Brown v. City of Clewiston, 848 F.2d
1534, 1540 n.12 (11th Cir. 1988).

UNDISPUTED FACTS
Viewing the evidence in the light most favorable to the nonmoving defendants,
the court finds the following facts to be undisputed for purposes of evaluating the
motion for summary judgment:

4

MUSIC issued a commercial general liability policy of insurance to Defendant
Crystal Stovall Enterprises LLC2 with effective dates of March 17, 2011, to March 17,
2012 (Athe Policy@). (Doc. 1-2).

Crystal Stovall is the insured under the Policy,

which provides, in pertinent part:
1.

Insuring Agreement

a.

We will pay those sums that the insured becomes legally obligated to pay
as damages because of Abodily injury@ or Aproperty damage@ to which this
insurance applies. We will have the right and duty to defend the insured
against any Asuit@ seeking those damages. However, we will have no duty
to defend the insured against any Asuit@ seeking damages for Abodily
injury@ or Aproperty damage@ to which this insurance does not apply. We
may, at our discretion, investigate any Aoccurrence@ and settle any claim or
Asuit@ that may result. ....

b.

This insurance applies to Abodily injury@ and Aproperty damage@ only if:
(1)
The Abodily injury@ or Aproperty damage@ is caused by an
Aoccurrence@ that takes place in the Acoverage territory=;
(2)
The Abodily injury@ or Aproperty damage@ occurs during the policy
period; ...
****

2

The answer filed by Crystal Stovall, and the policy itself, spell Crystal with only one Al@
and deletes the slash mark in the company name. The instant Complaint, however, lists the name
as ACrystall/Stovall.@ The defendant will be referred to herein as Crystal Stovall.
5

ASSAULT AND BATTERY EXCLUSION
This policy does not apply to Abodily injury,@ Apersonal injury,@ or
Aproperty damage@ arising out of assault and/or battery or out of any act
or omission in connection with the prevention or suppression of such
acts, including the failure to warn, train or supervise, whether caused by or
at the instigation or direction of the Insured, his employees, patrons or any
other person.
(Policy, Doc. 1-2, pp. 15, 19).3 The policy defines the term Aoccurrence@ as Aan
accident, including continuous or repeated exposure to substantially the same general
harmful conditions.” (Doc. 1-2, p. 32).4
On August 1, 2013, Charlotte Hubbard, as the personal representative of the
estate of her deceased son, filed an action in the Circuit Court of Calhoun County,
Alabama, alleging that her son, Jarred Michael Hubbard, suffered serious injury and
died as a result of a fight that occurred in the parking lot of a nightclub in Anniston,
Alabama, on August 29, 2011. Ms. Hubbard named as defendants The Office LLC,
which is the entity that ran the nightclub, and Crystal Stovall, the entity that owned,
3

The Policy also includes an exclusion for Aliquor liability,@ which excludes coverage for
Abodily injury@ and Aproperty damage@ for which the insured may be held liable by reason of: (1)
Causing or contributing to the intoxication of any person....@ (Doc. 1-2 p. 20). For reasons that
are not clear to the court, however, plaintiff does not cite to or rely upon this exclusion in its
motion or brief, and the court does not otherwise express an opinion about the applicability of that
exclusion.
4

The plaintiff does not provide the court with page numbers at which to find any of the
policy provisions on which it relies. Plaintiff refers to the definition, contained within the
73-page policy, as appearing at ASection 5 (18)@ with no specific page. (Doc. 27, p. 6). The only
definition the court locates within the document, however, is at ASection V (13)@ on page 32.
6

managed, leased or rented the real property on which the nightclub operated. She
alleged that the defendants in that action negligently or wantonly failed to prevent the
assault on her son.
The underlying complaint alleged that the decedent was at the nightclub as a
patron. He got into a physical altercation with another patron, Justin Crenshaw.
Both Hubbard and Crenshaw were highly intoxicated.

They remained at the

nightclub, and apparently continued to be served alcohol, until after it closed at 2:00
a.m. Shortly after 2:00 a.m., Hubbard left the nightclub and was assaulted in the
parking lot by Crenshaw. Hubbard was knocked to the ground and struck in the
head; he died three days later from an intracranial bleed. (Doc. 30, pp. 5-6).
On October 23, 2013, MUSIC filed this action, seeking a declaratory judgment
that the Policy imposes no duty to defend or indemnify Crystal Stovall for the
damages alleged by Ms. Hubbard, asserting that the claims are specifically excluded by
the assault and battery exclusion.5 In response, Ms. Hubbard argues that she is not
asserting any claim for assault and/or battery, making the exclusion Airrelevant@ (doc.
30, pp. 8-10), and that the case relied upon by the movant is distinguishable (doc. 30
5

MUSIC further suggests that no coverage exists because the incident that gave rise to
the injuries was not an Aoccurrence@ within the Policy definition. The plaintiff simply notes that
such argument could be made, but does not rely upon it as a ground for summary judgment;
accordingly the court does not issue any opinion as to whether the assault was an Aoccurrence@
under the policy.
7

pp. 10-12).

Ms. Hubbard further asserts that the contract should be liberally

construed in favor of coverage.

DISCUSSION
The issue before this court is whether there exists a genuine issue of material
fact regarding whether MUSIC must defend and indemnify in the underlying lawsuit
filed by Ms. Hubbard against The Office and Crystal Stovall. Under Alabama law,
the burden of proving that coverage exists under a policy of insurance rests with the
insured, but the burden of proving an exclusion applies to bar coverage lies with the
insurer. See Jordan v. National Accidental Ins. Underwriters, Inc., 922 F.2d 732,
735 (11th Cir. 1991), and cases cited therein. See also Pennsylvania Nat. Mut. Cas.
Ins. Co. v. Roberts Bros., Inc., 550 F. Supp. 2d 1295 (S.D. Ala. 2008). Under
Alabama law, the general rules of contract law govern an insurance contract, and the
policy must be enforced as written if the language of the policy is unambiguous.
Safeway Ins. Co. of Ala., Inc., v. Herrera, 912 So. 2d 1140, 1143 (Ala. 2005).
Whether a contract term is ambiguous is a question of law, and to the extent that a
term is ambiguous, it must be construed against the insurer. Safeway, 912 So. 2d at
1143. Furthermore, policies are to be liberally construed in favor of the insured.
Tanner v. State Farm Fire & Cas. Co., 874 So. 2d 1058, 1065 (Ala. 2003), quoting

8

Pacific Indem. Co. v. Run-A-Ford Co., 161 So.2d 789, 795 (Ala. 1964). However,
when a contract is unambiguous, the court must enforce the policy as written.
Lambert v. Coregis Ins. Co., Inc., 950 So. 2d 1156. An insured cannot avoid the
plain meaning of a term of the insurance policy by Aunduly strain[ing]@ the language.
Woodall v. Alfa Mut. Ins. Co., 658 So. 2d 369, 371 (Ala. 1995). The Alabama Supreme
Court noted:
A[I]nsurance companies are entitled to have their policy contracts
enforced as written, rather than risking their terms either to judicial
interpretation or the use of straining language, and the fact that different
parties contend for different constructions does not mean that the
disputed language is ambiguous.@
Woodall, 658 So. 2d at 371, quoting Gregory v. Western World Ins. Co., 481 So.2d
878, 881 (Ala.1985) (citation omitted).
MUSIC asserts that the Policy specifically excludes coverage of the claims
alleged in the underlying lawsuit.

The insurer argues that the exclusion is

unambiguous and enforceable and precludes any duty to defend or indemnify the
insureds with respect to Ms. Hubbard’s claims. In support of that argument, the
plaintiff points to Admiral Insurance Co. v. Price-Williams, 129 So. 3d 991 (Ala.
2013). In that case, Price-Williams was attacked and beaten at a fraternity house.

9

He sued the national fraternity, the local chapter of the fraternity, 6 two fraternity
officers alleged to have engaged in the attack, and a third man, not affiliated with the
fraternity, who also was alleged to have joined in the beating. His claims against the
two officers included negligence and/or wantonness in failing to prevent the assault
by failing to enforce the fraternity=s Arisk management program.@ 129 So. 3d at 992.
The officers apparently never appeared in the case; the two fraternal organizations
retained their own counsel until Admiral took over the defense.

Id.

The two

officers also were criminally charged for their participation in the assault. Id. at n. 3.
The trial court granted summary judgment in favor of the national fraternity, entered a
default judgment against the two officers, and proceeded to try the claims against the
local chapter. Id. at 993. The fraternity retained its own counsel and provided the
defense early in the action pursuant to a self-insured retention clause.7 Once the
expenses reached the threshold necessary to trigger the insurer=s duty to pay, Admiral
assumed the defense of the fraternity. No defense or indemnity for the two officers
was sought.

Id.

proceeded to trial.

The default judgment was apparently set aside, and the case
After closing arguments, the fraternity reached a settlement

6

The plaintiff sued both the national fraternity, Kappa Sigma, and the local chapter,
Kappa Nu. The insurer apparently defended and indemnified both Kappa Sigma and Kappa Nu.
7

The court defined a self-insured retention clause as one that requires the insured to pay
some Aamount of an otherwise-covered loss ... that usu[ally] must be paid before the insurer will
pay benefits.@ 129 So. 3d at 993, n. 4.
10

agreement with Price-Williams.

The court entered a judgment against the two

officers, finding they acted negligently and wantonly.

The court awarded

Price-Williams $500,000 in compensatory damages, and $750,000 in punitive damages.
129 So. 3d at 994.
Price-Williams then brought a separate action, pursuant to Alabama Code
Section 27-23-2, seeking to hold Admiral liable to indemnify the two officers,
asserting that they also should be deemed insureds under the commercial general
liability policy held by the fraternity. 129 So. 3d at 995. The trial court found that
the two officers= conduct in failing to implement the Arisk management@ policy was
covered under the policy, although their conduct in participating in the assault was
excluded under the assault and battery exclusion. Id. at 995-96. Admiral appealed,
and the Supreme Court addressed the question at issue here: whether the assault and
battery exclusion is unambiguous.
In the case relied upon by MUSIC, the Alabama Supreme Court ultimately
determined that the issue Ahinge[d] solely on the application of unambiguous
language@ in the policy which read: AThis insurance does not apply to >bodily injury,=
>property damage,= >personal injury,= or >advertising injury= arising out of any act of
assault and/or battery by any insured or additional insured.@ 129 So.3d at 996.
Defendant attempts to distinguish the clear holding in Price-Williams by arguing that

11

the case was a direct action brought by the injured party who Astood in the shoes@ of
the insureds. But the same can be said of the instant case. Ms. Hubbard is not an
“insured” under the terms of the Policy; she is sued in this declaratory judgment
action because she is a plaintiff against the insureds in the underlying tort action, and
therefore a necessary party. In a real sense, she also is “standing in the shoes” of the
insureds in this action because she wants to preserve insurance coverage of her claim
against the insureds in the underlying action. She is procedurally in the same posture
as a plaintiff who has obtained a judgment against the insureds and then proceeds in a
direct action against the insurer.

Thus, there is no real distinction between

Price-Williams and this case, at least as argued by Ms. Hubbard.
Even if a distinction did exist due to the direct-action posture of the
Price-Williams case, the ultimate issue decided by the appellate court was whether,
under Alabama law, the language of an assault-and-battery exclusion in a commercial
general liability policy was unambiguous and enforceable. The answer, quite simply,
was Ayes.@

With language very similar to the language in the instant case,

Price-Williams involved the more complicated issue of an exclusion tailored specifically
to exclude only an assault and/or battery committed by persons otherwise insured.
Even so, the lack of ambiguity and the enforceability of such the exclusion was clearly
analogous. The policy language at issue here, is substantially similar and even broader,

12

excluding insurance coverage for “‘personal injury’… arising out of assault and/or
battery or out of any act or omission in connection with the prevention or suppression of such acts,
including the failure to warn, train or supervise, whether caused by or at the instigation or
direction of the Insured, his employees, patrons or any other person.” (Emphasis added).
Although it is true that Ms. Hubbard does not allege in her tort suit that The Office or
Crystal Stovall committed an assault and battery on her son, the fact remains that his
“personal injuries” and death arose out of an assault and battery by a “patron.” All of
her legal claims against the insureds merely allege negligence or wantonness in failing to
“prevent[ ] or suppress[ ]” the attack on her son by another patron, Crenshaw, and these
are precisely the types of claims the assault and battery exclusion was intended to
exclude from overage. For declaratory judgment purposes, the coverage question is
not whether Ms. Hubbard contends the insureds attacked her son, but whether his
personal injuries were the product of an assault and battery for which the insureds
might be liable. The language of the exclusion makes plain that it excludes coverage
even where the assault and battery is “caused by… patrons or any other person.”
Because even Ms. Hubbard concedes that the personal injury suffered by her son arose
from an assault and battery, the exclusion clearly and unambiguously applies.
This is reading of the exclusion is made clear by the authority cited by the
Alabama Supreme Court for its holding in Price-Williams.

13

The holding in

Price-Williams was derived from another case construing a clause almost identical to the
language in the MUSIC policy. In Gregory v. Western World Insurance Co., Inc., 481
So. 2d 878 (Ala. 1985), the Alabama Supreme Court held that the exclusion precluded
coverage for the injuries the plaintiff, the patron of a bar, sustained after being struck in
a bar fight with another patron. The plaintiff sued the owners of the bar and other
defendants, alleging, inter alia, that the premises were negligently maintained. The
court found the exclusion for Abodily injury ... arising out of an assault and battery ...
whether caused by or at the instigation or direction of ... patrons or any other person@
was applicable and unambiguous. 481 So. 2d at 881. 8
Accordingly, the court must conclude that MUSIC=s policy, which excludes from
coverage A>bodily injury,= >personal injury,= or >property damage= arising out of assault
and/or battery@, is unambiguous and enforceable.

MUSIC is therefore entitled to a

declaratory judgment in its favor that there exists no coverage for the claims asserted in
the underlying lawsuit.

8

The court finds only one case that suggests, at least on the surface, that such an
exclusion could be deemed ambiguous, Acceptance Insurance Co. v. Brown, 832 So. 2d 1 (Ala.
2001). However, that case involved injuries arising from a shooting on the premises of the
insured=s gas station, and there was a jury question as to whether the shooting could have been an
accident and not an intentional assault. There is no issue of fact concerning the incidents giving
rise to the injuries in Price-Williams and in the instant case. Ms. Hubbard herself describes
Crenshaw’s conduct as an “attack.”
14

CONCLUSION
For all of the reasons set forth above, the motion for summary judgment filed
by plaintiff MUSIC is due to be and hereby is GRANTED. A separate order will be
entered declaring that MUSIC owes no duty to defend or indemnify insured
Crystall/Stovall Enterprises LLC., or other insureds under the Policy, with respect to
the claims alleged against them by defendant Hubbard as the personal representative
of the estate of Jarred Michael Hubbard, deceased.
Dated the 6th day of March, 2015.

_______________________________

T. MICHAEL PUTNAM
UNITED STATES MAGISTRATE JUDGE

15