Penn-America Ins. Co. v. White Pines, Inc.

• Citation: 476 F.Supp.3d 354
• Decision Date: 05 August 2020
• Docket Number: Civil No. 2:19cv57
• Court: U.S. District Court — Eastern District of Virginia
• Parties: PENN-AMERICA INSURANCE COMPANY, Plaintiff, v. WHITE PINES, INC., d/b/a L.A.’s Night Club, and Bryan Polli, Defendants.

476 F.Supp.3d 354

PENN-AMERICA INSURANCE COMPANY, Plaintiff,

v.WHITE PINES, INC., d/b/a L.A.’s Night Club, and Bryan Polli, Defendants.

Civil No. 2:19cv57

United States District Court, E.D. Virginia, Norfolk Division.

Signed August 5, 2020

Peter Erich Schurig, Setliff Law PC, Glen Allen, VA, for Plaintiff.

Matthew James Weinberg, Inman & Strickler PLC, Virginia Beach, VA, for Defendants.

OPINION AND ORDER

Mark S. Davis, CHIEF UNITED STATES DISTRICT JUDGE

This matter is before the Court on Plaintiff Penn-America Insurance Company's ("Penn-America") motion for judgment on the pleadings, ECF No. 37, and Defendant-Intervenor Bryan Polli's ("Polli") counter-motion for judgment on the pleadings, ECF No. 39. For the reasons stated below, Penn-America's motion is GRANTED and Polli's counter-motion is DENIED .

I. FACTUAL HISTORY

L.A.’s Night Club ("L.A.’s"), located in Virginia Beach, Virginia, is owned and operated by Defendant White Pines Inc. ("White Pines"). ECF No. 25-1 ("Polli Complaint") ¶ 1. Polli began working for White Pines in 2009, and he was promoted to manager of L.A.’s in 2014 after having served in several roles. Id. ¶¶ 5-6. Polli "was never provided employment status" by White Pines and "was not even provided a 1099 as an independent contractor[ ] until 2016," with his compensation instead coming from cash "under the table" either "from the business cash flow or out of the owner's pocket." Id. ¶¶ 8-9, 44.

Polli "observed an average of 3 or 4 incidents of violence a month" during the seven years he worked at L.A.’s, with police help being requested approximately once a month "after the incidents of violence escalated beyond the control of the security personnel on the premises." Id. ¶ 10. White Pines’ "standing policy" was for "staff to only call the police in emergency situations, preferring that its employees handle dangerous situations without the benefit of law enforcement to avoid drawing negative attention to the strip club." Id. ¶ 11.

On March 22, 2016, Polli arrived at L.A.’s for his scheduled shift, and was there with four other employees when the club opened at 4:00 P.M., although security personnel were not scheduled until 8:00 P.M. Id. ¶¶ 12-14. Around 6:30 P.M., Polli was informed by an employee that two unknown customers ("Assailant One" and "Assailant Two" or "the Assailants") "were harassing the entertainers by attempting to solicit sex from them and calling them derogatory names." Id. ¶¶ 15-16.

The Assailants were "physically intimidating," but Polli asked them to leave "[a]s was expected by Whites Pines in his capacity as manager." Id. ¶¶ 19-20. Assailant One refused to leave and responded that no one could "kick him out" because he was the "biggest person" there. Id. Polli called security personnel to come in early, but in the fifteen minutes before a security guard arrived, the Assailants "continued to threaten the staff and customers in L.A.’s." Id. ¶¶ 21-22. Polli asked the Assailants to leave twice more, including once with the added threat that he would call the police, but the Assailants refused. Id. ¶¶ 23-25. One of the Assailants then pushed the security guard who had just arrived early (as Polli had requested), causing a "very brief fight" before Assailant One was removed and Assailant Two left. Id. After the Assailants had left, the security guard told Polli that there was a retractable baton inside the front desk "to be used specifically for defense from violent customers." Id. ¶ 27.

About three minutes later, "the Assailants ran in the front door, swinging their fists wildly," targeting two other employees. Id. ¶ 28. "Fearing serious injury" to the other employees, Polli grabbed the baton "and hit Assailant One in the back of the head, attempting to subdue him," but the blow only "further enrage[d] the Assailant," and caused the Assailant "to focus his wrath" on Polli. Id. ¶ 29. Assailant One "land[ed] full force punches on [Polli's] jaw and ribs" as Polli retreated into the club swinging the baton at Assailant One, before an employee was able to tackle Assailant One. Id. ¶¶ 30-31. After the Assailants were restrained, the police arrived, but they "recommended against pressing charges due to injuries to both parties," although they did recommend securing a restraining order against the Assailants. Id. ¶ 33. Polli "informed the owner, Kenny Edwards, of the incident, and requested to leave early because he did not ‘feel right.’ " Id. ¶ 34.

Polli had a cut on his jaw and red marks on his ribs as a result of the incident, and he "began coughing up blood the next morning and went straight to the hospital." Id. ¶ 35. Polli received an x-ray which showed that his lung had been imploded during the fight and his heart had shifted; he was told his injuries could have been fatal had he not sought medical attention. Id. ¶¶ 36-37. "Shortly after [ ] Polli was admitted to the hospital, [White Pines] told [ ] Polli that [White Pines] would ‘help him out’ with his medical bills and expenses while he was unable to work," but to Polli's knowledge, White Pines "did not pay any of [ ] Polli's medical bills" nor did it "provide any other financial assistance to Polli." Id. ¶¶ 38-39. Furthermore, White Pines "never reported the incident to the Workers[’] Compensation Commission." Id. ¶ 44.

II. PROCEDURAL HISTORY

On March 22, 2018, Polli filed a lawsuit in the Circuit Court for the City of Virginia Beach alleging six counts against White Pines. Id. The first three counts allege that White Pines was negligent: Count One for failure to schedule security guards; Count Two for failure to prevent the Assailants from re-entering White Pines; and Count Three for failure to call for police assistance. Id. ¶¶ 45-63. The fourth and fifth counts are fraud claims: Count Four for actual fraud for intentionally misrepresenting Polli's employment status as an independent contractor to defraud Polli from the protections of the Virginia Workers’ Compensation Act; and Count Five for constructive fraud for doing the same either innocently or negligently. Id. ¶¶ 64-73. Count Six is a workers’ compensation claim under the Virginia Workers’ Compensation Act. Id. ¶¶ 74-76.¹

After Polli filed the Polli Complaint, White Pines and Polli both contacted Penn-America requesting coverage under a commercial general liability policy Penn-America issued to White Pines. ECF No. 1-2 ("the Policy"). Penn-America denied both requests. In response, Polli notified Penn-America of his intention to file a declaratory judgment action, but before he could, Penn-America filed a declaratory judgment action of its own against White Pines in this Court's Richmond Division, seeking a declaration that it has no duty to defend or indemnify White Pines. White Pines never responded to Penn-America's filing, and Penn-America secured an entry of default against White Pines. ECF No. 8.² Polli filed a motion to intervene, to transfer, and to set aside entry of default against White Pines, and the Richmond Division of this Court granted the motion to intervene and transferred the matter to this Court's Norfolk Division. See Penn-America Insurance Company v. White Pines, Inc. d/b/a L.A.’s Night Club, No. 3:18CV650, 2019 WL 418859 (E.D. Va. Feb. 1, 2019). This Court then denied the motion to set aside entry of default, stated that it would hold the entry of default against White Pines in abeyance, and issued an order exercising jurisdiction. ECF Nos. 19, 24.

On January 7, 2020, Penn-America submitted the instant motion for judgment on the pleadings. ECF No. 37. The motion and its supporting memorandum ask the Court to declare that "Penn-America owes no duty to defend or indemnify White Pines on the claims asserted by [ ] Polli because there is either no coverage under the Policy, or coverage is excluded under multiple provisions of the Policy." ECF No. 38 ("Penn-America Memo"), at 15. On January 17, 2020, Polli submitted a counter-motion for judgment on the pleadings. ECF No. 39. The counter-motion and its supporting memorandum request that the Court declare that "Penn-America owes a duty to defend White Pines against the negligence claims asserted by [ ] Polli in his underlying lawsuit." ECF No. 40 ("Polli Counter Memo"), at 11. Penn-America filed a response opposing Polli's counter-motion, to which Polli filed a reply brief. ECF Nos. 44, 45.

After having read and considered the filed briefs, the Court ordered the parties to submit supplemental briefing to address whether Polli's employment status as either an independent contractor or an employee would affect Penn-America's potential liability, and the extent to which either classification was appropriate. ECF No. 49. Both parties submitted their supplemental briefing. ECF Nos. 50 ("Polli Supp. Brief"), 51 ("Penn-America Supp. Brief"), 52 ("Polli Supp. Reply"). Now, having been fully briefed, Penn-America's motion for judgment on the pleadings and Polli's counter-motion for judgment on the pleadings are ripe for review.

III. LEGAL STANDARD

A. Standard for 12(c) Motion

"After the pleadings are closed – but early enough not to delay trial – a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). A motion for judgment on the pleadings is an appropriate mechanism for a party seeking declaratory judgment regarding a contractual dispute. See Paul v. ImpactOffice LLC, No. CV TDC-16-2686, 2017 WL 2462492, at *2 (D. Md. June 6, 2017) ("Such a motion can be used to obtain a declaratory judgment where the only dispute is the proper interpretation of contractual terms." (citing A. S. Abell Co. v. Balt. Typographical Union No. 12, 338 F.2d 190, 193-95 (4th Cir. 1964) )); see also 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1367 (3d ed. 2020) ("The motion for a judgment on the pleadings only has utility when all material allegations of fact are admitted or not controverted in the pleadings and only questions of law remain to be decided by the district court[,] ... for example,...