Nautilus Insurance Company v. The Frosted Mug, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

NAUTILUS INSURANCE COMPANY,

Plaintiff,

v. CIVIL ACTION NO. 1:19CV23

(Judge Keeley)

THE FROSTED MUG, LLC;

JOHN DOE ONE; and JODY

PATRICK MURRAY

Defendants.

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENT [DKT. NO. 31]

On February 7, 2016, Jody Patrick Murray (“Murray”) was

injured during a physical altercation at the Frosted Mug, LLC (“the

Frosted Mug”), a bar in Morgantown, West Virginia. As a result,

Murray sued the Frosted Mug, John Doe One (an employee of the

Frosted Mug), and John Doe Two (a patron of the Frosted Mug) in the

Circuit Court of Monongalia County, West Virginia. The plaintiff in

this case, Nautilus Insurance Company (“Nautilus”), is the insurer

of the Frosted Mug and has filed a complaint seeking a declaratory

judgment that it is not required to defend or indemnify the Frosted

Mug or John Doe One under its commercial general liability

insurance policy (“the Policy”) in effect at the time of the

altercation (Dkt. No. 1).1

Pending is Nautilus’s motion for default and summary judgment

1 All docket and page numbers refer to the numbers assigned by

the Court’s electronic docket.

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

against the Defendants (Dkt. No. 31).2 For the reasons that follow,

the Court GRANTS the motion (Dkt. No. 31) and DECLARES that

Nautilus has no duty to defend or indemnify the Frosted Mug and

John Doe One in the underlying state court litigation.

I. BACKGROUND3

On February 7, 2016, Murray’s neighbors invited him to the

Frosted Mug to celebrate their daughter’s 22nd birthday. When

Murray arrived around 9:30 p.m., Billy Daft (“Daft”) was working

security at the front door, and Donny Cutright (“Cutright”), an

off-duty security guard, was standing nearby.

At some point during the birthday party, Daft separated Murray

from Ryan Shaver, a friend of Murray’s neighbor, and Daft and

Cutright escorted Murray outside. Daft stated he did not want

Murray to have any trouble with Shaver, but Murray claimed they

2 Because Nautilus seeks both a default judgment and a judgment on

the merits, the Court construes its motion as one for a default

judgment against the Frosted Mug and one for summary judgment

against John Doe One and Murray.

3 Generally, when considering a motion for default judgment, the

Court must accept as true the well-pleaded factual allegations in

the complaint. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-

81 (4th Cir. 2001); Entrepreneur Media, Inc. v. JMD Entm’t Grp.,

LLC, 958 F. Supp. 2d 588, 593 (D. Md. 2013). However, because

Nautilus ultimately seeks a judgment on the merits, the Court

recites the facts in the light most favorable to Murray, the non-

moving party. Providence Square Assocs., L.L.C. v. G.D.F., Inc.,

211 F.3d 846, 850 (4th Cir. 2000).

2

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

were just hugging. Murray then returned to the birthday party, got

another beer, and continued drinking.

Later, Murray’s wife, Tracy Lynn Murray, and his sister,

Joanne Blosser, walked into the Frosted Mug, and his wife asked him

if he was there with a couple of women. As the two argued, Daft

walked over and inquired whether there was a problem. After an

exchange of words, with other customers gathering, Daft shoved

Murray and chaos ensued. One person dragged Murray outside, choking

him in the process, and another punched him in the head. Murray was

knocked unconscious and fell to the ground, after which someone

kicked him and jumped on top of him.

Eventually, Murray regained consciousness and found himself at

the local hospital, where he was treated for his injuries. He later

sued the Frosted Mug and two John Does in state court to recover

compensatory and punitive damages. Following on that, Nautilus

filed the instant litigation seeking a declaration of no duty to

defend or indemnify the Frosted Mug and its employee, John Doe One,

in the state court action (Dkt. No. 1).

II. STANDARD OF REVIEW

Summary judgment is appropriate where the “depositions,

documents, electronically stored information, affidavits or

declarations, stipulations . . . , admissions, interrogatory

3

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

answers, or other materials” establish that “there is no genuine

dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed R. Civ. P. 56(a), (c)(1)(A). The

Court must avoid weighing the evidence or determining its truth,

and limit its inquiry solely to a determination of whether genuine

issues of triable fact exist. Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 249 (1986).

The moving party bears the initial burden of informing the

Court of the basis for the motion and of establishing the

nonexistence of genuine issues of fact. Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986). Once the moving party has made the

necessary showing, the non-moving party “must set forth specific

facts showing that there is a genuine issue for trial.” Anderson,

477 U.S. at 256 (internal quotation marks and citation omitted).

The “mere existence of a scintilla of evidence” favoring the non-

moving party will not prevent the entry of summary judgment; the

evidence must be such that a rational trier of fact could

reasonably find for the nonmoving party. Id. at 248–52.

III. APPLICABLE LAW

The Declaratory Judgment Act authorizes district courts to

“declare the rights and other legal relations of any interested

party seeking such declaration.” 28 U.S.C. § 2201. In the Fourth

4

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

Circuit, “a declaratory judgment action is appropriate ‘when the

judgment will serve a useful purpose in clarifying and settling the

legal relations in issue, and . . . when it will terminate and

afford relief from the uncertainty, insecurity, and controversy

giving rise to the proceeding.’” Centennial Life Ins. Co. v.

Poston, 88 F.3d 255, 256 (4th Cir. 1996) (citing Aetna Cas. & Sur.

Co. v. Quarles, 92 F.2d 321, 324 (4th Cir. 1937) (internal citation

omitted)).

Here, because the entry of a declaratory judgment will resolve

the parties’ dispute, the Court’s exercise of jurisdiction over

this matter is proper. Pursuant to Erie R. Co. v. Tompkins, 304

U.S. 64, 78 (1938), the applicable law in a diversity case such as

this is determined by the substantive law of the state in which a

district court sits.4 The parties agree that the substantive law of

West Virginia governs the interpretation and application of the

insurance policy at issue.

IV. DISCUSSION

Nautilus seeks both a default judgment against the Frosted Mug

and a judgment on the merits against defendants John Doe One and

Murray. Because these defendants, including Murray, are not bound

4 It is undisputed that the parties are diverse and more than

$75,000 is in controversy. Thus, the Court has subject matter

jurisdiction over this matter. See 28 U.S.C. § 1332.

5

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

by a default judgment, the Court turns first to discuss the merits

of the declaratory judgment action. See Scottsdale Inc. Co. v.

Bounds, No. BEL-11-2912, 2012 WL 1576105, at *5 (D. Md. May 2,

2012) (“[T]he injured third party is ‘not bound by the default

judgment’ and is ‘entitled to defend on the merits in the

declaratory judgment proceeding.’”).

A. Declaratory Judgment

Under West Virginia law, liability insurance policies

establish two main duties on the part of the insurer, the duty to

defend and the duty to indemnify. See, e.g., Aetna Cas. & Sur. Co.

v. Pitrolo, 342 S.E.2d 156, 160 (W. Va. 1986); Donnelly v.

Transportation Insurance Co., 589 F.2d 761, 765 (4th Cir. 1978). As

a general rule, an insurer’s duty to defend is triggered when “the

allegations in the plaintiff’s complaint are reasonably susceptible

of an interpretation that the claim may be covered by the terms of

the insurance policy.” Pitrolo, 342 S.E.2d at 160; see also Syl.

Pt. 2, Farmers & Mechanics Mut. Ins. Co. of W. Va. v. Cook, 557

S.E.2d 801, 802 (W. Va. 2001). If any of the claims against the

insured might trigger coverage, the insurer must defend against all

the claims asserted. See Horace Mann Ins. Co. v. Leeber, 376 S.E.2d

581, 584 (W. Va. 1988) (citing Donnelly, 589 F.2d at 765).

Nevertheless, the insurer need not provide a defense if the claims

6

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

against the insured are “entirely foreign to the risk insured

against.” Air Force Ass’n v. Phoenix Ins. Co., 1990 WL 12677, at *2

(4th Cir. 1990) (citing Donnelly, 589 F.2d at 765).

The specific wording of an insurance policy determines whether

it provides coverage for a particular claim. See Beckley

Mechanical, 374 Fed. App’x at 383; Cherrington v. Erie Ins.

Property and Cas. Co., 745 S.E.2d 508, 524 (W. Va. 2013). Indeed,

“[l]anguage in an insurance policy should be given its plain,

ordinary meaning.” Syl. Pt. 8, Cherrington, 745 S.E.2d at 511

(internal quotations and citations omitted). Courts should not

endeavor to interpret policy provisions unless they are unclear or

ambiguous. Id. Instead, courts must give terms and provisions their

meaning in the “plain, ordinary and popular sense, not in a

strained or philosophical sense.” Polan v. Travelers Ins. Co., 192

S.E.2d 481, 484 (W. Va. 1972); see also Syl. Pt. 9, Cherrington,

745 S.E.2d at 511.

Here, Nautilus contends that, under the plain and unambiguous

terms of its Policy, it is not required to defend or indemnify the

Frosted Mug or John Doe One because (1) physical altercations are

not an “occurrence” covered by the Policy, and (2) coverage is

excluded under the assault-and-battery exclusion (Dkt. No. 32 at 6-

7

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

15).5 The Court will address each claim in turn.

1. Assault and Battery is Not an “Occurrence” Covered by the

Policy

To determine whether a physical altercation is a covered

“occurrence,” the Court begins with the relevant text of the

Policy:

SECTION I - COVERAGES

COVERAGE A BODILY INJURY AND PROPERTY DAMAGE

LIABILITY

1. INSURING AGREEMENT

a. 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. We

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 insurances does not

apply. We may, at our discretion,

investigate any “occurrence” and

settle any claim or “suit” that may

result.

. . .

b. This insurances applies to “bodily

injury” and “property damage” only

5 Because these arguments are dispositive, the Court need not

address Nautilus’s remaining contentions (Dkt. No. 32 at 13-16).

8

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

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 listed under Paragraph

1. of Section II - Who is An

Insured and no “employee”

authorized by you 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. If such a

listed insured or authorized

“employee” knew, prior to the

policy period, that the “bodily

injury” or “property damage”

occurred, then any

continuation, change or

resumption of such “bodily

injury” or “property damage”

during or after the policy

period will be deemed to have

been known prior to the policy

period.

(Dkt. No. 1-1 at 10).

The Policy defines an “occurrence,” as “an accident, including

continuous or repeated exposure to substantially the same general

harmful conditions.” Id. at 23. The question presented here is

whether the physical altercation that occurred on February 7, 2016,

was “an accident” covered under the Policy.

9

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

In Mt. Vernon Fire Ins. Co. v. Dobbs, 873 F. Supp. 2d 762, 765

(N.D. W. Va. 2012) (Stamp, J.), this Court considered whether an

insurance company had a duty to defend or indemnify two employees

of a bar who assaulted and battered one of its patrons. There, like

here, the insurance coverage applied to “bodily injury and property

damage only if, ‘the “bodily injury” or “property damage” is caused

by an “occurrence” that takes place in the “coverage territory.”’”

Id. (quoting the insurance policy). As in this case, the policy at

issue defined an “occurrence” as “‘an accident, including

continuous or repeated exposure to substantially the same general

harmful conditions.’” Id. (quoting same). Because the plaintiff’s

assault was not an accident, Judge Stamp concluded that it was not

“an occurrence” under the policy, and the insurance company

therefore had no duty to defend or indemnify the bar employees. Id.

at 765-66.

The policy here, as in Dobbs, “applies to ‘bodily injury’ and

‘property damage’ only if . . . [it] is caused by an ‘occurrence,’”

which is defined as “an accident” (Dkt. No. 1-1 at 10, 23). The

physical altercation at the Frosted Mug was no accident. In his own

words, Murray was shoved, punched, choked, kicked, knocked

unconscious, and dragged from the Frosted Mug (Dkt. No. 31-2 at 11,

14-15, 17-18). Because these acts were intentional, they are not

10

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

“an occurrence” under the Policy.

In an attempt to avoid this conclusion, Murray contends that,

although the alleged assault and battery may not be an

“occurrence,” he has also alleged a cause of action for negligence,

which is an “occurrence” that would trigger coverage under the

Policy (Dkt. No. 33 at 2-3). As clearly explained in Dobbs,

however, Murray “cannot mischaracterize intentional acts as

negligence claims in order to avoid the exclusions contained within

the insurance policy.” Dobbs, 873 F. Supp. 2d at 766 (citing

Evanston Ins. Co. v. Radcliff, No. 5:05–0230, 2006 WL 328147, at *3

(S.D. W. Va. Feb. 10, 2006) (“Under West Virginia law, a plaintiff

cannot bypass the intentional act exclusion by including

negligence-type allegations when the complaint essentially alleges

intentional conduct.”)). At bottom, Murray’s state court complaint

and his deposition testimony describe an intentional assault and

battery, which is not covered “occurrence” under the Policy.

2. The Policy Excludes Coverage for Assault and Battery

Nautilus alternatively contends that the Policy excludes

coverage for assault and battery (Dkt. No. 32 at 8-11). Again, the

Court looks to the relevant text:

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE

READ IT CAREFULLY.

11

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

EXCLUSION - ALL ASSAULT OR BATTERY

This endorsement modifies insurance provided

under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE

PART

A. The following exclusion is added to 2.

Exclusions of Section I - Coverage A -

Bodily Injury And Property Damage

Liability, Coverage B - Personal And

Advertising Injury Liability, and

Coverage C - Medical Payments:

Regardless of culpability or intent of

any person, this insurances does not

apply to “bodily injury”, “property

damage”, “personal and advertising

injury” or medical payments arising out

of any:

1. Actual or alleged assault or

battery;

2. Physical altercation; or

3. Any act or omission in connection

with the prevention or suppression

of such acts, including the alleged

failure to provide adequate

security.

This exclusion applies regardless of

whether such actual or alleged damages

are caused by any:

1. Insured;

2. “Employee”;

3. Patron; or

4. Any other person; and

whether or not such damages occurred at

any premises owned or occupied by any

insured.

This exclusion applies to:

1. All causes of action arising out of

any assault or battery, or out of a

physical altercation including, but

12

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

not limited to, allegations of

negligent hiring, placement,

training, or supervision, or to any

act, error, or omission relating to

such an assault or battery, or

physical altercation.

2. Any claims or “suits” brought by any

other person, firm or organization

asserting rights derived from,

contingent upon, or arising out of

an assault or battery, or a physical

altercation and specifically

excludes from coverage claims or

“suits” for:

a. Emotional distress for loss of

society, services, consortium

or income; or

b. Reimbursement for expenses

including, but not limited to,

medical expenses, hospital

expenses, or wages, paid or

incurred, by such other person,

firm or organization; or

3. Any obligation to share damages with

or repay someone who must pay

damages because of the injury.

B. We will have no duty to defend or

indemnify any insured in any action or

proceeding alleging damages arising out

of any assault or battery, or physical

altercation.

. . .

All other terms and conditions of this policy

remain unchanged.

(Dkt. No. 1-1 at 36).

During the physical altercation on February 7, 2016, Murray

was shoved, punched, choked, kicked, knocked unconscious, and

13

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

dragged from the Frosted Mug (Dkt. No. 31-2 at 11, 14-15, 17-18).

Each of these intentional acts qualifies as an assault, a battery,

or, at the least, a physical altercation, all of which are excluded

under the plain language of the Policy. See Dobbs, 873 F. Supp. 2d

at 766 (“Clearly, the alleged assault upon Dobbs cannot be

construed as an accident, and even if it could, the policy

specifically excludes any claim based on assault or battery.”).

Murray insists that his removal from the Frosted Mug was

negligence, and therefore, does “not fall within this particular

exclusion” (Dkt. No. 33 at 3, 3-4). But again, Murray “cannot

mischaracterize intentional acts as negligence claims in order to

avoid the exclusions contained within the insurance policy.” Dobbs,

873 F. Supp. 2d at 766 (citing Radcliff, 2006 WL 328147, at *3). To

be sure, Murray testified that he was pulled backwards and dragged

from the Frosted Mug, where he was kicked in the face and beaten up

(Dkt. No. 32-2 at 17-19, 21). In other words, his “removal” was not

a separate and distinct act from the assault and battery, but a

continuation of the assault, battery, or physical altercation that

began inside and ended outside the Frosted Mug. Accordingly, the

assault-and-battery exclusion precludes coverage under the Policy.

B. Default Judgment

Nautilus also seeks a default judgment against the Frosted the

14

NAUTILUS V. THE FROSTED MUG, ET AL. 1:19CV23

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S

MOTION FOR DEFAULT AND SUMMARY JUDGMENTS [DKT. NO. 31]

Mug (Dkt. Nos. 31, 32 at 4-6). Because the Frosted Mug has failed

to plead or otherwise defend itself in this case, despite having

been properly served with the amended and second amended complaints

(Dkt. Nos. 25, 31-4), the Court grants Nautilus’s motion for

default judgment (Dkt. No. 31).

V. CONCLUSION

For the reasons discussed, the Court GRANTS Nautilus’s

motions (Dkt. No. 31), and DECLARES it has no duty to defend or

indemnify the Frosted Mug and John Doe One on Murray’s underlying

claims.

It is so ORDERED.

The Court DIRECTS the Clerk to enter a separate judgment order

in favor of Nautilus, to transmit copies of both orders to counsel

of record, and to strike the case from its active docket.

DATED: May 14, 2020

/s/ Irene M. Keeley

IRENE M. KEELEY

UNITED STATES DISTRICT JUDGE

15