Insurer Needn’t Defend Bars Sued For Fatal Hit-And-Run

Source: Law360

By Jeff Sistrunk

July 2, 2018

A South Carolina federal judge ruled Monday that Scottsdale Insurance Co. has no duty to defend or indemnify a pair of bars in a suit alleging they overserved alcohol to a woman accused of mortally wounding a man with her car while fleeing the scene of a brawl, holding that a policy exclusion for claims arising out of assault and battery forecloses coverage.

While opining that the underlying incident was “most unfortunate indeed,” U.S. District Judge A. Marvin Quattlebaum Jr. found that the exclusion clearly relieves Scottsdale of any obligation to cover the two Murrells Inlet, South Carolina, venues in the still-pending suit filed by the estate of Michael Jason Dunn.

The estate claims that The Bar and the Sandy Monkey negligently served excessive quantities of alcohol to Janelle Castillo on the night she allegedly ran over Dunn after he was knocked unconscious while trying to break up a fight involving Castillo’s boyfriend. Dunn later died of his injuries, according to court documents.

In the insurance dispute, the estate argued that the assault and battery exclusion in the bars’ liability policies with Scottsdale is inapplicable because Castillo was not indicted for intentional assault or battery. But Judge Quattlebaum said the events that led to Dunn being rendered unconscious cannot be separated from Castillo’s alleged conduct in fleeing the scene.

“Ms. Castillo’s alleged conduct is neither isolated nor independent from [Dunn] being knocked unconscious,” the judge wrote. “Instead, the relationship between the assault and battery and the ultimate injury, based on the record before the court, was immediate and direct. It, therefore, arose from the assault and battery as contemplated under the policy exclusion.”

In January 2017, while attempting to break up a brawl that had spilled out into the Sandy Monkey’s parking lot, Dunn was knocked out by one of the combatants, according to court documents.

As Castillo and her boyfriend allegedly fled the scene in her SUV, the vehicle ran over Dunn’s head, “causing great bodily harm,” court documents state. Dunn died 10 days later, and Castillo was arrested and indicted on charges of reckless homicide and fleeing the scene of an accident, court papers indicate. The charges remain pending.

Dunn’s estate lodged the underlying suit against the Sandy Monkey, The Bar, Castillo and others in South Carolina state court in July 2017. The estate said that, on the night of the incident, Castillo first became intoxicated at The Bar and then continued drinking excessively at the Sandy Monkey.

Scottsdale filed suit in January, seeking a declaration that it doesn’t have to defend or indemnify the two bars in the estate’s suit. The insurance company took the position that the assault and battery exclusion plainly precludes coverage for the estate’s claims, given the totality of the circumstances leading to Dunn’s fatal injuries.

Dunn’s estate countered that the court must view Castillo’s alleged act of running over Dunn as independent from the blows that rendered him unconscious. It emphasized that neither of the criminal charges against Castillo requires a showing that she intended to injure Dunn.

Judge Quattlebaum was unconvinced by the estate’s arguments, saying that, “in light of the [Scottsdale] policies’ language, the court cannot just proceed as though the brawl never happened.” The judge noted that Castillo allegedly fled the scene on the instructions of her boyfriend, who was directly involved in the brawl.

“In this light, the injury to [Dunn] was ’caused by’ him being knocked unconscious by the fight and Ms. Castillo’s act of running over the decedent as she fled from the fight, at the direction of her male companion who was in the fight,” the judge wrote.

The judge concluded that, because Scottsdale has no duty to defend The Bar or the Sandy Monkey in the Dunn estate’s suit, it also has no duty to indemnify the bars for any potential court judgment or settlement.

Attorneys for Scottsdale, the estate and the bars did not immediately respond to requests for comment.

Scottsdale is represented by Robert Mills Kennedy Jr. of Phelps Dunbar LLP.

The Dunn estate is represented by William Stuart Duncan of the Law Office of William Stuart Duncan.

The Bar is represented by Joseph Stanley Sandefur of Parsons Ouverson Stark Guest & Sandefur PA.

The Sandy Monkey is represented by Chelsea Lane Monroe and Douglas Charles Baxter of Richardson Plowden & Robinson PA.

The case is Scottsdale Insurance Co. v. GS Thadius LLC et al., 4:18-cv-00099, in the U.S. District Court for the District of South Carolina.