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Ma-Do Bars, Inc., Doing Business v. Penn-America Insurance Company and Penn-Star Insurance

December 9, 2010

MA-DO BARS, INC., DOING BUSINESS AS THE HUNTER VILLAGE INN; DOU-MAS REALTY, INC.; AND THOMAS S. SEBALD, PLAINTIFFS,
v.
PENN-AMERICA INSURANCE COMPANY AND PENN-STAR INSURANCE COMPANY, DEFENDANTS.



MEMORANDUM-DECISION AND ORDER

I. Introduction

Plaintiffs Ma-Do Bars, Inc., Dou-Mas Realty, Inc., and Thomas Sebald brought this action against defendants Penn-America and Penn-Star Insurance Companies, alleging that Penn-America and Penn-Star are obligated to defend and indemnify Ma-Do, Dou-Mas, and Sebald in an underlying personal injury and wrongful death action brought by the Estate of Peter Shine. (See generally Dkt. Nos. 1:2, 11:2.) Pending are plaintiffs' motions for summary judgment, (Dkt. Nos. 11, 12), and defendants' cross-motion for summary judgment, (Dkt. No. 13).All parties seek a declaratory judgment under FED. R. CIV. P. 57 regarding defendants' obligations to plaintiffs. For the reasons that follow, the court denies plaintiffs' motions, grants defendants' motion, and declares that defendants are not obligated to defend Ma-Do, Dou-Mas, or Sebald in the underlying action.

II. Background

Ma-Do Bars, Inc. and Dou-Mas Realty, Inc. are corporations organized and existing under New York State law with their principal place of business in New York. (See Ma-Do Compl. ¶¶ 2-3, Dkt. No. 1:2.) At all times relevant to this action, including February 5, 2006, Ma-Do operated the Hunter Village Inn, a bar and restaurant located in Hunter, New York. (See id. at ¶¶ 13-14.) Dou-Mas owned the premises upon which the Hunter Village Inn operated. (See id.) And Thomas Sebald worked for MaDo as a bouncer and runner. (See Pls. SMF ¶¶ 5-6, Dkt. No. 12:2.)

Penn-America and Penn-Star Insurance Companies are Pennsylvania corporations with their principal place of business in Pennsylvania. (See id. at ¶¶ 7-8.) Penn-Star issued a commercial general liability insurance policy to Ma-Do and Dou-Mas covering the Hunter Village Inn's premises for the period of December 22, 2005, to December 22, 2006. (See Defs. SMF ¶ 9, Dkt. No. 16:20.)

Under the insurance policy, coverage may be excluded on several bases. First, coverage is excluded for damages that arise from an "assault," "battery," or "physical altercation" occurring on the premises of the Hunter Village Inn. (Safranko Aff., Ex. M at 88, Dkt. No. 11:14.) The specific language of this "assault or battery exclusion" is:

[T]his insurance does not apply to liability for damages because of "bodily injury", "property damage" ... medical expenses arising out of an "assault", "battery", or "physical altercation" that occurs in, on, near or away from an insured's premises:

1) Whether or not caused by, at the instigation of, or with the direct or indirect involvement of an insured, an insured's employees, patrons or other persons in, on, near or away from an insured's premises, or

2) Whether or not caused by or arising out of an insured's failure to properly supervise or keep an insured's premises in a safe condition, or

3) Whether or not caused by or arising out of any insured's act or omission in connection with the prevention, suppression, failure to warn of the "assault", "battery" or "physical altercation", including but not limited to, negligent hiring, training and/or supervision.

4) Whether or not caused by or arising out of negligent, reckless or wanton conduct by an insured, an insured's employees, patrons or other persons.

(Id.) The policy defines "assault" as "any attempt or threat to inflict injury to another including any conduct that would reasonably place another in apprehension of such injury"; "battery" as "the intentional or reckless physical contact with or any use of force against a person without his or her consent that entails some injury or offensive touching whether or not the actual injury inflicted is intended or expected"; and "physical altercation" as "a dispute between individuals in which one or more persons sustain bodily injury arising out of the dispute." (Id.)

Second, the policy contains a "liquor liability exclusion," according to which ...


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