Penn-America Insurance Company v. White Pines, Inc.
Filing
53
OPINION AND ORDER granting Penn-America's 37 Motion for Judgment on the Pleadings and denying Polli's 39 Counter-Motion for Judgment on the Pleadings. Signed by Chief District Judge Mark S. Davis on 8/5/20. (bpet, )
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 1 of 30 PageID# 722
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
Norfolk Division
PENN-AMERICA INSURANCE COMPANY,
Plaintiff,
v.
Civil No. 2:19cv57
WHITE PINES, INC.,
d/b/a L.A’S NIGHT CLUB,
and
BRYAN POLLI,
Defendants.
OPINION AND ORDER
This matter is before the Court on Plaintiff Penn-America
Insurance Company’s (“Penn-America”) motion for judgment on the
pleadings, ECF No. 37, and Defendant-Intervenor Bryan Polli’s
(“Polli”) counter-motion for judgment on the pleadings, ECF No.
39.
For
the
reasons
stated
below,
Penn-America’s
motion
is
GRANTED and Polli’s counter-motion is DENIED.
I. FACTUAL HISTORY
L.A.’s Night Club (“L.A.’s”), located in Virginia Beach,
Virginia, is owned and operated by Defendant White Pines Inc.
(“White Pines”).
ECF No. 25-1 (“Polli Complaint”) ¶ 1.
Polli
began working for White Pines in 2009, and he was promoted to
manager of L.A.’s in 2014 after having served in several roles.
Id. ¶¶ 5-6.
Polli “was never provided employment status” by
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 2 of 30 PageID# 723
White Pines and “was not even provided a 1099 as an independent
contractor[] until 2016,” with his compensation instead coming
from cash “under the table” either “from the business cash flow
or out of the owner’s pocket.”
Id. ¶¶ 8-9, 44.
Polli “observed an average of 3 or 4 incidents of violence
a month” during the seven years he worked at L.A.’s, with police
help
being
incidents
requested
of
violence
approximately
escalated
once
beyond
security personnel on the premises.”
a
the
month
“after
control
Id. ¶ 10.
of
the
the
White Pines’
“standing policy” was for “staff to only call the police in
emergency
situations,
preferring
that
its
employees
handle
dangerous situations without the benefit of law enforcement to
avoid drawing negative attention to the strip club.”
On
March
22,
2016,
Polli
arrived
at
Id. ¶ 11.
L.A.’s
for
his
scheduled shift, and was there with four other employees when
the club opened at 4:00 P.M., although security personnel were
not scheduled until 8:00 P.M.
Id. ¶¶ 12-14.
Around 6:30 P.M.,
Polli was informed by an employee that two unknown customers
(“Assailant One” and “Assailant Two” or “the Assailants”) “were
harassing the entertainers by attempting to solicit sex from
them and calling them derogatory names.”
The
Assailants
were
“physically
Id. ¶¶ 15-16.
intimidating,”
but
Polli
asked them to leave “[a]s was expected by Whites Pines in his
capacity as manager.”
Id. ¶¶ 19-20.
2
Assailant One refused to
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 3 of 30 PageID# 724
leave and responded that no one could “kick him out” because he
was the “biggest person” there.
Id.
Polli called security
personnel to come in early, but in the fifteen minutes before a
security guard arrived, the Assailants “continued to threaten
the staff and customers in L.A.’s.”
the
Assailants
to
leave
twice
Id. ¶¶ 21-22.
more,
including
Polli asked
once
with
the
added threat that he would call the police, but the Assailants
refused.
Id. ¶¶ 23-25.
security
guard
who
One of the Assailants then pushed the
had
just
arrived
early
(as
Polli
had
requested), causing a “very brief fight” before Assailant One
was removed and Assailant Two left.
had
left,
the
security
guard
Id.
told
After the Assailants
Polli
that
there
was
a
retractable baton inside the front desk “to be used specifically
for defense from violent customers.”
Id. ¶ 27.
About three minutes later, “the Assailants ran in the front
door,
swinging
employees.
their
Id. ¶ 28.
fists
wildly,”
targeting
two
other
“Fearing serious injury” to the other
employees, Polli grabbed the baton “and hit Assailant One in the
back of the head, attempting to subdue him,” but the blow only
“further enrage[d] the Assailant,” and caused the Assailant “to
focus his wrath” on Polli.
Id. ¶ 29.
Assailant One “land[ed]
full force punches on [Polli’s] jaw and ribs” as Polli retreated
into the club swinging the baton at Assailant One, before an
employee was able to tackle Assailant One.
3
Id. ¶¶ 30-31.
After
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 4 of 30 PageID# 725
the Assailants were restrained, the police arrived, but they
“recommended against pressing charges due to injuries to both
parties,”
although
they
did
recommend
order against the Assailants.
securing
Id. ¶ 33.
a
restraining
Polli “informed the
owner, Kenny Edwards, of the incident, and requested to leave
early because he did not ‘feel right.’”
Id. ¶ 34.
Polli had a cut on his jaw and red marks on his ribs as a
result of the incident, and he “began coughing up blood the next
morning and went straight to the hospital.”
Id. ¶ 35.
Polli
received an x-ray which showed that his lung had been imploded
during the fight and his heart had shifted; he was told his
injuries
attention.
could
have
been
Id. ¶¶ 36-37.
fatal
had
he
not
sought
medical
“Shortly after [] Polli was admitted
to the hospital, [White Pines] told [] Polli that [White Pines]
would ‘help him out’ with his medical bills and expenses while
he was unable to work,” but to Polli’s knowledge, White Pines
“did
not
“provide
¶¶ 38-39.
pay
any
of
any
other
[]
Polli’s
financial
medical
assistance
bills”
to
nor
Polli.”
did
it
Id.
Furthermore, White Pines “never reported the incident
to the Workers[’] Compensation Commission.”
Id. ¶ 44.
II. PROCEDURAL HISTORY
On March 22, 2018, Polli filed a lawsuit in the Circuit
Court for the City of Virginia Beach alleging six counts against
White Pines.
Id.
The first three counts allege that White
4
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Pines was negligent: Count One for failure to schedule security
guards; Count Two for failure to prevent the Assailants from reentering White Pines; and Count Three for failure to call for
police assistance.
Id. ¶¶ 45-63.
The fourth and fifth counts
are fraud claims: Count Four for actual fraud for intentionally
misrepresenting
Polli’s
employment
status
as
an
independent
contractor to defraud Polli from the protections of the Virginia
Workers’ Compensation Act; and Count Five for constructive fraud
for
doing
¶¶ 64-73.
the
same
either
innocently
negligently.
Id.
Count Six is a workers’ compensation claim under the
Virginia Workers’ Compensation Act.
After
or
Polli
filed
the
Polli
Id. ¶¶ 74-76. 1
Complaint,
White
Pines
and
Polli both contacted Penn-America requesting coverage under a
commercial general liability policy Penn-America issued to White
Pines.
ECF No. 1-2 (“the Policy”).
requests.
In
response,
Polli
Penn-America denied both
notified
Penn-America
of
his
intention to file a declaratory judgment action, but before he
could, Penn-America filed a declaratory judgment action of its
own
against
White
Pines
in
this
Court’s
Richmond
Division,
seeking a declaration that it has no duty to defend or indemnify
White
Pines.
White
Pines
never
1
responded
to
Penn-America’s
A search of the Virginia Courts Case Information system revealed that
Polli’s Complaint is still an active case in the Virginia Beach Circuit
Court. The matter has been set for trial and continued two times. The
latest trial date was June 22, 2020, although there is no final
disposition entered as of the date of this Opinion and Order’s filing.
5
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 6 of 30 PageID# 727
filing, and Penn-America secured an entry of default against
White Pines.
ECF No. 8. 2
Polli filed a motion to intervene, to
transfer, and to set aside entry of default against White Pines,
and the Richmond Division of this Court granted the motion to
intervene and transferred the matter to this Court’s Norfolk
Division.
See Penn-America Insurance Company v. White Pines,
Inc.
L.A.’s
d/b/a
Night
Club,
(E.D. Va. Feb. 1, 2019).
No.
3:18CV650,
2019
WL
418859
This Court then denied the motion to
set aside entry of default, stated that it would hold the entry
of default against White Pines in abeyance, and issued an order
exercising jurisdiction.
On
January
7,
ECF Nos. 19, 24.
2020,
Penn-America
motion for judgment on the pleadings.
and its
supporting
memorandum
ask
submitted
the
ECF No. 37.
the
Court
to
instant
The motion
declare
that
“Penn-America owes no duty to defend or indemnify White Pines on
the
claims
coverage
asserted
under
the
by
[]
Polli
Policy,
or
because
coverage
multiple provisions of the Policy.”
Memo”), at 15.
and
its
is
is
either
excluded
no
under
ECF No. 38 (“Penn-America
On January 17, 2020, Polli submitted a counter-
motion for judgment on the pleadings.
motion
there
supporting
memorandum
ECF No. 39.
request
The counter-
that
the
Court
declare that “Penn-America owes a duty to defend White Pines
against
2
the
negligence
claims
asserted
by
[]
Polli
White Pines has never responded to any filing in this case.
6
in
his
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 7 of 30 PageID# 728
underlying lawsuit.”
ECF No. 40 (“Polli Counter Memo”), at 11.
Penn-America filed a response opposing Polli’s counter-motion,
to which Polli filed a reply brief.
After
having
read
and
ECF Nos. 44, 45.
considered
the
filed
briefs,
the
Court ordered the parties to submit supplemental briefing to
address
whether
independent
Polli’s
contractor
employment
or
an
status
employee
as
would
either
affect
an
Penn-
America’s potential liability, and the extent to which either
classification
submitted
their
was
appropriate.
supplemental
ECF
No.
briefing.
49.
ECF
Both
Nos.
50
parties
(“Polli
Supp. Brief”), 51 (“Penn-America Supp. Brief”), 52 (“Polli Supp.
Reply”).
Now, having been fully briefed, Penn-America’s motion
for judgment on the pleadings and Polli’s counter-motion for
judgment on the pleadings are ripe for review.
III. LEGAL STANDARD
A. Standard for 12(c) Motion
“After the pleadings are closed – but early enough not to
delay trial – a party may move for judgment on the pleadings.”
Fed. R. Civ. P. 12(c).
is
an
appropriate
A motion for judgment on the pleadings
mechanism
for
a
party
judgment regarding a contractual dispute.
seeking
declaratory
See Paul v. Impact
Office LLC, No. CV TDC-16-2686, 2017 WL 2462492, at *2 (D. Md.
June
6,
2017)
declaratory
(“Such
judgment
a
motion
where
the
7
can
only
be
used
dispute
to
is
obtain
the
a
proper
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 8 of 30 PageID# 729
interpretation of contractual terms.” (citing A. S. Abell Co. v.
Balt. Typographical Union No. 12, 338 F.2d 190, 193-95 (4th Cir.
1964))); see also 5C Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 1367 (3d ed. 2020) (“The motion
for
a
judgment
on
the
pleadings
only
has
utility
when
all
material allegations of fact are admitted or not controverted in
the pleadings and only questions of law remain to be decided by
the district court[,] . . . for example, in actions brought to
obtain the construction of a will or litigation in which the
sole
question
statutory
is
the
applicability
provision.”).
“On
a
or
motion
interpretation
for
judgment
of
on
a
the
pleadings, the court considers the pleadings, which consist of
the complaint, the answer, and any written instruments attached
to those filings, as well as any documents that are integral to
the complaint and authentic.”
Paul, 2017 WL 2462492, at *2–3
(citing Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th Cir.
2013)) (internal quotations omitted).
When a motion for judgment on the pleadings is based on the
underlying
merits
contract’s
terms,
of
the
the
dispute,
summary
appropriate standard to employ.
*2
(“In
resolving
a
Rule
such
judgment
as
interpreting
standard
is
a
the
See Paul, 2017 WL 2462492, at
12(c)
motion
on
the
basis
of
the
underlying merits, the court assumes the facts alleged by the
nonmoving
party
to
be
true
and
8
draws
all
reasonable
factual
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 9 of 30 PageID# 730
inferences in its favor, and judgment is appropriate only if the
moving party establishes that no genuine issue of material fact
remains
to
be
resolved
and
that
the
party
is
entitled
to
judgment as a matter of law.”); see also Nationwide Mut. Fire
Ins. Co. v. Facello, No. 5:13-CV-21730, 2014 WL 801051, at *2
(S.D.W.
Va.
Feb.
28,
2014)
(applying
the
summary
judgment
standard for a 12(c) motion for a declaratory judgment in an
insurance dispute (citing King v. Gemini Food Servs., Inc., 438
F. Supp. 964, 966 (E.D. Va. 1976))); Bell Atl.-Maryland, Inc. v.
Prince George’s Cty., 155 F. Supp. 2d 465, 473 (D. Md. 2001)
(applying
the
summary
judgment
standard
for
a
12(c)
motion
determining whether a state statute was preempted (citing King,
438 F. Supp. at 966)).
As the instant matter involves cross-
motions seeking a Rule 12(c) declaratory judgment on the basis
of the underlying merits, and as both parties posit that there
are no genuine issues of material fact, the Court will apply the
summary judgment standard.
See 5C Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure § 1369 (3d ed. 2020)
(“Indeed,
the
identical
under
pleadings]
standard
both
motions”
applied
[summary
because
by
the
judgment
“[b]oth
are
court
and
appears
judgment
concerned
to
be
on
the
with
the
substance of the parties’ claims and defenses and are directed
towards
a
final
judgment
on
the
merits.”).
Therefore,
“the
court assumes the facts alleged by the nonmoving party to be
9
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 10 of 30 PageID# 731
true and draws all reasonable factual inferences in its favor,
and judgment is appropriate only if the moving party establishes
that no genuine issue of material fact remains to be resolved
and that the party is entitled to judgment as a matter of law.”
Paul, 2017 WL 2462492, at *2. 3
B. Interpreting the Policy’s Terms
A federal court resolving a diversity action is, absent a
controlling
constitutional
provision
or
act
of
Congress,
obligated to apply the substantive law of the state in which it
sits, including the state’s choice-of-law rules.
See Erie R.
Co. v. Tompkins, 304 U.S. 64, 78, (1938); see also Klaxon Co. v.
Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941).
Therefore,
Virginia’s substantive law, including its choice-of-law, applies
to the resolution of this diversity-based declaratory judgment
action.
See
Erie,
304
U.S.
at
78.
“Under
Virginia
law,
questions concerning the validity, effect, and interpretation of
a contract are resolved according to the principle of lex loci
3
Both parties agree that summary judgment is the appropriate standard.
See Penn-America Memo, at 4-5; Polli Counter Memo, at 3. Although there
is Fourth Circuit caselaw applying the Rule 12(b)(6) standard to Rule
12(c) motions, such cases evaluate 12(b)(6) defenses brought after an
answer was filed, and therefore, the 12(c) motion was simply used as a
vehicle to advance those defenses, as Rule 12(h)(2) allows.
See Occupy
Columbia, 738 F.3d at 115–16; Edwards v. City of Goldsboro, 178 F.3d 231,
243 (4th Cir. 1999); see also 5C Wright & Miller, Federal Practice and
Procedure § 1367 (“The Rule 12(c) motion may be employed by the defendant
as a vehicle for raising several of the defenses enumerated in Rule 12(b)
after the close of the pleadings. . . . In that context, Rule 12(c) is
merely serving as an auxiliary or supplementary procedural device to
determine the sufficiency of the case before proceeding any further and
investing additional resources in it.”).
10
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contractus, the law of the state where the contract was made
controls.”
Women In Military Serv. For Am. Mem’l Found., Inc.
v. Hartford Fire Ins. Co., 21 F. App’x 186, 191 (4th Cir. 2001)
(citing Woodson v. Celina Mut. Ins. Co., 211 Va. 423 (1970)).
Further, pursuant to Virginia jurisprudence, an insurance policy
is a contract to be construed in accordance with the principles
applicable to all contracts.
Graphic Arts Mut. Ins. Co. v. C.W.
Warthen Co., 240 Va. 457, 459 (1990) (citing Hill v. State Farm
Mut. Auto. Ins., 237 Va. 148, 152 (1989)). 4
Under Virginia law, “it is a well-established principle,
consistently
applied
in
this
Commonwealth,
that
only
the
allegations in the [underlying] complaint and the provisions of
the insurance policy are to be considered in deciding whether
there
is
a
duty
on
the
indemnify the insured.”
part
of
the
insurer
to
defend
and
AES Corp. v. Steadfast Ins. Co., 283
Va. 609, 616-17 (2012); see also Town Crier, Inc. v. Hume, 721
F. Supp. 99, 102 n.12 (E.D. Va. 1989) (“[A]n insurer’s duty to
defend
is
pleadings.”).
determined
solely
by
the
allegations
in
the
“This principle is commonly known as the ‘eight
corners rule’ because the determination is made by comparing the
4
“Under Virginia law, a contract is made when the last act necessary to
complete the contract is performed, and, in the context of an insurance
policy, the last act is the delivery of the policy to the insured.” Women
In Military Serv., 21 F. App’x at 191 (citing Buchanan v. Doe, 246 Va. 67,
70 (1993)).
Polli has not alleged that the delivery of the Policy
occurred in Virginia, however, both parties agree that Virginia contract
law applies. See Penn-America Memo, at 3-4; Polli Counter Memo, at 3.
11
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 12 of 30 PageID# 733
‘four
corners’
of
the
underlying
complaint
with
the
‘four
corners’ of the policy, to determine whether the allegations in
the underlying complaint come within the coverage provided by
the
policy.”
AES
Corp.,
283
Va.
at
617
(citing
Copp
v.
Nationwide Mut. Ins. Co., 279 Va. 675, 682-83 (2010)).
“If
an
insurance
policy
is
susceptible
to
two
constructions, one of which would effectuate coverage and the
other would not, it is to be construed liberally in favor of the
insured and strictly against the insurer.”
Penn-America Ins.
Co. v. Mapp, 461 F. Supp. 2d 442, 456 (E.D. Va. 2010) (citing
Cent. Sur. & Ins. Corp. v. Elder, 204 Va. 192, 198 (1993)); see
also Donnelly v. Transp. Ins. Co., 589 F.2d 761, 767 (4th Cir.
1978)
(“If
a
complaint,
however
ambiguous,
may
be
read
as
premising liability on alternative grounds, and either ground
states liability potentially or arguably covered by the policy,
the
insured
excused
from
is
entitled
its
duty
to
to
a
defense.”).
defend
the
“[A]n
insured
insurer
only
where
is
the
complaint against the insured clearly demonstrates no basis upon
which the insurer could be required to indemnify the insured
under the policy.”
Mapp, 461 F. Supp. 2d at 456 (citing Fuisz
v. Selective Ins. Co. of Am., 61 F.3d 238, 242 (4th Cir. 1995));
see
also
Travelers
Indem.
Co.
v.
Obenshain,
219
Va.
44,
46
(1978) (“The insurer is relieved of a duty to defend only when
it clearly appears from the initial pleading the insurer would
12
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 13 of 30 PageID# 734
not be liable under the policy for any judgment based upon the
allegations.”).
purporting
to
“In addition, language in an insurance policy
exclude
coverage
for
certain
construed most strongly against the insurer.”
events
will
be
Johnson v. Ins.
Co. of N. Am., 232 Va. 340, 345 (1986) (citing St. Paul Ins. v.
Nusbaum & Co., 227 Va. 407, 411 (1984)).
Therefore, “the burden
is on the insurer to prove that an exclusion applies.”
Id.
(citing White v. State Farm, 208 Va. 394, 396 (1967)).
IV. DISCUSSION
As required by the “eight corners rule,” AES Corp., 283 Va.
at 616-17, the Court will only consider the allegations in the
Polli Complaint and the language of the Policy when making its
determination as to whether Penn-America has a duty to defend
and/or indemnify White Pines.
independently
reviewed,
and
The merits of both motions were
because
judgement
is
entered
in
favor of Penn-America, the facts discussed herein reflect facts
and inferences made in favor of Polli.
A. Policy Coverage: An “Occurrence” under the Policy
The
relevant
language
from
the
Policy
indicates
that
coverage only applies to “bodily injury” and “property damage”
if “[t]he ‘bodily injury’ and ‘property damage’ is caused by an
‘occurrence’
that
takes
place
in
the
“coverage
territory[.]”
The Policy, SECTION I, COVERAGE A – BODILY INJURY AND PROPERTY
13
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DAMAGE LIABILITY ¶ 1.a-b. 5
“accident,
including
substantially
the
The Policy defines “occurrence” as an
continuous
same
general
or
repeated
harmful
exposure
to
conditions.”
Id.,
“‘[O]ccurrence’ and ‘accident’ are ‘synonymous and
. . .
SECTION V – Definitions ¶ 13.
refer to an incident that was unexpected from the viewpoint of
the insured.’”
AES Corp., 283 Va. at 617 (quoting Utica Mut.
Ins. Co. v. Travelers Indem. Co., 223 Va. 145, 147 (1982)).
Supreme
Court
of
Virginia
has
“held
that
an
‘accident’
The
is
commonly understood to mean ‘an event which creates an effect
which is not the natural or probable consequence of the means
employed
and
anticipated.”
is
not
intended,
designed,
or
reasonably
Id. at 617-18 (quoting Lynchburg Foundry Co. v.
Irvin, 178 Va. 265, 271 (1941)).
“An accidental injury is one
that ‘happen[s] by chance, or unexpectedly; taking place not
according to the usual course of things; casual; fortuitous.’”
Id. at 618 (quoting Fidelity & Guar. Ins. Underwriters, Inc. v.
Allied Realty Co., 238 Va. 458, 462 (1989)).
1. Damages from Intentional Battery
In
seeking
to
further
define
the
contours
of
an
“occurrence,” the Supreme Court of Virginia has “held that ‘[a]n
intentional act is neither an “occurrence” nor an “accident” and
5
Penn-America does not contest that Polli suffered “bodily injury” within
the “coverage territory.”
14
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therefore is not covered by the standard [insurance] policy.’”
Id.
at
614,
618
(quoting
Utica,
223
Va.
at
147);
see
also
Obenshain, 219 Va. at 46-47 (insurer had no duty to defend where
complaint
alleged
only
intentional
torts
performed
by
the
insured); Lark v. Western Heritage Ins. Co., 64 F. Supp. 3d 802,
808-09 (W.D. Va. 2014) (insurer had no duty to defend where
complaint
alleged
that
the
assaulted the plaintiffs).
because
the
“bodily
insured’s
employees
intentionally
Penn-America, therefore, argues that
injury”
in
this
case
arose
from
an
intentional battery, the incident was neither an “occurrence”
nor
an
“accident.”
Penn-America
Memo,
at
7-8.
However,
crucially, the Supreme Court of Virginia has stated that “[i]f a
result is the natural or probable consequence of an insured’s
intentional act, it is not an accident.”
AES Corp., 283 Va. at
617 (citing Resource Bankshares Corp. v. St. Paul Mercury Ins.
Co., 407 F.3d 631, 637 (4th Cir. 2005)) (emphasis added).
The
cases finding that an intentional act does not qualify as an
“occurrence”
involved
an
or
“accident”
intentional
act
that
Penn-America
performed
by
the
relies
insured.
on
all
Id.;
Obenshain, 219 Va. at 46-47; Lark, 64 F. Supp. 3d at 808-09.
Here, the intentional act was performed by a third-party, the
Assailants,
assertion
a
that
distinction
the
activity
that
here
undercuts
cannot
be
Penn-America’s
an
“occurrence”
simply because it was the result of an intentional act.
15
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 16 of 30 PageID# 737
Returning to the Supreme Court of Virginia’s definition of
“occurrence,” the question that must be answered in this case is
whether the battery committed by a third-party was expected from
the
viewpoint
of
the
insured.
AES
Corp.,
283
Va.
at
617
(quoting Utica, 223 Va. at 147); see Suffolk Lodging Partners,
LLC v. Eastguard Ins. Co., No. 2:12CV546, 2013 WL 12131747, at
*8 (E.D. Va. Aug. 23, 2013) (explaining that when determining
whether
an
event
‘occurrence,’”
is
the
an
“accident,”
“relevant
a
word
standard
is
“synonymous
not
whether
with
the
[victim’s] injury was unexpected by [the assailant], but whether
it
‘was
unexpected
from
the
viewpoint
(quoting Utica, 223 Va. at 147)).
of’
[the
insured].”
Polli’s Complaint alleges
that White Pines experienced “an average of 3 or 4 incidents of
violence a month,” including incidents of violence once a month
that
would
personnel”
¶ 10.
policy
escalate
and
Despite
for
situations,
situations
its
“beyond
require
this
police
preferring
the
to
only
that
control
of
“White
call
its
benefit
the
Pines
law
security
Complaint
had
police
employees
of
the
Polli
intervention.
knowledge,
staff
without
the
a
in
emergency
handle
dangerous
enforcement
drawing negative attention to the strip club.”
standing
to
avoid
Id. ¶ 11.
Assuming these allegations to be true, White Pines still
could not have “expected” that Polli would have been severely
battered
by
a
patron.
First,
16
even
though
the
attack
Polli
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 17 of 30 PageID# 738
suffered
was
“intentional”
in
the
sense
that
the
Assailants
intended to reenter the premises to fight White Pines workers,
that does not render it “expected” from White Pines’ point of
view;
rather,
through
the
the
Assailants’
unexpected
attack
aggression
of
happened
the
“by
violent
chance,”
Assailants.
AES Corp., 283 Va. at 618 (emphasis added); see Suffolk Lodging
Partners, 2013 WL 12131747, at *8 (finding the sexual assault of
an
employee
to
have
been
an
“accident”
where
there
was
“no
evidence that [the insured] expected this assault to occur”).
Second, the facts alleged do not indicate that any worker at
L.A.’s was
ever
previously
instances of violence.
injured
in
one
of
the
referenced
Third, the battery occurred during a
time of day when security was not even scheduled to be present,
further
normal
suggesting
course
of
that
the
violence
afternoon
was
not
anticipated
shift.
Fourth,
in
the
the
facts
indicate that White Pines expected its workers to contact the
police
when
situations
escalated
“beyond
the
control
of
the
security personnel,” and while one could argue that injuries to
security personnel may be expected during such an event, here
the
injured
party
Polli Complaint
instances
of
¶
was
10.
violence
a
manager,
Therefore,
at
L.A.’s,
and
not
although
the
a
security
there
alleged
guard.
were
facts
prior
do
not
support a conclusion that a violent act against a manager, as
was experienced by Polli, was “expected” for the purposes of the
17
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 18 of 30 PageID# 739
instant legal analysis.
12131747,
at
*8
See Suffolk Lodging Partners, 2013 WL
(“Because
[the
insured]
did
not
expect
[the
assailant] to assault [the victim], her injury constitutes an
‘accident’ within the meaning of the policy.”).
As such, Penn-
America has failed to “clearly demonstrate” that there is “no
basis upon which” the incident at issue could qualify as an
“occurrence” under the Policy.
Mapp, 461 F. Supp. 2d at 456.
2. Damages from Fraud
Considering next whether Penn-America has a duty to defend
and/or indemnify White Pines to the extent the Polli Complaint
alleges
damages
arising
out
of
fraud,
Penn-America
broadly
argues that it “owes no duty to defend or indemnify White Pines
on
the
claims
asserted
by
coverage under the Policy.”
of
action
among
for
other
intentionally
actual
fraud
elements,
that
and
knowingly
[]
Polli
because
there
is
Penn-America Memo, at 15. 6
requires
the
a
representation
false
.
.
.
.”
plaintiff
Cohn
v.
[]
A cause
to
was
prove,
“made
Knowledge
Connections, Inc., 266 Va. 362, 367 (2003) (emphasis added).
support
of
this
count,
Polli
6
argues
that
no
White
In
Pines
Penn-America puts forward no argument in its briefing specific to
Polli’s two fraud counts, however, it does broadly argue multiple times
that it is entitled to “a declaration that it has no duty to defend or
indemnify White Pines in connection with the claims asserted in the
Lawsuit” because there is no coverage under the Policy and/or because
Policy exclusions apply. ECF No. 25, at 7 (emphasis added); Penn-America
Memo, at 15; ECF No. 44, at 7; Penn-America Supp. Brief, at 6. Moreover,
as discussed above, Penn-America specifically argues that an intentional
act does not qualify as an “occurrence.”
18
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 19 of 30 PageID# 740
“intentionally
misrepresented
his
employment
status
as
an
independent contractor to defraud [] Polli from the protections
of the Virginia Workers’ Compensation Act,” thereby “diverting”
him
from
making
a
Virginia
Workers’
Compensation
Polli Complaint ¶¶ 64-68 (emphasis added).
Act
claim.
As discussed above,
because an intentional act committed by the insured is not an
“occurrence,” the actual fraud count is clearly not covered by
the Policy.
AES Corp., 283 Va. at 614-18; cf. Town Crier, Inc.,
721 F. Supp. at 106 (“There can be no coverage for the fraud
claim by virtue of the clause excluding coverage for intentional
acts.”).
Therefore,
the
Court
finds
that
Penn-America
has
“clearly demonstrate[d]” that there is “no basis upon which”
Penn-America could be required to indemnify and/or defend White
Pines under the Policy for Polli’s actual fraud count based on
the allegations in the Polli Complaint and the language of the
Policy.
Mapp, 461 F. Supp. 2d at 456. 7
B. The Assault and Battery Exclusion
Although Penn-America fails to clearly demonstrate that the
events at issue—with the exception of the actual fraud count—
cannot qualify as an “occurrence” under the Policy, the Policy’s
coverage is still subject to a number of exclusions.
7
If Penn-
Comparatively, Penn-America has failed to clearly demonstrate that
Polli’s constructive fraud count could not be an “occurrence” under the
Policy because Polli alleges that White Pines perpetrated the constructive
fraud either “innocently or negligently.” Polli Complaint ¶¶ 69-73.
19
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 20 of 30 PageID# 741
America
demonstrates
that
the
conditions
detailed
in
these
a
Policy
exclusions are met, coverage does not apply.
One
such
Endorsement
exclusion
that
raised
excludes
arising out of a “battery.”
by
liability
Penn-America
for
“bodily
is
injur[ies]”
The Endorsement reads as follows:
In consideration of the premium change, it is
understood and agreed that this insurance does not
apply to liability for damages because of “bodily
injury”, “property damage”, “personal and advertising
injury”, medical expense arising out of an “assault”,
“battery”, or “physical altercation” that occurs in,
on, near or away from an insured’s premises:
1) Whether or not caused by, at the instigation of, or
with the direct or indirect involvement of an insured,
an insured’s employees, patrons or other persons in,
on, near or away from an insured’s premises, or
2) Whether or not caused by or arising out of
insured’s failure to properly supervise or keep
insured’s premises in a safe condition, or
an
an
3) Whether or not caused by or arising out of any
insured’s act or omission in connection with the
prevention, suppression, failure to warn of the
“assault”,
“battery”
or
“physical
altercation”,
including but not limited to, negligent hiring,
training and/or supervision, or
4) Whether or not caused by or arising out of
negligent, reckless, or wanton conduct by an insured,
an insured’s employees, patrons or other persons.
DEFINITIONS:
For purposes of this endorsement:
20
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 21 of 30 PageID# 742
“Assault” means any attempt or threat to inflict
injury to another including any conduct that would
reasonably place another in apprehension of such
injury.
“Battery” means the intentional or reckless physical
contact with or any use of force against a person
without his or her consent that entails some injury or
offensive touching whether or not the actual injury
inflicted is intended or expected. The use of force
includes but is not limited to the use of a weapon.
“Physical
altercation”
means
a
dispute
individuals in which one or more persons
bodily injury arising out of the dispute.
The
Policy,
Assault
Battery
argues
Penn-America
or
that
this
General
Assault
between
sustain
Liability
and
Exclusion.
Battery
Exclusion
clearly encompasses the “bodily injury” suffered by Polli.
This same exclusion was considered by another Judge of this
Court in Downtown Norfolk Entertainment, Inc. v. Penn-America
Ins. Co., where a patron shot and injured another patron at a
venue insured by Penn-America.
2008).
The
defendants
plaintiff
“were
there
negligent
660 F. Supp. 2d 669 (E.D. Va.
alleged
‘in
in
two
allowing
an
counts
that
assault
to
the
be
committed’ against [the plaintiff], in that they failed to warn
him of an imminent probability of harm, failed to protect him
from
that
imminent
probability
of
harm,
failed
to
provide
adequate security, and failed to comply with certain ordinances
of the City of Norfolk regarding security.”
Id. at 678.
The
Court concluded that these claims fell “squarely within parts
21
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 22 of 30 PageID# 743
one
and
three
of
the
assault
and
battery
therefore” were excluded from coverage.
alleged
that
the
insured
“fail[ed]
Id.
to
exclusion,
and
A third count
provide
security
sufficient to warn and protect [the victim] from the imminent
probability of harm and a reasonably foreseeable danger,” which
the Court held was “plainly” excluded under part four.
Id.
As was the case in Downtown Norfolk Entertainment, here,
several claims advanced by Polli plainly fall within the Assault
and Battery Exclusion.
Polli’s Complaint pleads in Counts One
through Three that White Pines was negligent for failing to have
security guards scheduled at the time of the incident, failing
to prevent the Assailants from reentering White Pines as the
club lacked any kind of barrier, failing to have a policy in
place for contacting the police before a situation escalated
into violence, and failing to call the police to the scene on
the day of the incident.
Id. ¶¶ 45-63.
The claims that White
Pines failed to schedule security guards, failed to prevent the
re-entry of the Assailants, and failed to call the police all
fall within part two of the exclusion, as allegedly failing to
schedule security guards and call the police are failures to
properly supervise, and allegedly failing to have a barrier to
prevent reentry is a failure to keep the premises in a safe
22
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 23 of 30 PageID# 744
condition. 8
Additionally, failing to have a policy in place to
call the police fits within part three of the exclusion as Polli
has alleged that the staff was trained not to call the police
unless it was an emergency, which would constitute negligent
training.
See Downtown Norfolk Entertainment, 660 F. Supp. 2d
at 678 (finding that claims alleging negligence for failure to
provide
adequate
security
and
abide
by
city
regulations
regarding security were all excluded under part three).
Polli, for his part, has attempted to frame the issue so
that his bodily injury did not arise from the battery; rather,
he argues that it arose from his employment, therefore rendering
the Assault and Battery Exclusion inapplicable.
Memo, at 10. 9
Polli Counter
Polli’s main support for such argument is Butler
v. Southern States Co-op, Inc., 270 Va. 459 (2005).
the
Supreme
Court
of
Virginia
addressed
whether
In Butler,
the
sexual
8
Failing to schedule security guards would also fit within part three of
the
exclusion
as
negligent
supervision.
See
Downtown
Norfolk
Entertainment, 660 F. Supp. 2d at 678 (finding that claims alleging
negligence for failure to provide adequate security and abide by city
regulations regarding security were all excluded under part three).
Failing to have a barrier to prevent reentry also fits within part four
where the insured’s negligent conduct contributed to the battery. See id.
(finding that claims alleging negligence for “failing to provide security
sufficient to warn and protect [the victim] from the imminent probability
of harm and a reasonably foreseeable danger” were excluded under part
four).
9
In Polli’s view, Penn-America incorrectly reads the Policy language
“arise from” to mean “resulting from,” arguing that just because the
bodily injury “resulted from” the battery does not mean that it “arose
from” the battery.
Instead, Polli argues that it was his status as an
employee of White Pines where he was instructed to intervene in violent
situations that formed the causal connection to his bodily injuries.
23
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 24 of 30 PageID# 745
assault
of
workers’
an
employee
compensation
could
purposes
be
defined
where
the
as
an
injury
operative
for
statutory
text read “an injury arising out of the employment . . . .”
270
Va. at 463 (quoting Va. Code § 65.2-301) (emphasis added).
In
contrast,
the
Assault
and
Battery
Exclusion
in
the
Policy
precludes coverage for expenses “arising out of an ‘assault,’
‘battery,’
or
‘physical
altercation’
.
.
.
.”
The
Policy,
Assault or Battery General Liability Exclusion (emphasis added).
Therefore, the question facing this Court is whether the injury
“arose
out
of
a
battery,”
whereas
the
Court
in
Butler
deciding whether an injury “arose out of the employment.”
are
fundamentally
different
questions,
and
this
Court
was
These
agrees
with Penn-America that Polli’s framing of the argument diverges
from the Policy’s text.
See Virginia Elec. & Power Co. v.
Northbrook Prop. & Cas. Ins. Co., 252 Va. 265, 270–71 (1996)
(holding
“that
the
statutory
definition
contained
in
the
[Virginia Workers’ Compensation] Act will not be applied to an
insurance policy unless the policy provides by reference to the
specific statute that the statutory definition is intended to be
applied.”).
The bodily injury here arose from Assailant One
“landing full force punches on [Polli’s] jaw and ribs.”
Complaint ¶ 30.
he
did
not
Polli
Even though Polli would not have been harmed if
perform
his
job
24
responsibilities
as
he
was
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 25 of 30 PageID# 746
instructed, his injuries still “arose from” the battery, as the
exclusion’s language mandates.
Therefore, the Court finds that Penn-America has met its
burden to “clearly demonstrate” that there is “no basis upon
which” it could be required to indemnify and/or defend White
Pines under the Policy for Polli’s negligence claims based on
the allegations in the Polli Complaint, and the language of the
Assault and Battery Exclusion.
Mapp, 461 F. Supp. 2d at 456. 10
C. The Workers’ Compensation Exclusion
Penn-America
also
argues
that
coverage
is
excluded
for
Polli’s “bodily injury” under the Policy’s Workers’ Compensation
Exclusion.
Penn-America
Memo,
at
8-10.
The
Workers’
Compensation Exclusion states that the Policy does not apply to
“[a]ny obligation of the insured under a workers’ compensation,
disability
benefits
similar law.”
or
unemployment
compensation
law
or
any
The Policy, SECTION I, COVERAGE A – BODILY INJURY
10
Regarding Polli’s fraud counts, to the extent that Penn-America broadly
argues that the Assault and Battery Exclusion “unequivocally excludes
coverage for” all of Polli’s claims, it appears that Penn-America may have
met its burden to clearly demonstrate that the fraud counts are also
excluded under the Assault and Battery Exclusion. Penn-America Memo, at
12. Polli argues that because of White Pines’ fraud he was “diverted []
from making a claim for his accident to the [Virginia Workers’
Compensation Commission].”
Polli Complaint ¶ 72.
A necessary part of
making a claim for workers’ compensation is a “personal injury . . . by
accident arising out of and in the course of the employment,” Va. Code
Ann. § 65.2-300, which Polli alleges occurred when he was battered during
the course of his employment, Polli Complaint ¶¶ 15-33. As the result of
the alleged fraud was Polli’s failure to recover money to compensate him
for the physical injuries he suffered from the battery, the exclusion may
preclude coverage, because without the battery there is no injury, no
claim for workers’ compensation, and no claims for fraud.
25
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 26 of 30 PageID# 747
AND
PROPERTY
DAMAGE
LIABILITY
¶
2.d.
The
Polli
Complaint
includes a workers’ compensation count alleging that Polli is
“entitled to recovery for the accident which took place on March
22,
2016
in
his
Compensation Act.”
workplace
under
the
Virginia
Workers’
Polli Complaint ¶¶ 74-76.
1. Workers’ Compensation Count
Polli argues in his supplemental brief that his negligence
counts and workers’ compensation count are alternatively pled,
and that he therefore has an avenue to pursue damages regardless
of whether he is classified as an “employee” or an “independent
contractor.”
Polli Supp. Brief, at 3-4.
If Polli is determined
to be an employee entitled to workers’ compensation damages,
Polli acknowledges that such fact would “trigger the [Workers’
Compensation] Exclusion,” at least with respect to his workers’
compensation count.
7.
Id., at 3; see also Polli Counter Memo, at
However, because Polli was allegedly misclassified by White
Pines as a non-employee, and such misclassification purportedly
prevented
him
from
recovering
benefits
under
the
Virginia
Workers’ Compensation Act, Polli argues that he is at liberty to
pursue recovery through his negligence counts.
Memo, at 7-8.
Polli Counter
If, in contrast, Polli is determined to be an
independent contractor, he would have no basis for a workers’
compensation
claim,
but
he
could,
26
of
course,
pursue
his
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 27 of 30 PageID# 748
negligence
counts
compensation law.
without
interference
from
any
workers’
Polli Supp. Reply, at 4.
Regardless of his employment classification, or his theory
of relief, Polli’s negligence and workers’ compensation claims
are not covered under the Policy.
employee
capable
against
his
recovering
of
bringing
employer,
from
his
he
is
Penn-America
If Polli is found to be an
workers’
specifically
under
Compensation Exclusion, as he admits.
an
employee,
but
is
not
compensation
capable
the
claim
excluded
Policy’s
from
Workers’
Or, if he is found to be
of
bringing
a
workers’
compensation claim due to White Pines’ failure to comply with
the
Virginia
compensation
Workers’
claim
cannot
Compensation
proceed,
Act,
and
the
the
workers’
“alternative”
negligence counts are, at a minimum, excluded under the Assault
and Battery Exclusion, as was explained above in Part IV.B. 11
If instead Polli is found to be an independent contractor,
then
he
would
not
qualify
to
pursue
a
workers’
compensation
claim under the Virginia Workers’ Compensation Act, and that
count would fail on its face.
See Behrensen v. Whitaker, 392
S.E.2d 508, 509 (Va. Ct. App. 1990) (“One who seeks benefits
under the Workers’ Compensation Act must show that he is an
11
While Penn-America argues that the negligence counts are also excluded
under the Workers’ Compensation Exclusion because the battery was “within
the scope of [Polli’s] employment as a manager,” Penn-America Memo, at 810, as these counts are clearly excluded under the Assault and Battery
Exclusion, the Court declines to squarely address this argument.
27
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 28 of 30 PageID# 749
employee within the definition of [the Act].” (citing Carter v.
Hercules Powder Co., 182 Va. 282, 288 (1944))).
could
pursue
his
“alternative”
negligence
While Polli
counts
in
such
circumstances, his negligence counts would still be precluded
under the Assault and Battery Exclusion, as explained above.
Therefore, regardless of whether Polli is determined to be
an
employee
or
an
independent
contractor,
Penn-America
has
“clearly demonstrate[d]” that there is “no basis upon which”
Polli can recover on his workers’ compensation count based on
the allegations of the Polli Complaint and the language of the
Mapp, 461 F. Supp. 2d at 456. 12
Workers’ Compensation Exclusion.
2. Fraud Counts
Finally,
extent
that
turning
again
Penn-America
to
Polli’s
broadly
fraud
that
argues
counts,
“Polli’s
to
the
claims
fall squarely within White Pines’ obligations ‘under a workers’
compensation . . . law’” and therefore are “excluded under the
Policy,”
Penn-America
has
carried
its
burden
to
clearly
demonstrate that there is no basis upon which Polli can recover
on his two fraud counts based on the allegations of the Polli
Complaint
and
the
language
of
12
the
Workers’
Compensation
Upon initial review, the Court suspected that Polli’s employment
“status,” considered a mixed question of law and fact in many workers’
compensation cases, may be a material dispute that could only be resolved
by the trier of fact.
However, after further investigation, the Court
finds that Polli’s employment status, even if it turns on disputed facts,
is not “material” to the resolution of the pending motions as the Policy
excludes coverage regardless of Polli’s status.
28
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 29 of 30 PageID# 750
Exclusion.
Penn-America Memo, at 10.
Notably, Polli’s fraud
counts are grounded in the contention that White Pines, either
intentionally or innocently/negligently, avoided its obligation
under
the
Virginia
Workers’
classify him as an employee.
Compensation
Act
to
properly
Polli Complaint ¶¶ 69-76.
Such
claims fall squarely within the Workers’ Compensation Exclusion
which states that the Policy does not cover “[a]ny obligation of
the insured under a workers’ compensation . . . law . . . .”
The Policy, SECTION I, COVERAGE A – BODILY INJURY AND PROPERTY
DAMAGE
LIABILITY
failure
workers’
of
White
¶
2.d.
Pines
compensation
Because
to
the
fraud
comply
with
its
laws,
Penn-America
counts
allege
obligations
owes
no
a
under
duty
to
indemnify and/or defend White Pines as to such counts. 13
D. The “Expected or Intended Injury” and the “Employer’s
Liability” Exclusions
In light of the Court’s determination that Penn-America has
met its burden to demonstrate that coverage for all counts is
excluded under the Policy, the “Expected or Intended Injury” and
“Employer’s
Liability”
considered at this time.
Exclusions
need
not
be
squarely
The Policy, SECTION I, COVERAGE A –
BODILY INJURY AND PROPERTY DAMAGE LIABILITY ¶¶ 1.a-b, 2.e.
13
The fraud counts necessarily rely on Polli’s status as an employee, and
like the workers’ compensation count, were Polli to be classified as an
independent contractor, the fraud claims would fail as a matter of law.
29
Case 2:19-cv-00057-MSD-DEM Document 53 Filed 08/05/20 Page 30 of 30 PageID# 751
V. CONCLUSION
For the reasons detailed above, Penn-America’s motion for
judgment on the pleadings is GRANTED, ECF No. 37, and Polli’s
counter-motion for judgment on the pleadings is DENIED, ECF No.
39.
Penn-America owes no duty to defend and/or indemnify White
Pines on the claims asserted by Polli in the Polli Complaint
because
the
claims
either
do
not
fall
within
the
insurance
coverage, or coverage is excluded under the Policy’s Assault and
Battery Exclusion and/or the Workers’ Compensation Exclusion. 14
The Clerk is REQUESTED to send a copy of this Opinion and
Order to all counsel of record.
IT IS SO ORDERED.
/s/
Mark S. Davis
CHIEF UNITED STATES DISTRICT JUDGE
Norfolk, Virginia
August ______, 2020
5
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The Court notes again for the record that White Pines has never made an
appearance in this matter, and while this case was defended solely by
Polli, the Court’s ruling is binding as to White Pines, whether by virtue
of the entry of default, ECF No. 8, or the granting of Penn-America’s
motion, ECF No. 37.
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