Founders Insurance Company v. Hamilton et al

Filing 89

ORDER AND OPINION denying 84 Motion for Reconsideration re 82 Order on Motion for Summary Judgment denying 85 MOTION for Reconsideration re 82 Order on Motion for Summary Judgment. Signed by Honorable J Michelle Childs on 10/13/2017.(asni, ) (Main Document 89 replaced on 10/13/2017) (asni, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
ORANGEBURG DIVISION
Founders Insurance Company,

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)
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Plaintiff,
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v.
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John Hamilton a/k/a Jim Hamilton,
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Individually and d/b/a Aces High Club,
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Aces High Club and Kenneth Weatherford, )
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Defendants.
)
____________________________________)

Civil Action No.: 5:15-cv-00408-JMC

ORDER AND OPINION

Plaintiff Founders Insurance Company (“Plaintiff”) filed a Declaratory Judgment action
against Defendants John Hamilton a/k/a Jim Hamilton, individually and d/b/a Aces High Club
(“Hamilton”), and Aces High Club (“AHC”) (together “Defendants”) 1 seeking a declaration by
the court that a Liquor Liability Policy issued by Plaintiff and bearing policy number LLSC000270
(“Policy”) does not provide coverage to Defendants, create an obligation to defend Defendants or
create an obligation to indemnify Defendants with regard to the lawsuit styled Kenneth
Weatherford v. John Hamilton, Aces High Club, John Calvin Sikes, Fish Tales a/k/a JB Fish Tales,
pending in the Court of Common Pleas for Orangeburg County (South Carolina) and bearing Case
No. 2014-CP-38-00433 (hereinafter the “Underlying Lawsuit”) (ECF No. 1-2). (ECF No. 1 at 12 ¶¶ 1-4.)

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Kenneth Weatherford, as Plaintiff in the Underlying Lawsuit, alleges that “Jim Hamilton” is the
“owner, manager, operator, agent, employee and/or controlling agent of ‘Aces High Club.’”
(ECF No. 1-2 at 4 ¶ 2.)
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This matter is before the court on Defendants’ and their Co-Defendant Kenneth
Weatherford’s (“Weatherford”) Motions to Reconsider, Alter, or Amend the court’s August 9,
2017 Order granting Plaintiff’s Renewed Motion for Summary Judgment (ECF No. 82). (ECF
Nos. 84, 85.) Plaintiff opposes their Motions. (ECF No. 86 at 1.) For the reasons set forth below,
the court DENIES Defendants’ and Weatherford’s Motions.
I.

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

Defendants are involved in the Underlying Lawsuit that alleges their negligence in serving
Oscar Melvin (“Melvin”) excessive amounts of alcohol, on or about January 22, 2012, was the
cause of an assault perpetrated by Melvin against Weatherford. (ECF No. 1 at 4 ¶ 16-17.) This
alleged assault occurred at a different bar than AHC, and resulted in physical injury to
Weatherford. (Id. at 4 ¶¶ 15.) Defendants claim they are entitled to coverage under the Policy,
and are also entitled to have Plaintiff defend and indemnify them in regard to the Underlying
Lawsuit. (Id. at 4-5 ¶¶ 19-20.)
Plaintiff issued the Policy to Defendants with effective dates of June 3, 2011, through June
3, 2012. (ECF No. 64-2 at 8.) In the Policy, there is an “Exclusions to Coverage” subsection that
contains a paragraph (k) titled “Assault and/or Battery,” which provides as follows:
This insurance does not apply to: . . . “Injury” arising from: (1) assault and/or
battery committed by any “insured[,]” any “employee” of an “insured[,]” or any
other person; (2) The failure to suppress or prevent assault and/or battery by any
person in subparagraph k.(1) above; (3) The selling, serving or furnishing of
alcoholic beverages which results in an assault and/or battery; or (4) The negligent:
(a) Employment; (b) Investigation; (c) Supervision; (d) Reporting to the proper
authorities, or failure to so report; or (e) Retention of or by a person for whom any
“insured” is or ever was legally responsible and whose conduct would be excluded
by subparagraphs k.(1) through k.(3) above.
(Id. at 2-3.)

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On April 18, 2014, Weatherford filed the Underlying Lawsuit alleging claims against
Defendants, John Calvin Sikes and Fish Tales a/k/a JB Fish Tales for (1) “negligence/dram
shop/negligence per se/survival/conscious pain and suffering”; and (2) piercing the corporate veil.
(ECF No. 1-2 at 9-13 ¶¶ 24-37.) Plaintiff provided Defendants a defense in the Underlying
Lawsuit pursuant to a reservation of rights. (ECF No. 64-1 at 3.)
On January 28, 2015, Plaintiff filed a Declaratory Judgment action in this court pursuant
to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, et seq. (ECF No. 1 at ¶ 1.) 2 On
October 14, 2015, Plaintiff filed a Motion for Summary Judgment. (ECF No. 36.) Neither
Defendants nor Weatherford filed opposition to this Motion. However, because the copy of the
Policy that was attached to the Complaint did not contain a declarations page, the court ordered
Plaintiff to file a complete copy of the Policy. On September 19, 2016, Plaintiff filed another copy
of the Policy that also did not contain the declarations page. (ECF No. 53.) As a result, the court
entered a Text Order on September 20, 2016 denying Plaintiff’s Motion for Summary Judgment
without prejudice. (ECF No. 54.) Plaintiff moved for reconsideration of the September 20, 2016
Text Order on September 28, 2016 (ECF No. 55), which was denied on January 24, 2017. (ECF
No. 62.)
Plaintiff filed a Renewed Motion for Summary Judgment on February 13, 2017 (ECF No.
64), that was granted on August 9, 2017. (ECF No. 82.) Defendants and Weatherford filed
Motions to Reconsider, Alter, or Amend the court’s Order on September 1 and September 5, 2017,
respectively. (ECF Nos. 84, 85.) Plaintiff responded on September 15, 2017, opposing their
Motions. (ECF No. 86.)

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Under the Declaratory Judgment Act, a district court, in a case or controversy otherwise within
its jurisdiction, “may declare the rights and other legal relations of any interested party seeking
such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a).
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II.

JURISDICTION

The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a) based on
Plaintiff’s allegations that the action is between citizens of different states and the amount in
controversy is in excess of $75,000, exclusive of costs and interest. (ECF No. 1 at 2-3 ¶¶ 5-11.)
III.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 59(e), a court may “alter or amend the judgment if
the movant shows either (1) an intervening change in the controlling law, (2) new evidence that
was not available at trial, or (3) that there has been a clear error of law or a manifest injustice.”
Robinson v. Wix Filtration Corp., 599 F.3d 403, 407 (4th Cir. 2010) (citation omitted). It is the
moving party’s burden to establish one of these three grounds in order to obtain relief under this
rule. Loren Data Corp. v. GXS, Inc., 501 Fed. App’x 275, 285 (4th Cir. 2012). The decision
whether to reconsider an order pursuant to this rule is within the discretion of the district court.
See Hughes v. Bedsole, 48 F.3d 1376, 1382 (4th Cir. 1995). A Rule 59(e) motion should not be a
“vehicle for rearguing the law, raising new arguments, or petitioning a court to change its mind.”
Lyles v. Reynolds, No. CV 4:14-1063-TMC, 2016 WL 1427324, at *1 (D.S.C. Apr. 12, 2016)
(citing Exxon Shipping Co. v. Baker, 554 U.S. 471, 486 n. 5 (2008)).
IV.

ANALYSIS

Defendants and Weatherford move the court to reconsider, alter or amend its Order
granting Plaintiff’s Renewed Motion for Summary Judgment (ECF No. 82) on the basis that the
court did not address the specific argument of “negligent training” and gave a “blanket ruling” that
“[Plaintiff] has no duty to defend or indemnify in the underlying case due to the assault and battery

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exclusion.” (ECF No. 84 at 2 ¶¶ 4-6.) 3 Defendants do not specifically assert the ground under
which they seek relief, but the court construes that they rely on a “clear error of law or manifest
injustice,” thus the Motions are proper. (See ECF No. 86 at 5.)
Defendants argue that Plaintiff must defend them in the Underlying Lawsuit based on the
language of the Policy which “does not include an exclusion for the negligent training of
employees . . . .” (ECF No. 84 at 2 ¶ 4.) Defendants also raised this argument in their Response
to Plaintiff’s Renewed Motion for Summary Judgment. (ECF No. 66 at 6.) 4 Defendants’ Motion
does not provide relevant authority as to the reason “negligent training” does not fall within the
“assault and battery” exclusion of the Policy. Instead they cite to Jessco, Inc. v. Builders Mutual
Ins. Co., 472 F. App’x. 225, 231 (4th Cir. 2012) and the Fourth Circuit’s notation that “the duty to
defend exists where there is a possibility of a covered claim [.]”
The court finds that the Fourth Circuit’s analysis in St. Paul Reinsurance Co. v. Riviello,
296 F. App’x 377 (4th Cir. 2008) is more analogous to this case than Jessco. Jessco concerns a
builder’s insurance company’s duty to defend and indemnify it in a suit brought by homeowners
whose house flooded and suffered damage. 472 F. App’x. 226-27. Riviello concerns the “assault
and battery” exclusion of a bar’s Liquor Liability portion of its insurance policy, and whether the
insurance company had a duty to defend or indemnify the bar. 296 F. App’x at 379.
In Riviello, the Fourth Circuit affirmed this court’s reliance on Sphere Drake Ins. Co. v.
Litchfield, in which the South Carolina Court of Appeals addressed an “assault and battery”
exclusion within an insurance policy. 296 F. App’x at 379 (citing St. Paul Reinsurance Co. v.

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The court notes that Weatherford joined in “all arguments and positions presented in
[Defendants’ Motions for Summary Judgment and Reconsideration].” (ECF Nos. 68 at 1, 85 at
1.)
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Supra note 3.
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Ollie's Seafood Grille & Bar, LLC, 242 F.R.D. 348, 351 (D.S.C. 2007)). The Court of Appeals
found that “[ ] the separate acts of negligence alleged by [the plaintiff in the underlying case] are
not actionable without the assault and battery, because without the assault and battery there would
be no damage suffered as a result of the alleged negligence of [the defendant nightclub]. The
negligence claims are for bodily injury “arising out of” assault and battery and come within the
exclusion.” Sphere Drake Ins. Co. v. Litchfield, 438 S.E.2d 275, 277 & n.1 (S.C. Ct. App. 1993)
(“[Plaintiff’s] [C]omplaint alleged, inter alia, negligence in failing to protect customers, failing to
provide adequate security devices, failing to properly train and supervise employees, and
negligence in hiring”) (emphasis added).
The court’s Order also relied on Sphere Drake finding that Weatherford’s
“negligence/dram shop/negligence per se/ survival/conscious pain and suffering” cause of action
fell within the “assault and battery” exclusion of the Policy because the separate acts arose from
the assault and battery, therefore foreclosing Plaintiff’s duty to defend and/or indemnify. (ECF
No. 82 at 9-10.)
Upon review of the court’s August 9, 2017 Order, the court finds that Defendants’
argument that “negligent training” is not excluded from coverage under the Policy is without merit.
Weatherford’s claim of negligent training is not actionable without the assault and battery claim,
therefore it “arises from” the assault and battery claim and is excluded under the Policy. The
court’s Order observed that “. . . claims arising from an assault and battery, whether rooted in the
actual assault and battery or couched in terms of negligence, fall within the parameters of an assault
and battery exclusion and, therefore, such claims do not trigger an insurer’s duty to defend or
indemnify.” (ECF No. 82 at 9.)

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V.

CONCLUSION

For the reasons set forth above, the court finds that it has not made a clear error of law or
manifest injustice and therefore DENIES Defendants’ and Weatherford’s Motions to Reconsider,
Alter, or Amend its August 9, 2017 Order. (ECF Nos. 84, 85.)
IT IS SO ORDERED.

United States District Judge
October 13, 2017
Columbia, South Carolina

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