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Nautilus Insurance Co. v. 200 West Cherry Street, LLC

United States District Court, D. Maryland

March 26, 2019

NAUTILUS INSURANCE COMPANY Plaintiff,
v.
200 WEST CHERRY STREET, LLC, d/b/a Nauti-Goose Saloon, et al. Defendants.

          MEMORANDUM OPINION

          Ellen Lipton Hollander, United States District Judge.

         In this insurance dispute, plaintiff Nautilus Insurance Company (“Nautilus”) has filed a declaratory judgment action against defendants 200 West Cherry Street, LLC, d/b/a Nauti-Goose Saloon (“200 West” or the “Saloon”); Richard Woollens; and William King, Jr. ECF 1 (“Complaint”).[1] In Count One, Nautilus seeks a declaration that it “has no duty to defend or indemnify 200 West or Woollens” under a Commercial Lines Policy (the “Policy”) that it issued to 200 West, which covered the period from March 12, 2013, to March 12, 2014. In Count Two, Nautilus seeks a declaration that it has no duty under the Policy to defend or indemnify “as a result of the assault or battery exclusion” under the Policy.[2] Subject matter jurisdiction is founded on diversity of citizenship. See Id. ¶ 9.

         The case is rooted in litigation arising from a tort suit filed by King in February 2016, in the Circuit Court for Cecil County against 200 West, Woollens, and several others. See King v. Nauti-Goose Saloon, No. 07-C-16000229 (Cir. Ct. for Cecil Cty. Feb. 10, 2016); see also ECF 1-1 (the “Tort Suit”). King alleged that Woollens, a 200 West employee, assaulted King on August 24, 2013, after King left the Saloon. ECF 1-1, ¶¶ 12, 16, 17.

         Nautilus has moved for summary judgment (ECF 23, the “Motion”), supported by two exhibits. ECF 23-1; ECF 23-2. Saloon opposes the Motion (ECF 30, the “Opposition”) and submitted four exhibits. ECF 30-1 to ECF 30-4. Plaintiff has replied. ECF 31 (“Reply”).

         The Motion is fully briefed and no hearing is necessary to resolve it. See Local Rule 105.6. For the reasons that follow, I shall deny the Motion.

         I. Factual Summary

         A. The Tort Litigation

         The Saloon is a restaurant and bar with its principal place of business located in Cecil County, Maryland. ECF 1-1, ¶ 5. At the relevant time, Woollens was an off-duty Maryland State Police officer, providing private security services for 200 West. Id. ¶¶ 8, 14; ECF 1, ¶ 11. King was a patron of the Saloon.

         On February 10, 2016, in the Circuit Court for Cecil County, King filed the Tort Suit, alleging claims against Woollens; 200 West; TTS Properties, Inc.; Anchor Boats, Inc.; Marcus Brown, individually and in his capacity as former Superintendent of the Maryland State Police; the Maryland State Police; and the State of Maryland. See ECF 1-1.[3] The Tort Suit contained thirteen counts, but it proceeded only as to six of them: “Battery” (Count I); “Gross Negligence” (Count IV); “Negligence - Security” (Count X); “Negligence: Hiring, Training, Retention, and/or Supervision” (Count XI); “Negligence - Failure to Warn” (Count XII); and “Negligence - Negligent Misrepresentation” (Count XIII). ECF 1, ¶ 12; see also ECF 1-1. Nautilus defended 200 West in the Tort Suit, retaining Eccleston & Wolf as defense counsel. See ECF 30 at 3.

         In the Tort Suit, King alleged that on the night of August 23, 2013, he and several friends went to the Saloon. ECF 1-1, ¶¶ 4, 12. At about 12:45 a.m. on August 24, 2013, a member of Saloon security allegedly asked King's friend to leave the bar. Id. ¶ 13. King's friend left, and King followed. Id. ¶ 13. King claimed that when he arrived in the parking lot, his friends were arguing with the Saloon's security personnel, including Woollens. Id. ¶ 14. According to the Tort Suit, Woollens, an off-duty police officer working security for 200 West, wore his Maryland State Police badge and carried a firearm and handcuffs. Id. ¶ 15. He also identified himself as a Maryland State Trooper. Id.

         King asserted that he was unarmed and posed no threat. Id. ¶ 16. Nevertheless, when he started walking toward his friends, he was pushed to the ground by the Saloon's security personnel. Id. Further, King asserts that when he stood up, Woollens grabbed him, lifted King above Woollen's head, and “swiftly slammed [King's] head to the concrete pavement, ” with “such force that patrons located more than one hundred feet away - on the lower deck inside of the restaurant - heard the thud.” Id. ¶ 17. As a result, King was knocked unconscious. Id. While King lay bleeding on the concrete, Woollens handcuffed him. Id. ¶ 18.

         King suffered “catastrophic injuries. Id. ¶ 19. These included “a fractured bone in the [right] side of his skull, a fractured plate in the middle of his skull, a fractured in [sic] right eye socket, a fractured bone in the rear area of the side of his skull, a concussion, severe bleeding behind his skull, and severe mental anguish.” Id.

         King “was charged with second degree assault, trespass, disorderly conduct, failure to obey, and resisting arrest in Cecil County District Court case number 4K00065839, State of Maryland v. William King.” Id. ¶ 20. He received a sentence of probation before judgment on April 20, 2015. Id. Therefore, there was no imposition of a judgment of conviction. Id.

         In the course of litigation in the Tort Suit, the Saloon and other defendants moved for summary judgment. Of relevance here, in its “Memorandum of Law in Support of Motion for Summary Judgment” (ECF 30-2) (“Memorandum”), 200 West disputed King's version of events, stating, ECF 30-2 at 6-7:

Plaintiff ignored [Woollens'] orders to leave and instead went towards TFC Woollens in an aggressive manner, and stated, “I don't care if you're a cop, I'll stab you.” [Exhibit No. 12, Affidavit of Richard A. Woollens, ¶ 6]. This statement gave TFC Woollens concern that Plaintiff had a concealed knife or sharp weapon. Id. That fact, coupled with Plaintiff's aggressive behavior, his intoxication, and the large number of people in the vicinity led TFC Woollens to believe Plaintiff would harm him or other people at the scene. Id.
Fearing for his safety and others, TFC Woollens wrapped his arms around Plaintiff in order to prevent the threatened assault. Id. at ¶7. TFC Woollens realized that the only way to gain control of Plaintiff in a safe manner was to execute a takedown, and therefore, he executed a take-down technique to take Plaintiff down to the ground. Id. . . .
During the takedown, Plaintiff sustained a head injury; TFC Woollens had no intent to cause an injury, only to take Plaintiff down as a quickly as possible to prevent him from causing an injury to those at the scene. Id. at ¶8.

         Judge Keith A. Baynes, of the Circuit Court for Cecil County, presided at the hearing on the motions for summary judgement. See ECF 30-4. At the close of the hearing, he issued an oral ruling (id. at 39-41), granting the motions (ECF 30-4). Judge Baynes stated, id. at 39-40:

[T]he Court does find looking at the evidence in the light most favorable to the plaintiff [i.e., King] that there's really not any dispute as to material fact and the Court does believe that the force used by the officer [i.e., Woollens] was reasonable based upon the conduct and language of the plaintiff at the time of the events. . . . [U]sing the reasonable officer standard, again, the Court finds that the conduct of the officer was reasonable based upon the threat that was immediately apparent.

See also ECF 30-3 (Judge Baynes's orders granting summary judgment to defendants).

         King noted an appeal to the Maryland Court of Special Appeals. ECF 30 at 5-6; see also King v. Nauti-Goose Saloon, No. 17-2183 (Md. Ct. Spec. App.). And, Nautilus has continued to defend 200 West in the appeal, pursuant to a reservation of rights letter (ECF 30-1), dated November 22, 2016. See ECF 30-2 at 3 n.2.

         B. The Insurance Policy

         As noted, Nautilus's request for declaratory judgment arises out of a Commercial Lines Policy of insurance issued to 200 West. See ECF 23-2. The Policy was in effect, and covered 200 West and its employees, from March 12, 2013 through March 12, 2014. Id. at 1, 11-12.

         The Policy contains two sections relevant to coverage in this case: (1) Coverage under the “Commercial General Liability [“CGL”] Coverage Form, ” id. at 4-18 (the “CGL Form”) and (2) an endorsement modifying the Policy, titled “EXCLUSION - ALL ASSAULT OR BATTERY.” Id. at 19 (the “Battery Exclusion”).

         The CGL Form of the Policy provides, in relevant part, id. at 4:

SECTION I - COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY
DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. . . .
* * *
b. This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”;

         Thus, under the Policy, Nautilus covers damages resulting from a “bodily injury” caused by an “occurrence, ” but does not have a duty to “defend the insured against any ‘suit' seeking damages for ‘bodily injury' . . . to which this insurance does not apply.” Id. Under the Policy, “bodily injury” is defined as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.” Id. at 15. And, “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Id. at 17. However, it does not appear that the Policy defines “accident.” See id.

         The CGL Form also contains an “exclusion” for expected or intended injuries. Id. at 5 (“Expected or Intended Injury Exclusion”). It states, id.:

2. Exclusions
This insurance does not apply to:
a. Expected Or Intended Injury
“Bodily injury” or “property damage” expected or intended from the standpoint of the insured. This exclusion does not apply to “bodily injury” resulting from the use of reasonable force to protect persons or property.

         As a result of this exclusion, the Policy does not cover a bodily injury that the insured “expected or intended.” Id. However, the Exclusion does not apply if the injury resulted “from the use of reasonable force to protect persons or property.” Id. (the “Reasonable Force Exception”).

         The CGL Form contains the following relevant endorsement modifying the Policy, id. at 19 (the “Battery Exclusion”):

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
EXCLUSION-ALL ASSAULT OR BATTERY
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
A. The following exclusion is added to 2. Exclusions of Section I - Coverage A -Bodily Injury And Property Damage Liability, Coverage B - Personal And Advertising Injury Liability, and Coverage C. - Medical Payments:
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. Any act or omission in connection with the prevention or suppression of such acts, including the alleged failure to provide adequate security.
This exclusion applies regardless of whether such actual or alleged damages ...

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