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White Pine Insurance Co. v. Taylor
Citations: 165 A.3d 624; 233 Md. App. 479; 2017 WL 3185655; 2017 Md. App. LEXIS 758Docket: 0493/16
Court: Court of Special Appeals of Maryland; July 27, 2017; Maryland; State Appellate Court
Original Court Document: View Document
White Pine Insurance Company denied coverage for a shooting injury sustained by Howard R. Taylor at West End Pub and Restaurant, LLC, on March 31, 2013. Taylor was shot in the leg as he exited the pub, with no suspect identified and no prior warnings about potential danger. Following White Pine's denial of defense against Taylor's negligence claim, West End and Taylor reached a Consent Verdict, where West End admitted negligence and agreed to a $100,000 settlement, subsequently assigning to Taylor its claims against White Pine for coverage denial. Taylor filed a breach of contract action against White Pine, seeking $74,999.99. The Circuit Court for Washington County ruled in favor of Taylor, awarding him $100,000. White Pine appealed, raising three issues: (1) whether the court erred in finding that Taylor's injury was not excluded under the Policy’s Assault and Battery Exclusion, thus obligating White Pine to indemnify West End; (2) whether the court erred by not deeming the Consent Verdict unreasonable; and (3) whether the damage award exceeded the ad damnum clause in Taylor's complaint. The case was reported in the Court of Special Appeals of Maryland, with the opinion filed on July 27, 2017. The “Commercial General Liability Coverage Form” outlines essential restrictions on coverage, emphasizing the need for careful review to understand rights and obligations. Under “Section I. Coverages,” the insurer agrees to pay damages for “bodily injury” or “property damage” that the insured is legally obligated to pay, and will defend against related lawsuits, except where insurance does not apply. Coverage for such damages is contingent upon three conditions: the incident must occur in the coverage territory, during the policy period, and the insured must not have prior knowledge of the incident. “Section IV. Commercial General Liability Conditions” states that a person can sue the insurer to recover on an agreed settlement or final judgment, but the insurer is not liable for damages outside the policy’s terms or exceeding the coverage limit. An "agreed settlement" requires a signed release by the insurer, insured, and claimant. Definitions provided in “Section V.” clarify key terms: “bodily injury” includes sickness or disease, "occurrence" refers to accidents or continuous exposure to harmful conditions, and "suit" means a civil proceeding alleging damages for covered bodily injury. The policy includes an “Assault, Battery, or Assault and Battery Exclusion,” which states that it does not cover damages resulting from assault or battery incidents, including negligence in prevention or training related to such acts. Definitions for “assault” and “battery” are provided, where assault involves creating apprehension of harm, and battery involves actual harmful or offensive contact. An “Assault and Battery” occurs when both actions are combined. Taylor filed a negligence lawsuit against West End Pub in the Circuit Court for Washington County following his injury. West End sought defense and indemnification from its insurer, White Pine, which denied coverage, claiming the incident was not included under the insurance policy. West End and Taylor reached a settlement, leading to a Consent Verdict awarding Taylor $100,000 for medical and non-economic damages. This verdict included an assignment of West End’s rights against White Pine to Taylor, including claims for breach of the insurance policy. Subsequently, Taylor demanded payment from White Pine, which was again denied for the same reasons as before. On March 12, 2015, Taylor filed a breach of contract complaint against White Pine, which responded with a counterclaim for declaratory relief. White Pine's motion for summary judgment was denied by the circuit court on June 4, 2015. During proceedings on March 10, 2016, both parties presented oral arguments, with Taylor's counsel asserting coverage under the policy, while White Pine maintained that an Assault and Battery Exclusion applied due to Taylor being shot. Taylor's counsel contended that White Pine did not prove the incident constituted an "assault" or "battery," whereas White Pine argued that the shooting alone sufficed to classify the event as a battery, noting the absence of an intent requirement in the policy definition. The trial court, in considering White Pine's motion for judgment, expressed uncertainty about the circumstances surrounding the shooting and ultimately denied the motion, indicating that without clarity on whether the incident constituted an assault or battery, the exclusion could not be applied. White Pine defended its position by presenting Lauren O’Shea, a Senior Claims Analyst from Conifer Holdings, Inc., who detailed the process of reviewing and denying Taylor’s claims. White Pine's counsel argued that the Policy’s Assault and Battery Exclusion applies only when a harmful act is committed by a person, asserting that accidental injuries, like cutting oneself on glass, do not fall under this exclusion. The court questioned the lack of evidence indicating a person intentionally shot Taylor, suggesting that a gun could discharge accidentally. Counsel for White Pine contended that even if a gun discharged accidentally, it would still be covered under the exclusion if a person committed the act causing harm, yet the court drew a parallel to an accidental injury caused by a waitress. Ultimately, on May 4, 2016, the circuit court ruled in favor of Taylor for $100,000, denying White Pine’s request for declaratory relief. White Pine appealed this decision. The appellate court will review both legal interpretations and evidence, adhering to the standard that it will not overturn the trial court's factual findings unless they are clearly erroneous. The critical issue involves whether White Pine demonstrated that Taylor's injuries constituted a “battery” under the Policy’s exclusion. The evidence only established that Taylor was shot without any indication of intentionality concerning the shooter. The trial court lacked evidence regarding the shooter's intent to harm or create apprehension of harm towards another individual, specifically concerning the shooting incident involving Taylor. White Pine contends that the trial court erroneously asserted that the evidence did not clarify how the injury occurred, particularly since the assailant's identity and location were unknown, despite the established fact that Taylor was shot. The court expressed hesitation to classify the incident as an assault or battery solely based on the occurrence of a gunshot. Two critical factors differentiate this case from previous case law. First, the policy's definition of "battery" in the Assault and Battery Exclusion does not explicitly require a particular state of mind. Other cases have allowed for the determination of assault or battery to be made in an underlying tort or criminal case. Second, the shooter remains unidentified, and there is no evidence indicating that anyone witnessed the shooting or the circumstances surrounding it. In contrast to other cases where intent was evident, the lack of such evidence raises the question of whether intent must be established to differentiate an injury from an accident. White Pine presents conflicting arguments about the relevance of the shooter's intent. While it suggests that the policy's definition of "battery" does not necessitate evidence of intent, this perspective complicates the distinction between injuries resulting from accidents and those arising from acts defined as battery. Conversely, when addressing the policy's ambiguity, White Pine claims the definition aligns with common legal interpretations of battery, which typically require intent. The unique circumstances of this case prompt inquiries into whether the policy's Assault and Battery Exclusion can legitimately exclude coverage for injuries and property damage resulting from harmful or offensive contact. The Policy’s exclusion may either bar coverage for all bodily injuries and property damage resulting from actions causing harmful or offensive contact, conflicting with common law battery definitions, or White Pine was required to demonstrate more than just Taylor’s shooting to show the injury fell within the exclusion. White Pine's counsel struggled to justify that nearly all bodily injuries caused by another are excluded, contradicting the Policy's purpose of covering accidents. The circuit court did not err in concluding that White Pine failed to prove it had no duty to indemnify West End Pub for Taylor's injury under the Assault and Battery Exclusion. White Pine had the burden to establish the exclusion applied, which is typically on the insurer to demonstrate an exclusion negates indemnity once coverage is shown. Taylor met his burden by presenting evidence of a Consent Verdict, where West End admitted negligence and agreed to a settlement. Taylor also testified he had no forewarning of the shooting and lacked knowledge about the shooter. White Pine did not provide evidence regarding the shooting's cause and contended that the definition of “battery” under the exclusion relieved it from presenting such evidence. The circuit court correctly found that White Pine did not establish that Taylor's injury fell under the Assault and Battery Exclusion. The Policy's coverage regarding unintentional or “accidental” acts under the assault and battery exclusion, specifically the definition of “battery,” is deemed ambiguous. In interpreting insurance policies, Maryland courts apply principles similar to those used in traditional contract interpretation, focusing on the intent of the parties as expressed through the contract language. The courts prioritize the ordinary and accepted meanings of words, ensuring that every clause is considered to avoid omitting significant elements of the agreement. In situations where the contract language is clear, it must be enforced as written, reflecting what a reasonable person would understand the terms to mean. Ambiguity arises when the language suggests multiple meanings to a prudent layperson, leading courts to analyze the contract’s character, purpose, and the parties' circumstances at the time of execution. Although Maryland does not adhere to the principle of construing policies against the insurer, any ambiguity will be interpreted in favor of the insured. Furthermore, exclusionary provisions in insurance contracts are interpreted narrowly to protect the insured's interests. Exclusions in insurance policies are interpreted strictly and favorably towards coverage. Insurers must draft exclusionary language conspicuously and clearly outline any limitations on coverage. Implicit exclusions are insufficient. Maryland courts evaluate the intent of the parties by examining the entire policy and considering extrinsic evidence. If ambiguity persists after such evaluation, it is construed against the insurer. The Policy's Assault and Battery Exclusion specifies that it does not cover bodily injury or property damage resulting from acts defined as "assault" or "battery." Notably, this exclusion lacks a state of mind requirement and does not define battery per common law, prompting White Pine to argue that the mere act of shooting, which causes injury, falls under the exclusion. However, interpreting the definition of "battery" alongside the entire exclusion suggests a reasonable view that it pertains to intentional acts, as the term "commit" implies deliberate actions. This interpretation aligns with legal precedents indicating that intent is fundamental to the definitions of assault and battery. The excerpt addresses the ambiguity in the insurance policy's definition of "battery," which states it as "harmful or offensive contact" but does not clarify whether intent is necessary. This vagueness fails to meet the clarity required for coverage exclusions, as noted in relevant case law (Megonnell, 368 Md. at 656). If the definition could include both intentional and accidental acts, it does not distinguish between acts that constitute a battery and those that are merely negligent. White Pine, as the policy drafter, should have explicitly defined such limitations. The law favors narrow construction of exclusions that allow for multiple interpretations, as established in Blackstone Int’l Ltd. (442 Md. at 695), emphasizing that insured parties need clear understanding of coverage limits. The court determined that White Pine did not demonstrate that Taylor’s injury resulted from a battery, as the policy's ambiguous definition necessitates reference to ordinary definitions of battery. White Pine argues that shooting someone constitutes a battery under common law, yet maintains that intent is irrelevant, contradicting established interpretations that require intent for a battery, including transferred intent scenarios. Battery in civil law is defined as intentional harmful or offensive contact without consent. Both civil and criminal definitions, including Maryland's, necessitate intent as a critical element. In Maryland, battery is characterized as the intentional touching of another person without consent, with "touching" encompassing both direct and indirect contact. Innocent or accidental actions that lead to harmful contact do not constitute battery. The requirement for intent was further articulated in the case of Nelson, emphasizing that a positive action by the defendant is necessary. A battery can occur whether through direct contact, such as striking someone, or indirectly, such as a bullet hitting a victim. In Maryland, battery is classified under the term "assault," which includes common law elements within statutory definitions. The Maryland assault statutes outline first and second degree assault, with first degree assault prohibiting intentional serious harm and second degree assault encompassing assault and battery. A specific intent or criminal negligence is essential for battery, with the burden of proof resting on the State to establish these elements. Criminal negligence is defined as conduct that grossly deviates from what a reasonable person would consider acceptable. In Maryland, a defendant's state of mind is crucial for proving second degree assault; an innocent accident does not establish criminal liability. White Pine claims that a shooting constitutes a "battery per se" regardless of intent, referencing the case Northfield Ins. Co. v. Boxley. However, the Boxley court emphasized the importance of intent, examining the circumstances surrounding the shooting to establish the shooter’s intent to commit an assault. Unlike Boxley, there is a lack of evidence in the current case regarding the shooter's intent in Taylor’s injury. The scenario involved a loaded gun brandished during a heated argument; if the shooter did not intend to harm Davis, it implies an intent to instill imminent fear of harm. Boxley does not propose alternative explanations for the shooter's actions. The Maryland Court of Appeals' decision in Nelson clarifies that the intent to commit an assault can fulfill the intent requirement for battery if contact occurs during the assault. Consequently, even if the shooter did not aim to hit the victim, intending to frighten them suffices for liability. The court concluded that solely accidental contact cannot meet the intent standard for battery. Ultimately, Boxley reinforces the need for evidence of intent, underscoring that White Pine failed to provide any indication that anyone intended to fire the gun causing Taylor's injury. White Pine did not provide evidence indicating that Taylor had an argument with the shooter prior to the incident, nor did it establish that the shooter intended to harm someone else, as would be necessary for claims of "bad aim" or "transferred intent." The absence of evidence regarding the circumstances of the shooting meant that White Pine failed to meet its burden of proof to demonstrate that the exclusion applied. White Pine further contended that evidence showing Taylor was unaware of the shooter and the gun supported a conclusion that the shooting was non-consensual and constituted a battery. However, the court noted that the question of Taylor's consent was not relevant to the case. It emphasized that intent is a critical component for establishing battery under Maryland law and that the trial court could reasonably conclude that Taylor did not consent to being shot. White Pine's assumption that the shooter intended to hit someone, regardless of whether it was Taylor, lacked evidentiary support. The court clarified that the shooter’s intent is significant for determining if a battery occurred under both civil and criminal definitions. The primary issue was whether White Pine sufficiently demonstrated that Taylor's injuries stemmed from a battery to uphold an exclusion from indemnity coverage under the insurance policy. The court held that White Pine did not establish the exclusion's applicability and therefore affirmed the trial court's decision not to issue a declaratory judgment in favor of White Pine. Additionally, the court found no error in denying White Pine's request to deem the consent verdict between Taylor and West End Pub unreasonable. White Pine contends that the circuit court erred by not deeming the Consent Verdict between Taylor and West End Pub unreasonable concerning West End Pub's admission of liability for negligence and the judgment amount. Central to White Pine's argument is the assertion that Taylor failed to provide evidence supporting the reasonableness of the admission and judgment, thus not meeting his burden of proof. However, Maryland law requires White Pine, as the party challenging the settlement, to present sufficient evidence to create a legitimate issue. The circuit court found that White Pine did not meet this burden. White Pine referenced cases indicating that unforeseen shootings do not typically bind establishments, supported by Taylor's testimony that there were no fights or prior shootings at West End Pub. Despite this, White Pine's argument does not establish that West End Pub had no prior knowledge of dangerous conditions on its premises, which would render the settlement unreasonable. The only evidence White Pine presented was Taylor's lack of knowledge and a brief account from a witness regarding White Pine's denial of defense and indemnity requests. No testimony was provided about West End's awareness of dangerous conditions, undermining White Pine's position regarding the unreasonableness of the Consent Verdict under Maryland law. An insurer retains the right to contest the reasonableness of a settlement even if it has declined to defend the insured. However, if the insurer refuses to provide a defense, the insured can reasonably settle the case without forfeiting the right to recover from the insurer. In such scenarios, any policy clause requiring the insurer's consent for settlement is waived. The circuit court evaluated evidence, including medical bills and the admission of wrongdoing by West End Pub, but White Pine failed to demonstrate that the Consent Verdict was unreasonable, leading to the denial of White Pine's request for a declaration of unreasonableness. White Pine also contended that the circuit court incorrectly awarded damages exceeding the ad damnum clause of Taylor's complaint. Maryland Rule 2-305 mandates a clear statement of the relief sought, including the specific amount for money judgments. While courts may allow amendments to the ad damnum clause post-verdict, Taylor did not properly file for such an amendment. The circuit court awarded damages of $100,000, which reflected the Consent Verdict and maximum policy coverage, despite the complaint only claiming $74,999.99. Although there is precedent on amending the ad damnum clause, the judgment does not automatically reverse for exceeding the claimed amount if the plaintiff provides a release for the excess. However, it is generally held that failing to amend the ad damnum clause can lead to errors in judgment amounts. The Court of Appeals upheld the requirement that the claimed amount of damages must be explicitly stated, and any excess beyond the ad damnum must be released for the verdict to be preserved on appeal. Taylor acknowledged that the circuit court's award of $100,000 exceeded his initial claim and did not request a modification of the ad damnum clause. Consequently, Taylor's counsel accepted that the award should be reduced to $74,999.99. The court vacated the $100,000 judgment and remanded the case for the entry of a new judgment reflecting the reduced amount in favor of Taylor against White Pine Insurance Company. The costs of the appeal are to be divided, with the appellant responsible for two-thirds and the appellee for one-third. In a concurring opinion, Judge Arthur noted that the Assault and Battery Exclusion in White Pine's policy implies that intent must be demonstrated for the exclusion to apply. White Pine did not eliminate the possibility of an unintentional shooting incident, which justifies the circuit court's decision not to rule in its favor at trial.