United States District Court, D. Arizona
G. Campbell United States District Judge.
Ibrahima Fall filed this breach of contract action against
Defendant First Mercury Insurance Company, alleging that
First Mercury improperly refused to defend Gin-Cor, LLC
(“Gin-Cor, ” or the “Insured”) in the
underlying tort action, Fall v. Gin-Cor, LLC d/b/a/ Myst
Nightclub, et. al., Maricopa County Superior Court No.
CV2012-OI2552. Doc. 1-1. The parties have filed cross-motions
for summary judgment. Docs. 11, 20. The request for oral
argument is denied because the issues are fully briefed
(Docs. 12-19, 20-22, 26-28) and oral argument will not aid
the Court's decision. See Fed. R. Civ. P. 78(b);
Partridge v. Reich, 141 F.3d 920, 926 (9th Cir.
1998). For the reasons that follow, the Court will deny both
April 28, 2012, Plaintiff was “a business invitee and
guest” of Gin-Cor's nightclub. Doc. 12, ¶ 1;
Doc. 22 at 1-2. Around 1:55 a.m., after speaking with a
female patron of the nightclub, Plaintiff was approached by a
nightclub bouncer and informed that the female patron was the
bouncer's girlfriend. Doc. 12, ¶ 4. Before Plaintiff
could respond, “multiple additional men who . . . were
also security officers/bouncers and employed by [Gin-Cor],
then attacked, assaulted, and violently hit the Plaintiff by
punching him, kicking and stomping on him, and ultimately,
dragging him out of the nightclub and dumping him on the
sidewalk.” Id., ¶ 6. Police investigated
the incident, but no charges were filed because “it was
not obvious that there was excessive force used by the
bouncers of the nightclub in removing [Plaintiff][.]”
Id., ¶ 7.
was taken to a hospital by ambulance and an imaging study
revealed a “comminuted fracture through the lateral
tibial plateau, with slight depression of the fracture
fragments and slight impaction in this area.”
Id., ¶ 9. On May 2, 2012, Plaintiff underwent
surgery to correct the fracture. Id., ¶ 11.
Plaintiff alleges that he “incurred $38, 829.01 in
medical bills as a result of his injuries, and further
suffered lost wages of approximately $11, 000, for a total of
$49, 829.01 in special damages.” Id., ¶
Underlying Litigation and Damron Agreement.
September 10, 2012, Plaintiff filed a complaint against
Gin-Cor. Plaintiff amended the complaint three days later.
Id., ¶ 15. Plaintiff alleged five claims:
“(1) Assault; (2) Battery; (3) Negligence - Failure to
Train; (4) Negligence - Unsafe Condition/Failure to
Supervise; (5) Punitive Damages.” Id., ¶
16. After being served, Gin-Cor attempted to tender the
defense of all claims to First Mercury. Id., ¶
20. Gin-Cor believed it was insured by First Mercury through
commercial general liability policy number EPCA000805 with
liability limits of $1, 000, 000 per occurrence and $2, 000,
000 in the aggregate for the policy period from June 27, 2011
to June 27, 2012 (the “Policy”). Id.,
¶ 19. On December 20, 2012, First Mercury issued a
letter denying any duty to defend or indemnify Gin-Cor for
the claims asserted by Plaintiff. Id., ¶ 20;
Doc. 19 at 7 (“Exhibit J”). First Mercury denied
coverage based on exclusions in the Policy for
“Expected or Intended Injury, ” “Assault
& Battery, ” and “Punitive Damages.”
Doc. 12, ¶ 21.
August 22, 2013, Gin-Cor answered the amended complaint. Doc.
15 at 10 (Exhibit H - Gin-Cor's answer is dated August
22, 2013). But see Doc. 12, ¶ 17 (“The
nightclub answered the amended complaint on August 22,
2012.”). Gin-Cor denied liability, but admitted that:
“(1) it owed Plaintiff a duty of reasonable care by
adequately training its employees in proper security
measures; and (2) it owed a duty of reasonable care to
maintain a safe environment for all of its business
invitees.” Doc. 12, ¶ 18. On July 30, 2014,
Plaintiff and Gin-Cor stipulated to a judgment against
Gin-Cor for $250, 000. Id., ¶ 23. Gin-Cor
assigned its rights under the Policy to Plaintiff, Plaintiff
covenanted to not execute the judgment against Gin-Cor, and
Plaintiff retained the right to seek collection of the
judgment from First Mercury under the Policy. Id.,
¶¶ 21-23. This type of agreement is known in
Arizona as a Damron agreement. See Damron v.
Sledge, 460 P.2d 997 (Ariz. 1969); see also Parking
Concepts, Inc. v. Tenney, 83 P.3d 19, 20 & n.1
December 11, 2015, Plaintiff filed this action against First
Mercury, alleging breach of contract and bad faith. Doc. 1-1,
¶¶ 22-31. Plaintiff now moves for partial summary
judgment on his breach of contract claims. Doc. 11. First
Mercury has filed a response and cross-motion for summary
judgment on all of Plaintiff's claims, arguing that the
underlying action is not covered under the Policy and
Plaintiff's bad faith claim is time-barred. Doc. 20.
seeking summary judgment “bears the initial
responsibility of informing the district court of the basis
for its motion, and identifying those portions of [the
record] which it believes demonstrate the absence of a
genuine issue of material fact.” Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Summary judgment is
appropriate if the evidence, viewed in the light most
favorable to the nonmoving party, shows “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). Summary judgment is also appropriate against a party
who “fails to make a showing sufficient to establish
the existence of an element essential to that party's
case, and on which that party will bear the burden of proof
at trial.” Celotex, 477 U.S. at 322. Only
disputes over facts that might affect the outcome of the suit
will preclude the entry of summary judgment, and the disputed
evidence must be “such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
party contests that Arizona law applies to this case. Under
Arizona law, insurance contracts are interpreted according to
their plain and ordinary meaning. Keggi v. Northbrook
Prop. & Cas. Ins. Co., 13 P.3d 785, 788
(Ariz.Ct.App. 2000). “If a clause is susceptible to
different constructions, [a court will attempt] to discern
the meaning of the clause ‘by examining the purpose of
the exclusion in question, the public policy considerations
involved and the transaction as a whole.'”
State Farm Mut. Auto. Ins. Co. v. Connolly, 132 P.3d
1197, 1198 (Ariz.Ct.App. 2006) (quoting Ohio Cas. Ins.
Co. v. Henderson, 939 P.2d 1337, 1339 (Ariz. 1997)).
“If all else fails, and the clause remains ambiguous,
the insurance policy will be construed to provide
coverage.” Id. “Generally, the insured
bears the burden to establish coverage under an insuring
clause, and the insurer bears the burden to establish the
applicability of any exclusion.” Keggi, 13
P.3d at 788.
argues that he is entitled to partial summary judgment
“because the claims for negligence asserted in the
amended complaint triggered First Mercury's duty to
defend its insured, but First Mercury wrongfully breached
that duty.” Doc. 11 at 7. First Mercury denies that it
had any duty to defend Gin-Cor because (1) the Policy's
assault and battery exclusion precludes coverage for all
claims asserted by Plaintiff in the underlying action,