Opinion
C/A No. 3:19-cv-01747-JFA
08-31-2020
ACCEPTANCE CASUALTY INSURANCE COMPANY, Plaintiff, v. BODA, LLC d/b/a the Bird Dog ; Amanda P. Taylor; Matthew Standridge ; Justin Brown; and Michael Grogan, Defendants.
Tracy Lynn Eggleston, Cozen and O'Connor, Charlotte, NC, for Plaintiff. Joseph Matthew McCulloch, Jr., Kathy Ridenoure Schillaci, Joseph M. McCulloch Jr. Law Offices, Columbia, SC, for Defendant Boda LLC. Jessica Lee Gooding, Goings Law Firm, Robert Fredrick Goings, Goings Law Firm LLC, Columbia, SC, for Defendant Amanda P. Taylor. Harry Cooper Wilson, III, W. Mullins McLeod, Jr., McLeod Law Group LLC, Charleston, SC, for Defendants Matthew Standridge, Justin Brown. Vanessa C. Overbay, Popowski Callas and Shirley, Columbia, SC, for Defendant Michael Grogan.
Tracy Lynn Eggleston, Cozen and O'Connor, Charlotte, NC, for Plaintiff.
Joseph Matthew McCulloch, Jr., Kathy Ridenoure Schillaci, Joseph M. McCulloch Jr. Law Offices, Columbia, SC, for Defendant Boda LLC.
Jessica Lee Gooding, Goings Law Firm, Robert Fredrick Goings, Goings Law Firm LLC, Columbia, SC, for Defendant Amanda P. Taylor.
Harry Cooper Wilson, III, W. Mullins McLeod, Jr., McLeod Law Group LLC, Charleston, SC, for Defendants Matthew Standridge, Justin Brown.
Vanessa C. Overbay, Popowski Callas and Shirley, Columbia, SC, for Defendant Michael Grogan.
ORDER
Joseph F. Anderson, Jr., United States District Judge
This matter is before the Court on Acceptance Casualty Insurance's ("Plaintiff") motion for summary judgment (ECF No. 70), Justin Brown's ("Brown") and Matthew Standridge's ("Standridge") motion for summary judgment (ECF No. 71), Amanda P. Taylor's ("Taylor") motion for summary judgment (ECF No. 72), and Michael Grogan's ("Grogan") motion for summary judgment. (ECF No. 74). Also before this Court, BODA, LLC's ("BODA") motion for declaratory judgment seeks essentially the same relief as the motions above. (ECF No. 73). When combined, these motions seek a resolution as to all claims, cross-claims, counterclaims, and claims for declaratory judgment at issue. For the reasons discussed below, the Court grants Plaintiff's motion for summary judgment and denies Brown, Standridge, Taylor, and Grogan's motions for summary judgment. Additionally, the Court denies BODA's motion for declaratory judgment.
I. FACTUAL & PROCEDURAL HISTORY
This case arises out of an automobile accident that occurred on May 21, 2017 in Columbia, South Carolina. At the time of the incident, Brown and Standridge were passengers in Callie Bell's ("Bell") car, and Taylor and Grogan were police officers parked in their respective police cars conducting an unrelated traffic stop. Bell was attempting to take the ramp from Huger Street onto I-126 when she collided with Taylor's parked car, which in turn caused Taylor's vehicle to collide with Grogan's vehicle. Taylor, Grogan, Brown and Standridge (collectively "injured parties" or "Defendants") were each injured as a result of the collision. Subsequently, Bell was charged with driving under the influence.
Prior to the incident, Bell, Brown, and Standridge visited two bars located in the Five Points area, Cover 3 and The Bird Dog d/b/a BODA, LLC. After consuming alcoholic beverages, Bell, Brown, and Standridge left the bar in Bell's car. Brown, Standridge, Taylor, and Grogan have each filed Dram Shop actions in state court against BODA and its employees alleging they were negligent, grossly negligent, and negligent per se by serving Bell alcoholic beverages while in an intoxicated state and allowing Bell to leave the bar to drive home. Plaintiff is defending BODA and/or its employees in each of the actions under the applicable insurance policy.
Justin Brown v. PM Palmetto et al. , Civ. Act. No. 2018-CP-40-4566; Justin Brown v. Andrew Yi, et al. , Civ. Act. No. 2019-CP-40-04603; Matthew Standridge v. PM Palmetto, et al. , Civ. Act. No. 201-CP-40-0853; Matthew Standridge v. Andrew Yi, et al. , Civ. Act. No. 2019-CP-40-04604; Amanda P. Taylor v. PM Palmetto, et al. , Civ. Act. No. 2018-CP-40-4653; and Michael Grogan v. PM Palmetto, et al. , Civ. Act. No. 2019-CP-40-6013 (hereinafter, the "State Court Actions").
On June 19, 2019, Plaintiff filed this interpleader action alleging the applicable policy limits are $1,000,000.00 and that the damages claimed by the injured parties in the state court actions exceed those limits. The injured parties counterclaimed seeking a declaratory judgment that the coverage limit at issue is up to $4,000,000.00.
On June 16, 2020, Plaintiff, Brown, Standridge, Taylor, and Grogan each filed their motions for summary judgment. On this same day, Defendant BODA filed its motion for declaratory judgment. On July 15, 2020, Plaintiff filed a response in opposition to Defendants’ motion for summary judgment and Defendants filed a joint response in opposition to Plaintiff's motion for summary judgment. The parties did not file reply briefs. Each motion overlaps and requires the Court to conduct the same legal analysis. Therefore, this matter is ripe for review.
II. LEGAL STANDARD
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is proper when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A material fact is one that "might affect the outcome of the suit under the governing law." Spriggs v. Diamond Auto Glass , 242 F.3d 179, 183 (4th Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). A dispute of material fact is "genuine" if sufficient evidence favoring the nonmoving party exists for the trier of fact to return a verdict for that party. Anderson , 477 U.S. at 248–49, 106 S.Ct. 2505.
The moving party bears the initial burden of showing the absence of a genuine dispute of material fact. Celotex , 477 U.S. at 323, 106 S.Ct. 2548. If the moving party meets that burden and a properly supported motion is before the court, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." See Fed. R. Civ. P. 56(e) ; Celotex , 477 U.S. at 323, 106 S.Ct. 2548. All inferences must be viewed in a light most favorable to the nonmoving party, but the nonmoving party "cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another." Beale v. Hardy , 769 F.2d 213, 214 (4th Cir. 1985).
When opposing parties file cross-motions for summary judgment, the trial court applies the same standard of review to both motions. Gene Reed Enterprises, Inc. v. Avjet Corp. , 2015 WL 9239780, at *2 (D.S.C. Dec. 17, 2015).
III. DISCUSSION
The issue before the Court is the extent of coverage available under a Commercial Lines insurance policy ("Policy") Plaintiff issued to BODA. The Policy contains a Commercial General Liability Coverage Form ("CGL Form") and Liquor Liability Coverage Form ("Liquor Liability Form"). Plaintiff argues the applicable limit of coverage available under the Policy to satisfy all claims in the individual actions totals $1,000,000.00. Plaintiff contends liquor liability is expressly excluded under the CGL Form coverage such that the injured parties may only recover under the distinct Liquor Liability Form. Additionally, Plaintiff asserts that the Liquor Liability Form contains a $1,000,000.00 limit that applies to all injuries resulting from the service of alcohol to any one person.
In contrast, Defendants assert the total amount of coverage is $4,000,0000.00 because the claims asserted in the state court actions constitute two separate occurrences under the CGL Form and two separate causes under the Liquor Liability Form such that the injured parties may recover all damages up to the aggregate limits under both coverages.
In Defendant BODA's motion for declaratory judgment, it requests this Court adopt the expansive coverage requested by the injured parties in their pleadings.
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a. CGL Form Coverage
First, the Court must determine whether the CGL Form under the Policy excludes coverage under liquor liability provisions. Based on the plain language of the Policy, the Court finds that the explicit liquor liability exclusion plainly prohibits coverage under the CGL Form.
The issue of whether coverage exists under an insurance policy is a matter of law in South Carolina. See Williams v. Gov't Ins. Co. , 409 S.C. 586, 594, 762 S.E.2d 705, 709 (2014). The insured bears the burden of proving its claim falls within the policy's coverage. See Gamble v. Travelers Ins. Co. , 251 S.C. 98, 103, 160 S.E.2d 523, 525 (1968). "Insurance policies are subject to general rules of contract construction" and policy language must be given "its plain, ordinary and popular meaning." Diamond State Ins. Co. v. Homestead Indus., Inc. , 318 S.C. 231, 236, 456 S.E.2d 912, 915 (1995). While "ambiguous or conflicting terms ... must be construed liberally in favor of the insured," courts may not "torture the meaning of policy language to extend or defeat coverage that was never intended by the parties." Id. at 236, 456 S.E.2d at 915. "[R]ules of construction require clauses of exclusion to be narrowly interpreted, and clauses of inclusion to be broadly construed." McPherson By & Through McPherson v. Michigan Mut. Ins. Co. , 310 S.C. 316, 319, 426 S.E.2d 770, 771 (1993).
The CGL Form provides:
2. Exclusions
This insurance does not apply to: ...
c. Liquor Liability
"Bodily injury" ... for which any insured may be held liable by reason of:
(1) Causing or contributing to the intoxication of any person;
(2) The furnishing of 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.
This exclusion applies only if you are in the business of manufacturing, serving or furnishing alcoholic beverages. ...
(ECF No. 70-2, p. 10).
The exclusion unambiguously precludes coverage for liability arising from the sale of alcoholic beverages. In South Carolina, dram shop exclusions are generally valid and enforceable. B.L.G. Enterprises, Inc. v. First Fin. Ins. Co. , 334 S.C. 529, 536, 514 S.E.2d 327, 331 (1999). Defendants do not dispute that the CGL Form contains an exclusion for liquor liability. Defendants’ argument is that they are asserting two claims: (1) BODA is liable to the injured parties for its negligent failure to properly hire, train, and supervise its employees and (2) BODA is liable for negligently serving alcohol to Bell. Defendants contend these two claims are wholly separate and while the second claim may be excluded from the CGL Form, the first claim is not excluded. Whereas Plaintiff asserts that when separate acts of negligence are not actionable absent conduct expressly excluded under the Policy, coverage does not attach. Plaintiff reasons that absent the expressly precluded conduct, there would be no causal connection between the alleged negligence and the resulting injury. South Carolina law supports Plaintiff's position.
Instructively, Plaintiff cites to Federated Mut. Ins. Co. v. Piedmont Petroleum Corp . which contained similar facts. In Federated , a party injured by an intoxicated driver asserted a Piedmont employee sold the driver alcohol, and asserted claims against Piedmont for both dram shop liability and negligent hiring, training, and supervision. 314 S.C. 393, 444 S.E.2d 532 (1994). The Court of Appeals analyzed whether the injured party could maintain a claim for negligent supervision and dram shop liability when the insurance policy contained a liquor liability exclusion. Id. The Court reasoned "without that sale [of alcohol], there [was] no causal link by which Piedmont's negligence [could] be independently connected to [the underlying plaintiff's] injuries." Id. at 397, 444 S.E.2d at 533. As such, the Court held that the injuries for which Piedmont was allegedly responsible were proximately caused by the sale of alcohol and were excluded under the liquor liability exclusion in the policy. Id.
Moreover, in Oceola Development & Construction, LLP, v. Int'l Ins. Co. of Hannover, PLC , another district court in this circuit analyzed this same issue in relation to an assault and battery exclusion. 2020 WL 1677539 at *4 (D.S.C. April 6, 2020). Ultimately, the Court determined the underlying claim for negligence was excluded because it "arose out of" the assault and battery incident. Id. The Court reasoned "the underlying negligence claims would fail without the intentional act because the intentional act is the causal connection between [the] alleged negligence and [the] resulting injury." Id.
Defendants attempt to argue that South Carolina has established that a claim for negligent supervision is separate from a claim for vicarious liability. See James v. Kelly Trucking Co. , 377 S.C. 628, 661 S.E.2d 329 (2008) (holding that negligent hiring, training, and supervision is a separate claim from vicarious liability for an employee's negligence). Defendants’ argument misses the mark because this case did not concern the application of certain insurance policy provisions to alleged claims. Rather, it only addressed the ability of a plaintiff to bring separate and distinct causes of action against a tortfeasor and its employer.
Here, the underlying complaint alleges damages that are the direct result of BODA's sale of alcohol to Bell. Like the Court in Federated reasoned, "without that sale [of alcohol], there is no causal link by which [BODA's alleged] negligence can be independently connected to [Defendants’ resulting] injuries." 314 S.C. 393, 397, 444 S.E.2d 532, 533. Additionally, the CGL Form plainly excludes "bodily injury" arising out of the sale of alcohol. (ECF No. 70-2, p. 10).
Therefore, the Court finds coverage under the CGL Form is inapplicable to Defendants’ claims. b. Liquor Liability Coverage Form
Next, the Court must determine the maximum obligation of the Policy available under the Liquor Liability Form.
The Liquor Liability Form provides an "Aggregate Limit" of $2,000,000.00 and "Each Common Cause Limit" of $1,000,000.00." (ECF No. 70-2, p. 26). The Policy states that "the aggregate limit is the most we will pay for all injury as the result of the selling, serving, or furnishing of alcoholic beverages" and "subject to the aggregate limit, the Each Common Cause Limit is the most we will pay for all injury sustained by one or more person or organizations as the result of the selling, serving, or furnishing of any alcoholic beverage to any one person." (ECF No. 70-2, p. 26) (emphasis added).
Plaintiff asserts the total amount available under the Policy for all dram shop actions is the Each Common Cause Limit of $1,000,000.00. Conversely, Defendants seek $2,000,000.00 under the Aggregate Limit of the Policy because they assert there is more than one common cause for their injuries—(1) actions taken by BODA and (2) actions taken by its employees—and they have a right to recover against both insureds.
In support of their argument, Defendants contend "each common cause" is not defined within the Policy and as such, the Court should give the terms their plain meaning. Defendants argue that "common cause" relates to the cause of the injury and further, that "each common cause" means that there can be more than one cause of an injury. Specifically, Defendants ask the Court to find that more than one insured under the Policy can be the cause of the injury. Defendants present very little rationale for this interpretation other than the dictionary definitions of the individual words.
Defendants’ reading of this provision would require the Court to make the following interpretations regarding the Policy: (1) "Each Common Cause" refers to the cause of the injury at issue rather than the coverage limit under the Liquor Liability Form; (2) the word "each" means there can be more than one cause; and (3) more than one insured under the Policy can be the cause of the injury. However, the plain language of the Policy and South Carolina law contradicts such an interpretation. See Yarborough v. Phoenix Mut. Life Ins. Co., 266 S.C. 584, 592, 225 S.E.2d 344, 348 (1976) ("It is well settled that in construing an insurance contract, all of its provisions should be considered, and one may not, by pointing out a single sentence or clause, create an ambiguity.").
Nowhere in the Policy does it state that the language "each common cause" refers to the cause of the injury. In fact, this term in the Policy is "Each Common Cause Limit" and states that $1,000,000.00 is the most we will pay for all ‘injury’ sustained by one or more persons or organizations as the result of the selling, serving or furnishing of any alcoholic beverage to any one person." (ECF No. 70-2, p. 26) (emphasis added). Here, Defendants have asserted that BODA negligently served one person, Bell. Accordingly, it follows that the Each Common Cause Limit of $1,000,000.00 applies.
Even assuming the Policy did ascribe "each common cause" as the cause of the injury, Defendants’ interpretation would have the Court hold that there were two causes for Defendants’ injuries when in fact there was only one—the alleged negligent sale of alcohol to Bell. Yet, Defendants seek to have this Court separate BODA from its employees and further interpret the term "cause" to mean actors or claims asserted in the complaint. Defendants have asserted claims against BODA for its vicarious liability for its employees’ negligence and against the employees for overserving Bell. Defendants assert that these claims are separate and distinct, and they are correct. However, simply because Defendants have asserted separate legal claims against BODA and its employees, does not mean that each claim constitutes separate causes of their injuries.
These claims are based on the same conduct—the alleged negligent sale of alcohol to Bell. South Carolina law has established that business entities, such as BODA, can only act through agents and employees. See Hypes v. S. Ry. Co. , 82 S.C. 315, 64 S.E. 395, 396 (1909) ("While a corporation is non-personal in its formal legal entity, it represents natural persons and must necessarily perform its duties through natural persons as agents, hence must spring the correlative responsibility for the acts of its agents within the scope of their employment."). To separate the employees and BODA as two different "causes" of Defendants’ injuries would be to ignore South Carolina law and rewrite or torture the Policy to find coverage in Defendants’ favor where none exists. Sphere Drake Ins. Co. v. Litchfield , 313 S.C. 471, 473, 438 S.E.2d 275, 277 (1993) ("It is not the function of the courts to rewrite or torture the meaning of the policy to extend coverage.").
Moreover, Plaintiff argues that the "separation of insureds" provision in the Policy defeats Defendants’ argument because it specifies that the limits of liability do not increase even if there is more than one insured to which coverage applies. The Liquor Liability Form states "The Limits of insurance ... fix the most we will pay regardless of the number of: a. Insured ...." (ECF No. 70-2, p. 26). The Court finds this provision forecloses Defendants’ argument that they can recover from more than one insured under the Policy. Therefore, the Court finds that there is one common cause and the $1,000,0000 limit applies.
IV. CONCLUSION
For the reasons set forth above, the Court grants Plaintiff's motion for summary judgment (ECF No. 70) and denies defendants Brown and Standridge's motion for summary judgment (ECF No. 71), defendant Taylor's motion for summary judgment (ECF No. 72), and defendant Grogan's motion for summary judgment (ECF No. 74). Additionally, the Court denies BODA's motion for declaratory judgment. (ECF No. 73). The resolution of these motions serves to terminate all claims, cross-claims, counterclaims, and claims for declaratory judgment at issue.
Accordingly, all that remains before this Court is Plaintiff's Complaint in Interpleader. (ECF No. 1). Plaintiff is ordered to deposit into the Court the sum of $1,000,000.00 within 30 days, which will fully resolve this matter. Plaintiff is directed to submit funds payable to "Clerk, U.S. District Court," in the amount of $1,000,000.00, and delivered to the Court, via the Clerk, United States District Courthouse, Matthew J. Perry, Jr., Courthouse, 901 Richland Street, Columbia, SC 29201. The Clerk is directed to receive and retain the funds and place them in an interest-bearing account. Such funds are to remain in the Court registry until further Order of this Court, based on the outcome of the Defendants’ pending dispute.
It is further ordered that once the funds are received by the Clerk, the Plaintiff will be deemed discharged from this case and relieved from all further court appearances in this case, as its requested Interpleader will have been achieved.
IT IS SO ORDERED.