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Canopius U.S. Insurance, Inc. v. Yanhos, Inc.

United States District Court, N.D. Indiana, Fort Wayne Division

July 10, 2017

CANOPIUS U.S. INSURANCE, INC., Plaintiff,
v.
YANHOS, INC., et al., Defendants.

          OPINION AND ORDER

          Robert L. Miller, Jr. Judge.

         Whether Canopius U.S. Insurance must cover a bar's liability for a brawl depends on whether the insurance broker was Canopius's agent. There isn't enough evidence for a jury to conclude that he was Canopius's agent, and so Canopius has no coverage obligations and the court grants its motion for summary judgment.

         I. Background

         This is a dispute over whether Canopius has any obligation to provide insurance coverage for, to defend against, or to indemnify for losses related to a fight at the Hideaway Bar & Grill. There's discrepancy about who started the fight. All agree, though, that bar employee Tequilla Hoskins punched Jordan Funk in the face, breaking her nose. Ms. Hoskins was then convicted of battery.

         Ms. Funk sued in Grant Superior Court I. She sued Ms. Hoskins for breaking her nose and the related medical expenses, pain, anguish, and emotional distress. She also sued Yanhos, Inc., which owns the Hideaway, and Charles Hoskins and Rudolph Yanis, who own Yanhos. She claimed they had inadequate security at the bar and inadequate control over their employees.

         Canopius is Yanhos's commercial general liability insurer. Canopius sued Yanhos, Ms. Hoskins, Mr. Yanis, Mr. Hoskins, and Ms. Funk in this court for a declaration that Canopius has no obligation to cover Ms. Funk's claims, and that it has no duty to defend or to indemnify Yanhos, Mr. Yanis, Mr. Hoskins, or Ms. Hoskins against or for Ms. Funk's claims. The court already has entered default judgments against Ms. Hoskins and Ms. Funk. Canopius now seeks summary judgment against Yanhos, Mr. Yanis, and Mr. Hoskins. The court heard oral argument on July 6, 2017.

         The defendants don't dispute whether liability from the fight falls beyond Canopius's written coverage obligations.[1] They parry that Canopius misrepresented their coverage to include bar-fights. Whether Canopius did this depends on how the Canopius insurance policy was sold to Yanhos.

         John Burnette sold Canopius insurance to Yanhos. He considers himself an independent insurance agent. Mr. Burnette doesn't have direct contractual relationships with insurers that cover high-risk customers, such as bars. Instead, he goes through a managing general agent to procure policies for these customers. The customer fills out the application, Mr. Burnette passes it on to the managing general agent, the managing general agent obtains quotes from different insurance companies, and Mr. Burnette then presents one or more quotes to the customer.

         Mr. Burnette worked with Mr. Hoskins to obtain insurance for the Drunken Chicken, a different bar that Mr. Hoskins used to operate. In his deposition, Mr. Burnette said that when he sold the policy for the Drunken Chicken, he explained to Mr. Hoskins that the policy didn't cover altercations. He said that commercial general liability policies always exclude assault and battery claims. He said they discussed the fact that Mr. Hoskins wasn't buying a liquor liability policy for the Drunken Chicken. Mr. Burnette later clarified in his affidavit that the Drunken Chicken policy had limited liability coverage for assault and battery, but no liquor liability coverage. Mr. Hoskins said he remembered asking Mr. Burnette for coverage for everything, including bar fights, for the Drunken Chicken.

         Mr. Burnette and Mr. Hoskins worked together again to insure the Hideaway. Mr. Burnette says he explained the insurance options for the Hideaway similarly to the way he did for the Drunken Chicken. Mr. Burnette said he obtained a quote for a liquor liability policy, but because of the price, Mr. Hoskins opted for a general commercial liability policy, which excludes assault and battery claims. Mr. Hoskins recalls it differently: he says he remembered asking for coverage for everything at the Hideaway, just like he did with the Drunken Chicken, and that when he picked up the policy, Mr. Burnette explained that it provided coverage for everything Mr. Hoskins wanted.

         In his affidavit, Mr. Burnette explained that because the Hideaway offered food and drink, it was a low enough risk to qualify for Canopius insurance. The Drunken Chicken only sold drinks. This made its policy significantly more expensive, but that more expensive policy also included limited liability coverage for assault and battery.

         Mr. Burnette doesn't have a contract with Canopius. Roush Insurance Services was the managing general agent that provided Mr. Burnette with an insurance quote for the Hideaway. Mr. Burnette gave Mr. Hoskins's application to Roush. Roush then obtained quotes from Canopius and Scottsdale Insurance Company. Roush determined that Canopius had the best policy, and sent Mr. Burnette the Canopius quote to present to Mr. Hoskins. Because the Canopius policy's rate was substantially better than the Scottsdale policy's rate, Mr. Burnette presented only the Canopius policy to Mr. Hoskins, and that's what Mr. Hoskins purchased.

         II. Standard of Review

         Summary judgment is appropriate when the pleadings, discovery materials, disclosures, and affidavits demonstrate no genuine issue of material fact, such that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Protective Life Ins. Co. v. Hansen, 632 F.3d 388, 391-392 (7th Cir. 2011). The evidence and all inferences that reasonably can be drawn from it must be construed in the light most favorable to the non-moving parties. Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 255 (1986). As the moving party, Canopius bears the burden of informing the court of the basis for its motion, together with evidence demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If Canopius meets that burden, the defendants can't rest upon the allegations in the pleadings, but must “point to evidence that can be put in admissible form at trial, and that, if believed by the fact-finder, could support judgment in [their] favor.” Marr v. Bank of Am., N.A., 662 F.3d 963, 966 (7th Cir. 2011); Hammel v. Eau Galle ...


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