Essex Insurance Company v. Napple's Bullpen, LLC et al
Filing
27
MEMORANDUM OPINION AND ORDER DENYING IN PART AND GRANTING IN PART PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT AND GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT: Essex's motion for default judgment 14 is DENIED IN PART as it pertains t o Napple's Bullpen, LLC, and Patrick Michael Napple and is GRANTED IN PART as it pertains to Wheeling Coin, LLC.; Essex's motion for summary judgment 22 is GRANTED. Civil Action is dismissed; Clerk directed to enter judgment. Signed by Senior Judge Frederick P. Stamp, Jr. on 7/17/14. (copy to counsel of record via CM/ECF)(rjs)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
ESSEX INSURANCE COMPANY,
Plaintiff,
v.
Civil Action No. 5:13CV115
(STAMP)
NAPPLE’S BULLPEN, LLC,
a West Virginia limited
liability company,
PATRICK MICHAEL NAPPLE
and WHEELING COIN, LLC,
a West Virginia limited
liability company,
Defendants.
MEMORANDUM OPINION AND ORDER
DENYING IN PART AND GRANTING IN PART
PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT AND
GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
I.
Procedural History
The plaintiff, Essex Insurance Company (“Essex”), has filed a
declaratory judgment action in this Court to determine whether it
has a duty to provide coverage to the defendants in an underlying
state court action filed by Douglas Ayers in the Circuit Court of
Ohio County, West Virginia (“Ayers state court action”).
In
Essex’s complaint, Essex claims that it is not required to provide
a defense for any of the defendants, although it is currently
providing a defense for defendant Wheeling Coin, LLC (“Wheeling
Coin”) in the Ayers state court action under a reservation of
rights agreement.
Essex asserts that it does not have to defend
Wheeling Coin because the Ayers state court action is based on
claims of premises liability and a violation of West Virginia
public safety laws.
The underlying action that gave rise to this case involved a
battery that occurred outside of Napple’s Bullpen Bar (“Napple’s
Bar”) in Elm Grove, Ohio County, West Virginia. Essex in the Ayers
state court action has brought suit in the Circuit Court of Ohio
County,
West
Virginia
against
all
three
defendants
claiming
premises liability and violation of the West Virginia state law
that prevents the sale of alcohol from 3:30 a.m. to 7:00 a.m.1
Essex asserts in its complaint that under the insurance policy
at issue, there is an exemption of coverage for liquor liability
and assault and/or battery which allows Essex to disclaim coverage
to any of the defendants in the Ayers state court action.
claims
that
the
Ayers
state
court
action
falls
within
Essex
that
exemption because the statutory public safety laws claimed by
Douglas Ayers relate to the sale, gift, or distribution of liquor
which is not covered under the policy. Further, Essex asserts that
it has no duty to the other two defendants, Napple’s Bullpen, LLC
and Patrick Michael Napple (“the Napple defendants”), because they
were not insured under the policy.
1
In the alternative, if the
The West Virginia Alcohol Beverage Control Commission has set
forth the following regulation: “No licensee shall . . . sell, give
or dispense alcoholic liquors or nonintoxicating beer, or permit
the consumption thereof, on any licensed premises or in any rooms
directly connected therewith, between the hours of three thirty
a.m. (3:30 AM) and seven a.m. (7:00 AM) on any weekday.” W. Va.
Code R. § 175-2-4.
2
Court finds that they were, Essex asserts the same claims as
against Wheeling Coin.
After filing the complaint asserting the above claims, default
was entered by the Clerk of Court against Wheeling Coin after
Wheeling Coin failed to make an appearance or participate in anyway
in this action.
judgment.
Thereafter, Essex filed a motion for default
This Court previously found that Wheeling Coin had
defaulted and that it had no right to be further involved in this
action.
ECF No. 21.
However, given that there were other
defendants, this Court found that it had to defer judgment on
default pursuant to Federal Rule of Civil Procedure 54(b).
such, Essex’s motion for default judgment is still pending.
As
This
Court then entered a scheduling order. Essex was the only party to
file a dispositive motion and a review of the docket report shows
that no formal discovery has taken place in this case.
In its motion for summary judgment, Essex first argues that
there are no genuine issues of material fact as Wheeling Coin has
defaulted in this action and was the only named insured under the
insurance policy in question.
Further, Essex asserts that even if
the Napple defendants are insureds, the “liquor liability” and
“assault and/or battery” exclusions in the policy would not provide
coverage.
Additionally,
Essex
contends
that
there
was
no
“occurrence” that would qualify under the policy because the
assault on Douglas Ayers was not an accident.
3
Finally, Essex
argues that the Napple defendants have defaulted as they did not
file a responsive pleading within 14 days after this Court denied
their motion to dismiss.
In
response,
the
Napple
defendants
contend
that
summary
judgment is not appropriate as discovery has not been completed in
state court.
The Napple defendants assert that it is unclear
whether or not Wheeling Coin and the Napple defendants, in their
joint venture (which is disputed by Essex), contributed to the
intoxication of any person involved in the altercation with Ayers
and thus there is a genuine dispute as to whether or not the
exclusions claimed by Essex apply in this case.
Napple
defendants
“occurrence”
is
assert
ambiguous
that
the
because
the
policy
policy
Finally, the
language
as
provisions
to
also
include the descriptors “bodily injury” or “property damage.”
Essex, in reply, asserts that the Napple defendants cannot
rely on an argument that discovery needs to take place in the Ayers
state court action to defend against the motion for summary
judgment.
Essex contends that under West Virginia law, this Court
is to look to the allegations in the complaint rather than the
veracity of those claims in determining whether an insurance
company has a duty to defend.
Essex then goes on to reiterate its
previous argument as to the Napple defendants’ lack of coverage
under
the
policy.
Further,
Essex
argues
that
the
Napple
defendants’ assertion that the “occurrence” language is ambiguous
4
is not supported and that the policy provisions make it clear that
“occurrence” only applies to accident claims, not those caused by
intentional acts.
Finally, Essex notes that the Napple defendants
do not contest the fact that the liquor liability exclusion is
unambiguous.
Essex’s motion for summary judgment is now fully briefed.
Further, Essex’s motion for default judgment is still pending
before this Court as this Court had previously deferred judgment.
Based on the following, this Court finds that Essex’s motion for
default judgment should be denied in part as it pertains to the
Napple defendants and granted in part as it pertains to Wheeling
Coin.
However, Essex’s motion for summary judgment should be
granted.
II.
A.
Applicable Law
Default Judgment
The United States Court of Appeals for the Fourth Circuit
favors
resolution
of
disputes
on
their
merits.
Colleton
Preparatory Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413,
417 (4th Cir. 2010).
Nonetheless, the Court may properly grant
default judgment if the “adversary process has been halted because
of an essentially unresponsive party.”
Supp. 2d 418, 421 (D. Md. 2005).
SEC v. Lawbaugh, 359 F.
Federal Rule of Civil Procedure
12 sets forth the times by which a party must serve a responsive
pleading.
Specifically, Rule 12 holds that if a party responds to
5
the complaint by motion and that motion is then denied by the
Court, “the responsive pleading must be served within 14 days after
notice of the court’s action.”
Fed. R. Civ. P. 12(a)(4)(a).
However, “default should be set aside where the moving party acts
with reasonable promptness and alleges a meritorious defense.”
Consolidated Masonry & Fireproofing, Inc. v. Wagman Constr. Corp.,
383 F.2d 249, 251 (4th Cir. 1967).
B.
Summary Judgment
The party seeking summary judgment bears the initial burden of
showing the absence of any genuine issues of material fact.
See
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). “The burden
then shifts to the nonmoving party to come forward with facts
sufficient to create a triable issue of fact.” Temkin v. Frederick
County Comm’rs, 945 F.2d 716, 718 (4th Cir. 1991), cert. denied,
502 U.S. 1095 (1992) (citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247-48 (1986)).
However, as the United States Supreme
Court noted in Anderson, “Rule 56(e) itself provides that a party
opposing a properly supported motion for summary judgment may not
rest upon the mere allegations or denials of his pleading, but
. . . must set forth specific facts showing that there is a genuine
issue for trial.”
Id. at 256.
“The inquiry performed is the
threshold inquiry of determining whether there is the need for a
trial-whether, in other words, there are any genuine factual issues
that properly can be resolved only by a finder of fact because they
6
may reasonably be resolved in favor of either party.”
Id. at 250;
see also Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th
Cir. 1979) (Summary judgment “should be granted only in those cases
where it is perfectly clear that no issue of fact is involved and
inquiry into the facts is not desirable to clarify the application
of the law.” (citing Stevens v. Howard D. Johnson Co., 181 F.2d
390, 394 (4th Cir. 1950))).
Further, summary judgment is generally appropriate only after
adequate time for discovery.
Evans v. Technologies Applications &
Serv. Co., 80 F.3d 954, 961 (4th Cir. 1996).
must
be
refused
where
the
nonmoving
“[S]ummary judgment
party
has
not
had
the
opportunity to discover information that is essential to his
opposition.”
Anderson, 477 U.S. at 250 n.5.
However, “great
weight [is placed] on the [Federal Rule of Civil Procedure] Rule
[56(d)] affidavit, believing that a party may not simply assert in
its brief that discovery was necessary and thereby overturn summary
judgment when it failed to comply with the requirements of Rule
[56(d)] to set out reasons for the need for discovery in an
affidavit.”
Evans, 80 F.3d at 961.
In reviewing the supported
underlying facts, all inferences must be viewed in the light most
favorable to the party opposing the motion.
See Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
7
IV.
A.
Discussion
Default Judgment
In this action, defendant Wheeling Coin has been dismissed as
a participating party by this Court because default was entered
against it.
However, the Napple defendants have taken some action
in the instant case to raise a meritorious defense to Essex’s
allegations.
The Napple defendants responded both to Essex’s
complaint by filing a motion to dismiss and have responded to
Essex’s
motion
for
summary
judgment.
However,
the
Napple
defendants did not file an answer within 14 days of this Court’s
order denying their motion to dismiss and thus did not follow the
procedure set forth under Rule 14 of the Federal Rules of Civil
Procedure.
Despite their failure, however, this Court finds that
default judgment is not appropriate as to the Napple defendants as
they have at least put forth a defense to the allegations made in
Essex’s complaint by way of a motion to dismiss and by way of their
response in opposition to Essex’s motion for summary judgment.
Accordingly, as a default judgment is to be used sparingly, this
Court finds that Essex’s motion for default judgment should be
denied in part inasmuch as it pertains to the Napple defendants.
B.
Motion for Summary Judgment
The Napple defendants have raised two main defenses to Essex’s
motion for summary judgment. First, the Napple defendants contend
that summary judgment is inappropriate at this time because more
8
discovery is needed in order to determine what actually happened to
Ayers at the Napple’s Bar.
Thus, the Napple defendants argue that
more discovery is needed in the Ayers state court action.
First,
the Napple defendants argue that they are covered by the insurance
policy as they were involved in a joint venture with Wheeling Coin.
Further, the Napple defendants contend that coverage is appropriate
because the insurance policy exclusions that Essex raises are not
applicable.
This Court will, for purposes of this opinion, assume that the
Napple defendants had entered into a joint venture without actually
finding that a joint venture existed between the defendants.
This
is so because even if the Napple defendants were involved in a
joint venture with Wheeling Coin, they would not be entitled to
coverage under the insurance policy because of the exclusions that
apply based on the allegations put forward in the Ayers state court
action.
1.
Discovery Request
The Napple defendants argue that Essex’s motion for summary
judgment is premature and should be denied to allow for sufficient
discovery in the Circuit Court of Ohio County action.
The Napple
defendants argue that more discovery is required in the Ayers state
court action to determine what actually occurred at the Napple’s
Bar the night of the alleged incident and whether the incident is
covered by the insurance policy.
9
Generally,
“summary
judgment
adequate time for discovery.”
is
appropriate
only
after
Evans v. Technologies Applications
& Serv. Co., 80 F.3d 954, 961 (4th Cir. 1996) (internal quotations
and citations omitted).
“If a party believes that more discovery
is necessary for it to demonstrate a genuine issue of material
fact, the proper course is to file a Rule [56(d)] affidavit stating
‘that it could not properly oppose a motion for summary judgment
without a chance to conduct discovery.’”2
Harrods Ltd v. Sixty
Internet Domain Names, 302 F.3d 214, 244 (4th Cir. 2002) (quoting
Evans, 80 F.3d at 961).
The United States Court of Appeals for the
Fourth Circuit has stated that a failure to file a Rule 56(d)
affidavit “is itself sufficient grounds to reject a claim that the
opportunity
for
discovery
was
inadequate.”
quotations and citations omitted).
Id.
(internal
The failure to file a Rule
56(d) affidavit, however, may be excused “if the nonmoving party’s
objections before the district court ‘served as the functional
equivalent of an affidavit,’ and if the nonmoving party was not lax
in pursuing discovery.” Id. at 244-45 (quoting First Chicago Int’l
v. United Exchange Co., 836 F.3d 1375, 1380 (D.D.C. 1988)).
2
While Harrods and cases prior to the 2010 Amendments to the
Federal Rules of Civil Procedure refer to these affidavits as Rule
56(f) affidavits, such affidavits are now properly filed pursuant
to Rule 56(d) which “carries forward without substantial change the
provisions of former subdivision (f).” Fed. R. Civ. P. 56 advisory
committee’s note; see also Radi v. Sebelius, 434 F. App’x 177, 178
n.1 (4th Cir. 2011).
10
In this case, the Napple defendants have failed to file a Rule
56(d) affidavit. Further, the Napple defendants had an opportunity
to conduct discovery in this Court and have chosen not to do so.
Thus, the Napple defendants’ objections at this point that more
discovery is needed do not amount to the “functional equivalent of
an affidavit” and thus, this Court will not excuse the failure to
file a Rule 56(d) affidavit.
The Napple defendants have asserted that more discovery is
required, not in this Court, but in the state court.
However, the
Napple defendants’ argument fails in that there was little if no
effort by them in this Court to conduct discovery and thus support
their request for discovery after the period for discovery lapsed.
2.
Insurance Policy Exclusions
The parties disagree as to whether certain exclusions–liquor
liability, assault, and “occurrence”–in the insurance policy are
applicable in this action. Essex contends that they are applicable
because Ayers, the alleged victim, has alleged that the incident
occurred because the Napple defendants served alcohol outside of a
time allowed by West Virginia statute, an assault occurred, and the
injury to the victim was intentional and not by accident.
The
Napple defendants, on the other hand, argue that it is unclear
whether or not the exclusions apply because more discovery is
needed to discern whether or not the Napple defendants provided
alcohol to the alleged assailants. As this Court has already found
11
that the Napple defendants are not entitled to more discovery, this
argument is moot. However, this Court will still determine whether
or
not,
given
the
facts
exclusions are applicable.
furnished
to
the
Court,
the
policy
Finally, the Napple defendants assert
that the term “occurrence” is an ambiguous policy term.
The West Virginia Supreme Court has found that an insurance
company may decide “whether it must provide liability coverage
and/or a defense to the insured based upon two documents: the
complaint, and the insurance policy.”
West Virginia Fire & Cas.
Co. v. Stanley, 602 S.E.2d 483, 498-99 (W. Va. 2004).
Thus,
resolution of the duty-to-defend question “requires examination of
(1) the policy language to ascertain the terms of the coverage and
(2) the underlying complaint to determine whether any claims
alleged therein are covered by the policy.”
Fuisz v. Selective
Ins. Co. of Am., 61 F.3d 238, 242 (4th Cir. 1995).
“This principle
is [sometimes] known as the ‘eight corners rule’ because the
determination is made by comparing the ‘four corners’ of the
underlying complaint with the ‘four corners’ of the policy.” First
Tenn. Bank Nat’l Ass’n v. St. Paul Fire & Marine Ins. Co., 501 F.
App’x 255 (4th Cir. 2012).
In applying the eight corners rule, a court must look to the
language of the insurance policy which “should be given its plain,
ordinary meaning.”
Syllabus Point 1, Mylan Labs Inc. v. Amer.
Motorists Ins. Co., 700 S.E.2d 518 (W. Va. 2010).
12
“‘Where the
provisions
of
an
insurance
policy
contract
are
clear
and
unambiguous they are not subject to judicial construction or
interpretation, but full effect will be given to the plain meaning
intended.’” Syllabus Point 2, id. (citation omitted). However, if
the language of an insurance policy provision is “reasonably
susceptible of two different meanings or is of such doubtful
meaning that reasonable minds might be uncertain or disagree as to
its meaning, it is ambiguous.”
i.
The
Syllabus Point 3, id.
Liquor Liability Exclusion
liquor
liability
exclusion
at
issue
in
this
action
precludes coverage for bodily injury claims for which an insured
may be held liable by reason of (1) causing or contributing to the
intoxication of any person; (2) furnishing alcoholic beverages to
a person under the legal drinking age or under the influence of
alcohol; or (3) any statute, ordinance or regulation relating to
the sale, gift, distribution or use of alcoholic beverages.
ECF
No. 1-1 *23. The West Virginia Alcohol Beverage Control Commission
has set forth the following regulation: “No licensee shall . . .
sell, give or dispense alcoholic liquors or nonintoxicating beer,
or permit the consumption thereof, on any licensed premises or in
any rooms directly connected therewith, between the hours of three
thirty a.m. (3:30 AM) and seven a.m. (7:00 AM) on any weekday.”
Va. Code R. § 175-2-4.
13
W.
The West Virginia Supreme Court has found that the plain
meaning of a liquor liability exclusion like the one cited above is
that “the insurance does not apply to bodily injury for which the
insured may be liable if the insured caused or contributed to the
intoxication of the person involved and the insured is in the
business of . . . serving or furnishing alcoholic beverages.”
Kelly v. Painter, 504 S.E.2d 171, 174 (W. Va. 1987).
this Court has adopted such a finding.
In addition,
Essex Ins. Co. v. Tri-Area
Amusement, Co., Civil Action No. 5:09CV23, 2010 WL 148381 *13 (N.D.
W. Va. Jan. 12, 2010).
Further, the Ayers plaintiff has set forth
in his complaint that the incident complained of occurred in part
because alcohol was served at the Napple’s Bar after 3:30 a.m. in
violation of the West Virginia Code and that the assailant was a
patron of the Napple’s Bar.
ECF No. 1-2 *5.
The liquor liability exclusion is unambiguous, as found by the
West Virginia Supreme Court.
Further, the allegations of the
underlying complaint fall into either the first exception, causing
or contributing to the intoxication of any person who was the cause
of a liability, or the third exception, liability for an injury
under a statute, of that exclusion.
As such, given the eight
corners rule, the liquor liability exclusion applies to the Napple
defendants.
14
ii.
Assault/Battery Exclusion
In the underlying Ayers state court complaint, Ayers complains
that he was “attacked, robbed and brutally beaten.”
ECF No. 1-2
*5. Ayers also alleges that one of the assailants has already been
convicted of felony charges in conjunction with the beating.
No. 1-2 *5.
ECF
Further, the complaint alleges that the incident
occurred because of the “Defendants tortious acts and omissions”
and that Ayers sustained severe injuries.
assault/battery
exclusion
in
the
ECF No. 1-2 *5-6.
applicable
insurance
The
policy
provides that coverage does not apply to claims for “bodily injury”
“arising out of . . . [a]ssault and/or battery, or any act or
omission in connection with the prevention or suppression of such
acts, whether caused by or at the direction of any insured,
insured’s ‘employees’, patrons or any other person.”
ECF No. 1-1
*17.
Given the allegations of the complaint in conjunction with the
policy language, it is clear that the Napple defendants are not
entitled to coverage under the insurance policy.
Ayers asserts
that bodily injury occurred, covering the first part of the
exclusion. He then alleges that a brutal beating took place, which
is read in conjunction with the “assault and/or battery” language
of the exclusion.
In addition, the beating described in the
complaint would fall under the definition of battery in the West
Virginia Code and thus would exclude the Napple defendants from
15
coverage.3
Finally, the complaint also alleges that the incident
occurred because of acts or omissions by the Napple defendants.
Thus, the Napple defendants are excluded under either the “assault
and/or battery” language or the “act or omission” language of the
assault/battery exclusion.
iii.
The
Occurrence Exclusion
Napple
defendants
contend
that
“occurrence”
is
an
ambiguous term and thus summary judgment should not be granted.
The Commercial General Liability Coverage Part states that the
insurance applies to bodily injury only if the bodily injury “is
caused by an ‘occurrence’ that takes place in the ‘coverage
territory.’”
The policy defines “occurrence” as “an accident,
including continuous or repeated exposure to substantially the same
general harmful conditions.”
ECF No. 1-1 *35.
This Court has previously found this exclusionary language to
be
unambiguous
and
that
“when
a
person
‘engages
in
conduct
knowingly, that conduct clearly cannot be said to be unexpected and
unforeseen
from
the
perspective’
of
that
person.”
Tri-Area
Amusement Co., 2010 WL 148381 at *12 (citing Am. Modern Home Ins.
Co. v. Corra, 671 S.E.2d 802, 806 (W. Va. 2008)).
This Court
further found that “‘conduct engaged in knowingly is not an
3
West Virginia Code § 61-2-9 uses the following definition for
battery: “Battery. -- Any person who unlawfully and intentionally
makes physical contact with force capable of causing physical pain
or injury to the person of another or unlawfully and intentionally
causes physical pain or injury to another person . . . .”
16
‘accident’ and thus not an ‘occurrence’ under [the insurance]
policy.’”
Id. at *12-13.
The Ayers complaint alleges that Ayers was brutally beaten by
three assailants, one of which of was a patron of the Napple’s Bar
and has already been convicted of felony charges in relation to the
underlying incident. As stated previously, this allegation appears
to fall within the West Virginia Code provision for battery.
As
battery is an intentional act, the underlying incident would not be
an “occurrence” and thus would be precluded from coverage. See Mt.
Vernon Fire Ins. Co. v. Dobbs, 873 F. Supp. 2d 762, 766 (N.D. W.
Va. 2012).
Because the Napple defendants are not entitled to further
discovery and because the three exclusions described above are
applicable to the underlying incident, the Napple defendants are
not entitled to coverage pursuant to the Essex insurance policy.
Thus, Essex is entitled to a favorable judgment as a matter of law.
Additionally, because (1) this Court has now found that the Napple
defendants are not entitled to coverage and (2) this Court had
previously found that Wheeling Coin defaulted, this Court now finds
that the motion for default judgment is granted as to Wheeling Coin
as there are no co-defendants left in this action that may receive
a ruling other than the one announced in this order.
Civ. P. 54(b); ECF No. 21.
17
See Fed. R.
V.
Conclusion
Based on the analysis above, this Court finds that Essex
Insurance Company, as a matter of law, has no duty under Essex
Insurance Company Policy Number 3D3504 to indemnify and defend
Napple’s Bullpen, LLC, Patrick Michael Napple, or Wheeling Coin,
LLC.
As such, Essex’s motion for summary judgment (ECF No. 22) is
GRANTED.
Further, for the reasons stated previously, Essex’s
motion for default judgment (ECF No. 14) is DENIED IN PART as it
pertains to Napple’s Bullpen, LLC, and Patrick Michael Napple and
is GRANTED IN PART as it pertains to Wheeling Coin, LLC.
It is further ORDERED that this civil action be DISMISSED and
STRICKEN from the active docket of this Court.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein. Pursuant to Federal
Rule of Civil Procedure 58, the Clerk is DIRECTED to enter judgment
on this matter.
DATED:
July 17, 2014
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
18
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