Pennsylvania- Reversing himself, a federal judge has ruled that an insurer has no duty to indemnify the owner of a strip club for a bouncer’s assault on a patron because the policy’s assault-and-battery exclusion was triggered by the bouncer’s conviction on a criminal assault charge.

Chief U.S. District Judge Harvey Bartle III of the Eastern District of Pennsylvania had previously ruled in favor of the club in Essex Insurance Co. v. RMJC Inc., declaring that a civil jury’s finding of negligence on the part of the club owner meant that the incident was covered under the policy and the insurer must cover the jury’s $350,000 award.

But the 3rd U.S. Circuit Court of Appeals reversed, finding that Bartle had erred by relying entirely on the civil jury’s negligence finding when making his ruling on the indemnity issue.

Now, after holding a nonjury trial, Bartle has ruled that the insurer has no duty to cover the verdict because the evidence clearly shows that an assault occurred.

Significantly, Bartle also ruled that the insurer is entitled to restitution of more than $410,000 it paid to satisfy the judgment.

Bartle rejected RMJC’s argument that, where an express contractual relationship exists between the parties, remedies sounding in restitution or unjust enrichment are generally unavailable.

“It was clear to Essex and RMJC from the very beginning … that indemnification was contested and would not be resolved until after the state court negligence trial ended,” Bartle wrote.

The ruling is a victory for attorneys Richard W. Yost, Phillip J. Meyer and Paul D. Hendriksen of Yost & Tretta.

According to court papers, Mark Jaworski attended his brother-in-law’s bachelor party at the Show and Tel Show Bar on March 26, 2000, and was involved in an altercation with a bouncer, Terrence Benson.

Benson was later convicted of simple assault after a nonjury trial in the Philadelphia Court of Common Pleas. Jaworski then filed a civil suit against RMJC, alleging that Benson had attacked him inside the club, dragged him out a side exit, and threw him down the stairs, causing serious injuries to his wrist.

In the suit, Jaworski pursued only negligence claims and did not seek recovery on an assault and battery theory.

Soon after the suit was filed, Essex went to federal court and filed a declaratory judgment action, seeking a ruling that it had no duty to defend or indemnify RMJC in Jaworski’s suit because his injuries were caused by an assault.

But Bartle found that since Jaworski was alleging only negligence claims, the insurer clearly had a duty to tender a defense. Bartle then stayed the insurer’s suit, saying the court would address the issue of indemnification after the state court suit was resolved.

In February 2003, an 11-member jury unanimously found in favor of Jaworski and against RMJC, and awarded $350,000 in damages.

Essex paid the entire judgment in May 2005, including more than $60,000 in delay damages.

When the dispute returned to federal court, Bartle ruled in favor of the club, finding that the insurer should cover the judgment because the jury had found negligence on the part of RMJC, which was covered under the insurance policy.

But the 3rd Circuit ruled that the civil jury’s finding of negligence was not enough to decide the issue of indemnification and ordered Bartle to reopen the case to determine whether the assault-and-battery exclusion would nonetheless apply.

Now Bartle has concluded that the terms of the exclusion are unambiguous and that Essex carried its burden of proving that an assault occurred and that it was the “but for” cause of Jaworski’s injuries.

Bartle also found that Essex is entitled to be reimbursed more than $410,000 because it paid the judgment after Jaworski’s verdict was upheld by the Pennsylvania courts.

RMJC’s lawyer, Joel E. Oshtry, argued that Essex had no valid claim for reimbursement on an unjust enrichment theory because the policy is a contract and does not provide for reimbursement.

Bartle disagreed, saying “Essex is not attempting to modify its contract with RMJC so as to preclude a claim for restitution premised on unjust enrichment. The insurance policy issued by Essex to RMJC simply does not address the question concerning the payment by Essex of an underlying judgment against its insured when the issue of which of the two is ultimately responsible for the judgment remains contested.”

If Essex had “adopted a wait-and-see attitude” and refused to pay Jaworski until the conclusion of the insurance dispute, Bartle said, the judgment would have continued to grow with added delay damages.

“By paying the money to Jaworski when it did before this court decided whether it or RMJC would ultimately be liable, Essex protected not only itself but also its insured, RMJC, from having to expend an even larger amount when this action was finally decided,” Bartle wrote.

If not for Essex’s payment of the judgment, Bartle said, RMJC “would now be faced with paying Jaworski a significantly greater amount.”

As a result, Bartle said, “it would be unconscionable for RMJC, which is liable for the Jaworski judgment, not to pay restitution to Essex.”

Oshtry declined to comment on the ruling.