NJ Trial Court Declares No Indemnity Owed to Event Host Under Total Liquor Liability Exclusion
September 20, 2010
Patricia W. Holden, recently sought and obtained summary judgment on behalf of her insurance company client which disclaimed coverage under a total liquor liability exclusion.
The case arose out of a wedding that was held a catering facility which unfortunately resulted in a wedding guest leaving the reception in an intoxicated state. The guest got behind the wheel of his car and was involved in a collision with a motor cyclist. The cyclist was severely injured. The cyclist brought companion suits against the drunk driver, the event host and the wedding party seeking damages for his personal injuries.
The ‘event host’ (or catering facility) did not have a liquor license. Rather it allowed its client-guests to bring their own liquor to the facility. A dispute arose between the wedding party and the event host as to which of them hired the bartenders for the evening. The event host claimed it only suggested where to get the bartenders but that the wedding party hired and paid for those services. The wedding party admitted paying for the services but claimed it was the event host that retained the bartenders. In addition, the event host admitted that there are signs at the facility indicating that no alcoholic beverages would be served to anyone under the legal drinking age or to anyone who was visibly intoxicated. The event host also made it a policy to monitor the attendees as they left to ensure those leaving the facility and who intended to drive were not intoxicated.
The event host obtained a policy of insurance from Ms. Holden’s client which provided that the policy would not cover liquor liability. Initially, the carrier disclaimed coverage. The event host joined the carrier as a third party defendant which portion of the action was settled by the carrier agreeing to provide a defense under a reservation of rights such that the question of whether the event host was to be indemnified would remain open. At the close of discovery, the carrier was permitted to intervene in the action to settle the question of indemnity under the policy and it moved for summary judgment. The carrier argued that an endorsement on the policy, which was clear and unambiguous, contained a total liquor liability exclusion which precluded coverage. The insured (and other parties) in the suit opposed the motion claiming that the policy language was ambiguous and that there were issues of fact which required resolution before a coverage determination could be made.
Specifically, in the main body of the policy, the liquor liability exclusion was limited to only those insureds that were in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. It was argued that because the event host did not have a liquor license, and because the wedding was a “BYOB” event, it did none of these things. By endorsement, however, this limiting language was removed and the carrier argued that the policy therefore excluded coverage for causing or contributing to the intoxication of any person, furnishing alcoholic beverages to anyone under the legal drinking age or who was visibly intoxicated, or in violation of any statute, ordinance or regulation governing the sale, gift, distribution or use of alcoholic beverages, regardless of its status as a purveyor of alcohol. In fact, the allegations against the event host included that it was negligent in violating its own policy of supervising the door to ensure no one left in an intoxicated state. The carrier argued that this allegation of negligent supervision is so tied to the service of alcohol to a visibly intoxicated individual that it essentially cannot be separated from alcoholic beverage service issue.
The court found that while there might be some question of fact as to the liability of the wedding party versus that of the event host, those allegations were not determinative of the coverage issue. The court questioned whether the policy could have been written initially to include only the language of the endorsement, but found there was nothing improper in issuing it with such an endorsement. The court concluded that the language of the endorsement was clear and unambiguous and clearly meant to exclude situations such as the one now confronting the event host. Therefore the court ruled that the total liquor liability exclusion contained in the endorsement precluded coverage for this loss and it granted summary judgment to the carrier.