Capitol Indem. Corp. v. Blazer

Citation51 F.Supp.2d 1080
Decision Date27 April 1999
Docket NumberNo. CV-S-9801013PMP(RJJ).,CV-S-9801013PMP(RJJ).
PartiesCAPITOL INDEMNITY CORPORATION, a Wisconsin Corporation, Plaintiff, v. Robert BLAZER d/b/a Bird Off Paradise Lounge; and Tina Petruccio, Defendants.
CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Nevada

David Barron, William H. Pruitt, Lefebvre, Barron & Vivone, Las Vegas, NV, for plaintiff.

Robert K. Sparks, Law Offices of Robert K. Sparks, Las Vegas, NV, for defendants.

ORDER

PRO, District Judge.

Presently before the Court is Plaintiff Capitol Indemnity Corporation's ("Capitol Indemnity") Motion for Summary Judgment (# 8) filed December 2, 1998. Defendant Robert Blazer d/b/a Bird Off Paradise Lounge ("Blazer") filed an Opposition (# 11) on January 11, 1999. Capitol Indemnity filed a Reply (# 14) on February 8, 1999.

I. Introduction

This is a Summary Judgment Motion to determine an insurer's obligation to indemnify or defend the insured against suit pursuant to the terms and provisions of an insurance policy. The insurer also seeks to recover all costs incurred in the investigation and defense of the underlying suit. Adjudication of the summary judgment motion requires the Court to interpret the insurance policy and decide the following two questions: (1) whether the incidents giving rise to the insured's liability constitute an "occurrence" under the policy, and (2) if so, whether the exclusion provisions of the policy nevertheless preclude coverage in this case.

The Court finds that while this case involves an "occurrence," as defined by the insurance policy, the exclusion provisions preclude coverage. Therefore, the insurer has no duty to defend or indemnify the insured with respect to the underlying suit. Nonetheless, the insurer is not entitled to reimbursement of its expenses in this case due to its failure to provide evidence of any understanding providing for this right.

II. Factual Background

On January 23, 1997, Peter Banach ("Banach"), Buddy Simpson ("Simpson") and David Lawrence Shaw ("Shaw"), were patrons of a tavern known as the Bird Off Paradise Lounge ("Lounge"), owned and operated by Robert A. Blazer, Jr. ("Blazer"). While at the Lounge, Banach and Simpson committed assault and battery upon Shaw. As a result, Shaw allegedly suffered serious bodily injuries, including a total loss of vision in his left eye. Banach and Simpson were subsequently found guilty of criminal assault and battery. (J.'s of Conviction, Dist. Ct., Clark County, Nevada, Case Nos. C141543, C141682.)

Shaw filed a civil complaint against Banach, Simpson, Blazer, the Lounge, and the bartender working the night of the assault, Tina Petruccio ("Petruccio"). The Complaint states five claims for relief, sounding in both intentional tort and negligence. Shaw seeks medical and related expenses, general and punitive damages, costs and attorneys fees.

Blazer maintained a commercial general liability policy with Capitol Indemnity Corporation ("Capitol Indemnity") which was effective at the time of the assault and battery. The policy provides coverage for bodily injury only if it is caused by an "occurrence." The policy, in turn, defines an "occurrence" as an "accident." In addition, the policy contains various exclusionary provisions which bar coverage in particular instances, even where the event may qualify as an "occurrence."

First, the Assault and Battery Exclusion precludes coverage for "`bodily injury' ... arising out of assault, battery or assault and battery." (Pl.'s Mot. for Summ.J., Ex. D at C0084.) Second, the Liquor Liability Exclusion precludes coverage for "`bodily injury' ... for which any insured may be held liable by reason of causing or contributing to the intoxication of any person ... or any statute, ordinance, or regulation relating to the sale, gift, distribution or use of alcoholic beverages." (Id. at C0066.) Third, the insurance does not apply to "`bodily injury' ... expected or intended from the standpoint of the insured." (Id. at C0049.)

Pursuant to this insurance policy, Capitol Indemnity filed a Complaint for Declaratory Relief (# 1) on July 13, 1998, alleging that it had no duty to defend or indemnify Blazer, Petruccio, or the Lounge and seeking reimbursement for all expenses incurred in the investigation or defense of Shaw's claims. After Blazer filed his Answer (# 4), Capitol Indemnity moved for summary judgment of its Complaint.

III. Standard for Summary Judgment

Pursuant to Federal Rule of Civil Procedure 56, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56.

A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the differing versions of the truth. See S.E.C. v. Seaboard Corp., 677 F.2d 1297, 1300-01 (9th Cir.1982). The substantive law defines which facts are material. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact is more than some "metaphysical doubt" as to the material facts. See Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Thus, only disputes over outcome determinative facts under the applicable substantive law will preclude the entry of summary judgment. Id.

Moreover, all facts and inferences drawn must be viewed in the light most favorable to the responding party when determining whether a genuine issue of material fact exists for summary judgment purposes. See Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1050 (9th Cir.1995). After drawing inferences favorable to the respondent, summary judgment will be granted only if all reasonable inferences defeat the respondent's claims. See S.E.C. v. Seaboard Corp., 677 F.2d 1297, 1298 (9th Cir.1982).

Accordingly, the court must determine whether a reasonable jury could return a verdict for the respondent. See Anderson, 477 U.S. at 248-250, 106 S.Ct. 2505. If the factual context makes the respondent's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The party moving for summary judgment has the initial burden of showing the absence of a genuine issue of material fact. See Metro Indus., Inc. v. Sammi Corp., 82 F.3d 839, 847 (9th Cir.1996), cert. denied, 519 U.S. 868, 117 S.Ct. 181, 136 L.Ed.2d 120 (1996). Once the movant's burden is met by presenting evidence which, if uncontroverted, would entitle the movant to a directed verdict at trial, the burden then shifts to the respondent to set forth specific facts demonstrating that there is a genuine issue for trial. See Anderson, 477 U.S. at 250, 106 S.Ct. 2505. In meeting this burden, parties seeking to defeat summary judgment cannot stand on their pleadings once the movant has submitted affidavits or other similar materials. See Fed. R.Civ.P. 56. Affidavits that do not affirmatively demonstrate personal knowledge are insufficient. See Keenan v. Allan, 91 F.3d 1275, 1278 (9th Cir.1996).

The Supreme Court cases cited above establish that "[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp., 477 U.S. at 327, 106 S.Ct. 2548 (quoting Fed. R.Civ.P. 1).

IV. Discussion

Interpretation of unambiguous language in a contract is a pure question of law and appropriate for disposition by summary adjudication. See Tzung v. State Farm Fire & Casualty Co., 873 F.2d 1338, 1341 (9th Cir.1989). Whether ambiguity exists is also a question of law for the court. See United States v. Sacramento Mun. Util. Dist., 652 F.2d 1341, 1343 (9th Cir.1981).

To determine Capitol Indemnity's entitlement to summary judgment, this Court must answer the following questions about the policy provisions: (1) Does an intentional assault and battery constitute an insurable "occurrence" as defined by the policy? (2) If so, do the assault and battery and liquor liability exclusion provisions preclude coverage for Blazer's liability? (3) If coverage is precluded, is Capitol Indemnity entitled to reimbursement of its expenses incurred in the investigation and defense of Shaw's claims?1

A. Applicable Law

A federal court, sitting in diversity, must apply state law in construing an insurance policy. See Fortis Benefits Ins. Co. v. Johnson, 966 F.Supp. 987, 989 (D.Nev. 1997). Accordingly, this Court must construe the policy as a Nevada state court would if presented with the same question. See id. at 990. In the absence of Nevada Supreme Court precedent, "federal courts exercising diversity jurisdiction may look to other state-court decisions, well-reasoned decisions from other jurisdictions, and any other available authority' to determine how the state court would resolve the issue." Santana v. Zilog, Inc., 95 F.3d 780, 783 (9th Cir.1996) (quoting Burns v. International Ins. Co., 929 F.2d 1422, 1424 (9th Cir.1991)).

An insurance company's duty to defend and/or indemnify its insured arises from the provisions of the insurance policy. See Rockwood Ins. Co. v. Federated Capital Corp., 694 F.Supp. 772, 776 (D.Nev. 1988). "The insurer must defend any lawsuit brought against its insured which potentially seeks damages within the coverage of the policy." Id.

"An insurance policy is to be judged from the perspective of one not trained in law or in insurance, with the terms of the contract viewed in their plain, ordinary and popular sense." Siggelkow v. Phoenix Ins. Co., 109 Nev. 42, 846 P.2d 303, 304 (1993)....

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