Liquor Liability Exclusion In CGL Policy Unambiguous, Federal Judge Finds

liquorliability

PHILADELPHIA, Nov. 20 – A federal district judge has ruled that a liquor liability exclusion in a CGL policy is unambiguous, and relieved an insurer from the duty to defend or indemnify its insured in underlying liquor liability litigation.

In Transportation Ins. Co. V. Healthland Hosp. Group, No. 15-4525, 2017 U.S. Dist. LEXIS 191951 (E.D.Pa. 2017), the U.S. District Court for the Eastern District of Pa. ruled that Transportation and CNA Insurance companies had no duty to defend or indemnity Healthland Hospitality, a group that operated bar service for the Woodbury Country Club.    Healthland was sued in state court after an over-served patron killed another motorist in a motor vehicle accident.

The exclusion in the CGL policy excluded defense or indemnity to Healthland for losses arising from:

“Bodily injury” or “property damage” for which any insured may be held liable by reason of:

(1) Causing or contributing to the intoxication of any person;

(2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or

(3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.

This exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.

CNA denied coverage to Healthland, citing the exclusion.

Healthland argued in opposition, however,  that the exclusion’s  “in the business of” language was ambiguous.  The Court disagreed after the parties filed cross-motions for summary judgment:

“Here, reading the relevant “in the business of” language in the context of the entire policy and the exclusion, it is clear that the provision is intended to distinguish an insured who occasionally serves alcohol from an insured who is involved with the service of alcohol with such regularity that the insured represents a significantly greater insurance risk. Indeed, numerous courts, including the Pennsylvania Superior Court, have reviewed identical or nearly identical liquor liability provisions and found them to not be ambiguous.”

Since the Court found the exclusion unambiguous, it found the underlying state court liquor liability litigation to be squarely within the exclusion, and held that CNA did not have a duty to defend or indemnify Healthland in those cases.  The Court granted the insurers’ motions for summary judgment, and denied Healthland’s cross-motion for summary judgment on coverage.

Transportation Ins. Co. V. Healthland Hosp. Group, No. 15-4525, 2017 U.S. Dist. LEXIS 191951 (E.D.Pa. 2017)

 

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