Forsman v. Blues, Brews & Bar-B-Ques, Inc.
Decision Date | 16 November 2017 |
Docket Number | No. 20170088,20170088 |
Parties | Carol FORSMAN, Creditor and Appellee v. BLUES, BREWS AND BAR-B-QUES, INC., dba Muddy Rivers, and Amanda Espinoza, Debtors and United Fire & Casualty Company, Garnishee and Appellant |
Court | North Dakota Supreme Court |
Craig E. Johnson (argued) and Jared J. Hines (appeared), Fargo, ND, for creditor and appellee.
Kendra E. Olson (argued) and H. Morrison Kershner (appeared), Fergus Falls, MN, for garnishee and appellant.
[¶1] United Fire & Casualty Company appeals from a district court judgment awarding Carol Forsman $249,554.30 in her garnishment action against United Fire, commenced after she settled claims in the underlying suit against Blues, Brews and Bar-B-Ques, Inc., d.b.a. Muddy Rivers. We conclude the court erred in granting summary judgment because material fact issues exist on whether exclusions for "assault and battery" and "liquor liability" in the commercial general liability ("CGL") policy exclude coverage of Forsman's negligence claim against Muddy Rivers. We further conclude the court properly granted summary judgment to Forsman holding United Fire had a duty to defend Muddy Rivers under the CGL policy in the underlying suit. We affirm in part, reverse in part and remand for further proceedings.
[¶2] Muddy Rivers is a bar in Grand Forks that was insured by United Fire under a CGL policy. In 2010, Forsman sued Muddy Rivers and Amanda Espinoza seeking damages for injuries to her leg allegedly sustained while a guest at a February 2010 private party at Muddy Rivers. Muddy Rivers notified United Fire of the suit and requested coverage. United Fire denied defense and indemnification based on the policy's exclusions for assault and battery and liquor liability. In 2011, the district court held a trial on Forsman's claims. After Forsman rested her case, the district court granted Muddy Rivers' motion for judgment as a matter of law, dismissing Forsman's claims. Forsman appealed.
[¶3] In Forsman v. Blues, Brews and Bar-B-Ques, Inc., 2012 ND 184, ¶¶ 1, 19, 820 N.W.2d 748 (" Forsman I"), we reversed and remanded, concluding Forsman presented sufficient evidence on her dram shop and premises liability claims to defeat Muddy Rivers' motion for judgment as a matter of law. We summarized relevant facts adduced at trial as follows:
Forsman I, at ¶¶ 4–5 (emphasis added).
[¶4] We reversed and remanded, holding Forsman's testimony raised disputed fact issues under N.D.C.C. § 5–01–06.1 (dram shop law) about whether Muddy Rivers knowingly provided alcoholic beverages to an obviously intoxicated Espinoza and whether Espinoza caused Forsman's injuries. Forsman I, 2012 ND 184, ¶ 11, 820 N.W.2d 748. We also declined to hold as a matter of law, "on the record in this case," that Forsman failed to establish Muddy Rivers breached a duty of care for premises liability under N.D.C.C. § 9–10–06 ( ). Forsman I, at ¶¶ 12–14. We specifically held Forsman could pursue her negligence claim for premises liability against Muddy Rivers on remand. Id. at ¶ 14. Before a new trial was held on remand, Forsman and Muddy Rivers settled the case with a Miller-Shugart agreement, in which Muddy Rivers admitted negligence and liability but limited collection on the judgment to Muddy Rivers' insurer, United Fire. See Miller v. Shugart, 316 N.W.2d 729 (Minn. 1982) ; Sellie v. N.D. Insur. Guar. Ass'n., 494 N.W.2d 151 (N.D. 1992) (recognizing Miller-Shugart settlements in North Dakota). The district court entered judgment against Muddy Rivers based on the agreement. Forsman subsequently obtained a default judgment against Espinoza.
[¶5] In April 2016, Forsman moved the district court for leave to file a supplemental complaint seeking garnishment against United Fire, which was granted. She moved for partial summary judgment, asserting the United Fire CGL policy provides coverage for her premises liability claim against Muddy Rivers. United Fire made a cross-motion for summary judgment on its duty to defend and indemnify under the CGL policy, arguing no coverage exists based on the policy's assault and battery exclusion. Forsman responded, contending coverage was not precluded under either the assault and battery exclusion or the liquor liability exclusion.
[¶6] The district court granted partial summary judgment in favor of Forsman, concluding the CGL policy provided coverage for Forsman's claims against Muddy Rivers and obligating United Fire to defend Muddy Rivers. The court based its coverage decision on this Court's earlier decision in Forsman I that held Forsman could pursue her negligence claim for premises liability against Muddy Rivers. 2012 ND 184, 820 N.W.2d 748. In November 2016, the court held a trial on the reasonableness of the Miller-Shugart settlement. The court ruled in Forsman's favor, finding the settlement amount was reasonable and entering judgment against United Fire for $249,554.30.
[¶7] At the outset, we discuss the effect of the parties' Miller-Shugart agreement and judgment establishing Muddy Rivers' liability on the present garnishment proceedings against United Fire. In Medd v. Fonder, 543 N.W.2d 483, 485 (N.D. 1996), we explained:
(Emphasis added.) As the court in Nelson v. Am. Home Assur. Co., 702 F.3d 1038, 1041 (8th Cir. 2012), explained:
[¶8] Even though Forsman and Muddy Rivers stipulated to the underlying judgment resolving Forsman's negligence claim against Muddy Rivers, this determination is not conclusive on United Fire. See McPhee v. Tufty, 2001 ND 51, ¶ 10 n.1, 623 N.W.2d 390 ; Rebel v. Nodak Mut. Ins. Co., 1998 ND 194, ¶ 5 n.1, 585 N.W.2d 811. On appeal, United Fire contends the CGL policy does not provide coverage for Forsman's underlying claims, and United Fire has not specifically raised any other issues regarding the reasonableness of the settlement. Although United Fire has not raised other issues about the settlement's reasonableness, Forsman still must establish the CGL policy provides coverage for her negligence claim against Muddy Rivers.
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