Court: District Court, D. South Carolina; August 17, 2016; Federal District Court
David C. Norton, United States District Judge, has ruled on the motions regarding Canopius US Insurance, Inc.'s first and second motions for summary judgment, as well as the competing motion for summary judgment from the Hamilton-Heyward defendants and Lateika Jones. The court denies Canopius's first motion, grants the second motion, and partially grants and partially denies the defendants' motion.
The background of the case involves a shooting incident on February 22, 2015, at Charley O’s nightclub in North Charleston, South Carolina, where multiple individuals, including the defendants, were involved. Local media speculated that the shooting stemmed from a feud involving one of the defendants. Although there were suggestions from certain defendants that the gunfire was related to a feud, this information lacks confirmation or admissible evidence. It is established that the shooting caused patrons to flee the nightclub.
At the time of this incident, Charles Middleton, the club owner, held a commercial general liability insurance policy with Canopius. The policy obligates Canopius to pay damages for bodily injury caused by an occurrence during the policy period, with "bodily injury" defined as physical harm to a person. The policy includes a $1,000,000 limit per occurrence but also contains an Assault and Battery Exclusion, which negates coverage for claims arising from assaults or physical altercations, regardless of intent, and excludes damages related to negligent hiring or failure to provide proper security in such contexts.
Canopius initiated a declaratory judgment action on September 15, 2015, seeking a determination that it is not obligated to indemnify the defendants for bodily injuries resulting from a February 22, 2015, incident. Canopius filed its first motion for summary judgment on February 24, 2016. Subsequently, on March 4, 2016, Greene filed a civil lawsuit against Middleton, alleging negligence related to a dispute among patrons at Charley O’s that escalated into gunfire, resulting in injuries to Greene and others. Greene's claims include failures by Middleton to protect patrons, implement crime deterrent measures, adequately staff the premises, and properly train personnel.
In response, Middleton demanded that Canopius defend him in the Greene Action and indemnify him for any damages. Canopius filed a second motion for summary judgment on April 14, 2016, specifically asserting it had no duty to defend or indemnify any defendants regarding the Greene Action. The moving defendants submitted a joint response and their own motion for summary judgment by May 2, 2016. Following further responses and replies, a hearing on the motions took place on June 22, 2016.
On July 19, 2016, the Hamilton-Heyward defendants filed three separate but identical actions against Middleton, claiming negligence without alleging a specific dispute leading to the incident. The court is now set to review the motions for summary judgment. The standard for summary judgment requires the movant to demonstrate there is no genuine dispute of material fact, with the nonmoving party needing to show an error of law or a genuine issue of material fact to defeat the motion.
The nonmoving party in a summary judgment motion must present specific facts showing a genuine issue for trial, rather than relying on conclusory allegations or speculation. If the nonmoving party fails to provide sufficient evidence to support their case, the court will grant summary judgment in favor of the moving party, regardless of any substantive law evidentiary requirements. The judge’s role is to determine the existence of a genuine issue for trial rather than weigh evidence.
In this case, the motions center on whether the Assault/Battery (A/B) Exclusion applies to claims from the February 22, 2015, shooting. Canopius contends that the exclusion is applicable since the shooting constituted an assault or battery under the policy. In contrast, Middleton and the moving defendants argue that the shooting was not necessarily related to an assault or battery and claim there is ambiguity in the policy that should favor the insured. Canopius seeks summary judgment to relieve it of any duty to defend or indemnify Middleton in related actions, while the defendants are seeking summary judgment in their favor.
According to South Carolina law, an insurer's duty to defend is based on the allegations in the underlying complaint, and if there is a possibility of coverage, the insurer must defend. Conversely, the duty to indemnify relies on factual findings made during the trial. If no duty to defend exists, there is also no duty to indemnify. The court needs to determine if the A/B Exclusion applies to the allegations in the Greene Action, the Hamilton-Heyward Action, and any potential future claims from Jones.
An insurance policy is a contract between the insured and the insurer, interpreted under contract law to reflect the parties' intentions as expressed in the policy language. If the language is clear and unambiguous, it governs the contract's effect. However, any ambiguity must be resolved in favor of the insured, and exclusionary clauses should be narrowly interpreted. The A/B Exclusion specifically applies to claims arising from assault and battery, with "arising out of" interpreted narrowly as "caused by," requiring an immediate and direct connection between cause and effect.
In this context, the injuries sustained by Greene and others were directly caused by a shooting incident. The determination hinges on whether the shooting constitutes assault or battery according to South Carolina law. Assault is defined both criminally—as an unlawful attempt to inflict injury with present ability—and civilly—as conduct causing reasonable fear of bodily harm. Battery is defined as the actual infliction of unlawful violence or injury upon another.
The Greene Action alleges that a dispute at Charley O's escalated into gunfire, resulting in Greene and others being shot. Greene claims his injuries were caused by the negligence and recklessness of another party. Canopius contends that these allegations fall under the A/B Exclusion.
The Greene complaint alleges that gunfire resulted from an assault or battery, as firing a gun in a dispute typically serves to threaten or intimidate. Relevant case law, specifically In re McGee, defines assault as an unlawful offer to inflict harm, which instills reasonable fear of bodily harm in others. The A/B Exclusion in the insurance policy applies regardless of whether the claims are brought by the assault's target, as long as they arise from an assault. The court granted summary judgment in favor of Canopius concerning the Greene Action, stating that Greene's claims directly stem from the alleged assault.
In the Hamilton-Heyward Actions, the complaints fail to specify the circumstances surrounding the gunfire but claim injuries due to its discharge. The defendants argue that if the gunfire was accidental, it could be deemed a covered “occurrence” under the policy. Canopius counters that the A/B Exclusion applies regardless of the shooter’s intent, explicitly stating that it covers claims arising from an assault or battery irrespective of the actor's culpability. The determination of Canopius's duty to defend hinges on whether an accidental discharge qualifies as an “unintentional” assault or battery. The Mellen court’s definition of battery requires intent, emphasizing that battery involves an unlawful touching intended to cause harmful or offensive contact, which poses challenges in defining assault or battery without considering mental state.
The terms "rude, insolent, or revengeful" are analogous to "harmful or offensive," indicating that they are normative concepts related to an actor's mental state. The Mellen court's distinction between criminal assault and civil assault and battery suggests that while intent is relevant, it is not essential for a civil action for assault. However, this does not imply that battery can be unintentional, as the reference to "assault and battery" indicates that the two are interconnected. The court clarifies that a reasonable fear of bodily harm constitutes an assault, but this does not address battery when considered alone. For battery to be meaningful under the Policy, it must involve intent; thus, the attempt to define it without culpability renders the term ineffective. Consequently, the Hamilton-Heyward Actions do not arise from a battery as defined by the A/B Exclusion. Conversely, there is some support in South Carolina law for unintentional civil assault, where conduct instills reasonable fear of bodily harm, as evidenced by patrons fleeing due to gunfire. This suggests that an assault occurred, and the defendants' injuries could fall within the A/B Exclusion.
Removing intent from the definition of assault leads to exclusions that undermine the coverage intended by the Policy for claims of bodily injury. South Carolina courts, as established in Isle of Palms, reject policy exclusions that render coverage nearly meaningless. In that case, the court refused an insurer's interpretation that excluded all claims related to a pest control company's services, which were the very risks the policy was designed to cover. The Isle of Palms ruling focused on ambiguity, a principle echoed in Bell v. Progressive Direct Insurance Co., where the court applied the reasonable expectations doctrine. This doctrine allows for the interpretation of ambiguous or conflicting policy terms based on the insured's expectations at the time of contract formation, especially when fine print undermines broader promises. While the Bell court noted that this doctrine applies only under unclear conditions, it can also be invoked if a policy's literal terms lead to absurd outcomes, as highlighted in the South Carolina Farm Bureau Mutual Insurance Co. v. Kennedy case. The reasonable expectations doctrine is specifically applicable when exclusions are bizarre or oppressive, negate agreed terms, or undermine the transaction's main purpose. The distinction between unambiguous policies and those leading to unreasonable results is nuanced, focusing on the nature and extent of the conflict created by exclusions rather than the mere existence of conflicts themselves.
The court concludes that a literal interpretation of the A/B Exclusion would unjustly broaden its application, potentially including all claims that instill a reasonable fear of bodily harm, regardless of intent. This interpretation could encompass various accidental incidents, such as a dropped firearm or tray, leading to claims that should not fall under the exclusion. Canopius's argument that the dropped tray scenario is not an applicable occurrence lacks sufficient explanation, and the court finds it difficult to distinguish between accidental incidents. The A/B Exclusion, as interpreted by Canopius, would drastically limit coverage by excluding claims related to any bodily injuries that might induce reasonable fear, which contradicts the initial intent of the policy to cover bodily injury claims arising from accidents. The court deems this a detrimental and unreasonable outcome, rendering the coverage effectively illusory. Therefore, the court rejects Canopius's interpretation, affirming that an assault must involve intent. Given that the allegations against Middleton suggest the possibility of an accidental incident, Canopius is obligated to defend Middleton in the underlying action, although the duty to indemnify will depend on the factual findings of that case.
Jones has not yet initiated any legal action against Middleton, distinguishing his situation from that of Greene and the Hamilton-Heyward defendants. The court notes that an insurer's duty to defend is based on the allegations in the underlying complaint, while the duty to indemnify relies on factual evidence determined by a factfinder. Due to insufficient information regarding Jones's potential claims, the court cannot definitively ascertain whether they would fall under the A/B Exclusion or any other exclusions. It remains possible that Jones may file a complaint aligned with the allegations in the Hamilton-Heyward Actions. Consequently, the court denies Canopius's first motion for summary judgment, except where it overlaps with the second motion, grants the second motion, and grants the moving defendants' motion regarding Canopius's duty to defend Middleton in the Hamilton-Heyward Actions, while denying the motion in other respects.
Additionally, the plaintiff, a South Carolina resident, alleges that on February 2, 2015, while lawfully present at Middleton's business, Charley O's, he was injured due to the negligence of Middleton and his employees, specifically from a firearm discharge on the premises.
The Defendant, along with his agents, servants, and employees, is alleged to have engaged in negligent and careless conduct leading to an incident that caused injury to the Plaintiff. Specific failures attributed to the Defendant include:
1. Not maintaining Charley O’s in a safe condition for patrons.
2. Failing to identify and rectify hazardous conditions on the premises.
3. Negligently managing the property under his control.
4. Not addressing dangerous conditions promptly after becoming aware of them.
5. Failing to provide adequate warnings about hazardous conditions.
6. Not taking necessary precautions against known dangers.
7. Allowing firearms on the property, which posed a hidden danger to the Plaintiff.
8. Failing to properly inspect the premises while patrons were nearby.
9. Not adequately hiring staff to ensure safety on the premises.
10. Failing to remove or warn of existing dangerous conditions.
11. Lacking the degree of care expected of a reasonable person in similar circumstances.
As a result of these actions, the Plaintiff sustained severe injuries from firearms being discharged on the premises, necessitating medical treatment and hospitalization. The Plaintiff has experienced ongoing pain, mental anguish, emotional distress, and permanent injuries, leading to incapacity, lost wages, and diminished earning capacity. He seeks compensation for actual damages and additional relief deemed appropriate, along with the costs of the legal action.
Frivolous civil proceedings may incur sanctions under SCRCP, Rule 11 and the South Carolina Frivolous Civil Proceedings Sanctions Act. Effective January 1, 2016, Alternative Dispute Resolution (ADR) is mandatory for all civil cases in South Carolina, unless exempted. Key requirements include:
1. Parties must select a neutral mediator and file a “Proof of ADR” form within 210 days of filing the action; if not, the Clerk of Court will appoint mediators.
2. The initial ADR conference is to occur within 300 days after filing.
3. Medical malpractice mediations must take place within 120 days following service of the “Notice of Intent to File Suit.”
4. Exemptions from ADR include special proceedings, temporary relief requests, appeals, post-conviction relief, contempt proceedings, governmental forfeiture actions, mortgage foreclosures, and cases that have previously undergone ADR unless mandated otherwise.
5. For cases not subject to ADR, the Chief Judge may order mediation upon motion by the court or a party.
6. A motion to waive neutral fees due to indigency must be filed within ten days of the ADR conference conclusion.
Compliance with Supreme Court Rules on ADR is mandatory, with noncompliance potentially affecting the case or leading to sanctions.
The document also includes a summons requiring the defendant, Charles Middleton, Jr., owner of Charley O’s, to respond to the complaint regarding an incident on February 2, 2015, when the plaintiff was injured due to the defendant’s negligence while on the premises. The plaintiff asserts that the defendant failed to maintain a safe environment, contributing to the incident involving a firearm discharge.
Defendant is accused of multiple acts of negligence regarding the safety of their premises, including failing to identify and rectify hazardous conditions, improperly managing the property, and neglecting to provide adequate warnings about dangers present. The allegations highlight the Defendant's responsibility to maintain safety, including ensuring that firearms were not allowed on the premises, as well as the failure to conduct proper inspections and hire competent employees for safety oversight. As a result of these negligent actions, the Plaintiff sustained serious injuries from a firearm incident, which necessitated medical treatment, hospitalization, and ongoing care. The Plaintiff has experienced significant physical pain, mental anguish, and emotional distress, alongside financial burdens from medical expenses and lost wages. The injuries are described as permanent, affecting the Plaintiff's ability to conduct regular activities and diminishing their quality of life.
Plaintiff seeks judgment against Defendant for compensation covering actual damages, additional relief as deemed appropriate, and reimbursement for legal costs. The document outlines the rules for Alternative Dispute Resolution (ADR) mandated in South Carolina for civil cases, effective January 1, 2016. Key requirements include:
1. Parties must select a neutral mediator and file a “Proof of ADR” form within 210 days of filing the action. If not done, the Clerk of Court will appoint mediators.
2. The initial ADR conference must occur within 300 days after the action's filing.
3. Pre-suit medical malpractice mediations must be conducted within 120 days of serving defendants with a “Notice of Intent to File Suit.”
4. Exemptions from ADR include specific legal proceedings such as mandamus, habeas corpus, temporary relief requests, appeals, post-conviction relief, contempt proceedings, forfeiture actions by government entities, mortgage foreclosures, and previously mediated cases unless required again.
5. In cases exempt from ADR, the Chief Judge may still order mediation upon request.
6. A motion to waive neutral fees due to indigency must be filed within ten days post-ADR conference.
Failure to comply with ADR rules may result in sanctions. The document also includes a summons for the Defendant, requiring a response to the Complaint within 30 days, or default judgment may be entered against them. The Plaintiff is identified as a resident of South Carolina.
Charles Middleton, Jr., doing business as Charley O’s, is identified as a resident of Charleston County, South Carolina, and the owner of the establishment Charley O’s located on Dorchester Road. On February 2, 2015, the Plaintiff was lawfully on the premises as a patron and was injured due to a firearm discharge, which resulted from the negligence of the Defendant and his employees. The claims of negligence include multiple failures:
1. Failing to maintain a safe environment for patrons.
2. Failing to identify and rectify hazardous conditions on the premises that posed risks.
3. Mismanaging the property under his control.
4. Neglecting to provide adequate warnings regarding the dangers present.
5. Allowing employees and patrons to carry firearms, creating an additional risk.
6. Failing to conduct proper inspections of the premises, particularly when patrons were nearby.
7. Inadequate hiring practices concerning staff responsible for safety.
8. A general failure to exercise the care expected of a reasonable person under similar circumstances.
These failures contributed to the dangerous situation that led to the Plaintiff's injuries.
Negligence by the Defendant and their agents resulted in a firearms incident on the premises, leading to the Plaintiff's severe injuries, particularly to her arm, necessitating medical treatment and hospitalization. The Plaintiff has incurred and will continue to incur medical expenses, has undergone ongoing care from multiple specialists, and suffers from permanent injuries that affect her daily life and capabilities. She experiences pain, mental anguish, emotional distress, scarring, and disfigurement, resulting in lost wages and reduced earning capacity. The Plaintiff seeks compensation for actual damages and legal costs.
The document references an alleged shooter, Stanley Greene, who is unrelated to the Defendant, Brandon Greene. It notes that motions filed by Middleton incorporate the arguments of the moving defendants, though it is unclear if those arguments apply to the Greene Action, which hasn't been addressed in the defendants' briefs. The court contemplates applying the doctrine of transferred intent to connect the shooter’s actions to the assault on the victims. Despite discussions of an assault and battery exclusion based on the circumstances of the shooting, evidence regarding how the firearm discharged remains unclear, with the court acknowledging the term "shooter" may be misleading in the context of an accidental discharge.
A court in this district has determined that the definition of battery does not eliminate all intent but only the specific intent to cause bodily injury. In battery cases, liability may arise from the intent to bring about offensive contact instead. The court expresses caution in aligning the reasonable expectations doctrine under Bell with the ambiguity discussed in Isle of Palms, as the latter involved conflicting provisions that were unclear in their application. The reasonable expectations doctrine does not necessitate such a high level of conflict. The similarities between the doctrines become evident, particularly when considering battery without intent, which could encompass any conduct causing physical injury. If a legal definition of battery without intent were to be recognized, it would complicate the relationship between the Policy’s coverage and the A/B Exclusion. Olson contends that the shooting incident was not accidental, arguing that an accidental shooting cannot result in injuries to five people. However, the record lacks evidence to support this claim. Canopius’s duty to defend and indemnify the Hamilton-Heyward defendants is based on the allegations and findings in the Hamilton-Heyward Actions. The court notes that Canopius’s interpretation of the A/B Exclusion may allow for claims related to assault or battery regardless of the actor's intent, although this interpretation is not thoroughly examined by the parties and is not critical for the current motions. The court indicates that other exclusions may apply to these instances, which could imply that the literal interpretation of the A/B Exclusion renders the Policy's "bodily injury" coverage ineffective.
