Slate Bar & Lounge In v. Founders Insurance Company

Filing 23

MEMORANDUM (Order to follow as separate docket entry) re 20 MOTION for Reconsideration re 19 Order on Motion to Dismiss for Failure to State a Claim filed by Founders Insurance Company Signed by Magistrate Judge Joseph F. Saporito, Jr on 1/9/17. (ms)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
SLATE BAR & LOUNGE, INC., :
Plaintiff,
:
:
v.
:
:
FOUNDERS INSURANCE
:
COMPANY,
:
Defendant.
:

CIVIL NO.: 3:15-cv-2251
Magistrate Judge Saporito

MEMORANDUM
This insurance coverage declaratory judgment action is before us on
the motion for reconsideration (Doc. 20) filed by the defendant, Founders
Insurance Company (“Founders”). Founders seeks reconsideration of our
order (Doc. 19) denying its motion to dismiss for failure to state a claim.
(Doc. 3). For the reasons set forth herein we will deny the motion for
reconsideration.
I.

Background
As we write solely for the parties, we incorporate our recitation of

the facts and applicable law set forth in our memorandum dated July 8,
2016. (Doc. 18). In its motion for reconsideration, Founders contends that
we erred as a matter of law by denying its motion to dismiss claiming that
we misinterpreted the scope of coverage available under the liquor

liability insurance policy issued by Founders to Slate Bar & Lounge, Inc.
(“Slate Bar”). As the motion for reconsideration has been fully briefed, it
is ripe for disposition.
II.

Legal Standards
Fed. R. Civ. P 60(b) provides in pertinent part, that “[o]n motion and

just terms, the court may relieve a party or its legal representative from
a final judgment, order, or proceeding for the following reasons: . . . (6) any
other reason that justifies relief.” “The purpose of a motion for
reconsideration is to correct manifest errors of law or fact or to present
newly discovered evidence.” Harsco v. Zlotnicki, 779 Fed. 906, 909 (3d
Cir. 1985). A judgment may be altered or amended if the party seeking
reconsideration shows at least one of the following grounds. (1) an
intervening change in controlling law; (2) the availability of new evidence
that was not previously available; or (3) the need to correct a clear error
of law or fact or to prevent manifest injustice. Max’s Seafood Café ex rel.
Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999).
III.

Discussion
As there is no intervening change in controlling law nor newly

discovered evidence, Founders bases its motion for reconsideration on the
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ground that there is a need to correct a clear error of law. In its brief,
Founders has misinterpreted our decision. Founders maintains that we
concluded that the subject policy “covers any claim by any person who is
at the bar for any reason related to alcoholic beverages, regardless of
whether there is a causal connection between the injury and the actual
serving of alcoholic beverages by the bar.” (Doc. 20-1, at 4). That was not
our holding in ruling upon Founders’ motion to dismiss.

In our

memorandum, we made it clear that the subject policy contained an
assault and battery exclusion. (Doc. 18, at 10-11).

This exclusion, as

written, would have precluded coverage because the language was plain
and unambiguous. We also found that Slate Bar paid for an endorsement
to the policy whereby the assault and battery exclusion shall not apply
and coverage for any injury that otherwise would be excluded by the
assault and/or battery exclusion shall be provided. (Id. at 11). We based
our decision on the assault and battery buy-back endorsement and
specifically stated that without it, the original assault and battery
exclusion would preclude coverage. (Id. at 12).

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Further, we found that the assault and battery exclusion specifically
excluded coverage for an “injury” arising from the selling, serving, or
furnishing of alcoholic beverages which results in assault and/or battery.
The buy back endorsement eliminated that portion of the exclusion as well
as the remainder of it. (Id. at 12-13). It was on that basis that we found
the facts alleged in the complaint of the underlying action created “the
possibility that the underlying claim could be covered by the policy at
issue.” (Id. at 13).
While we agree with Founders’ assertion that the assault and
battery endorsement does not change the insuring agreement’s language
that the insurance applies to injury imposed on an insured by reason of
the insured selling, serving, or furnishing alcoholic beverages on the
insured premises, we cannot ignore the plain language of the
endorsement. For example, the endorsement removes the assault and
battery exclusion entirely. See Liberty Surplus Ins. Corp. v. McFadden
at Ballpark LLC, 116 F. Supp. 3d 447 (E.D. Pa. 2015)(security staff attack
on a departing patron of a tavern triggered liquor liability coverage where
the insured purchased an assault and battery buy-back endorsement).
Part of the exclusion from coverage involves the selling, serving, or
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furnishing of alcoholic beverages which results in an assault and/or
battery and the negligent employment, supervision, or retention of a
person from whom the insured is legally responsible. Further, Founders
attempts to limit coverage to a situation where the insured, in fact, sold,
served, or furnished alcoholic beverages. (Doc. 20-1, at 3). The subject
policy, however, requires that the injury be a direct result of the insured
“selling, serving, or furnishing alcoholic beverages on the insured
premises.”
As we found in our memorandum, the facts alleged in the complaint
of the underlying action create the possibility that the underlying claim
could be covered by the policy at issue. (Doc. 18, at 13). Our denial of the
motion to dismiss without prejudice leaves open the possibility that the
issues may be revisited after the close of discovery in a motion for
summary judgment.
Finally, Founders posits that our interpretation contravenes the
plain language of the insuring agreement and produces an absurd result
by transforming the liquor liability insurance policy into a policy covering
general liability risks. (Doc. 20-1, at 6). We disagree. In support of this
position, Founders cites two examples. In the first example, Founders
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reasons that under our interpretation, if Fine alleged that he slipped and
fell on a crack in the sidewalk outside of the Slate Bar while on his way
to the bar to buy a beer, the claim would be covered because that would
be a sufficient allegation of causal connection between the injury and
Slate Bar’s “selling, serving, or furnishing of any alcoholic beverage.”
Founders’ example is unsound and would not result in liability. First, in
this example, the incident did not occur on the insured premises as
defined in the policy, and second, the “other acts” exclusion contained in
the policy would preclude coverage because the injury would have been
“caused directly or indirectly” by any act of an insured, its employee, or
anyone acting on its behalf other than the selling, serving, or furnishing
of any alcoholic beverage.
Similarly, coverage would be excluded by the “other acts” exclusion
in the second example offered by Founders involving a claim by a delivery
man for injuries resulting from a slip and fall on a defect in the bar’s floor
while delivering a keg of beer to the bar. In that example, the defect in the
floor caused the injury. Founders fails to acknowledge that Slate Bar
paid for and Founders accepted an additional premium to allow for
coverage in a situation involving an assault and battery. Thus, we will
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deny Founders’ motion for reconsideration.

s/ Joseph F. Saporito, Jr.
JOSEPH F. SAPORITO, JR.
U.S. Magistrate Judge

Dated: January 9, 2017