Opinion
Civil Action 6:20-cv-4374-TMC-KFM
12-14-2022
Great American Alliance Insurance Company, Plaintiff, v. WHR Social Club, Inc. d/b/a Lavish Lounge, Carlos Antonio Quiroga, Reginal Campbell, Tasha Kotz as Special Administrator of the Estate of Mykala Bell, JyQuavious Young, DeAundre Jacquez Goldsmith, and Tinaszia Tykel Taylor, Defendants.
REPORT OF MAGISTRATE JUDGE
Kevin F. McDonald, United States Magistrate Judge
This matter is before the court on the plaintiff's motion for summary judgment (doc. 133). Pursuant to the provisions of 28 U.S.C. § 636(b)(1)(A) and Local Civil Rule 73.02(B)(2)(e) (D.S.C.), this magistrate judge is authorized to review all pretrial matters in cases involving pro se litigants and submit findings and recommendations to the district court.
Defendants Young and Goldsmith were initially represented by counsel in this action (see docs. 12, 13). On August 25, 2021, the motions to withdraw of counsel for defendants Young and Goldsmith were granted by the Honorable Timothy M. Cain, United States District Judge, and, when no appearance by legal counsel was made on the defendants' behalf within thirty days thereafter, the court presumed they intended to proceed pro se without counsel (docs. 88, 100). Accordingly, on September 29, 2021, Judge Cain referred the case to the undersigned for pretrial proceedings (doc. 100).
I. BACKGROUND
A. Underlying State Court Lawsuits
Plaintiff Great American Alliance Insurance Company (“GAIC”) filed this action on December 17, 2020, seeking a declaratory judgment that there is no coverage under a commercial general liability policy (“the Policy”) that GAIC issued to defendant WHR Social Club, Inc. d/b/a Lavish Lounge (“Lavish Lounge”) for the allegations raised in underlying state court lawsuits brought by defendant Tasha Kotz as Personal Representative of the Estate of Mykala Bell and defendants JyQuavious Young, DeAundre Jacquez Goldsmith, and Tinaszia Tykel Taylor (see docs. 35-1, 35-1, 35-3, 35-4). The underlying state court lawsuits regard a shooting that took place at Lavish Lounge in the early morning hours of July 5, 2020. At the time, Lavish Lounge was hosting a concert by rapper Foogiano (doc. 35, amend. comp. ¶ 15). Shortly before 2:00 a.m., a scuffle took place near the stage after gang signals were exchanged between attendees at the concert (id.). Thereafter, GAIC alleges, upon information and belief, that Jarquez Kezavion Cooper, a member of Foogiano's entourage, began shooting a firearm (id.). The shooting resulted in the death of Bell and the alleged injuries to Young, Goldsmith, and Taylor (id.). Cooper was indicted on two counts of murder, seven counts of assault/attempted murder, and possession of a weapon during a violent crime, and those charges remain pending (see https://www2.greenvillecounty.org/SCJD/PublicIndex) (last viewed 12/14/2022).
In the underlying state court lawsuits, Kotz, Young, Goldsmith, and Taylor brought claims against Lavish Lounge, Carlos Antonio Quiroga, and Rommie Khalil, who have been named by GAIC as defendants in this action (docs. 35-1, 35-2, 35-3, 35-4).Quiroga was a member of the Board and also the manager of Lavish Lounge (id.; doc. 1451, Quiroga aff. ¶ 2). Lavish Lounge was located in a building leased from Khalil at 1701 White Horse Road in Greenville, South Carolina (doc. 127 at 2). GAIC is currently defending Lavish Lounge and Quiroga in the underlying lawsuits under a full and complete reservation of rights (doc. 35, amend. comp. ¶¶ 21, 28, 30, 36). GAIC denied coverage to Khalil because he is not an insured under the Policy. Reginal Campbell, who is also a named defendant in this action, was a director, member, signing officer, and treasurer for Lavish Lounge (docs. 133-5, 133-6).
In the underlying state court lawsuits, Kotz, Young, Goldsmith, and Taylor also brought claims against other persons that are not at issue in this declaratory judgment action. Kotz alleges one cause of action entitled “False Imprisonment and Wrongful Death” against Lavish Lounge, Quiroga, and Khalil (doc. 35-1). Young asserts causes of action against Lavish Lounge, Quiroga, and Khalil for negligence and punitive damages (doc. 352), as does Goldsmith (doc. 35-3). Taylor asserts two causes of action against Lavish Lounge and Khalil for negligence and negligent supervision (doc. 35-4).
Defendant Campbell is not named as a defendant in any of the underlying state court lawsuits. He was served with the summons and amended complaint in this action on May 6, 2021 (doc. 74). He has not filed a responsive pleading or otherwise appeared in this action. Accordingly, at the request of plaintiff GAIC (doc. 111), the Clerk of Court entered Campbell's default on December 3, 2021 (doc. 113).
B. The Policy
GAIC issued the Policy (policy number PL2664771) at issue in this declaratory judgment action to a risk purchasing group (“RPG”) known as the Beauty Health & Trade Alliance (“BHTA”) (doc. 133-3, Donovan aff. ¶¶ 2-7; doc. 35-5). The Policy is a master policy issued to the BHTA under a program known as the Food Liability Insurance Program (doc. 133-3, Donovan aff. ¶ 7). The Food Liability Insurance Program is an insurance program written for vendors, distributors, and manufacturers of food products who are participating members of the BHTA (id. ¶ 5). Each insurer in the Food Liability Insurance Program issues a master policy to the BHTA (id. ¶ 6). Members of the RPG can then apply for insurance coverage through the Food Liability Insurance Program and, if approved, become insureds under one or more master policy(ies) through a Certificate of Coverage (id.).
The Policy issued by GAIC to the BHTA through the Food Liability Insurance Program is designed to enroll through certificates individuals or businesses that are smaller in nature involved in operations that include, but are not limited to, concessionaires such as food trucks, food cart or food trailers, personal or private chefs, farmers' markets and caterers (doc. 133-3, Donovan aff. ¶ 8). Lavish Lounge applied for insurance under the Food Liability Insurance Program for “bartending and concession” operations (id. ¶ 9; doc. 133-3 at 8, Donovan aff. ex. 1). The application includes questions relevant to liquor liability and general liability (doc. 133-3 at 12-13, Donovan aff. ex. 1). In the application, Lavish Lounge represented that it was not a bar or tavern and that its operations did not go beyond 2:00 a.m. (id.). Lavish Lounge also represented that it was not responsible for and did not offer any kind of entertainment with its services (id.). The application also provided that there is no coverage for a “restaurant, cafe, bakery, tavern, or similar establishment, with operations where you own or lease the space where customers enter to purchase food/beverages” (id. at 15).
Pursuant to its representations in the application that it was engaged in bartending and concessions operations, Lavish Lounge became a certificate holder under two master policies issued to the BHTA - the commercial general liability policy issued by GAIC and a liquor liability policy issued by Certain Underwriters at Lloyd's (“Lloyd's”) (doc. 133-3, Donovan aff. ¶¶ 13-14). The Lloyd's liquor liability policy contains a liquor liability coverage form and several endorsements, including an assault and/or battery sublimit endorsement (doc. 133-3 at 19-60, Donovan aff. ex. 2). The only policy at issue in this action is the Policy issued by GAIC.
The insuring agreement under Coverage A - Bodily Injury and Property Damage of the Policy provides, in relevant part, as follows:
SECTION I - COVERAGES
Coverage A - Bodily Injury and Property Damage
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. We may, at our discretion, investigate any “occurrence” and settle any claim or “suit” that may result. . . .
b. This insurance applies to “bodily injury” and “property damage” caused by an “occurrence” that takes place in the coverage territory” only if:
(1) The “bodily injury” or “property damage”:
(a) Occurs on the premises shown in the Schedule or the grounds and structures appurtenant to those premises; or
(b) Arises out of the project or operation shown in the Schedule.
(2) The “bodily injury” or “property damage” occurs during the policy period; and
* * *(Doc. 35-5 at 14, 56, the Policy).
The Policy also contains a number of exclusions applicable to Coverage A, which provide, in relevant part, as follows:
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.
* * *
c. Liquor Liability
“Bodily injury or “property damage” 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 even if the claims against any insured allege negligence or other wrongdoing in:
(a) the supervision, hiring, employment, training or monitoring of others by that insured; or
(b) providing or failing to provide transportation with respect to any person that may be under the influence of alcohol;
if the “occurrence” which caused the “bodily injury” or “property damage,” involved that which is described in paragraph (1), (2) or (3) above.
However, this exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. For the purposes of this exclusion, permitting a person to bring alcoholic beverages on your premises, for consumption on your premises, whether or not a fee is charged or a license is required for such activity, is not by itself considered the business of selling, serving or furnishing alcoholic beverages.
* * *
o. Personal and Advertising Injury
“Bodily injury” arising out of “personal and advertising injury.”
* * *(Doc. 35-5 at 14-16, 19, 55-56, the Policy).
The Policy also contains the following relevant endorsements, which modify coverage under the Coverage A - Bodily Injury and Property Damage coverage form:
EXCLUSION - DESIGNATED ONGOING OPERATIONS
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
SCHEDULE
Description of Designated Ongoing Operations
Operations not in compliance with County, State and Federal Food and Safety Regulations
...
Restaurant, Cafe, Bakery, Tavern, or similar establishment, owned or operated by the insured
Specified Location (If Applicable)
None.
(If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement.)
The following exclusion is added to Paragraph 2., Exclusions of COVERAGE A - BODILY INJURY AND PROPERTY DAMAGE LIABILITY (Section I - Coverages):
This insurance does not apply to “bodily injury” or “property damage” arising out of the ongoing operations described in the Schedule of this endorsement,regardless of whether such operations are conducted by you or on your behalf or whether the operations are conducted for yourself or for others.
Unless a “location” is specified in the Schedule, this exclusion applies regardless of where such operations are conducted by you or on your behalf. If the specific “location” is designated in the Schedule of this endorsement, this exclusion applies only to the described ongoing operations conducted at that “location.”
For the purpose of this endorsement, “Location” means premises involving the same or connecting lots, or premises whose connection is interrupted only by a street roadway waterway or right- of-way of a railroad.
* * *(Doc. 35-5 at 39, the Policy).
The insuring agreement under Coverage B - Personal and Advertising Injury of the Policy provides, in relevant part, as follows:
SECTION I - COVERAGES
Coverage B - Personal and Advertising Injury
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “personal and advertising injury” 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 “personal and advertising injury” to which this insurance does not apply. We may, at our discretion, investigate any “occurrence” and settle any claim or “suit” that may result. . . .
b. This insurance applies to “personal and advertising injury” caused by an offense committed in the “coverage territory” but only if:
(1) The offense arises out of your business:
(a) Performed on the premises shown in the Schedule; or
(b) In connection with the project or operation shown in the Schedule; and
(2) The offense was committed during the policy period.
* * *(Doc. 35-5 at 20, the Policy).
The Policy also contains a number of exclusions applicable to Coverage B, which provide, in relevant part, as follows:
2. Exclusions
This insurance does not apply to:
a. Knowing Violation of Rights of Another
“Personal and advertising injury caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict “personal and advertising injury.”
* * *
d. Criminal Acts
“Personal and advertising injury” arising out of a criminal act committed by or at the direction of the insured.
* * *(Doc. 35-5 at 20-21, 56, the Policy).
The Policy defines “personal and advertising injury” as “'injury,' including consequential 'bodily injury,' arising out of one or more of the following offenses: a. false arrest, detention or imprisonment; . . . .” (doc. 35-5 at 31-32, the Policy). The Policy contains the following relevant endorsement that modifies coverage under the Coverage A - Bodily Injury and Property Damage and Coverage B - Personal and Advertising Injury:
ASSAULT AND BATTERY EXCLUSION
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
This insurance does not apply to “bodily injury,” “property damage,” or “personal and advertising injury” arising from, based on or caused by:
1. assault and/or battery committed by any person;
2. the failure of any person to suppress or prevent any assault or battery, or any act or omission in connection with the prevention or suppression of any Assault and or Battery; or
3. the negligent hiring, placement, supervision, employment or training of any employee or agent of the insured with respect to the events described in 1. or 2. above.
This exclusion does not change any other provision of the Policy.
* * *(Id. at 46, the Policy).
According to the affidavit of defendant Quiroga, the application for the Policy and payment were completed by Campbell on Campbell's cell phone through an online portal, and the entire process took approximately 30 minutes (doc. 145-1, Quiroga aff. ¶ 3). Quiroga claimed that Campbell was an “independent contractor” and was not employed by Lavish Lounge (id. ¶ 5). Quiroga stated in his affidavit, “I listed the type of business as 'bartending,' which appeared to be the closest description of our business. I assumed that an insurance policy purchased for a bartending company would cover liquor-related incidents, including assaults and other injuries at the club” (id. ¶ 6). Quiroga further stated that he did not know the Policy contained any exclusions (id. ¶ 7).
Defendants Taylor and Kotz both submitted Quiroga's affidavit as an exhibit in support of their response to the motion for summary judgment (docs. 145-1, 146-2).
C. South Carolina Administrative Court Order
After the shooting, the South Carolina Department of Revenue (“SCDOR”) filed a motion in the South Carolina Administrative Law Court against Lavish Lounge seeking permanent revocation of Lavish Lounge's beer and wine permit and liquor license due to its violation of Executive Order 2020-18 in South Carolina Department of Revenue v. WHR Social Club, Inc., d/b/a Lavish Ultralounge, C. A. No. 20-ALJ-17-0176-IJ (“the SCDOR Action”). Following a hearing, the Administrative Law Court permanently revoked Lavish Lounge's beer and wine permit and liquor license (“the ALJ Order”) (doc. 133-4). In support of this decision, the court made a number of factual findings:
Executive Order 2020-18 was issued by South Carolina Governor Henry McMaster on April 3, 2020, in response to the COVID-19 pandemic. The Executive Order directed all non-essential businesses, including nightclubs and concert venues, to remain closed to non-employees and the public (doc. 133-4 at 3).
• Lavish Lounge was operating as a nightclub on July 4-5, 2020, and hosted concerts in violation of the State's Executive Order 2020-18, the purpose of which was to encourage and enforce social distancing to prevent and mitigate the spread of COVID-19 (id. at 10).
• Lavish Lounge failed to provide security or otherwise control the patrons on its premises resulting in more than twenty calls to law enforcement over the past year for assaults, narcotics, burglary, discharged weapons, and homicide (id.).
• Lavish Lounge, by violating the Executive Order, “knowingly permitted an act constituting a crime which obviously affected the public's health, safety, and welfare . . .” (id. at 11).
• Lavish Lounge violated its beer and wine/liquor licenses by selling beer, wine, and liquor to patrons of events who were not members of Lavish Lounge, a purported private club/non-profit organization (id. at 12).
The court concluded as follows:
Due to the repeated acts of unlawfulness committed upon Respondent's premises and its continued unwillingness or inability to provide security or otherwise control its patrons as well as its refusal to comply with Executive Order 2020-8 during a pandemic, I find that Respondents' permit and license should be revoked pursuant to § 1-23-370(c).(Id.).
D. Procedural History of this Case
As noted, in this case, plaintiff GAIC seeks a declaratory judgment that there is no coverage under the Policy for the allegations arising from the shooting that were raised by defendants Kotz, Young, Goldsmith, and Taylor in the underlying state court lawsuits (docs. 35-1,35-1,35-3, 35-4). On April 14, 2022, GAIC, with the consent of Khalil, filed a motion for judgment on the pleadings in this action requesting that the court enter judgment that no coverage is provided to Khalil under the Policy (doc. 120). On June 2, 2022, Judge Cain entered judgment in favor of GAIC (id. at 3).
On July 11, 2022, plaintiff GAIC filed the motion for summary judgment now before the court for consideration (doc. 133). On July 12, 2022, pursuant to Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), defendants Goldsmith and Young, who are proceeding pro se, were advised of the summary judgment procedure and the possible consequences if they failed to respond adequately. Neither of the pro se defendants filed responses in opposition to the motion for summary judgment. Defendants Lavish Lounge and Quiroga filed their response in opposition on August 11, 2022 (doc. 144), as did defendant Taylor (doc. 145). Defendant Kotz filed a response in opposition on August 12, 2022 (doc. 146). After receiving an extension of time (doc. 148), plaintiff GAIC filed a reply in support of the motion for summary judgment on August 25, 2022 (doc. 154).
By email on September 15, 2022, the parties informed the undersigned that at mediation of this case on September 9, 2022, GAIC reached a resolution in this action with defendants Kotz and Taylor (doc. 158). Further, the parties informed the undersigned that at the mediation defendants Lavish Lounge and Quiroga “agreed to stipulate that they will be bound by whatever rulings the court makes on coverage when it rules on [GAIC's] pending motion for summary judgment[,] which will go forward as to the pro se defendants” (id.). The parties requested that the court not make any rulings during a thirty-day period that would end on October 9, 2022, while certain issues were resolved that did not involve GAIC (id.). In a conference call with counsel for the parties on November 2, 2022, the court indicated that it would move forward with a report and recommendation on the motion for summary judgment (id.). Stipulations of dismissal for defendants Kotz, Taylor, Lavish Lounge, and Quiroga have not yet been filed by the parties.
Pro se defendants Goldsmith and Young did not participate in mediation, despite being provided with written notice and the option for virtual attendance (doc. 158).
Pro se defendants Goldsmith and Young did not participate in the conference call despite being provided with notice and call-in instructions (docs. 156, 157).
As noted above, the Clerk of Court entered the default of defendant Reginal Campbell on December 3, 2021 (doc. 113). Because default has been entered against Campbell, the court accepts GAIC's well-pleaded factual allegations against him as true. See DIRECTV, Inc. v. Rawlins, 523 F.3d 318, 322 n.2 (4th Cir. 2008) (“Due to [the defendant's] default, we accept [the plaintiff's] allegations against him as true.”) (citing Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001)). However, defendant Campbell is not held to have admitted conclusions of law, Ryan, 253 F.3d at 780 (citing Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)).
On November 4, 2021, GAIC served requests for admission on Lavish Lounge and Quiroga's attorney (doc. 133-6 at 10). GAIC stated at the time of the filing of the motion for summary judgment, some eight months after the requests for admission were served, that no responses to the requests for admission had been received (doc. 133-1 at 17), and there is no indication in the record that these defendants have yet responded. Thus, GAIC contends, and the undersigned agrees, that the following facts are deemed admitted by defendants Lavish Lounge and Quiroga:
Counsel for Lavish Lounge and Quiroga contends in response to the motion for summary judgment, with no support by affidavit or otherwise, that the defendants “did not receive the Request to Admit” (doc. 144 at 2, 5-6). However, GAIC included as an exhibit to its motion for summary judgment a certificate of service showing the requests for admission were served on counsel by mail and email (doc. 133-6 at 10). Further, GAIC provided an email as an exhibit to its reply showing counsel for Lavish Lounge and Quiroga confirmed receipt and accessed the requests for admission and attachments thereto (docs. 154-2, 154-3). Counsel also makes the meritless argument that GAIC is somehow precluded from serving written discovery on Lavish Lounge and Quiroga in this declaratory judgment action because GAIC is defending them in the underlying lawsuits under a reservation of rights (doc. 144 at 2-3 (“Since when does an attorney for a client send the client Requests to Admit.”)). As argued by GAIC, while Lavish Lounge and Quiroga are being defended by outside defense counsel in the underlying lawsuits, they are being defended in this action by their personal counsel, and GAIC has the absolute right to serve discovery on these defendants in this insurance coverage matter. Any conclusion to the contrary would eviscerate the ability of insurers to determine coverage issues in declaratory judgment actions. See Harleysville Grp. Ins. v. Heritage Communities, Inc., 803 S.E.2d 288, 297 (S.C. 2017) (recognizing the purpose of a reservation of rights letter is to give fair notice to the insured that the insurer intends to assert defenses to coverage or to pursue a declaratory relief action at a later date).
a. On the evening of July 4, 2020/early morning of July 5, 2020,
a concert by rapper Foogiano took place at Lavish Lounge
located at 1701 White Horse Road, Greenville, South Carolina, 29605.
b. In the early morning hours of July 5, 2020, an altercation took place at Lavish Lounge during the concert by rapper Foogiano.
c. In the early morning hours of July 5, 2020, an altercation at Lavish Lounge during the Foogiano concert resulted in the shooting of firearms.
d. On the evening of July 4, 2020/early morning of July 5, 2020, Lavish Lounge served alcoholic beverages for purchase during the concert by rapper Foogiano.
e. Lavish Lounge was operating a nightclub at 1701 White Horse Road, Greenville, South Carolina, 29605 the evening of July 4, 2020, and the early morning hours of July 5, 2020.
f. On July 4, 2020/July 5, 2020, the date of the concert held at Lavish Lounge, there was in effect Executive Order No. 2020-08, issued by South Carolina Governor Henry McMaster, in which he declared a state of emergency for the state of South Carolina due to the COVID-19 pandemic.
g. On March 31, 2020, Governor McMaster issued Executive Order No. 2020-17 in which he ordered non-essential businesses, venues, facilities, services, and activities to be closed to non-employees and not open for access to the public.
h. In Executive Order No. 2020-17, nightclubs and concert venues were designated as non-essential entertainment venues and facilities.
i. On April 3, 2020, Governor McMaster issued Executive Order No. 2020-18 in which he directed that non-essential businesses, including nightclubs and concert venues, should remain closed to non-employees and the public.
j. On June 11, 2020, Governor McMaster issued Executive Order No. 2020-40, continuing the State of Emergency.
k. On July 4, 2020, and July 5, 2020, Governor McMaster's Executive Order directing non-essential businesses, nightclubs, and concert venues to remain closed to non-employees and businesses, was in effect.
l. Governor McMaster rescinded the executive order prohibiting the operation of nightclubs and concert venues on August 2, 2020, pursuant to Executive Order 2020-50.
m. On October 8, 2020, the South Carolina Administrative Law Court issued a Final Order and Decision revoking the on-premises beer and wine permit and nonprofit club liquor-by-the-drink license for WHR Social Club d/b/a Lavish Ultralounge.
n. On page 9 of the Final Order and Decision [doc. 133-6 at 7991], the court stated “it is clear that Respondent was operating as a nightclub in violation of the Executive Order.”
o. On page 10 of the Final Order and Decision [doc. 133-6 at 79-91], the court stated “Respondent knowingly permitted an act constituting a crime which obviously affected the public's health, safety and welfare . . ..”
p. On or about October 23, 2018, Campbell was appointed and confirmed as signing officer, Treasurer and director for WHR Social Club, Inc.
q. Campbell continued to be a signing officer, Treasurer and director of WHR Social Club, Inc. through 2020.
r. Campbell applied for the insurance policy issued to WHR Social Club, Inc. D/B/A Lavish Lounge by Great American Alliance Insurance Company, bearing certificate number F085067 for the policy period 01/27/2020 to 01/27/2021.
s. The insurance policy was made available to Campbell by email dated January 27, 2020.(Doc. 133-6 at 3-9, requests for admission). See Fed.R.Civ.P. 36(a)(3) (stating that a matter is admitted unless within 30 days after being served with a request a party serves a written answer or objection).
GAIC also served requests for admission on pro se defendants Young and Goldsmith (docs. 133-9, 133-10, requests for admission). Young and Goldsmith have not responded, and, therefore, the requests are deemed admitted (id.). See Fed.R.Civ.P. 36(a)(3).
II. APPLICABLE LAW AND ANALYSIS
A. Legal Standard
1. Summary Judgment
Federal Rule of Civil Procedure 56 states, as to a party who has moved for summary judgment: “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). As to the first of these determinations, a fact is deemed “material” if proof of its existence or nonexistence would affect the disposition of the case under the applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is “genuine” if the evidence offered is such that a reasonable jury might return a verdict for the non-movant. Id. at 257. In determining whether a genuine issue has been raised, the court must construe all inferences and ambiguities against the movant and in favor of the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
The party seeking summary judgment shoulders the initial burden of demonstrating to the district court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the movant has made this threshold demonstration, the non-moving party, to survive the motion for summary judgment, may not rest on the allegations averred in his pleadings; rather, he must demonstrate that specific, material facts exist that give rise to a genuine issue. Id. at 324. Under this standard, the existence of a mere scintilla of evidence in support of the plaintiff's position is insufficient to withstand the summary judgment motion. Anderson, 477 U.S. at 252. Likewise, conclusory allegations or denials, without more, are insufficient to preclude the granting of the summary judgment motion. Id. at 248. “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Id.
Here, as noted above, defendants Campbell, Young, and Goldsmith did not respond to the motion for summary judgment. “Although the failure of a party to respond to a summary judgment motion may leave uncontroverted those facts established by the motion, the moving party must still show that the uncontroverted facts entitle the party to ‘a judgment as a matter of law.'” Custer v. Pan Am. Life Ins. Co., 12 F.3d 410, 416 (4th Cir. 1993). Therefore, the district court “must ‘thoroughly analyze[ ]' even an unopposed motion for summary judgment.” Philips v. Saibu, PWG-17-3221, 2020 WL 42754, at *1 (D. Md. Jan. 3, 2020) (alterations in Philips) (quoting Maryland v. Universal Elections, Inc., 729 F.3d 370, 380 (4th Cir. 2013)). Indeed, in considering a motion for summary judgment, the district court “must review the motion, even if unopposed, and determine from what it has before it whether the moving party is entitled to summary judgment as a matter of law.” Robinson v. Wix Filtration Corp. LLC, 599 F.3d 403, 409 n.8 (4th Cir. 2010) (emphasis in original) (citation and internal quotations omitted).
2. Insurance Contract Construction
Under South Carolina law, insurance policies are subject to the general rules of contract interpretation. M&M Corp. of S.C. v. Auto-Owners Ins. Co., 701 S.E.2d 33, 35 (S.C. 2010). An insurer's duties and obligations under a policy of insurance are defined by the terms and provisions of the policy itself and cannot be enlarged by judicial construction. Nationwide Mutual Ins. Co. v. Commercial Bank, 479 S.E.2d 524 (S.C. Ct. App.1996). In interpreting the policy, the court must afford policy language its plain, ordinary, and popular meaning. Diamond State Ins. Co. v. Homestead Indus., Inc., 456 S.E.2d 912, 915 (S.C. 1995). Where the intent of the parties is clear, courts do not have the authority to torture the meaning of policy language to extend or defeat coverage that was never intended by the parties. Id. Insurers have the right to limit their liability and to impose conditions on their obligations provided they are not in contravention of public policy or a statutory prohibition. B.L.G. Enters., Inc. v. First Fin. Ins. Co., 514 S.E.2d 529, 535-536 (S.C. 1999). Insurance policy exclusions are construed most strongly against the insurance company, which also bears the burden of establishing the exclusion's applicability. Owners Ins. Co. v. Clayton, 614 S.E.2d 611, 614 (S.C. 2005) (citation omitted). The interpretation of an insurance contract is a question of law for the court. Bennett & Bennett Constr., Inc. v. Auto Owners Ins. Co., 747 S.E.2d 426, 427 (S.C. 2013).
B. GAIC'S ARGUMENTS IN SUPPORT OF SUMMARY JUDGMENT
GAIC presents other arguments in support of its motion for summary judgment (doc. 133-1 at 29-38). However, as the undersigned finds the issue in either Section B(1) or B(2) is dispositive of the motion, the remaining issues will not be addressed herein.
1. Lavish Lounge Operated as a Nightclub
GAIC first argues that there is no coverage under the Policy for the claims asserted in the underlying state court lawsuits because the claims do not arise out of an occurrence or offense arising out of the operations identified on the Policy's certificate (doc. 133-1 at 21-24). By endorsement, the insuring agreement under Coverage A of the Policy affords coverage for “bodily injury” and “property damage” caused by an “occurrence” during the policy period if the “bodily injury” and “property damage” (1) occur on the premises shown on the schedule or the grounds and structures appurtenant to those premises; or (2) arise out of the project or operation shown in the schedule (doc. 35-5 at 14, 55-58, the Policy). Under Coverage B, the Policy affords coverage for “personal and advertising injury” caused by an offense during the policy period if the offense (1) arises out of your business performed on the premises shown in the schedule; or (2) arises out of your business in connection with the project or operations shown in the schedule (id. at 20, 5558). No premises or projects are identified on the schedule or certificate (id. at 2). Lavish Lounge's business is described on the certificate as “Bartending, Concessions” (id.).
In the underlying state court lawsuits, Kotz, Taylor, Young, and Goldsmith all allege that Lavish Lounge was operating as a bar and nightclub on the night of the shooting (doc. 35-1, Kotz comp. ¶¶ 1, 11; doc. 35-2, Young comp. ¶ 19; doc. 35-3, Goldsmith comp. ¶ 19; doc. 35-4, Taylor comp. ¶ 16). In addition, by failing to answer or otherwise respond to the amended complaint, Campbell, an officer and director of Lavish Lounge, has admitted the shooting and alleged injuries in the underlying lawsuits arose out of nightclub operations (doc. 35, amend. comp. ¶ 51). Likewise, by failing to respond to GAIC's requests for admission, Lavish Lounge and Quiroga admit Lavish Lounge was operating as a nightclub at the time of the shooting (doc. 133-6 at 6, requests for admission ¶ 5). See Fed.R.Civ.P. 36(a)(3). Further, the South Carolina Administrative Law Judge held Lavish Lounge was operating as a nightclub at the time of the shooting (doc. 133-4 at 10). Thus, GAIC contends that Lavish Lounge was not engaged in bartending/concessions operations (Lavish Lounge's business as identified on the Policy's certificate (doc. 35-5 at 2, the Policy)) at the time of the shooting. Instead, it contends that the shooting and the alleged injuries in the underlying lawsuits undisputedly arose out of nightclub operations. According, GAIC argues that there is no coverage under the Policy for the claims asserted in the underlying state court lawsuits because the claims do not arise out of an occurrence or offense arising out of the operations identified on the Policy's certificate.
2. Assault and Battery Exclusion
GAIC further argues that even if Coverages A or B of the Policy are triggered, which GAIC expressly denies, coverage is excluded for the claims asserted in the underlying state court lawsuits under the Policy's Assault and Battery Exclusion endorsement (doc. 133-1 at 24-29). Under the endorsement, coverage is excluded for bodily injury, property damage, and personal or advertising injury arising from, based on or caused by assault and/or battery by any person, the failure to suppress or prevent an assault or battery, or the negligent hiring, placement, supervision, employment or training of any employee or agent with respect to assault and/or battery or the failure to suppress or prevent an assault or battery (doc. 35-5 at 46, the Policy). As such, GAIC contends that the Assault and Battery Exclusion excludes coverage under the Policy for Lavish Lounge, Quiroga, and Campbell for claims arising out of the shooting, regardless of the specific causes of action asserted against them.
C. DEFENDANTS' ARGUMENTS IN OPPOSITION
As noted above, defendants Campbell, Young, and Goldsmith, who are the only defendants against whom GAIC states it has not resolved this action, did not respond to the motion for summary judgment. While the parties state that GAIC has resolved this declaratory judgment action as to defendants Kotz, Taylor, Lavish Lounge, and Quiroga, the parties have not yet filed stipulations of dismissal, and, therefore, the motion for summary judgment remains pending as to these defendants. Accordingly, the undersigned has considered these defendants' arguments in opposition to the motion for summary judgment herein.
In their responses to the motion for summary judgment, defendants Kotz and Taylor argue that Lavish Lounge is an unsophisticated commercial insured and thus a question of fact exists as to whether GAIC made a “meaningful offer” of coverage to Lavish Lounge (doc. 145 at 6-9; doc. 146 at 4-6). Kotz and Taylor rely on Croft v. Old Republic Insurance Co., in which the South Carolina Supreme Court recognized the obligation of automobile insurance carriers in South Carolina to make meaningful offers of underinsured motorist coverage when selling an exempt commercial policy to a commercial insured. 618 S.E.2d 909, 914 (S.C. 2005). Their argument is based primarily on the application process, which permitted Lavish Lounge to apply for coverage online via a smart phone and did not require the insurer to advise Lavish Lounge of policy provisions, including the exclusions, and they also complain that Quiroga was not provided with a hard copy of the Policy (doc. 145 at 8; doc. 146 at 6). Taylor also argues the Policy “and its many exclusions” violate public policy (doc. 145 at 9-10). Kotz and Taylor contend that the coverage provided under the Policy is “illusory” because, despite Lavish Lounge identifying its business as “bartending” and “concessions,” the Policy does not provide coverage for liquor liability or bar/tavern operations, and they further argue that the Policy is vague and ambiguous (doc. 145 at 10-16; doc. 146 at 7-10).
As noted by GAIC, the arguments made by Lavish Lounge and Quiroga in response to the motion for summary judgment are difficult to discern. However, it appears that Lavish Lounge and Quiroga contend that summary judgment should be denied because GAIC failed to provide a hard copy of the Policy to Quiroga and instead emailed the Policy to Campbell but did not “note” any exclusions (doc. 144 at 1-2). Further, it appears that these defendants contend the Policy is illusory because it does not provide coverage for the shooting. Further, Lavish Lounge and Quiroga argue there is a question of material fact regarding whether Lavish Lounge was operating as a bar, tavern, or nightclub at the time of the shooting as “[t]he occur[re]nce of a one time event or an isolated event e.g. such as a music show, does not in any stretch of the imagination render the nonprofit into a 'nightclub'!” (id. at 2). Finally, Lavish Lounge and Quiroga argue that a number of liability defenses in the underlying state court lawsuits should affect the court's decision in this declaratory judgment action (id. at 3-7).
As noted above, the undersigned has determined that Lavish Lounge and Quiroga, by failing to respond to GAIC's requests for admission, have admitted that Lavish Lounge was operating as a nightclub on the night of the shooting (doc. 133-6).
D. ANALYSIS
The undersigned finds that the defendants have failed to raise a genuine issue of material fact and that GAIC has demonstrated that it is entitled to judgment as a matter of law.
The undersigned will first address each of the defendants' arguments in opposition to summary judgment in turn. As noted above, the defendants rely on Croft in arguing that Lavish Lounge is an unsophisticated commercial insured and thus a question of fact exists as to whether GAIC made a “meaningful offer” of coverage to Lavish Lounge (doc. 145 at 6-9). 618 S.E.2d at 914. However, as argued by GAIC in its reply (doc. 154 at 4-5), there are fundamental differences between automobile liability insurance like that at issue in Croft and commercial general liability insurance like that at issue here. First, specific minimum limits of automobile liability coverage are required for all South Carolina drivers. See S.C. Code Ann. §§ 56-10-10, 38-77-140. Further, South Carolina law requires all automobile insurers issuing policies in the state to offer underinsured motorist coverage. Id. § 38-77-160. In making the offer, the South Carolina legislature has mandated that certain information be provided to insureds so that they are able to make their decision; however, that is not the case with voluntary, non-automobile policies such as the commercial general liability policy at issue here. Despite the defendants' argument that the “ruling in Croft applies directly to the case at bar” (doc. 145 at 8; see also doc. 146 at 5), they have failed to cite any cases applying the Croft ruling to such a policy. Accordingly, this argument fails.
Next, the undersigned finds unavailing the defendants' argument regarding the application process for the Policy. Specifically, the defendants take issue with the fact that Campbell used his cell phone to complete the application. However, as argued by GAIC, Lavish Lounge voluntarily chose to engage in that process, and a smart phone is effectively a handheld computer. See State v. Moore, 839 S.E.2d 882, 885 (S.C. 2020) (“[A] ‘smart phone' is ‘a cell phone with a broad range of other functions based on advanced computing capability, large storage capacity, and [i]nternet connectivity....”) (quoting Riley v. California, 573 U.S. 373, 379, 380 (2014)). Further, the defendants cite no authority in support of their argument that the use of a cell phone/smart phone to apply for an insurance policy is improper in any respect. As such, this argument is baseless.
GAIC notes that defendants Kotz and Taylor incorrectly identify the application as “GAIC's application” (doc. 154 at 8 n.3), while the application was actually completed by Lavish Lounge through the Food Liability Insurance Program, not GAIC (doc. 133-3, Donovan aff. ¶ 9 & ex. 1).
Moreover, the defendants' arguments concerning other alleged deficiencies in the application process are unsupported under South Carolina law and the record before the court. While Quiroga claimed in his affidavit that Campbell was an “independent contractor” and was not employed by Lavish Lounge (doc. 146-2, Quiroga aff. ¶ 5), in completing the application, Campbell held himself out as a member and authorized representative of Lavish Lounge, and Campbell is identified in Lavish Lounge's Directors' Meeting Minutes dated October 23, 2018, as a director, member, treasurer, and signing officer of Lavish Lounge (doc. 133-5 at 2-4). Further, Quiroga knew Campbell applied for the coverage and admits he was present and sitting next to Campbell when he completed the application on behalf of Lavish Lounge (doc. 146-2, Quiroga aff. ¶ 5). Campbell provided his email address as the contact address, and it is undisputed GAIC emailed the Policy to the email address provided by Campbell on behalf of Lavish Lounge (doc. 133-3 at 7-8, 16-17). As argued by GAIC, whether the addressee (Campbell) shared the Policy with other members or representatives of Lavish Lounge, such as Quiroga, is irrelevant and entirely out of GAIC's control. GAIC has no obligation to track down undisclosed contacts for the insured and provide them with copies of the Policy. Likewise, it had no obligation to call Lavish Lounge and discuss the provisions of the Policy. Lavish Lounge had a copy of the Policy and an opportunity to inform itself as to its terms, conditions and exclusions. As with any contract, the insured has a duty to read the Policy. See, e.g., Dukes v. Life Ins. Co., 193 S.E. 36, 38 (S.C. 1937) (“She [the insured] had the policy in her possession for ten years. She had every opportunity to read it; she had every opportunity to have Miss Jennings to sign the slip which would make plaintiff beneficiary of the policy, but she did none of these things. How can she be heard now to complain?”). If the insured did not understand the Policy's exclusions, it had a duty to inquire and ask about the coverage. See, e.g., Doub v. Weathersby-Breeland Ins. Agency, 233 S.E.2d 111, 114 (S.C. 1977) (holding that the insured's failure to read his policy and make inquiries as to any specific terms and provisions was evidence that he abandoned all care and could not therefore prevail on a claim for fraud in the misrepresentation of the contents of the policy against the insurance agent). Thus, GAIC had no affirmative obligation to explain the Policy's exclusions to Lavish Lounge.
As discussed above, by failing to respond to GAIC's requests for admission, Lavish Lounge and Quiroga have admitted that Campbell was appointed and confirmed as signing officer, treasurer, and director for Lavish Lounge in October 2018 and continued as such through 2020 (doc. 133-6).
The defendants further argue that the coverage provided under the Policy is illusory (doc. 145 at 10-13; doc. 146 at 6-10). In support of this argument, Kotz and Taylor contend that because the application completed by Lavish Lounge includes questions about liquor liability and the Policy excludes liquor liability, it does not provide the coverage for which Lavish Lounge applied. It is undisputed that the application includes questions relevant to liquor liability. However, as argued by GAIC (doc. 154 at 7-8), the defendants' argument ignores the fact that as a result of Lavish Lounge's responses on the application for coverage, Lavish Lounge was issued two policies - the GAIC commercial general liability policy and the Lloyd's liquor liability policy (doc. 133-3, Donovan aff. ¶¶ 10, 13, 14). The Lloyd's liquor liability policy contains a liquor liability coverage form and several endorsements, including an assault and/or battery sublimit endorsement that provides, not excludes, coverage for assault and battery (id. at 20-60, ex. 2). Thus, to the extent Kotz and Taylor contend Lavish Lounge intended to procure coverage for liquor liability and assault and battery, it did obtain such coverage through the Lloyd's policy.
Kotz and Taylor also contend the Policy is illusory because it purports to cover “bartending” but not the operation of a bar/tavern or liquor liability (doc. 145 at 11-12; doc. 146 at 8-10). As argued by GAIC, however, the illusory coverage doctrine protects insureds where the terms of an insurance policy exclude from coverage “'the very risk contemplated by the parties,' rendering a policy provision 'virtually meaningless.'” Dudek v. Commonwealth Land Title Ins. Co., 466 F.Supp.3d 610, 620 (D.S.C. 2020) (quoting Isle of Palms Pest Control Co. v. Monticello Ins. Co., 459 S.E.2d 318, 321 (S.C. Ct. App. 1994)). The Policy here, however, provides coverage for liability arising out of “bartending and concessions” operations, subject to valid and enforceable limitations and exclusions previously upheld by South Carolina courts. In the application under the Food Liability Insurance Program, Lavish Lounge sought coverage for “bartending and concessions” operations and also stated it was not a bar or tavern (doc. 133-3, Donovan aff. ¶ 9 & ex. 1). Therefore, the GAIC Policy was issued for “bartending and concessions” operations, not for operations of Lavish Lounge as a bar or tavern. The Policy provides coverage for the former but not the latter. As argued by GAIC, the distinction is important, particularly in the context of the Food Liability Insurance Program under which Lavish Lounge sought coverage. GAIC provides the following examples of coverage in connection with the act of bartending: if Lavish Lounge spilled a drink at an event venue, causing someone to slip and fall; if Lavish Lounge, in the course of bartending, broke a glass causing injury to a third party; or if Lavish Lounge served a contaminated drink to a customer (doc. 154 at 9-10). As noted by GAIC, the risks associated with providing coverage to insureds operating bars, taverns, restaurants, nightclubs, or similar establishments would be significantly greater than insuring the provision of “bartending and concessions” services.
Defendants Kotz and T aylor also argue that the term “tavern” in the application and the Policy is ambiguous (doc. 145 at 15; doc. 146 at 9-10). The undersigned disagrees. “Typically, where a term is not defined in an insurance policy, the court must define the term according to the usual understanding of the term's significance to the ordinary person.” Evanston Ins. Co. v. Watts, 52 F.Supp.3d 761, 776 (D.S.C. 2014), as amended (Oct. 21, 2014) (citation omitted). “Tavern” is commonly defined as “an establishment where alcoholic beverages are sold to be drunk on the premises.” See Tavern, Merriam-Webster, http://www.merriam-webster.com/dictionary/tavern. The dictionary lists “bar” as a synonym for “tavern.” Id. Here, Lavish Lounge explicitly stated in the application that it was not a bar or tavern (doc. 133-3 at 12).
Further, the liquor liability exclusion in the GAIC Policy does not render the Policy illusory (doc. 154 at 10). The liquor liability exclusion excludes coverage where the insured may be held liable for causing or contributing to the intoxication of any person, furnishing alcohol to underage patrons, and violating the law related to the sale of alcohol (doc. 35-5 at 15-16), but would not exclude coverage for negligence claims against Lavish Lounge in the examples provided by GAIC above. Thus, the defendants' argument that the Policy does not provide coverage for anything and is thus illusory is simply inaccurate. Moreover, as discussed above, Lavish Lounge actually obtained liquor liability coverage from Lloyd's as part of the package of policies it received after completing the application through the Food Liability Insurance Program (doc. 133-3, Donovan aff. ¶¶ 9, 13, 14).
Defendant Taylor argues that a question of fact exists as to whether or not the Policy violates public policy because GAIC never contacted Lavish Lounge to determine if it received a copy of the Policy, took no precautions to ensure Lavish Lounge understood the Policy, provided an application process that could be completed on a cell phone in under 30 minutes, and “riddled the Policy with exceptions and exclusion such that no patron of Lavish [Lounge] could ever recover from it” (doc. 145 at 9-10). The majority of Taylor's arguments have already been addressed herein. With regard to Taylor's argument that the exclusions in the Policy contravene public policy, the Policy's Assault and Battery Exclusion will be discussed below. Further, South Carolina courts have held that liquor liability and expected or intended injury exclusions are valid and enforceable. See, e.g., State Farm Fire & Cas. Co. v. Blanton, C. A. No. 4:13-cv-2508-RBH, 2015 WL 9239788, at *10 (D.S.C. Dec. 17, 2015) (recognizing the expected or intended injury exclusion as valid and enforceable under South Carolina law); B.L.G. Enters., Inc. v. First Fin. Ins. Co., 514 S.E.2d 327, 331 (S.C. 1999) (holding that the dram shop or liquor liability exclusion was valid and enforceable under South Carolina law). Accordingly, the undersigned finds that the exclusions contained in the Policy do not violate public policy.
Lastly, in their response to the motion for summary judgment, defendants Lavish Lounge and Quiroga raise a number of purported liability defenses as to the claims in the underlying state court lawsuits (doc. 144 at 3-7). For example, Lavish Lounge and Quiroga argue (1) they have “adamantly denied” the allegations against them in the underlying lawsuits; (2) security was not allowed to search the “rapper” or his “entourage”; and (3) there was no service of alcohol to underage guests. These liability defenses, however, are not applicable to the coverage issues in this declaratory judgment action.
GAIC has demonstrated that it is entitled to judgment as a matter of law. The undersigned agrees with GAIC that there is no coverage under the Policy for the claims asserted in the underlying state court lawsuits because the claims do not arise out of an occurrence or offense arising out of the operations identified on the Policy's certificate (doc. 133-1 at 21-24). While Lavish Lounge was selling and serving alcoholic drinks on the night in question, it was not “bartending” -- i.e., providing bartending services in the context of the Policy. Instead, Lavish Lounge was operating a bar/tavern/nightclub, none of which fall within the operations for which the Policy was issued. Therefore, there is no coverage under Coverage A or B of the Policy for the claims asserted in the underlying state court lawsuits.
The undersigned further agrees with GAIC that even if Coverages A or B of the Policy are triggered, coverage is excluded for the claims asserted in the underlying state court lawsuits under the Policy's Assault and Battery Exclusion endorsement (doc. 133-1 at 24-29). As argued by GAIC, assault and battery exclusions have been consistently upheld in South Carolina. In Sphere Drake Insurance Co. v. Litchfield, the South Carolina Court of Appeals relied on a similar assault and battery exclusion to exclude coverage for negligence claims against a club owner arising out of a physical attack on a patron. 438 S.E.2d 275, 277-78 (S.C. Ct. App. 1993). In that case, Litchfield and his wife were sitting at the bar at the club when another patron asked Litchfield's wife to dance, and she refused. Id. at 276. The other patron then struck Litchfield on the side of the head, knocking him to the floor. Id. Thereafter, several men acting as bouncers for the club approached the disturbance and threw Litchfield out of the club while continuing to kick and beat him, resulting in severe bodily injuries to Litchfield. Id. Litchfield filed a complaint against the club, asserting claims for assault and battery and negligence for failing to protect customers, failing to provide adequate security, failing to properly train and supervise employees, and negligent hiring arising out of a physical attack on a patron at the club. Id. at 277 n.1. The court held that the assault and battery exclusion unambiguously applied to all claims asserted in the complaint, including the negligence claims against the club owner. Id. at 277. The court stated: “In readily understandable language, it exclude[d] claims arising out of assault and battery, no matter what the cause,” and “the separate acts of negligence alleged . . . were not actionable without assault and battery, because without assault and battery there would be no damage suffered as a result of the alleged negligence.” Id.
Similarly, in St. Paul Reinsurance Co. Ltd. v. Ollie's Seafood Grille and Bar, LLC, the court applied an assault and battery exclusion to exclude coverage for negligence claims against an insured. 242 F.R.D. 348, 351 (D.S.C. 2007). In that case, a customer of Ollie's was involved in an altercation with two other customers after consuming alcoholic beverages. Id. at 349. As a result of the altercation, the customer sustained serious injuries. Id. The customer then filed a complaint against the insured and the other two customers, asserting an assault and battery claim against them as well as negligent failure to (1) provide a safe environment, (2) prevent the sale of alcohol to persons in an intoxicated condition, (3) prevent the sale of alcohol to minors, and (4) protect against the foreseeable criminal acts of third parties against the insured. Id. In applying the exclusion, the court held that in the absence of the assault and battery, the separate acts of negligence against the insured would not be actionable because the only injuries suffered by the customer were a result of assault and battery. Id. at 351. As such, all of the claims in the complaint, including the negligence claims against the insured, arose from the alleged assault and battery and were excluded from coverage under the plain terms of the policy. Id.
Further, in Scottsdale Insurance Co. v. Moonshine Saloon, LLC, the court applied an assault and battery sublimit where the decedent was shot after a patron at a bar was involved in an altercation and, after he was asked to leave, discharged a firearm in the parking lot striking the decedent who remained inside. 228 F.Supp.3d 554, 561 (D.S.C. 2017). The estate argued the shooter's discharge of the firearm did not constitute “assault” or “battery” within the meaning of the policy provision because those terms require intent to harm, which he could not have formed. Id. at 559-60. Of note, like the GAIC Policy, the policy did not require the injured party to be the target of the assault or battery. One of the arguments asserted by the insured was that the shooter discharged the firearm at random into the air and wall of the bar and, therefore, did not possess the requisite intent to assault or batter anyone. In response to the insured's arguments, the court first acknowledged that a civil assault may not require intent. Id. at 559 (citing Canopius U.S. Ins., Inc. v. Middleton, 202 F.Supp.3d 540, 550 (D.S.C. 2016) (“[T]here is some support in South Carolina case law for the proposition that one may commit a civil assault unintentionally.”); Herring v. Lawrence Warehouse Co., 72 S.E.2d 453, 458 (S.C. 1952) (“In civil actions, the intent, while pertinent and relevant, is not an essential element.”); Mellen v. Lane, 659 S.E.2d 236, 244 (S.C. Ct. App. 2008) (“The elements of assault are: (1) conduct of the defendant which places the plaintiff, (2) in reasonable fear of bodily harm.”)). Nevertheless, the court explained that even if the shooter randomly fired the gun, his actions would still possess the requisite intent to fall within a more restrictive, intent-based definition of assault because he intended to place someone in reasonable fear of bodily harm, an essential element of assault. Id. at 559-60 (citation omitted). The court noted that the shooter fired the gun in reaction to being chased out of the bar following an altercation. Id. at 560. He also discharged the firearm several times. Id. Under these facts, the court concluded the only reasonable inference was that the shooter intended to intimidate or frighten certain persons at the bar. Id. Therefore, the court held that the decedent's death arose from the assault, within the meaning of the policy. Id.
Here, as argued by GAIC, it is undisputed that the shooter fired his gun several times after an altercation that involved competing gang signs took place in front of the stage at Lavish Lounge (doc. 35-1, Kotz comp. ¶¶ 6-7; doc. 35-2, Young comp. ¶ 32; doc. 35-3, Goldsmith comp. ¶ 32; doc. 35-4, Taylor comp. ¶ 29). Thus, the only reasonable inference is that the shooter used a firearm to threaten or intimidate others. See Moonshine Saloon, 228 F.Supp.3d at 560; see also Middleton, 202 F.Supp.3d at 547 (“Firing a gun in connection with a dispute is almost invariably done to threaten or intimidate the other parties to the dispute. Such action certainly places others in ‘reasonable fear of bodily harm.' It makes no difference that the dispute did not involve [the claimant] because the A/B Exclusion does not require that the subject claims be brought by the target of an assault, only that they ‘arise from' an assault.” (internal citations omitted)). The shooter was charged with and indicted on two counts of murder, seven counts of assault/attempted murder, and possession of a weapon during a violent crime, and, while these charges have not been adjudicated, they indicate there were multiple gunshots, supporting the conclusion that the discharges were anything but accidental. Thus, as argued by GAIC, all of the claims asserted by Kotz, Taylor, Young, and Goldsmith would not exist in the absence of an assault and/or battery, and the direct causal link between the altercation, shooting, and injuries, cannot be ignored. According, the undersigned agrees that coverage is excluded for all of the claims under the Policy's Assault and Battery Exclusion.
Based upon the foregoing, GAIC is entitled to a declaration that it does not have a duty to defend or indemnify Lavish Lounge, Quiroga, Campbell, or anyone else claiming coverage under the Policy for the claims asserted in the underlying state court lawsuits.
III. CONCLUSION AND RECOMMENDATION
Wherefore, based upon the foregoing, the undersigned recommends that GAIC's motion for summary judgment (doc.133) be granted.
IT IS SO RECOMMENDED.
The attention of the parties is directed to the important notice on the following page.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
250 East North Street, Suite 2300
Greenville, South Carolina 29601
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).