Certain Underwriters at Lloyd's London v. Butler et al
ORDER denying 19 Motion for Summary Judgment Signed by Honorable J Michelle Childs on 2/13/2017.(eber)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
Certain Underwriters at Lloyd’s London,
subscribing to Policy TCN051814,
Sarah Butler, Willie Butler, and
Civil Action No.: 1:16-cv-00975-JMC
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 was
The court notes that abstention pursuant to the decisions in Wilton v. Seven Falls Co., 515 U.S.
277 (1995), and Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942), is not appropriate in the
circumstances presented by this case. See Penn-America Ins. Co. v. Coffey, 368 F.3d 409 (4th Cir.
Plaintiffs attached Green’s state-court complaint to the complaint that Plaintiffs filed in this court.
(See ECF No. 1-1). The court takes judicial notice that the publicly-available state-court docket
reflects that the complaint Plaintiffs attached remains the operative complaint in Green’s state case
against the Butlers and Round Two. See Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th
Cir. 1989) (“We note that the most frequent use of judicial notice of ascertainable facts is in
noticing the content of court records.” (internal quotation marks and brackets omitted)); Bradacs
a 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
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.
v. Haley, 58 F. Supp. 3d 499, 513 n.9 (D.S.C. 2014) (“The court may take judicial notice of court
files and records.”).
Plaintiffs attached the Policy to their complaint.
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
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
. . . . 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, to
survive 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).
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
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 determined by reference to the allegations of the complaint or by reference to the
facts of the case as determined by a factfinder. On one hand, some authorities have stated that “[i]n
an action for a declaratory judgment, the obligation of a liability insurance company to defend and
indemnify is determined by the allegations in the complaint.” Collins Holding Corp. v. Wausau
Underwriters Inc. Co., 666 S.E.2d 897, 899 (S.C. 2008) (emphasis added); see also R.A. Earnhardt
Textile Mach. Div. Inc. v. S.C. Ins. Co., 282 S.E.2d 856 (S.C. 1981); Mfrs. and Merchants Mut.
Ins. Co. v. Harvey, 498 S.E.2d 222, 227 (S.C. Ct. App. 1998). Thus, based only on the allegations
of an underlying complaint, at least one court has granted summary judgement to an insurer
seeking a declaration that it has no duty to indemnify. See United Fin. Cas. Co. v Butler, No. 2:11cv-02897-DCN, 2013 WL 1110813 (D.S.C. March 18, 2013).
On the other hand, some authorities have explained that, “‘[w]hile the duty to defend is
based on the allegations in the underlying complaint, the duty to indemnify is based on the
evidence found by the factfinder.’” Darwin, 36 F. Supp. 3d at 655 (quoting Union Ins. Co., 465 F.
Supp. 2d at 573); see also Ellett Bros., Inc., 275 F.3d at 388; Jourdan v. Boggs/Vaughn
Contracting, Inc., 476 S.E.2d 708, 711 (S.C. 1996). “Generally, whether an insurer has a duty to
indemnify the insured for a particular liability is only ripe for consideration, for purposes of
declaratory judgment actions, if findings of fact have been made in the underlying lawsuit.”
Darwin, 36 F. Supp. 3d at 656 (citing Union Ins. Co., 465 F. Supp. 2d at 573); see also Jourdan,
476 S.E.2d at 711. However, if a complaint has been filed in the underlying case and the court has
determined that, even if the allegations of the complaint were proved, the insurer would have no
duty to defend, then the insurer also would have no duty to indemnify, and concerns of ripeness
do not necessarily bar declaratory judgment to that effect. See Canopius US Ins., Inc. v. Middleton,
No. 2:15-cv-3673-DCN, ___ F. Supp. 3d. ___, 2016 WL 4379538, at *4 (D.S.C. Aug. 17, 2016)
(“[I]f an insurer has no duty to defend, it necessarily has no duty to indemnify . . . .”); Union Ins.
Co., 465 F. Supp. 2d at 575 n.3 (“‘Although an insurer’s duty to indemnify will depend on
resolution of facts alleged in the complaint, no such factfinding is necessary if there is no duty to
defend because the allegations, even when taken as proved, would fall outside the policy’s
coverage.’” (quoting Penn-America Ins. Co. v. Coffey, 368 F.3d 409, 413 (4th Cir. 2004))); see
also Builders Mut. Ins. Co. v. Wingard Props., Inc., No. 4-07-3183-RBH, 2010 WL 4393270, at
*2 (D.S.C. Oct. 29, 2010); Green Textiles Assocs., Inc. v. Fed. Ins. Co., No. 7:05-3233-HMH,
2006 WL 1677184, at *5 (D.S.C. June 16, 2006); cf. Fid. & Guar Ins. Underwriters, Inc. v. Robert
W. Booher Constr., Inc., No. 2:06-690-CWH, 2007 WL 2351010, at *2 (D.S.C. Aug. 15, 2007).
Nevertheless, if the court either determines that the insurer has a duty to defend or is unable to
make a determination as to the duty to defend, a determination as to the insurer’s duty to indemnify
is premature. Middleton, ___ F. Supp. 3d ___, 2016 WL 4379538, at *4 (“[i]f [the insurer] does
have a duty to defend, the court may be unable to determine whether the insurer has a duty to
indemnify until the resolution of the underlying action.”); see Am. S. Ins. Co. v. Moras Roofing,
LLC, No. 2:09–cv–1966, 2010 WL 2710588, at *3 (D.S.C. July 7, 2010).
In all material respects, the facts of this case are on all fours with the facts in Middleton,
which involved an insurer’s duties to defend and indemnify based on two underlying state-court
complaints filed against a nightclub, which had an insurance policy with the insurer. Middleton,
___ F. Supp. 3d ___, 2016 WL 4379538, at *1-2. In the first complaint, a plaintiff alleged that,
while he was a guest at the nightclub,
a dispute occurred amongst patrons inside [the nightclub;] that this dispute
escalated into gunfire resulting in four innocent patrons, including [the
plaintiff], being shot[; that] . . . his injuries were caused by [the nightclub’s]
negligence in failing to protect [him] from foreseeable risk of physical harm[,]
failing to implement proper measures to deter and prevent crimes on the
premises[,] failing to staff adequate personnel to ensure the rights and safety
of [the plaintiff,] and failing to train personnel as were on hand in the best
Id. at *2 (internal citations, quotation marks, and brackets omitted); see id. at *5. The second
complaint brought identical actions against the nightclub but, importantly, “[did] not specifically
allege that the . . . incident arose from a dispute[;] instead, the [plaintiffs] simply allege[d] that
they were injured by the discharge of a firearm at [the nightclub’s] premises.” Id. at *2; see id. at
*5. The insurer filed a declaratory judgment action in federal court, seeking a declaration that it
had no duty to defend or indemnify the insured nightclub due to an assault and battery exclusion
in the policy with the exact same language as the assault and battery exclusion in the Policy at
issue in the instant case. See id. at *1-2.
The court had no difficulty concluding that the first complaint alleged an injury arising
from an assault or battery. See id. at *5. The court explained that, under South Carolina law,
“[f]iring a gun in connection with a dispute is almost invariably done to threaten or intimidate the
other parties to the dispute,” which constitutes an assault, see id. at *5 (citing In re McGee, 299
S.E.2d 334, 334 (S.C. 1983); Mellen v. Lane, 659 S.E.2d 236, 244 (S.C. Ct. App. 2008)), or,
because the discharge resulted in a harmful touching, a battery, under the doctrine of transferred
intent, see id. at *5 n.4 (citing USF Ins. Co. v. D&J Enters., Inc., No. 0:09–cv–2510, 2010 WL
2232211, at *4 (D.S.C. June 3, 2010)). The fact that the patron who was injured alleged that he
was not a part of the dispute was irrelevant because the exclusion applied to any claim arising from
an assault or battery and did not specify that it arise from the target of an assault or battery. See id.
at *5 (citing Coleman v. Acceptance Indem. Ins. Co., 369 F. App’x 595, 597 (5th Cir. 2010)).
However, the court concluded that the second complaint, construed liberally, did not allege
an injury that is validly excluded by the policy’s assault and battery exclusion. See id. at *7, *9.
For purposes of an insurance policy exclusion, the court, after thoroughly canvassing South
Carolina law, concluded that, for an injury to arise from an assault or battery, the conduct of the
person committing the putative assault or battery must include some form of intent. See id. at *49. This is so because excluding coverage for injuries arising from assault and battery, defined to
include unintentional conduct, would swallow the coverage provision and render it virtually
meaningless, a result not permitted in South Carolina law. See id. Accordingly, the court rejected
the insurer’s proposed definition of assault and battery, which included unintentional conduct. See
id. Because the second complaint contained no hint of an allegation that the injury resulted from
some form of intentional conduct, it remained possible that the complaint did not allege an injury
arising from an assault or battery and that, therefore, the assault and battery exclusion did not
apply. See id. Thus, the court concluded that the assault and battery exclusion to which the insurer
pointed provided no basis for a declaration that the insurer had no duty to defend and that a
determination as to the insurer’s duty to indemnify was premature. See id. at *9.
Here, the court concludes that Green’s state-court complaint leaves open the possibility
that the injury she alleges does not arise from an assault or battery. The only allegation in her
complaint regarding the circumstances of the shooting do not suggest that the weapon’s discharge
was intentional in any way. In its entirety, the only sentence describing the incident is as follows:
“On or about the 11th day of August 2013, the Plaintiff, a minor at the time, was a guest at the
adult business of the Defendants when she [was] shot in both of her legs, causing permanent
damage.” (ECF No. 1-1 at 1.) Nothing in this sentence suggests that the weapon was discharged
during, or in relation to, a dispute or that it was discharged with some form of intent to cause bodily
injury or to place another in apprehension of bodily injury. Instead, the sentence is consistent with
an allegation that the weapon was discharged unintentionally or by accident. Any argument
Plaintiffs might raise that the incident alleged in Green’s complaint amounts to assault or battery
because the element of intent should be disregarded must be rejected for the reasons set forth in
Middleton, which this court finds persuasive. Ultimately, because Green’s underlying complaint
creates a possibility that her injury did not arise from assault or battery, the court cannot conclude
that the assault and battery exclusion of the Policy precludes Plaintiffs’ duty to defend. See Darwin,
36 F. Supp. 3d at 655; Union Ins. Co., 465 F. Supp. 2d at 573; Isle of Palms, 459 S.E.2d at 319;
Gordon–Gallup Realtors, 265 S.E.2d at 40.
Under either line of cases regarding the duty to indemnify, the court cannot conclude that
Plaintiffs have no duty to indemnify under the Policy at issue here. Under the first line of cases set
forth above, looking only to the allegations of the complaint, the court cannot conclude that the
assault and battery exclusion excludes coverage for the injury alleged by Green in her complaint.
Under the second line of cases, because the court cannot conclude that Plaintiffs have no duty to
defend, a determination as to Plaintiffs’ duty to indemnify is premature. See Middleton, ___ F.
Supp. 3d ___, 2016 WL 4379538, at *4; see Moras Roofing, 2010 WL 2710588, at *3.
For the foregoing reasons, Plaintiffs’ motion for summary judgment on their claim for a
declaratory judgment that they have no duty to defend or indemnify the Butlers for the claim
asserted against the Butlers in Green’s state-court complaint based on the assault and battery
exclusion of the Policy (ECF No. 19) is DENIED.
IT IS SO ORDERED.
United States District Court Judge
February 13, 2017
Columbia, South Carolina
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