Ethan Connolly's parents filed a wrongful death lawsuit against Capozzoli and the Center, among others. They contended that the defendants had proximately caused their son's death due to their negligence in failing to maintain the premises and in failing to ensure that underage patrons were not served alcohol.

Harleysville Preferred Insurance Company and Nationwide Mutual Insurance Company, which had issued commercial general liability insurance policies to Capozzoli and the Center, filed a declaratory judgment action contending that they were not obligated to defend Capozzoli and the Center in the underlying suit because a liquor liability exclusion applied.

The insurers moved for summary judgment, arguing that the exclusion applied because Capozzoli and the Center were in the business of furnishing alcohol. In particular, the insurers argued that Capozzoli and the Center were in the business of furnishing alcohol because they advertised bar options online, negotiated bar options directly with customers, and collected money from customers for alcohol and bartenders. Additionally, the insurers contended that Capozzoli and the Center were in the business of furnishing alcohol because they admitted that their ability to provide alcohol at events was “integral” to their business success.

For their part, Capozzoli and the Center argued that the liquor liability exclusion should be construed in their favor because the word “furnish” was ambiguous in this factual context. Specifically, Capozzoli and the Center argued that they were not in the business of furnishing alcohol because they did not serve alcohol – Local No. 74 hired bartenders who served alcohol. Furthermore, Capozzoli and the Center pointed out that they did not hold the liquor license, and that they had received none of the proceeds from the sale of alcohol on the premises.

The Insurance Policies

The policies provided that the insurers had the:

duty to defend the insured against any “suit” seeking damages for … “bodily injury.”

The liquor liability exclusion removed coverage for:

bodily injury

when an 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 applied only if the insured was:

in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. 

The court granted summary judgment in favor of the insurers.

In its decision, the court found that the exclusion had to be construed according to its ordinary and usual meaning because the word “furnish” was “unambiguous” in this context. The court declared that “furnishing” something was “not limited to one physically handing something to another” but that one could furnish something to another “by providing the means for that person to obtain it.”

The court said that although it was true that Capozzoli and the Center neither physically poured the alcoholic beverages nor held the liquor license, they were “directly responsible for making alcohol available at events,” were “in the business of catering social events at the Center,” and advertised their business online. The court added that interested customers, who saw the advertisements, contacted Capozzoli and the Center to book an event and that, while booking an event, customers told Capozzoli and the Center which bar service, if any, they wanted and Capozzoli and the Center provided that service accordingly. Customers did not discuss anything about bar services with Local No. 74, which provided the bartenders, the court observed.

Simply put, the court concluded, an important part of Capozzoli and the Center's business was contracting with interested customers about the bar services that would be offered at events. Therefore, Capozzoli and the Center were in the business of furnishing alcohol because a part of their business was to arrange for alcohol to be served at events, and the exclusion applied to preclude coverage, the court decided.

The case is Harleysville Preferred Ins. Co. v. Executive Banquet and Conference Center, No. N15C-07-068 FWW (Del. Super. Nov. 21, 2016). Attorneys involved include: Nicholas E. Skiles, Esquire, Swartz Campbell LLC, 300 Delaware Avenue, Suite 1410, P.O. Box 330, Wilmington, Delaware 19801; William T. Salzer, Esquire, Swartz Campbell LLC, Two Liberty Place, 50 S. 16th Street, 28th Floor, Philadelphia, Pennsylvania 19102; Attorneys for Plaintiffs Harleysville Preferred Insurance Company and Nationwide Mutual Insurance Company; Melissa L. Rhoads, Esquire, Jason J. Cummings, Esquire, Tighe & Cottrell, P.A., 704 N. King Street, Suite 500, P.O. Box 1031, Wilmington, Delaware 19801; Attorneys for Defendants Capozzoli Catering of Delaware, Inc. & Executive Banquet and Conference Center Catering of Delaware; Vincent J. X. Hedrick, II, Esquire, Beverly L. Bove, Esquire, 1020 West 18th Street, P.O. Box 1607, Wilmington, Delaware 19899; Attorneys for Defendant Connolly; Kevin J. Connors, Esquire, Marshall Dennehey Warner Coleman & Goggin, 1007 N. Orange Street, Suite 600, P.O. Box 8888, Wilmington, Delaware 19899; Attorney for Defendant Alpha Epsilon Phi Sorority; Megan T. Mantzavinos, Esquire, Emily K. Silverstein, Esquire, Marks, O'Neill, O'Brien, Doherty & Kelly, P.C., 300 Delaware Avenue, Suite 900, Wilmington, Delaware 19801; Michael C. Osborne, Esquire, Jennifer A. Riso, Esquire, Archer Norris, One Embarcadero Center, Suite 360, San Francisco, California 94011; Christopher K. Trembley, Esquire, Archer Norris, 777 Figueroa Street, Suite 4250, Los Angeles, California 90017; Attorneys for Defendant for Theta Chi Fraternity.