White Pine Ins. Co. v. Taylor

• Decision Date: 27 July 2017
• Docket Number: No. 493, Sept. Term, 2016,493, Sept. Term, 2016
• Citation: 165 A.3d 624,233 Md.App. 479
• Parties: WHITE PINE INSURANCE COMPANY v. Howard R. TAYLOR
• Court: Court of Special Appeals of Maryland

233 Md.App. 479

165 A.3d 624

WHITE PINE INSURANCE COMPANY

v.Howard R. TAYLOR

No. 493, Sept. Term, 2016

Court of Special Appeals of Maryland.

July 27, 2017

Argued by: Karen M. Herzog (Ward & Herzog, LLC, on the brief), Baltimore, MD, for Appellant.

Argued by: Bradley J. Reed (Britt–Reed Law Offices, on the brief), Hagerstown, MD, for Appellee.

Panel: Woodward, C.J., Berger, Arthur, JJ.

Berger, J.

This appeal arises from appellant-defendant, White Pine Insurance Company's ("White Pine"), denial of coverage to its insured, West End Pub and Restaurant, LLC ("West End" or "West End Pub"), for a shooting injury suffered by one of West End's patrons, plaintiff-appellee, Howard R. Taylor ("Taylor"). The injury occurred on March 31, 2013, as Taylor opened the door of the pub and was shot in the leg. No suspect was apprehended and Taylor did not see who fired the gun. After West End's insurer, White Pine, denied West End's request to provide a defense to Taylor's claim for negligence, West End and Taylor reached a consent judgment agreement (the "Consent Verdict"), in which West End admitted negligence and agreed to a settlement of $100,000.00. Further, West End assigned to Taylor its claims against White Pine for denying indemnity coverage under its commercial general liability policy ("the Policy").

Thereafter, Taylor filed an action for breach of contract against White Pine seeking judgment in the amount of $74,999.99 in the Circuit Court for Washington County. After a bench trial, during which neither side presented any evidence of the circumstances leading to the shooting (other than the Consent Verdict), the circuit court found in favor of Taylor and awarded damages in the amount of $100,000.00.

White Pine presents three issues on appeal, which we have reworded as follows:

1. Whether the circuit court erred by finding that White Pine presented insufficient evidence that Taylor's injury was excluded from coverage under the Policy's Assault and Battery Exclusion, and therefore, that White Pine had a duty to indemnify West End Pub for its liability to Taylor.

2. Whether the circuit court erred when it did not find that White Pine had established that the Consent Verdict between West End Pub and Taylor, in which West End Pub admitted liability for negligence, was unreasonable.

3. Whether the circuit court properly awarded damages in the amount of $100,000.00, which exceeded the $74,999.99 amount of the ad damnum clause of Taylor's complaint.

BACKGROUND AND PROCEDURAL HISTORY

Factual Circumstances

On the night of March 31, 2013, Taylor visited the West End Pub in Hagerstown, Maryland, not far from his apartment to watch a basketball game. Taylor began to leave the pub at approximately 1:43 a.m. As Taylor opened the door to exit, however, he was struck by a bullet in his left leg. The police did not apprehend the shooter or determine his or her identity, and the shooter's motivation for firing the gun remains unknown. Taylor testified that he did not observe anyone brandishing a gun while he was inside West End Pub, nor had he been warned that he was about to be shot. Taylor further testified that he had not heard of any prior shootings at the Pub, and he did not see who shot him or where the bullet was fired. In addition, Taylor testified that approximately ten people were standing nearby when he was shot, two of whom were employees of the pub. No other evidence regarding the circumstances of the shooting was entered into evidence.

Commercial General Liability Framework

On the first page of the "Commercial General Liability Coverage Form," the Policy begins by noting that "[v]arious provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered." Under "Section I—Coverages," the Policy provides that the insurer

will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. [The insurer] will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any ‘occurrence’ and settle any claim or ‘suit’ that may result.

...

This insurance applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";

(2) The "bodily injury" or "property damage" occurs during the policy period; and

(3) Prior to the policy period, no insured ... and no "employee" authorized by [the named insured] to give or receive notice of an "occurrence" or claim, knew that the "bodily injury" or "property damage" had occurred in whole or in part.

Under Section IV—"Commercial General Liability Conditions," regarding third-party actions against the insurer, the Policy provides the following:

A person or organization may sue us to recover on an agreed settlement or on a final judgment against an insured; but we will not be liable for damages that are not payable under the terms of this Coverage Part or that are in excess of the applicable limit of insurance. An agreed settlement means a settlement and release of liability signed by us, the insured and the claimant or the claimant's legal representative.

Finally, Section V—"Definitions"—defines several terms used in the Policy.

"Bodily injury" means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.

...

"Occurrence" means an accident , including continuous or repeated exposure to substantially the same general harmful conditions.

...

"Suit" means a civil proceeding in which damages because of "bodily injury" ... to which this insurance applies are alleged.

(Emphasis added).

The "Assault, Battery, or Assault and Battery Exclusion" ("Assault and Battery Exclusion") is an endorsement, which is attached to the Policy. The Assault and Battery Exclusion provides that the insurance policy

does not apply to "bodily injury", "property damage" or "personal and advertising injury" arising out of or resulting from:

1. "Assault", "Battery", or "Assault and Battery" committed by any person;

2. The failure to suppress or prevent "Assault", "Battery", or "Assault and Battery" committed by any person;

3. The failure to provide an environment safe from "Assault", "Battery", or "Assault and Battery";4. The failure to warn of the dangers of the environment which could contribute to "Assault", "Battery", or "Assault and Battery";

5. "Assault", "Battery", or "Assault and Battery" arising out of the negligent hiring, supervision, or training of any person;

6. The use of any force to protect persons or property whether or not the "bodily injury" or "property damage" or "personal and advertising injury" was intended from the standpoint of the insured or committed by or at the direction of the insured.

The Policy provides definitions for "Assault", "Battery", and "Assault and Battery." An "assault" is defined as (a) "an act creating an apprehension in another of immediate harmful or offensive contact," or (b) "an attempt to commit a ‘Battery.’ "

A "battery" is "an act which brings about harmful or offensive contact to another or anything connected to another." According to the Policy, an "Assault and Battery" occurs when both are committed together.

Procedural History

Following his injury, Taylor sued West End Pub alleging negligence in the Circuit Court for Washington County. West End requested a defense and indemnification from White Pine and White Pine denied the request, asserting that the shooting incident was not covered under the Policy. West End and Taylor agreed to settle and the circuit court entered a Consent Verdict in the amount of $100,000.00 for medical expenses and noneconomic damages. Under the terms of the Consent Verdict, West End assigned to Taylor all of its rights, interests, claims, actions, and suits, including extra contractual and punitive damage claims against West End's insurer, White Pine, for breach of the Policy.

Thereafter, Taylor made a demand on White Pine for payment, including medical payment benefits, which White Pine denied for the same reasons that it denied West End a defense and indemnification. Taylor filed his Complaint against White Pine for breach of contract on March 12, 2015, and White Pine filed a counterclaim for declaratory relief. On or around June 4, 2015, White Pine moved for summary judgment, which the circuit court denied. Both parties presented oral arguments during open court proceedings on March 10, 2016. White Pine moved for judgment at the close of Taylor's case and renewed the motion at the close of all evidence. The court denied both motions.

During the proceedings, Taylor's counsel argued that Taylor's injury was covered under the insurance policy, and White Pine argued that the Assault and Battery Exclusion removed the incident from coverage under the Policy. Taylor's counsel argued that White Pine failed to show that Taylor's injury was the result of an "assault" or a "battery." White Pine argued, and continues to argue on appeal, that the fact that Taylor was shot by a gun is enough to show that the incident constituted a battery, as there is no intent requirement under the Policy's definition of "battery." In ruling on White Pine's motion for judgment, the trial court explained:

I have to admit that as I was listening to the testimony, the—the brief testimony of Mr. Taylor, it did occur to me that I don't know what happened. I know he was, based on this testimony, he was shot. That doesn't seem to be in dispute here. But how—how that happened, I—I don't know. And I think it's very easy to have a knee-jerk reaction and say, "Well clearly it's an assault and battery. If a person's shot, it's an assault and battery." But that's not

...