United States District Court, D. Massachusetts
FINDINGS OF FACTS AND RULINGS OF LAW
TIMOTHY S. HILLMAN DISTRICT JUDGE
early morning hours of November 28, 2010, Kailee Higgins was
seriously injured in an automobile accident after leaving her
employ as an exotic dancer at a nightclub in Worcester called
Centerfolds II, owned by P.J.D. Entertainment of Worcester,
Inc. (“P.J.D.”). P.J.D. was insured by Capitol
Specialty Insurance Corporation (“Capitol”). Ms.
Higgins alleges that she was served alcohol while underage
that made her intoxicated and that she was allowed to drive
despite being obviously intoxicated. Ms. Higgins claims that
Capitol violated M.G.L. C. 176D by “failing to adopt
and implement reasonable standards for the prompt
investigation of claims arising under insurance
policies” (Count III); that Capitol violated M.G.L. C.
176D by “refusing to pay her claim against P.J.D.
without conducting a reasonable investigation based upon all
available information” (Count IV); and that Capitol
violated the M.G.L. C. 176D by “failing to effectuate
prompt, fair, and equitable settlements of her claim against
P.J.D. in which liability has become reasonable clear”
(Count V). After careful consideration, review of the
evidence in this case and the proposed findings and rulings
from counsel I find for the Defendant, Plaintiff in
Counterclaim, Ms. Higgins in the amount of $5, 400, 000.00. .
November 27, 2010 the Plaintiff Kailee Higgins was 20 years
old. She lived by herself, owned her own automobile, and was
by all accounts an attractive, intelligent, young woman. She
began working at P.J.D. approximately three months before the
accident. When she was hired, P.J.D. required her to provide
a driver's license which demonstrated that she was not
old enough to drink. As an exotic dancer at P.J.D. she was
not paid an hourly rate or salary but relied on tips from
customers for her income. As part of her employment she had
to pay the club a fee to dance and, in order to stay on their
good side, tip the DJ, bouncers, and waitstaff at the end of
Higgins was advised upon hiring, and it was her experience at
other clubs where she worked, that she was to pressure
customers to buy drinks. This resulted in customers buying
her drinks which required Ms. Higgins to drink alcohol, even
though she was underage. During her time at P.J.D. she was
never refused a drink, or asked for proof of age by the
waitstaff or bartenders and Ms. Higgins regularly drank to
excess while performing at P.J.D. P.J.D. also maintained a
“Champagne Room” which enabled the dancers to
give private dances to a customer. The dancer would make
significantly more money in tips in the Champagne Room than
dancing on the stage.
Girls” were present on the floor in order to enhance
the opportunities for customers to purchase alcohol for
themselves and the dancers. It was common, and expected, for
P.J.D. to serve alcohol to the dancers purchased by
customers, which occurred regularly and without any
restrictions by management. As one of the “perks”
of the job, the dancers were given a free shift drink before
beginning their shift. Ms. Higgins was in the habit of
ordering Patron Tequila as her shift drink, and was often
observed by her friend Deanna Macleod, who was also a dancer,
drinking to excess while at work.
had a policy of having a bouncer escort every dancer to their
car at the end of their shift, or to call a cab to take a
dancer (or customer) home who was intoxicated. As part of
this policy P.J.D. employed Duane Prince as a bouncer who was
in charge of the safety of the dancers.
November 27, 2010 Ms. Higgins worked a shift at P.J.D. Before
starting her shift she had three shots of Patron Tequila.
During her shift she consumed at least 12 more shots of
Tequila in the club and the Champagne Room and she became
heavily intoxicated. At no time did personnel from P.J.D. try
to prevent her from drinking. Ms. Macleod, who was also
working that evening, had seen Ms. Higgins intoxicated before
and knew that she was intoxicated because she was unsteady on
her feet and her voice was unusually loud. Ms. Macleod's
shift ended at approximately 11:30 p.m. and, as was the
custom, she was escorted to her car by Mr. Prince. Ms.
Macleod believed that she was visibly intoxicated and was
stumbling as she walked, but was allowed to drive away. Ms.
Higgins' shift ended around 2:00 a.m. (on November 28)
and she too was escorted to her car by Mr. Prince. Mr. Prince
had to take her keys from her in order to open the car door
and physically sit her into the driver's seat. He then
gave the keys back to her and watched as she started her car.
Before Ms. Higgins drove away she texted a friend “he
he maaad drunk lol” (tt2-116, 16-20). Ms. Higgins was
allowed to drive away in a heavily intoxicated condition.
minutes of leaving P.J.D., Ms. Higgins was involved in a
two-car collision with an off-duty Worcester Police Officer.
She suffered serious and permanent injuries including
traumatic brain injury, multiple facial bone fractures,
including a dislocation fracture of her left orbit socket,
and a shattered nose. Her teeth were knocked out, a lip was
ripped open, she sustained a large laceration on the left
side of her face, and her left arm was permanently damaged.
She has had over a dozen surgeries to rebuild and reconstruct
her face. The surgical repair of her left eyeball has left
her with a permanently damaged, mis-matched left eye. After
leaving the hospital she went to the Spaulding Rehabilitation
Center for several weeks. Her medical expenses and lost wages
are in excess $375, 000.00.
owner of P.J.D. is Richard McCabe. Immediately after learning
of the accident, Mr. McCabe spoke with Duane Prince. Mr.
Prince denied to Mr. McCabe that Ms. Higgins was intoxicated
when he walked her to her car. Mr. McCabe duly reported the
accident to his insurance broker, Donald Bunker, who put
Capitol on notice of a potential claim via an ACORD, general
liability notice of an occurrence. That ACORD advised Capitol
that Higgins, had sustained serious bodily injury in a car
accident shortly after leaving the workplace and that she was
December 15, 2010, Capitol referred the claim to Norfield
& Associates, an adjustment agency with instructions to
do a “limited investigation” of the accident. The
“limited investigation” is significant because
the policy issued to P.J.D. by Capitol was an eroding limits
policy which means that once a claim is made the cost of
investigation and defense are deducted from the policy
limits. Until a claim is made, the costs are born by Capitol.
Because the ACORD was not a claim, the expense of the
investigation fell on Capitol.
surprisingly, the P.J.D. employees interviewed maintained
that Ms. Higgins was not drinking at the club, or if
she was, she was drinking alcohol she brought with her. This
is “not surprising” because the accident had
generated a great deal of media publicity which included a
criminal investigation and an investigation by the Alcohol
began its investigation on December 16, 2010 and on December
28th, sent a preliminary report of its investigation to
Capitol. That preliminary investigation relied solely on
statements from Richard McCabe, his brother Robert, who was
the General Manager at PJD, and one bartender, all of whom
denied that Ms. Higgins was drinking at the club or that she
appeared intoxicated when she drove away. By December 28th
Norfield had not secured an employee list for the evening of
the incident, or a copy of the sign-in sheet identifying the
dancers who were present that evening. Nor was there any
indication that Norfield (or Capitol) had any idea of
P.J.D.'s policy of having the dancers encourage patrons
to drink and to buy them drinks or had done anything else to
verify the self-serving statements of the McCabes or the
preliminary report that Norfield sent to Capitol, they
advised that they were about to schedule a meeting with
Centerfolds to obtain further liability information and to
obtain a list of the employees who were present that evening.
However, before that could happen Capitol, through its claim
manager, Michael Wedwick terminated Norfield's
investigation. Significantly, that was the extent ...