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Nautilus Insurance Co. v. Shawn Owens Inc.

United States District Court, E.D. Pennsylvania

July 17, 2018

SHAWN OWENS INC. t/a OWEN'S CAFÉ, SHAWN ZRANKOWSKI, and CLARE M. EWING and THOMAS F. EWING as Co-Administrators of the Estate of Thomas C. Ewing, Deceased, Defendants.



         This is a declaratory judgment action brought by an insurance company against its insured, a bar, and the plaintiffs in an underlying wrongful death action, arising out of a stabbing incident that occurred near the bar. Nautilus Insurance Company seeks a declaration that it does not have a duty to defend or indemnify Owen's Café because of a policy exclusion for bodily injury that arises from an assault, battery, or physical altercation. Both Owen's Café and plaintiffs in the underlying case seek to characterize the complaint in that action so as to avoid the exclusion, primarily relying on QBE Insurance Corporation v. M & S Landis Corp., 915 A.2d 1222, 1224 (Pa. Super. 2007). But because the policy exclusion here is much broader than the exclusion in Landis, I am compelled to grant Judgment on the Pleadings in favor of Nautilus.

         I. Relevant Facts

         Following the death of Thomas C. Ewing, his parents[1] brought a wrongful death and survival action in the Philadelphia Court of Common Pleas against Defendants Owen's Café and Shawn Szrankowski [hereinafter “Owen's”]. The underlying complaint, pleads that Mr. Ewing was stabbed to death by one Angelo Maldonado on August 7, 2015. (Pl.'s Ex. 3-22, ECF No. 1-2 .) The chain of events began when Ewing and other patrons took a bottle from behind the bar, ostensibly without paying for it. In response, Owen's employees directed Maldonado, a regular customer of the bar, to confront the patrons who had taken the bottle. Shortly after leaving the bar, Ewing was confronted by Maldonado, and he stabbed Ewing multiple times. The complaint asserts that the incident “resulted solely from the negligence” of Owen's employees, in that they were aware of Maldonado's violent history and had served him alcohol despite his being both visibly intoxicated and a minor, rendering it entirely foreseeable that he would confront the other patrons in a manner that would result in severe injuries or death. The Ewings' complaint was skillfully crafted to make Owen's negligent conduct in bringing about their son's death the focus of the underlying action.

         Owen's presented the claim to Nautilus Insurance Company, which proceeded to defend Owen's against the underlying action under a reservation of rights. Nautilus now moves for Judgment on the Pleadings on the basis of the assault and battery exclusion mentioned above.

         II. Controlling Legal Standard

         “The proper construction of an insurance policy is resolved as a matter of law in a declaratory judgment action, ” QBE Ins. Corp. v. Walters, 148 A.3d 785, 787 (Pa. Super. 2016), particularly where the existence of coverage is not the subject of dispute in the underlying state court action, Homesite Ins. Co. v. Neary, 2017 WL 5172294, at *3 (E.D. Pa. 2017). A motion for judgment on the pleadings is properly granted in a contract case, if the moving party clearly establishes that it is entitled to judgment as a matter of law. DiCarlo v. St. Mary Hosp., 530 F.3d 255, 259 (3d Cir. 2008). I must view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to Defendants, as the non-moving party, and grant the motion only if Defendants would not be entitled to relief under any set of facts that could be proved consistent with the allegations made in the complaint. Oxford Assocs. v. Waste Sys. Auth. of E. Montgomery Cty., 271 F.3d 140, 144 (3d Cir. 2001) (citing Green v. Fund Asset Mgmt., L.P., 245 F.3d 214, 220 (3d Cir. 2001)).

         The terms of the insurance policy and the allegations in the underlying third party complaint are determinative. J.H. France Refractories Co. v. Allstate Ins. Co., 534 Pa. 29, 43, 626 A.2d 502, 510 (1993). The insurer is required to accept all of the allegations contained in that complaint as true and provide a defense if the possibility exists that the alleged injury could be covered. Selective Way Ins. Co. v. Hosp. Grp. Servs., Inc., 119 A.3d 1035, 1046 (Pa. Super. 2015) (en banc). Where the insurer relies on a policy exclusion as the basis for denying coverage, it has the burden of proving the exclusion applies, with such exclusions being strictly construed against the insurer and in favor of the insured. See Swarner v. Mutual Ben. Group, 72 A.3d 641, 645 (Pa. Super. 2013).

         III. Analysis

         Although the claim clearly falls with the policy's definition of “bodily injury, ” Nautilus argues that an exclusion for injuries arising out of an assault, battery, or physical altercation applies. The exclusion states,

Regardless of culpability or intent of any person, this insurance does not apply to ‘bodily injury', ‘property damage', ‘personal and advertising injury' or medical payments arising out of any (1) actual or alleged assault or battery; (2) physical altercation; or (3) [a]ny act or omission in connection with the prevention or suppression of such acts, including the alleged failure to provide adequate security.

         Assault and Battery Exclusion, Pl.'s Ex. 59, ECF No. 1-2. The exclusion applies regardless of whether such damages are caused by any “insured, employee, patron, or any other person, ” and so long as the damages occurred at any “premises owned or occupied by any insured.” Id. It specifically excludes from coverage both the obligation to indemnify and the obligation to defend. Id.

         Fairly read, the underlying complaint falls within the language of this exclusion. Notwithstanding skillful pleading by Ewing's counsel as to the role played by Owen's in causing this tragedy, by any objective measure the injuries leading to Ewing's death at least in part arose out of an assault, battery, or physical altercation. It strains credulity to assert otherwise, when the complaint expressly states that “Ewing was confronted by a visibly intoxicated Angelo Maldonado who stabbed him multiple times resulting in his death.” (Ewing Compl. ¶ 26, Pl.'s Ex. 8, ECF No. 1-2.)

         Defendants assert that the policy is ambiguous because of Nautilus's failure to include a definition of ‘assault,' ‘battery,' ‘physical altercation,' or ‘arise out of' in the policy. But those terms have both common meaning and legal definition. When challenged at oral argument to identify what further clarification would be necessary for a policyholder to comprehend the scope and applicability of the exclusion, defense counsel could only reply that “assault” and “battery” are legal terms of art. Yet to the extent that they are, such terms are defined by Pennsylvania law. Recently, my colleague Judge Savage applied Pennsylvania definitions of “Trafficking, ” “Rape, ” and “Simple Assault” in determining the applicability of this same exclusion to claims that a motel's employee allowed unlawful conduct to take place on its premises. Nautilus Ins. Co. v. Motel Mgmt. Servs., Inc., d/b/a Neshaminy Inn & E.B., 2018 WL 2363594, at *4-6 (E.D. Pa. 2018). See also Markel Int'l Ins. Co. v. 2421 Salam, Inc., 2009 WL 1220557, at *6 (E.D. Pa. 2009) (citing Essex Ins. Co. v. Starlight Mgmt. Co., 198 Fed.Appx. 179, 183 (3d Cir.2006) for the proposition that the terms “assault” and “arising out of, ” which were not defined in the policy, were unambiguous because Pennsylvania law provides a definition), report and recommendation adopted, 2009 WL 1203341 (E.D. Pa. Apr. 30, 2009); Liberty Surplus Ins. Corp. v. McFaddens at Ballpark LLC, 116 F.Supp.3d 447, 458 (E.D. Pa. 2015) ...

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