Clark v. Sputniks, LLC
Decision Date | 30 May 2012 |
Docket Number | No. M2010-02145-SC-R11-CV,No. M2010-02163-SC-R11-CV,M2010-02163-SC-R11-CV,M2010-02145-SC-R11-CV |
Parties | DONNA CLARK v. SPUTNIKS, LLC ET AL. LEONARD GAMBLE v. SPUTNIKS, LLC ET AL. |
Court | Tennessee Supreme Court |
Appeal by Permission from the Court of Appeals, Middle Section
Circuit Court for Sumner County
No. 31663-C C.L. Rogers, Judge
Appeal by Permission from the Court of Appeals, Middle Section
Circuit Court for Sumner County
No. 31525-C C.L. Rogers, Judge
In these consolidated cases, the primary issue is whether there is liability insurance coverage for the plaintiffs' injuries resulting from an altercation on the premises of the insured's bar and restaurant. The insurer denied coverage and declined to defend the insured based on its determination that there was no coverage under the terms of the policy. We hold that based on the clear terms of the policy agreement, there is no liability coverage because the incident arose from an assault and battery, which was an excluded cause, and because there is no nonexcluded concurrent cause to provide coverage. We further hold that estoppel by judgment does not apply to collaterally estop the insurer from arguing the lack of coverage. The judgment of the trial court is reversed.
Tenn. R. App. P. 11 Appeal by Permission; Judgment of the Court of Appeals
Affirmed in Part and Reversed in Part
Russell E. Reviere and Jonathan D. Stewart, Jackson, Tennessee, for the appellant, QBE Insurance Company.
William B. Jakes, III, and Mary Martin Schaffner (at trial) Nashville, Tennessee; Joe Dalton, Jr., Hendersonville, Tennessee, for the appellees, Donna Clark and Leonard Gamble.
On September 20, 2007, decedent Samuel Clark, plaintiff Leonard Gamble, and David Smotherman were patrons at Sputniks, a bar and restaurant in Hendersonville. While at Sputniks, Mr. Smotherman assaulted Mr. Clark "by hitting his head repeatedly on a table until he killed him." Mr. Gamble tried to intervene and was allegedly injured in the attempt.1
Ms. Clark and Mr. Gamble brought separate tort actions against Sputniks, LLC, and Cristie Phillips, individually and doing business as Sputniks, LLC ("the defendants").2 The plaintiffs alleged that the defendants engaged in a pattern of conduct encouraging inebriation of Sputniks' patrons and failed to take reasonable steps to protect customers from foreseeable criminal attacks. Neither Sputniks nor Ms. Phillips defended the actions.
At the time of the bar fight, Sputniks was insured by QBE Insurance Corporation ("Insurer") under a liability insurance policy. After Sputniks timely notified Insurer of the lawsuits, Insurer denied coverage and declined to defend the actions. On November 17, 2008, the trial court entered identical orders in both cases stating that "default judgment on the issue of liability is hereby granted to the plaintiff in this cause and the matter shall proceed on the issue of damages, reserved for further hearing." After hearings on February 11 and 18, 2008, the trial court entered final judgments against the defendants, awarding Mr. Gamble $275,000 and Ms. Clark $2,500,000 in compensatory damages.
In an effort to collect the judgments, the plaintiffs brought declaratory actions against Insurer seeking a ruling that Insurer's liability insurance policy provided coverage for the tortjudgments and also filed a writ of non-wage garnishment against Insurer. Insurer denied there was any insurance coverage under the policy for the plaintiffs' injuries and denied that it owed the plaintiffs any money. Following a hearing, the trial court entered an order on August 24, 2010, finding that the altercation at Sputniks was covered under both the commercial general liability and liquor liability provisions of the policy. The trial court held Insurer liable for satisfaction of the non-wage garnishment writs in the amount of the underlying tort judgments.
Insurer appealed. The Court of Appeals ruled that the liquor liability coverage agreement provided coverage for the judgments but that the commercial general liability agreement provided no coverage. Clark v. Sputniks, LLC, No. M2010-02163-COA-R3-CV, 2011 WL 2135407, at *1 ; Gamble v. Sputniks, LLC, No. M2010-02145-COA-R3-CV, 2011 WL 2135438, at *1 . We granted Insurer's applications for permission to appeal, ordered the two actions consolidated for purposes of this appeal, and now address two issues: (1) whether Insurer is collaterally estopped by operation of the doctrine of estoppel by judgment from arguing that there is no insurance coverage because of the previously entered default judgments against the defendants in the underlying tort actions, and (2) if Insurer is not collaterally estopped from asserting the coverage issue, whether the policy issued by Insurer to Sputniks provides coverage for the plaintiffs' injuries in the tort actions.
By allowing default judgments to be entered against them, the defendants impliedly admitted as true all the material factual allegations contained in the complaints, except the amount of the plaintiffs' unliquidated damages. Patterson v. Rockwell Int'l, 665 S.W.2d 96, 101 (Tenn. 1984); Adkisson v. Huffman, 469 S.W.2d 368, 375 (Tenn. 1971); Warren v. Kennedy, 48 Tenn. (1 Heisk.) 437, 439 (1870). Because the factual allegations of the complaints were conclusively established by the trial court's default judgments, Insurer cannot attack or challenge the facts in a later action. See Home Ins. Co. v. Leinart, 698 S.W.2d 335, 336 (Tenn. 1985); Kelly v. Cherokee Ins. Co., 574 S.W.2d 735, 737-38 (Tenn. 1978); Adkisson, 469 S.W.2d at 375.
The relevant allegations from Ms. Clark's complaint,3 which are taken as true, are:
(Numbering in original omitted).
These facts must be considered in relation to the following provisions of the commercial general liability policy and the liquor liability agreement issued to Sputniks:
(Emphasis added).
(Emphasis added).
The trial court ruled that based on the facts alleged in the complaint there was coverage under the general and liquor portions of the policy. Since the determination of thescope of insurance coverage is a question of law, U.S. Bank, N.A. v. Tenn. Farmers Mut. Ins. Co., 277 S.W.3d 381, 386 (Tenn. 2009), our review is de novo with no presumption of correctness. Harman v. Univ. of...
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