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Mesa Underwriters Specialty Insurance Co. v. Boot Scooters LLC

United States District Court, W.D. Oklahoma

October 4, 2019




         Plaintiff filed this declaratory judgment action seeking a determination regarding the extent of its obligation to defend and indemnify Defendant Boot Scooters LLC and Defendants Carl Vick and Winston Tedrick, bouncers who worked at Scooters, the bar operated by Boot Scooters, in claims pressed by Charles McLaughlin. Before the Court is the Motion for Summary Judgment (Doc.No. 21) filed by Plaintiff Mesa Underwriters Specialty Insurance (“MESA”). Defendants Boot Scooters, Vick, and Tedrick filed a response as did the state-court plaintiff, Charles McLaughlin. (Doc. Nos. 23 and 26). The Court conducted a hearing on the motion on September 26, 2019. Upon consideration of the parties' submissions and arguments, the Court finds as follows.

         Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The presence of a genuine issue of material fact defeats the motion. An issue is “genuine” if the evidence is significantly probative or more than merely colorable such that a jury could reasonably return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” if proof thereof might affect the outcome of the lawsuit as assessed from the controlling substantive law. Id. at 249.

         Charles McLaughlin filed suit in the District Court of Jackson County, Oklahoma, against Boot Scooters, Vick, and Tedrick alleging he was injured as a result of actions taken by the individuals in removing him from the bar on August 6, 2017. Mr. McLaughlin and his girlfriend were customers early that morning when they started arguing, which brought them to the attention of patrons and the bouncer Vick. McLaughlin was poking his girlfriend's chest and forehead as they appeared to be arguing.[1] When Defendant Tedrick approached McLaughlin's girlfriend she was crying and indicated he had some of her belongings, including her wallet and phone and would not return them.[2] Tedrick approached McLaughlin and asked for the items, McLaughlin responded that he was leaving and took a swing at Tedrick. When Tedrick leaned back out of the way, Vick grabbed McLaughlin from behind, grabbing underneath his arms. His arms disabled by Vick, Charles McLaughlin started kicking at Mr. Tedrick, who in response grabbed Charles McLaughlin's legs.[3] The men proceeded to carry McLaughlin across the bar. When Vick used his body to open the door to exit, McLaughlin kicked Tedrick “in the side again and did the alligator roll, and that's when he came out and landed on the ground.” (Doc. No. 21- 2, p. 53).[4] He suffered a subdural hematoma and bleeding in the brain. Mr. McLaughlin testified about his limited memories from the night in question, specifically he has no recollection of his interactions with Boot Scooters employees.

         In the initial state-court petition, McLaughlin alleged that Vick and Tedrick wrongfully detained or falsely imprisoned him when they picked him up and carried him outside the bar. He further alleged that Defendants Vick and Tedrick acted maliciously and with reckless disregard for his rights when they threw him down on the sidewalk. McLaughlin subsequently amended his state-court petition, substantially modifying his allegations. Rather than alleging any intentional torts by Defendants Vick and Tedrick, he alleged both men acted negligently while performing their duties as bouncers, omitting any intentional torts. At the time of McLaughlin's injuries, Boot Scooters was covered by a commercial insurance policy issued by MESA; Plaintiff is defending Boot Scooters and its employees under a reservation of rights. MESA now seeks a declaration that its obligation is limited to $25, 000 to Boot Scooters, inclusive of defense costs, and that it does not owe either employee a defense or indemnification for any judgment that might ensue.

         The parties do not address what law applies in this diversity action, and the Court finds no basis in the record for concluding that any law other than Oklahoma law is relevant. See, e.g., Universal Underwriters, Ins. Co. v. Winton, 818 F.3d 1103, 1105-06 (10th Cir. 2016). An insurance policy is a contract to which general principles of contractual interpretation apply. Under Oklahoma law, “[w]hen policy provisions are clear, consistent, and unambiguous, [the court must] look to the plain and ordinary meaning of the policy language to determine and give effect to the parties' intent.” Porter v. Okla. Farm Bureau Mut. Ins. Co., 330 P.3d 511, 515 (Okla. 2014). “[N]either forced nor strained construction will be indulged, nor will any provision be taken out of context and narrowly focused upon to create and then construe an ambiguity so as to import a favorable consideration to either party than that expressed in the contract.” Dodson v. St. Paul Ins. Co., 812 P.2d 372, 376 (Okla. 1991)(footnote omitted). Generally, the insured has the burden of showing the occurrence of a covered loss and the insurer has the burden of showing that a loss falls within an exclusionary clause of the policy. See Pitman v. Blue Cross & Blue Shield of Okla., 217 F.3d 1291, 1298 (10th Cir. 2000) (Once coverage is established, “the insurer has the burden of showing that a loss falls within an exclusionary clause of the policy.”); An exclusion is a policy term eliminating coverage where it otherwise would have existed under the general declaration. Dodson, 812 P.2d at 377.

         The parties do not argue that the general provisions of the Policy are inapplicable, Plaintiff contends, however, that the general provisions are modified by an Assault and Battery exclusion as well as an Endorsement providing for Limited Assault and Battery Coverage. Plaintiff argues that as a result of the Exclusion and Endorsement, that coverage under the Policy for the August 6, 2017 incident is limited to $25, 000 rather than the $1, 000, 000 of coverage otherwise available under the Policy without consideration of these two provisions.

         MESA seeks relief from continuing to defend Boot Scooters and its employees. Under Oklahoma law, “[a] liability insurance policy generally contains two basic duties - the duty to defend and the duty to indemnify[.]” First Bank of Turley v. Fid. & Deposit Ins. Co. of Md., 928 P.2d 298, 302-303 (Okla. 1996). The duty to defend is broader than the duty to indemnify and is not limited by “determinable contingencies” or the “outcome of the third-party action.” Id. at 303-04. Rather, under Oklahoma law, “[a]n insurer has a duty to defend an insured whenever it ascertains the presence of facts that give rise to the potential of liability under the policy.” Id. at 303 (emphasis in original) (internal footnote omitted). An insurer's duty to defend is determined on the basis of the allegations of the petition (and other pleadings), as well as information obtained from the insured and other sources reasonably available to the insurer. Id. Thus, under Oklahoma law, “[t]he duty to defend cannot be limited by the precise language of the pleadings. The insurer has the duty to look behind the third party's allegations to analyze whether coverage is possible.” Id. at 303 n.15 (emphasis in original). See also Utica Mut. Ins. Co. v. Voyles, 277 Fed.Appx. 809, 812 (10th Cir. 2008) (“Oklahoma does not recognize the four-corners rule followed by some courts. A court must look beyond the language of the complaint to determine whether a duty to defend exists.”).

         Before considering the specifics of the Exclusion and Endorsement, the Court may quickly dispense with Plaintiff's first contention. Plaintiff MESA contends that the language of Charles McLaughlin's initial petition filed in the District Court of Jackson County dictates the outcome herein; specifically arguing that the allegations of intentional conduct place this case squarely within the Limited Assault or Battery Coverage Endorsement. Plaintiff argues that the Endorsement limits coverage to Boot Scooters, Inc. and precludes coverage to Defendants Vick and Tedrick. Plaintiff contends that the allegations in the initial petition are admissions that may be used against Defendants.[5]Defendants assert that, because Charles McLaughlin amended his Petition, his initial allegations are of no legal consequence; therefore, MESA cannot avoid defending or indemnifying Boot Scooters, Vick, and Tedrick in the underlying lawsuit.

         The Court finds no basis in the law for adopting any of the parties' positions. As set forth above, Oklahoma is not a “four corners” state and the insurer was obligated, regardless of the allegations, to consider the facts, not merely the language of the state-court petitions. The parties' briefs operate under the assumption that the legal monikers assigned by the underlying plaintiff dictate the outcome of the declaratory judgment action. The terms “assault” and “battery” are defined within the Policy; those definitions apply and “it is irrelevant how [Charles McLaughlin may] have pled [his] claims in state court. Instead the Court must focus on the relevant language in the insurance policy.” James Rivers Ins. Co. v. Blue Ox Dance Hall, LLC, No. 16-cv-0151-CVE-FHM, 2017 WL 2367052, * 5 (N.D. Okla. May 31, 2017); see also First Bank of Turley, 928 P.2d 298, 303 n. 13 (“The duty to defend should focus upon the facts rather than upon the complaint's allegations, which may or may not control the ultimate determination of liability.”)(emphasis in original)(citing Texaco, Inc. v. Hartford Acc. and Indemnity, 453 F.Supp. 1109, 1113 (E.D.Okla. 1978)); Hartford Cas. Ins. v. Merchants & Farmers Bank, 928 So.2d 1006, 1012 (Ala. 2005)(“it is the facts, not the legal phraseology, that determine whether an insurer has a duty to defend its insured in the action.”) Thus, the Court finds that Plaintiff's first argument in support of summary judgment provides no basis for limiting or excluding coverage to Boot Scooters, Vick and Tedrick.

         The Policy provides:

We 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. . .
This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” or “property damage” is caused by an ...

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