Thomas A. Carpenter, Appellant-Plaintiff,
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,
Thomas A. Carpenter, Lovell's Lounge and Grill, LLC, and Jeremy Lovell d/b/a Lovell's Lounge and Grill, Appellants-Defendants
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
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.
and Procedural History
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).
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.
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.
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.
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
Id. at 51.
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.
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
Id. at 288.
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.
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
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 ...