United States District Court, E.D. Tennessee, Knoxville
PAMELA L. REEVES, District Judge.
This case arises out of the death of a patron at the Grill & Pub, a tavern owned and operated by Grover Norton in Harriman, Tennessee. On the evening of July 23, 2011, a patron of the tavern accidently backed his vehicle into another vehicle in the tavern's parking lot. A dispute then arose between several patrons leading to the violent beating death of David Lee Harvey. A wrongful death lawsuit was filed against Norton and others in Roane County Circuit Court. Atlantic Casualty Insurance Company has brought this declaratory action seeking a declaration that it has no duty to defend or indemnify Norton in the Roane County action. Norton has filed a Third-Party Complaint for failure to procure insurance against AGA Insurance, Inc. The parties have filed cross-motions for summary judgment [R. 22, 33, 56].
Atlantic states that it does not owe Norton a duty to defend or indemnify him in the wrongful death lawsuit. Atlantic asserts that the allegations in the wrongful death lawsuit are excluded from coverage pursuant to the terms of the insurance policy Atlantic issued to Norton including, but not limited to, the policy's "Assault and/or Battery" exclusion. Atlantic moves for an order granting summary judgment in its favor, declaring and decreeing that Atlantic is relieved of all duties and liabilities by reason of lack of insurance coverage to Norton for the incidents alleged in the wrongful death lawsuit. Atlantic further moves the court to prohibit any of the defendants, their attorneys, and their agents from filing or prosecuting any action against Atlantic for insurance coverage for the incidents alleged in the wrongful death lawsuit in any court.
Norton moves for summary judgment against Atlantic on the grounds that the coverage sold to him by Atlantic is illusory; that is, the premium he paid for coverage of his tavern would not pay benefits under any reasonably expected set of circumstances. Norton asserts the policy sold to him would exclude injuries arising out of assaults, batteries, or contributing to the intoxication of any person. Norton operated a tavern where a specific premium was charged due to the fact that 75% or greater of his total annual sales were in alcohol. He argues it is reasonably foreseeable, and in fact, expected that intended injuries arising out of a fight on the premises will take place. Therefore, the exclusions effectively eviscerate the insuring agreement in the policy. Norton moves for an order holding that coverage would apply to the wrongful death lawsuit.
Norton has also filed a Third-Party Complaint against AGA Insurance, Inc., alleging that he relied on AGA to exercise due diligence in providing a policy that would protect him for foreseeable perils such as the assault and battery described in the wrongful death lawsuit. Therefore, to the extent that coverage is not available to him under the policy of insurance with Atlantic, AGA should be held liable for any damages assessed against Norton as a result of its intentional or negligent acts, omissions, or misrepresentations related to procurement of coverage for the tavern.
AGA responds that there was no failure to procure insurance in this case, because Norton requested and was provided with property and commercial liability coverage, which clearly indicated an Assault and/or Battery exclusion. By his receipt of the policy, Norton is conclusively presumed to have read, understood, and assented to the terms of the policy.
I. Applicable Policy Provisions
Atlantic issued a commercial lines insurance policy to Grover Norton d/b/a/The Grill & Pub. The policy includes the following provisions relevant to whether it provides coverage for the allegations in the underlying wrongful death action:
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.
EXCLUSION - ASSAULT AND/OR BATTERY
This insurance does not apply to and we have no duty to defend any claims or "suits" for "bodily injury, " "property damage, " or "personal and advertising injury" arising in whole or in part out of:
a) the actual or threatened assault and/or battery whether caused by or at the instigation or direction of any insured, his employees, patrons or any other person;
b) the failure of any insured or anyone else for whom any insured is legally responsible to prevent or suppress assault and/or battery;
c) the negligent (i) employment; (ii) investigation; (iii) supervision; (iv) training; (v) retention of a person for whom any insured is or ever was legally responsible and whose conduct would be excluded by (a) or (b) above;
d) any actual or alleged injury arises [sic] out of any combination of an assault and/or battery-related cause and a non-assault or battery-related cause;
e) any actual or alleged injury arises [sic] out of a chain of events which includes assault and/or battery, regardless of whether or the assault and/or battery is the initial precipitating event or a substantial cause of injury;
f) any actual or alleged injury arises [sic] out of assault and/or battery as a concurrent cause of injury, regardless of whether the assault and/or battery is the proximate cause of injury; or
g) claims arising out of, caused by, resulting from, or alleging, in whole or in part, any insured's failure to thwart, foil, avoid, hinder, stop, lessen or prevent any attack, fight, assault and/or battery, theft, or crime.
3. For the purposes of this endorsement, the words, "assault and/or battery" are intended to include, but are not limited to, injury of any kind resulting from the use, or threatened use, of a gun, firearm, knife or weapon of any kind.
EXCLUSION - LIQUOR LIABILITY
This insurance does not apply to:
"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 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... selling, serving or ...