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Carpenter v. Lovell's Lounge and Grill, LLC

Court of Appeals of Indiana

September 8, 2016

Thomas A. Carpenter, Appellant-Plaintiff,
v.
Lovell's Lounge and Grill, LLC and Jerry Dean Johnson, Defendants, and The Cincinnati Specialty Underwriters Insurance Company, a subsidiary of the Cincinnati Insurance Companies, Garnishee-Defendant The Cincinnati Specialty Underwriters Insurance Company, Appellee-Plaintiff,
v.
Thomas A. Carpenter, Lovell's Lounge and Grill, LLC, and Jeremy Lovell d/b/a Lovell's Lounge and Grill, Appellants-Defendants

         Appeal from the Henry Circuit Court The Honorable Mary G. Willis, Judge Trial Court Cause No. 33C01-1308-CT-27

          ATTORNEY FOR APPELLANTS Mark A. Matthes Yoder Ainlay Ulmer & Buckingham, LLP Goshen, Indiana

          ATTORNEYS FOR APPELLEE David S. Wirth Fairfield, Ohio Kristine Lindley Richard R. Skiles Skiles DeTrude Indianapolis, Indiana

          Crone, Judge.

         Case Summary

         [¶1] This case arises from an incident at Lovell's Lounge and Grill, in which Thomas A. Carpenter was injured by Jerry Dean Johnson. Carpenter, Lovell's Lounge and Grill, LLC, and Jeremy Lovell d/b/a Lovell's Lounge and Grill (collectively "Appellants") appeal the judgment in favor of The Cincinnati Specialty Underwriters Insurance Company ("CSU") on its action seeking a declaratory judgment regarding its obligations under its insurance policy with Lovell's Lounge. In that judgment, the trial court found that CSU had no obligation to make payments under a consent judgment ("the Consent Judgment"), in which Carpenter and Lovell's Lounge agreed that Carpenter's injuries were caused by Lovell's Lounge negligence or that Lovell's Lounge was vicariously liable for Johnson's negligence. Appellants argue that the trial court erred in finding that the Consent Judgment was the product of bad faith or collusion, and therefore collateral estoppel does not require CSU to be bound by the determinations of liability and damages in the Consent Judgment. Because we conclude that CSU has carried its burden to show by clear and convincing evidence that the Consent Judgment was the product of bad faith or collusion, we conclude that the trial court did not err in finding that collateral estoppel does not require CSU to be bound by the Consent Judgment. Therefore, we affirm.

         Facts and Procedural History

         [¶2] Lovell's Lounge operates Lovell's Lounge and Grill ("the Lounge") in New Castle. Jeremy Lovell is the registered agent for Lovell's Lounge. In May 2012, Carpenter went to the Lounge, and within moments of entering, he was injured by Jerry Dean Johnson ("the Incident"). Johnson was charged with class C felony battery resulting in serious bodily injury for his actions in injuring Carpenter. At the trial, Carpenter testified that upon entering the Lounge, he heard Johnson say, "You're stupid for coming in here." Appellee's App. at 60. Carpenter also testified that Johnson hit him in the left jaw, causing him to fall, and kicked him in the left eye. Id. at 61. In addition, Carpenter testified that a couple months prior to the Incident, Johnson threatened to hurt him because Johnson was upset that Carpenter was dating Johnson's ex-girlfriend. Id. at 63-64. A jury found Johnson guilty as charged. Johnson appealed, and this Court affirmed his conviction. Johnson v. State, No. 33A01-1306-CR-266 (Ind.Ct.App. Dec. 31, 2013), trans. denied (2014).

         [¶3] In August 2013, Carpenter filed a verified complaint against Lovell's Lounge and Johnson based on the Incident. The complaint's "Facts" section contained the following allegation: "Within moments of entering [the] Lounge, Carpenter was brutally attacked by [Johnson] with numerous punches and kicks." Appellants' App. at 41. In the "Parties and Jurisdiction" section, the complaint alleged that "Johnson [was] an employee of and/or performed services for Lovell's Lounge." Id. at 40.

         [¶4] Carpenter's complaint included three counts. In Count I, a claim for civil assault and battery, Carpenter alleged that "Johnson did effectuate a civil assault and battery upon [him], " and "intended to cause a harmful or offensive contact with [him], " which caused severe bodily injury to him. Id. at 42. In Count II, a negligence claim based on premises liability, Carpenter alleged that he was an invitee and that Lovell's Lounge breached its duty to him by failing to protect him from "expected criminal acts, " failing to "prevent a reasonably foreseeable attack by [Johnson], " and "failing to manage the [Lounge] in a manner that took previously known threats or acts of violence into consideration of the safety of patrons, including Carpenter." Id. at 43. In Count III, a claim based on a Dram Shop Act violation, Carpenter alleged that Lovell's Lounge furnished Johnson with alcohol when Johnson was visibly intoxicated and Johnson's intoxication was a proximate cause of Carpenter's injury and damages. Id.

         [¶5] Lovell's Lounge was insured by CSU under a commercial general liability policy ("the Policy") and sought insurance coverage from CSU for Carpenter's complaint. However, in October 2013, CSU denied coverage to Lovell's Lounge on several grounds, including that the Policy contained an exclusion for assault and battery.

         [¶6] In July 2014, Carpenter filed a verified amended complaint against Lovell's Lounge and Johnson. The amended complaint was identical to the first complaint except for four paragraphs added to the end of Count III, which contained the following allegations:

38. Johnson owed Carpenter a duty not to cause harm to the person or property of Carpenter.
39. On or about May 12, 2012, Johnson negligently breached the duty of care by coming into physical contact with Carpenter at which time Johnson accidently caused bodily injury to Carpenter.
40. As a proximate result of Johnson's negligence Carpenter sustained injuries … .
41. Lovell's Lounge owed Carpenter, an invitee, a duty to protect him from foreseeable negligent harm, and/or [] to warn of foreseeable harm. Lovell's Lounge breached that duty.

Id. at 51.

         [¶7] Lovell's Lounge sought insurance coverage from CSU based on Carpenter's amended complaint. In a letter dated August 4, 2014, CSU again denied coverage based on the Policy's exclusion for assault and battery.

         [¶8] On November 14, 2014, attorney Mark A. Matthes filed an appearance for Carpenter. At that time, Lovell's Lounge was represented by attorney Robert Emmerson. Matthes and Emmerson attempted to negotiate a consent judgment between Carpenter and Lovell's Lounge. On December 17, 2014, Emmerson sent Matthes the following email:

I would kindly request until Jan. 9th for Lovell's Lounge to file an answer. I am trying to get a final answer from Jeremy regarding his intentions, but I cannot sign the proposed consent judgment as drafted. As we have discussed, I do not believe my ethical obligations to the court would allow me to sign a judgment which states that Jerry Johnson was an agent of Lovell's Lounge at the time of the incident.

Id. at 288.

         [¶9] On December 31, 2014, Emmerson withdrew his appearance on behalf of Lovell's Lounge. During his deposition, Jeremy testified that Emmerson withdrew because Emmerson had charged him $7000 for legal fees and Lovell "told [Emmerson] I wasn't gonna pay him." Id. at 215.

         [¶10] On February 25, 2015, Carpenter and Lovell's Lounge submitted their Consent Judgment to the trial court, which the court approved and entered. The Consent Judgment provided in relevant part as follows:

2. Upon entering Lovell's Lounge, [Johnson] negligently came into physical contact with Carpenter, accidently causing him serious bodily injury. The harm was neither intended nor expected from the standpoint of Johnson or Lovell's Lounge.
….
6. Carpenter was a business invitee, and as such, Lovell's Lounge owed a duty of reasonable care, including the duty to warn Carpenter of foreseeable ...

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