United National Insurance v. Penuche's, Inc.

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 97-1476

UNITED NATIONAL INSURANCE COMPANY,

Plaintiff, Appellant,

v.

PENUCHE'S, INC., ET AL.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Joseph A. DiClerico, U.S. District Judge]

Before

Torruella, Chief Judge,

Lynch, Circuit Judge,

and Keeton,* District Judge.

Richard J. Riley, with whom Murphy & Riley, P.C. was on

brief for appellant.
Jeffrey S. Cohen, with whom Gregory R. Kirsh and Sulloway &

Hollis, P.L.L.C. were on brief for appellees.

November 6, 1997

* Of the District of Massachusetts, sitting by designation.

TORRUELLA, Chief Judge. United National Insurance
TORRUELLA, Chief Judge.

Company ("United National") brought this suit seeking a

declaration that it has no duty to defend or indemnify Penuche's,

Inc. ("Penuche's"), and its president, Todd Tousley, in a tort

action brought by a Penuche's Ale House patron, Thomas Burke. At

Penuche's, Burke was involved in an altercation which Tousley

attempted to break up. In so doing, Tousley caused Burke to fall

backward, injuring his spine. Among other contentions, United

National claims that under New Hampshire law it has no duty to

indemnify Penuche's or Tousley for this claim because its multi-

peril insurance policy contains an exclusion for any claims

"arising out of an assault and/or battery." We reject United

National's arguments and affirm the district court's award of

summary judgment to Penuche's and Tousley, but we do so on

different grounds than decided by that court.

BACKGROUND
BACKGROUND

The facts in this case are essentially undisputed. On

October 4, 1995, Burke was in Penuche's Ale House in Keene, New

Hampshire. An altercation ensued between two men, and Burke left

his table to attempt to calm them down. Afterwards, as he turned

his back to return to his table, he was attacked by one of the

men with a barrage of punches to the side and back of his head.

As he turned around to face his assailant, he observed a

Penuche's employee, Tousley, coming toward him to stop the fight.

Tousley grabbed Burke in a "bear hug," pinning his arms to his

sides in an apparent attempt to immobilize him and prevent

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further fighting. Tousley's momentum, however, caused Burke to

fall backwards, striking various obstructions as he fell. The

fall left Burke with a severe spinal cord injury.

Burke sued Tousley and Penuche's in a New Hampshire

court, alleging that his injuries resulted from Tousley's

negligence in carelessly intercepting and restraining him. Burke

further claimed that Penuche's is liable under respondeat

superior, and "actively negligent" insofar as slippery and/or

cluttered premises proximately caused his injuries. After the

commencement of the state court action, Tousley and Penuche's

demanded that United National provide coverage and defense of

Burke's claims under a multi-peril insurance policy held by "Todd

Tousley DBA Penuche's Ale House." United National agreed to

provide a defense subject to a reservation of rights, claiming

that an exclusion in its policy relieves it of any indemnity

obligation. It subsequently sued Penuche's and Tousley in

federal district court under diversity jurisdiction, 28 U.S.C.

1332, seeking a declaratory judgment to this effect.

Penuche's policy requires United National to defend and

indemnify it against claims asserting bodily injury caused by

"occurrence[s] . . . arising out of the ownership, maintenance or

use of the insured premises." United National contends that

"exclusions" take away coverage that would otherwise apply to

this case under this broad "coverage" provision.

One of the policy provisions excludes coverage for:

claims arising out of an assault and/or
battery, whether caused by or at the

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instigation of, or at the direction of, or
omission by, the Insured, and/or his
employees.

This is the "assault and battery" exclusion at issue. United

National also requests a limited declaration that insofar as

Burke's claims arise out of Penuche's negligent sale or service

of alcoholic beverages, coverage is precluded by a "liquor

liability" exclusion.

The district court found that neither exclusion

precluded coverage for the underlying suit. The court awarded

summary judgment for Penuche's and Tousley, ordering United

National to defend and indemnify the claims. United National

appeals this award, asking for declaratory judgments under both

exclusions and further arguing that it was premature for the

district court to order it to indemnify the underlying claims, as

opposed to merely ordering a defense of those claims.

DISCUSSION
DISCUSSION

We review de novo a district court's grant of summary

judgment. Pine Tree Medical Associates v. Secretary of Health

and Human Services, F.3d , 1997 WL 563587 at *2, (1st Cir.

1997).

I. The Assault and Battery Exclusion
I. The Assault and Battery Exclusion

United National claims that coverage for Burke's

injuries is excluded because they "arose out of" two assault and

batteries: first Burke was attacked by another Penuche's patron;

and then he was manhandled by Tousley, who was attempting to

break up the fighting. United National argues that the assault

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and battery exclusion applies if the claims arose out of either

or both of these incidents.

A. The Fight
A. The Fight

It is not disputed that Burke was battered by another

patron of Penuche's on October 4, 1995. However, the assault and

battery exclusion is only implicated by this fight if batteries

by customers were a type of battery excluded by the contract, and

if Burke's injuries could fairly be said to "arise out of" this

patron's attack.

The policy excludes "claims arising out of an assault

and/or battery, whether caused by or at the instigation of, or at

the direction of, or omission by, the Insured, and/or his

employees." (emphasis added). Tousley claims that this exclusion

is inapplicable to any claims arising out of the patrons' fight

because its terms only exclude coverage for assaults caused by

acts or omissions of employees. In other words, Tousley reads

the examples following the word "whether" as an exhaustive list.

He argues that, at the very least, this provision is ambiguous,

and that under New Hampshire law this ambiguity must be resolved

against United National. See Hoepp v. State Farm Ins. Co., 697

A.2d 943, 945 (N.H. 1997). These arguments fail.

An insurance policy's language "must be accorded its

natural and ordinary meaning." Coakley v. Maine Bonding and Cas.

Co., 618 A.2d 777, 781 (N.H. 1992) (quoting Trombly v. Blue

Cross/Blue Shield, 423 A.2d 980, 984 (N.H. 1980)). Tousley's

position either reads the word "whether" out of the exclusion

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completely, or gives it a meaning identical to the word "if."

This interpretation runs against the commonly accepted meaning of

the word "whether" in this context. If one hears, "the post

office will deliver your mail, whether it is raining or snowing,"

one will not take this to mean that mail is only delivered in

inclement weather. Similarly, where this policy lists specific

types of excluded assaults and batteries after the word

"whether," it does not follow that other assaults and batteries

are not excluded. Our interpretation of this exclusion is

consistent with the only other court that we have found to have

addressed this question. In United Nat'l Ins. Co. v. Horning,

Ltd., 882 F. Supp. 310 (W.D.N.Y. 1995), United National sought a

declaratory judgment under an identical exclusion in a liquor

liability policy. Horning involved an action brought by a rape

victim against a drinking establishment and bartenders for

serving her attacker even though he was under the influence.

Rejecting a reading of the clause identical to that proposed here

by Tousley, the district court held that "[t]he specific

instances identified in the clause are simply not meant to

provide an exhaustive list of the conduct contemplated by the

exclusion." Id. at 314. We agree.

Furthermore, if Burke is trying to hold these

defendants liable for the actions of a customer, his theory of

liability must necessarily follow from an act or omission of

Penuche's or its employees. See, e.g., United Nat'l Ins. Co. v.

Waterfront New York Realty Corp., 994 F.2d 105, 109-110 (2d Cir.

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1993) citing United Nat'l Ins. Co. v. The Tunnel, Inc., 988 F.2d

351, 354 (2d Cir. 1993) (identical assault and battery exclusion

cannot be read to exclude only more "direct" acts or omissions of

employees as opposed to more "remote acts of negligence" leading

to assaults and batteries). Therefore, the exclusion applies to

the fight in this case, and the district court erred in adopting

Penuche's limited interpretation of this clause.

Even if the policy exclusion covers this type of

battery, however, the exclusion only precludes recovery in this

case if Burke's injuries also can be said to "arise out of" the

fight. Under New Hampshire law, "arising out of" is a very broad

term meaning "originating from or growing out of or flowing

from." Winnacunnet Coop. Sch. Dist. v. National Union Fire Ins.

Co., 84 F.3d 32, 35 (1st Cir. 1996) (citing Merrimack Sch. Dist.

v. National Sch. Bus Serv., Inc., 661 A.2d 1197, 1199 (N.H. 1995)

(quoting Carter v. Bergeron, 160 A.2d 348, 353 (N.H. 1960))).

While the concept of "arising out of" is broader than proximate

causation, it is not so broad as to encompass a "tenuous"

connection. See Cannon v. Maine Bonding & Casualty Co., 639 A.2d

270, 271 (N.H. 1994); Akerley v. Hartford Ins. Group, 616 A.2d

511, 515 (N.H. 1992).

United National argues that Burke's injuries arose out

of the altercation with the other patron insofar as that

altercation necessitated Tousley's doomed intervention. While

this argument has some plausibility, we hold that Burke's

injuries cannot be said to "arise out of" the initial attack.

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The spinal injury occurred when Tousley's "bear hug" and his

momentum from hurrying over to stop the fight caused Burke to

fall backward, into a table and onto the floor. All of the

damages in this tort action stem from a discrete intervening act

of alleged negligence, and this claim cannot be said to arise out

of earlier actions. Tousley had a completely different objective

from the brawling patron, and Burke's eventual injuries were not

caused by the blows he received in the fight. See Winnacunnet,

84 F.3d at 38 (observing that assault and battery exclusions are

intended to preclude coverage of claims where such excluded acts

immediately cause the injury). This is not a case in which a

bartender or bouncer joined sides in a donnybrook. The injury

caused by the employee in this case arose entirely out of his own

actions.

The district court's conclusion that the assault and

battery exclusion is inapplicable to the fight is affirmed on

these alternate grounds. See Frillz, Inc. v. Lader, 104 F.3d

515, 516 (1st Cir. 1997) (reviewing court is not bound by the

rationale of the lower court on summary judgment, but may affirm

"on any alternative ground made manifest by the record").

B. The "Bear Hug"
B. The "Bear Hug"

Having disposed of United National's argument that

Burke's fight precludes coverage, the applicability of the

assault and battery exclusion hinges on whether Tousley's attempt

to break up the fight itself constituted a "battery." Since

there is no definition of "battery" in the policy, we look to the

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common law definition of the term. According to the Restatement

(Second) of Torts, an actor is liable to another for battery if:

(a) he acts intending to cause a harmful
or offensive contact with the person of
the other or a third person, or an
imminent apprehension of such a contact,
and
(b) a harmful contact with the person of
the other directly or indirectly results.

Restatement (Second) of Torts 13 (1977). As both parties

acknowledge in their briefs, the disputed issue here is whether

Tousley had the requisite intent to cause an "offensive" contact

with Burke.1

United National refers this Court to section 19 of the

Restatement (Second), which provides that "bodily contact is

offensive if it offends a reasonable person's sense of personal

dignity." It argues that Tousley's protective "bear hug" would

offend a reasonable person's sense of dignity. We find this

argument unpersuasive.

Burke testified at his deposition that, from the moment

he saw Tousley about to grab him, he understood Tousley to be

acting in a peacekeeping role. No reasonable person would feel

their personal dignity offended by a bartender trying to prevent

fighting in his establishment. This would be a different case if

1 To commit an "assault" under the Restatement (Second) of
Torts, the actor must intend to cause an imminent apprehension in
another person of harmful or offensive contact. Restatement
(Second) of Torts 21 (1977). Because, under the common law,
the intent element of "battery" subsumes the intent element of
"assault," and because neither party argues that Tousley's bear
hug constituted an "assault" rather than a "battery," it will
suffice to inquire whether Tousley committed a battery.

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Tousley had hit or pushed Burke, however, it is undisputed that

Tousley was merely attempting to keep Burke out of harm's way.

Professor Prosser offered a helpful example to

distinguish between the intentional battery and negligence:

If an automobile driver runs down a man
in the street before him, with the desire
to hit him, or with the belief that he is
certain to do so, it is an intentional
battery; but if he has no such desire or
belief, but merely acts unreasonably in
failing to guard against a risk which he
should appreciate, it is negligence.

Prosser, Law of Torts, section 31 at 145 (4th ed. 1971). In this

case, Tousley's actions were negligent at most, and United

National's "offending dignity" argument is unavailing.

II. The Liquor Liability Exclusion
II. The Liquor Liability Exclusion

United National also seeks a declaratory judgment that,

to the extent that Burke's claims arise out of Penuche's sale or

service of alcoholic beverages, coverage is precluded by a

"liquor liability" exclusion. This exclusion bars claims for

"bodily injury or property damages for which the insured or his

indemnitee may be held liable . . . as a person or organization

engaged in the business of manufacturing, distributing, selling

or serving alcoholic beverages." However, in his Memorandum in

Support of Motion for Summary Judgment, Burke admitted "[t]here

is no allegation or evidence that Tousley or Penuche's would be

liable for bodily injury by reason of the 'violation of any

statute, ordinance or regulation' pertaining to the sale of

alcohol." In the face of this concession, United National's

request for a declaration on its "liquor liability" exclusion is

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superfluous. Under no reasonable construction of Burke's

complaint is Penuche's being sued for negligently furnishing

alcoholic beverages.

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III. The Court Order to Indemnify the Insured
III. The Court Order to Indemnify the Insured

Finally, United National argues that even if the

exclusions do not apply to Burke's tort claims, the district

court acted prematurely when it ordered United National to

indemnify the insured before a trial. The insurance company

argues that "[i]t is currently unknown precisely what the

evidence will be concerning the encounter," and that it was error

to "assume that the evidence will be as it has been presented in

discovery." This argument lacks any support in law. The New

Hampshire Supreme Court, as a matter of course, affirms court

orders to indemnify that are issued before trial. See, e.g.,

Trefethen v. New Hampshire Ins. Group, 645 A.2d 72, 75 (N.H.

1994) (affirming declaratory judgment that insurer had duty to

defend and indemnify claims); White Mountain Constr. Co. v.

Transamerica Ins. Co., 631 A.2d 907, 910 (N.H. 1993) (same).

If Burke prevails at trial, and we have determined that

no exclusions in the policy apply, United National simply cannot

avoid its obligation. Federal courts cannot limit their rulings

in anticipation of potential surprise revelations during trial.

If, in fact, some heretofore unanticipated development during

trial negates the rationale of this or any judgment, the affected

party may file a Motion for Relief From Judgment or Order in

accordance with Rule 60(b) of the Federal Rules of Civil

Procedure. However, we will not refrain from affirming an order

awarding indemnification for insurance claims on summary judgment

whereallavailablefactsandlawindicatethatsuchanorderisappropriate.

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For the reasons stated herein, the district court's

award for summary judgment and order for the defense and

indemnification of Thomas Burke's claims is affirmed.

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