Insurance Company v. Penuche's, Inc

• Court: Court of Appeals for the First Circuit
• Decided: November 10, 1997
• Docket: 97-1476
• Status: Published

Opinion

USCA1 Opinion

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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