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Graf v. Hospitality Mutual Insurance Co.

United States Court of Appeals, First Circuit

June 11, 2014

KATIE GRAF, Plaintiff, Appellant,
v.
HOSPITALITY MUTUAL INSURANCE COMPANY, Defendant, Appellee

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Kenneth P. Neiman, U.S. Magistrate Judge.

Mark J. Albano, with whom Dalsey & Albano was on brief, for appellant.

James E. Harvey, Jr., with whom John F. Brosnan and O'Malleyand Harvey, LLP were on brief, for appellee.

Before Lynch, Chief Judge, Thompson, Circuit Judge, and Smith,[*] District Judge.

OPINION

Page 75

SMITH, Chief District Judge.

The Appellee, Hospitality Mutual Insurance Company (" Hospitality" ), issued a Liquor Liability Insurance Policy (the " Policy" ) to Torcia & Sons, Inc. (" Torcia" ). Torcia owns and operates the Fat Cat Bar & Grill (the " Fat Cat" ), a Springfield, Massachusetts establishment. The Policy represented the full extent of Torcia's applicable liability coverage.

The Appellant, Katie Graf, secured a judgment in her favor in Massachusetts state court after she was injured while a patron on the Fat Cat's premises. Following a jury trial, Graf was awarded $500,000 in damages and $111,124.26 in prejudgment interest against Torcia and a Fat Cat employee.[1]

Hospitality disclaimed liability for the prejudgment interest portion of the award, arguing that the terms of the Policy limited coverage to $500,000 per person, per incident. As a result, Graf sought and was granted a writ of attachment on Torcia's liquor license to secure the excess judgment.

Graf and Torcia sought payment from Hospitality for the cost of a bond to release

Page 76

the attachment. To obtain such a bond, Hospitality would have been required to post approximately $115,000 in cash or other collateral, and pay an annual premium of $2,300. Again, Hospitality refused on grounds that it was not liable for the cost of the bond because the $500,000 damages award had independently triggered the Policy's coverage limit.

The parties then entered into a settlement agreement. In relevant part, the settlement agreement provided that Graf would discharge the attachment of the liquor license and Torcia would assign its rights against Hospitality to Graf. Pursuant to the assignment of rights, Graf brought suit against Hospitality in Massachusetts state court, and the action was then removed to federal court in the District of Massachusetts.[2]

In the ensuing litigation, the magistrate judge agreed with Hospitality's interpretation of the Policy and granted Hospitality's Motion to Dismiss, see Graf v. Hospitality Mut. Ins. Co.,956 F.Supp.2d 337 (D. Mass. 2013), then denied Graf's subsequent Motion to Amend Judgment in a text order. The magistrate judge found that the $500,000 damages award represented the full extent of recoverable proceeds under the Policy. He reasoned that to require Hospitality to pay for the cost of the bond would have expanded Hospitality's liability in ...


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