Bucci v. Essex Ins. Co.

• Decision Date: 05 January 2005
• Docket Number: No. 04-1664.,No. 04-1619.,04-1619.,04-1664.
• Citation: 393 F.3d 285
• Parties: Benjamin A. BUCCI, Individually and as Assignee of N.E.C.N., Inc. d/b/a The Industry, Plaintiff, Appellant/Cross-Appellee, v. ESSEX INSURANCE COMPANY, Defendant, Appellee/Cross-Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 285

393 F.3d 285

Benjamin A. BUCCI, Individually and as Assignee of N.E.C.N., Inc. d/b/a The Industry, Plaintiff, Appellant/Cross-Appellee, v. ESSEX INSURANCE COMPANY, Defendant, Appellee/Cross-Appellant.

No. 04-1619.

No. 04-1664.

United States Court of Appeals, First Circuit.

Heard November 4, 2004.

Decided January 5, 2005.

James D. Poliquin, with whom Thomas S. Marjerison, Lance E. Walker, and Norman, Hanson & DeTroy, LLC were on brief, for Benjamin A. Bucci.

Jonathan M. Dunitz, with whom Michelle Allott and Friedman, Gaythwaite, Wolf & Leavitt were on brief, for Essex Insurance Company.

Before SELYA, Circuit Judge, STAHL, Senior Circuit Judge, and LYNCH, Circuit Judge.

LYNCH, Circuit Judge.

Benjamin Bucci was injured in an attack outside a Portland, Maine nightclub called The Industry. In state court, he sued the club and then settled with it, taking an assignment of the club's claims against its insurer, Essex Insurance Company ("Essex"). A stipulated judgment was entered against The Industry. Before settling with Bucci, the club had asked Essex to defend and to indemnify it; Essex declined both requests. Essex disclaimed coverage, based on an exclusion in the policy for "any claim, suit, cost or expense arising out of assault and/or battery" ("assault/battery exclusion").

Bucci, individually and as assignee of The Industry, then sued Essex in a state case; the case was removed to federal court. Bucci won on his claim that Essex had a duty to defend on a motion for partial summary judgment. After a bench trial, Bucci lost on the claim that Essex had a duty to indemnify. Each side appeals.

Essex's appeal from the award on breach of its duty to defend primarily involves whether Maine has adopted a "but for" interpretation of an assault/battery exclusion, and whether Bucci was properly awarded attorney's fees for being forced to bring the claim for breach of the duty.

Bucci's appeal from the denial of his indemnity claim raises interesting issues under Maine law and a subsidiary federal evidence law issue. The first has to do with whether under Maine law an insurer that has violated its duty to defend is limited in presenting a defense that it nonetheless had no duty to indemnify. Bucci argues that he was rendered unconscious instantaneously, and absent evidence from a witness to the attack, the insurer, which bears the burden on the exclusion, cannot prove there was a battery, that is, a hitting with the intent to cause harm. In support, Bucci also argues that the court erred under Fed R. Evid. 803(4) by considering evidence from Bucci's medical records.

We reject both parties' arguments. Each side was given a conscientious and fair hearing by the district judge, who committed no errors of law, and we affirm the judgment.

I.

The facts and the history of the proceedings are based on the record and the district court's two opinions in this case, Bucci v. Essex Ins. Co., 287 F.Supp.2d 75 (D.Me.2003) ("Bucci I"), and Bucci v. Essex Ins. Co., 323 F.Supp.2d 84 (D.Me.2004) ("Bucci II").

On the night of December 22-23, 2000, Bucci was waiting in line outside The Industry, a nightclub in Portland, Maine, when an unknown assailant hit him on the back of the head. Bucci II, 323 F.Supp.2d at 86. He remembers the first blow to the back of his head, but then lost consciousness. Id. With the exception of one split second in the ambulance, he has no memory of what happened after that first blow until he arrived at the hospital. Id. at 87. He cannot describe the assailant. Id. Bucci suffered significant injuries to his face and required reconstructive surgery. His medical records from December 23, 2000 indicate that he was "hit," "kicked," and "punched" in the face. Id.

In early 2001, Bucci notified The Industry that he intended to sue it for his injuries. The Industry was insured at the time under a standard commercial general liability ("CGL") policy issued by Essex. Bucci I, 287 F.Supp.2d at 77. The Industry requested that Essex defend and indemnify it under the terms of the CGL policy. Id. On June 29, 2001, Essex denied it had any duty to defend or to indemnify The Industry based on the assault/battery exclusion in the policy:

The coverage under this policy does not apply to any claim, suit, cost or expense arising out of assault and/or battery, or out of any act or omission in connection with the prevention or suppression of such acts, whether caused by or at the instigation or direction of any Insured, Insured's employees, patrons or any other person. Nor does this insurance apply with respect to any charges or allegations of negligent hiring, training, placement or supervision.

Id.

Bucci then filed suit against The Industry in Maine Superior Court. In his complaint, Bucci alleged the following:

10. While waiting in line at the club, the Plaintiff was viciously attacked by a person known to agents and employees of the Defendant.

11. The Plaintiff was repeatedly kicked in the head by a person known to agents and employees of the Defendant causing serious permanent injuries that required surgery and hospitalization.

12. Despite this vicious assault, employees and agents of the Defendant failed to take reasonable measures to assist the Plaintiff or to prevent the assault on the Plaintiff.

13. Following this vicious assault, agents and employees of the Defendant assisted the individual who assaulted the Plaintiff by telling him to run inside The Industry to avoid the Portland Police Officers responding to the assault.

The complaint asserted legal claims for negligence, negligent security, negligent supervision and training, negligent infliction of emotional distress, concerted action, spoliation of evidence, and punitive damages. The Industry forwarded a copy of the complaint to Essex and again requested defense and indemnity. Essex again denied the request on August 29, 2001.

On July 17, 2002, Bucci and The Industry, each represented by counsel, settled the underlying action and stipulated to a judgment of $200,000. Id. In consideration for an agreement by Bucci not to execute $193,000 of the judgment against The Industry, The Industry assigned its rights under the insurance policy to Bucci. Id. Thus, The Industry paid Bucci only $7,000. The Industry also incurred $8,800 in attorney's fees for its defense of the action. On July 23, 2002, the state trial court entered judgment pursuant to the parties' stipulations.

Bucci also successfully put in a claim to the Maine Victim's Compensation Board, asserting he was the victim of a violent crime.

On March 6, 2003, Bucci filed a complaint in Maine state court against Essex, alleging that Essex was in breach of its contract with The Industry by violating its duties to defend and to indemnify The Industry against Bucci's suit, and that Essex had engaged in unfair settlement practices. Bucci sought to recover $200,000, the amount of the stipulated judgment entered against The Industry, plus attorney's fees, costs, and interest. On April 7, 2003, Essex removed the case to the U.S. District Court for the District of Maine.¹

Bucci and Essex each moved for partial summary judgment on the issue of whether Essex violated its duty to defend. On October 23, 2003, the district court granted Bucci's motion for partial summary judgment and denied Essex's motion. Bucci I, 287 F.Supp.2d at 76. The district court determined that the assault/battery exclusion did not exclude claims for bodily injury resulting from conduct occurring after an alleged assault. Id. at 79. Because Bucci's complaint in the underlying action included allegations of The Industry's conduct which purportedly caused Bucci injury after the alleged assault, the district court held that Essex did violate its duty to defend The Industry under the insurance policy. Id. The posture of the case at that point was that if there were a duty to indemnify, it had to arise from conduct by The Industry after the assault. The court left for trial the determination of whether Essex violated the separate duty to indemnify and the amount of damages for the violation of the duty to defend. Id. at 80.

At the half-day bench trial conducted on December 5, 2003, the central issue was whether all of Bucci's injuries resulted from the attack and so fell within the policy's assault/battery exclusion. Brian Hanson, the president of The Industry, testified about the history of the law suit by Bucci against The Industry and Essex's refusal to defend the suit. Kimberly Payne, a senior claims examiner at Essex, testified that she denied the request to defend after she received the notice of claim and spoke with Hanson's counsel, Hanson himself, and Bucci's counsel on June 29, 2001. From the information contained in the notice of claim and the conversations, she determined that Bucci's injuries were precluded from coverage by the assault/battery exclusion in the policy. She also testified that after Bucci commenced the suit against The Industry, The Industry sent a copy of the complaint to her. And on August 29, 2001, after consulting local counsel, she again denied coverage based on her determination that the assault/battery exclusion precluded coverage. She testified that while Essex did not have an official definition for the terms "assault and battery" used in the exclusion, she understood it to mirror the civil definition for the tort of "assault and battery" in the state in which the claim arises, that is, "an intentional hitting or striking or harm in some way" (emphasis added).

Bucci also testified, describing in detail the nature of his injuries, the medical treatment he required, and what he could remember of the events on the night of December 22-23, 2000. Bucci replied "no" when asked if he was disputing that he was assaulted outside The Industry. Bucci testified that he remembered being hit "[i]n the back of the head" by the unknown assailant. He also said that he knew he lost consciousness and that the...