May 5, 2014

This action was filed by the insurer to determine its rights and obligations pursuant to a general liability insurance policy issued to the insured. This case is State Automobile Mutual Insurance Company v. Lucchesi, 2012 U.S. Dist. LEXIS 77733 (M.D. Pa. 2012).

Bronson was a patron at Champs where he was served alcoholic beverages by Lucchesi and others while he was visibly intoxicated. Bronson later left the bar and attempted to cross the street on which Champs is located. Bronson was hit by a car and suffered severe injuries. He then filed a lawsuit against Champs, Lucchesi and the other bartenders alleging negligence on their part by permitting him to leave the premises while visibly intoxicated, failing to administer programs designed to identify and assist intoxicated patrons, and failing to ensure that Bronson left the establishment with a competent individual.

The insurance policy covering Champs was issued by State Automobile Mutual Insurance Company. Based on the liquor liability exclusion on the policy, the insurer denied coverage and filed a declaratory judgment action to determine its duty to defend and indemnify the insured.

The U.S. District Court, M.D. Pennsylvania, noted that the sole dispute in this matter is the scope of the liquor liability exclusion, specifically whether Bronson's claims are excluded from coverage pursuant to the liquor liability exclusion. The insured claimed that while Bronson's complaint includes a number of claims based on the service of alcohol (and these are barred by the liquor liability exclusion), the complaint also includes claims of negligence that are not contingent on the service of alcohol.

In determining whether the liquor liability exclusion applies, the court said that it must look to the factual averments in the complaint, and not simply rely on the labels applied to those averments. Accordingly, the court went on, the overwhelming weight of authority dictates that when considering whether a liquor liability exclusion applies to a claim of negligence that does not specifically refer to the provision of alcohol, the reviewing court must consider whether the claims of negligence are inextricably intertwined with the negligent provision of alcohol. Where the claims of negligence are inextricably intertwined with, or not sufficiently independent of, the provision of alcohol, the liquor liability exclusion will bar coverage.

The court found that most of Bronson's claims against the insured are premised on the theory that Bronson was served alcohol after he was heavily intoxicated. Furthermore, if the court were to accept the insured's argument in favor of coverage, any commercial enterprise, even an enterprise that does not engage in the sale or distribution of alcohol, would have a legal duty, upon seeing an intoxicated person, to prevent him from leaving the establishment while intoxicated. The court said it could find no support in law for the finding of a duty in such circumstances. According to the court, the insured failed to identify any legal precedent for the proposition that a restaurant and bar has taken charge of its patrons when the patrons enter the premises.

The court decided that the only basis for concluding that the insured owed a duty to Bronson is as a result of having furnished him with alcohol while he was visibly intoxicated. Therefore, the court found that the claims of negligence are inextricably intertwined with the claims based on the furnishing of alcohol, and they fall under the clear and unambiguous terms of the liquor liability exclusion. The motion of the insurer was granted.

Editor's Note: The insured attempted to skirt the application of the liquor liability exclusion by claiming Bronson's charges of negligence were separate from the furnishing of alcohol. However, the U.S. District Court could find no precedents to support this theory. The court found that the claims of Bronson were based on the insured's serving of alcohol to Bronson and so, the liquor liability exclusion clearly applied.