Bad night for Big Daddy
INSURANCE-RELATED COURT CASES
Digested from case reports published online
On July 5, 2015, William Spence drank alcohol at Big Daddy’s Show Club and drove away in his truck. Meanwhile, the Eberts traveled eastbound on Morgan Street until they approached its intersection with Davis Street. They stopped at the flashing red lights marking the four-way intersection before proceeding to cross the street. Spence traveled northbound on Davis Street; when he reached the intersection, he failed to stop at the flashing lights and collided with the Eberts’ vehicle. At the time he had a blood alcohol content of 0.195%.
Earlier in the night, the police had removed Spence from Big Daddy’s because “he got out of hand.”
On that same night, Christopher France stopped by the show club to see if the employees needed any help. France ordinarily worked as a bouncer for Little Daddy’s and occasionally worked at Big Daddy’s, but he was not on the clock that night. After France noticed Spence lingering in the parking lot, he ordered him to leave. Spence grabbed a pipe from his truck and proceeded to step toward France with the item in hand. France threatened him with bodily harm if he would not leave the property in his truck. Spence then left and collided with the Eberts’ vehicle.
The Eberts filed suit against Big Daddy’s, Little Daddy’s, and Daniel Parks, the owner of both clubs (collectively referred to as Parks defendants). They claimed Big Daddy’s violated Indiana’s Dram Shop Act by serving alcohol to Spence when it knew or should have known of his inebriation. The Eberts also claimed the Parks defendants: (a) continued to serve Spence alcohol when they knew or should have known he was inebriated and impaired; (b) allowed Spence to drive his vehicle from Big Daddy’s when they knew or should have known he was inebriated and impaired; (c) failed to notify law enforcement that Spence left Big Daddy’s and operated his vehicle in an inebriated state; and (d) failed to obtain alternative transportation for Spence to prevent him from operating his vehicle.
Illinois Casualty Company had issued separate and identical business-owners and liquor liability policies to each show club; each of these four policies was in effect on the night of the collision between Spence and the Eberts.
Illinois Casualty initially agreed to defend the Parks defendants. On July 19, 2018, the insurer filed a separate declaratory action seeking a judgment that it did not owe a duty to defend or indemnify the Parks defendants in the underlying lawsuit. As support, Illinois Casualty relied on language in its businessowners policies excluding coverage for claims of bodily injury for which an insured may be liable by reason of causing or contributing to the intoxication of any person or furnishing alcoholic beverages to a person under the influence of alcohol. Illinois Casualty argued that the liquor liability policy issued to Big Daddy’s was the only potential source of indemnification.
Illinois Casualty moved for summary judgment, which the trial court granted in its favor, finding the insurer did not owe the Parks defendants “any duty to defend or duty to indemnify with respect to the underlying lawsuit” under the liquor liability policy issued to Little Daddy’s and the businessowners policies for both clubs. Nevertheless, the trial court concluded that Illinois Casualty did owe a duty to defend or indemnify the Parks defendants under the Big Daddy’s liquor liability policy.
The Eberts and Parks defendants appealed. The court of appeals concluded that “the trial court erroneously interpreted the insurance contracts at issue,” and the businessowners policies imposed a contractual duty on Illinois Casualty to defend the show clubs.
Illinois Casualty sought transfer, which was granted, vacating the court of appeals’ opinion.
On appeal to the supreme court, the court noted that the businessowners policies issued to each show club obligated Illinois Casualty to pay as damages because of “bodily injury,” “property damage,” or “personal and advertising injury” to which [the] insurance applied. The policies each contained a liquor liability exclusion, and the Parks defendants argued that the policy language was ambiguous. The court concluded that the exclusion was unambiguous.
The court found that the predominant cause of the Eberts’ injuries was drunk driving precipitated by the negligent service of alcohol, and because the policy excluded coverage for claims of bodily injury after causing or contributing to a person’s intoxication or furnishing alcohol to a person under the influence of alcohol, the policy excluded the Eberts’ claims from its coverage. The court concluded that Illinois Casualty did not owe a duty to defend or indemnify the Parks defendants under the businessowners policies issued to either show club and the liquor liability policy issued to Little Daddy’s. Accordingly, the court affirmed the trial court’s grant of summary judgment in Illinois Casualty’s favor.
Ebert and Parks v. Illinois Casualty Company—Indiana Supreme Court—June 16, 2022—No. 34D02-1807-PL-555.