Opinion
Nos. 91-0533 and 90-3330.
Decided September 17, 1991.
Wingate, Bracy Kuhl and John Kuhl, for plaintiff.
Dale Anderson, for defendant.
I
The litigation before the court involves two related cases: a wrongful death claim (case No. 90-3330) and a declaratory judgment action (case No. 91-0533).
Case No. 90-3330 was filed October 2, 1990 by Franklin D. Haney, Administrator of the Estate of Matthew D. Haney, against defendants Allen A. Vargo, Dale's Bar Grill, Inc. ("Dale's"), Andrew Vargo and Marjorie Vargo. The complaint alleges, among other things, that on October 11, 1988 Matthew D. Haney was killed while riding as a passenger in an automobile driven by Allen Vargo. The complaint also alleges that just before the auto accident, Allen Vargo was drinking alcoholic beverages at Dale's in Maumee, Ohio. Counts one and two of the complaint involve claims against Allen Vargo and his parents, seeking damages for loss of support, loss of services, and loss of society. Count three of the complaint alleges that Dale's violated R.C. 4301.22(B), which imposes a duty on persons to refrain from selling alcoholic beverages to an intoxicated person. Count four asserts that the misconduct of Dale's rises to the level of actual malice, entitling Matthew Haney's estate to an award of punitive damages.
Case No. 91-0533, a declaratory judgment action, was filed by Auto-Owners Mutual Insurance Company ("Auto-Owners") on February 15, 1991 and was then consolidated with case No. 90-3330. Auto-Owners filed its suit after Dale's, its insured, demanded a defense in the wrongful death action. According to Auto-Owners, Policy No. 874603 05371207 00 88 excludes from insurance coverage "bodily injury" or "property damages" for which the insured may be held liable subject to certain stated exclusions. Auto-Owners claims it has no duty under the policy to either defend or indemnify defendant Dale's in case No. 90-3330.
Dale's immediately responded with a memorandum in opposition to Auto-Owners' complaint for declaratory relief and in support of Auto-Owners' duty to defend and/or indemnify. Auto-Owners filed a reply memorandum and the matter is now before the court. Both parties ask for a prompt ruling on the issue.
II
The insurance policy, termed "Commercial General Liability," issued to Dale's by Auto-Owners, at Section I, Coverages, Coverage A, provides as follows:
"Coverage A — BODILY INJURY AND PROPERTY DAMAGES LIABILITY
"I. Insuring Agreement
"a. We will pay those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies. No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under SUPPLEMENTARY PAYMENTS — COVERAGES A AND B. * * *[W]e will have the right and duty to defend any `suit' seeking those damages.
"* * *
"II. Exclusions
"This insurance does not apply to:
"* * *
"c. `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."
Although the policy forms provided to Dale's referred to "liquor liability coverage" as a type of insurance available, it does not appear that the parties ever contracted for this type of coverage.
According to Auto-Owners, the exclusionary language of the insurance agreement protects it from the duty to indemnify or defend suits that relate to circumstances involving intoxication of any person. Auto-Owners contends that the language of the wrongful death complaint against Dale's is very specific with respect to violation of a statutory duty, and, not being a general claim for negligence, is neither potentially nor arguably within the policy coverage.
Auto-Owners further states that count four, which simply demands punitive damages without an underlying request for compensatory damages, is also outside the scope of insurance coverage. It relies upon R.C. 3937.182(B) which, effective January 5, 1988, provides that no policy of liability insurance shall provide coverage for judgments or claims against an insured for punitive or exemplary damages. Dale's policy was renewed in July 1988, within the statute's effective date.
In opposing the declaratory judgment action, Dale's emphasizes that the duty to defend and the duty to indemnify are separate contractual liabilities. Dale's urges the court to order Auto-Owners to defend it since material issues exist over whether it "caused" or "contributed to" the intoxication of the defendant driver and whether the driver was "under the influence" while he was at Dale's. Dale's argues that the policy itself raises factual issues and that the narrow allegations in the wrongful death complaint may be expanded through continued litigation.
III
It is true that pleadings alone may not always provide enough information to determine whether an insurer has a duty to defend. If there is "potentially or arguably" a claim covered by insurance, however, the company must provide a defense. Willoughby Hills v. Cincinnati Ins. Co. (1984), 9 Ohio St.3d 177, 9 OBR 463, 459 N.E.2d 555, syllabus. Here, however, the complaint against Dale's alleges a specific violation of the statutory duty to refrain from selling alcoholic beverages to an intoxicated person. The complaint does not allege general negligence (such as it would do in a slip and fall case, for example); plaintiff's sole cause of action against Dale's (although stated in two separate counts — one for compensatory and the other for punitive relief) is founded on the selling or serving of alcoholic beverages by Dale's.
As Gressman v. McClain (1988), 40 Ohio St.3d 359, 533 N.E.2d 732 shows, an establishment with a liquor permit whose employee knowingly sells an intoxicating beverage to a noticeably intoxicated person may be liable to third persons if the intoxication proximately caused the damages sought. Dale's denies the allegations, but Dale's did not purchase "liquor liability coverage" as it apparently could have done. Nothing in the Auto-Owners' policy shows this additional endorsement or premium paid. Unfortunately for Dale's, circumstances leading to "liquor liability" is the particular type of risk specifically excluded from the Commercial General Liability Coverage which it did purchase. Allegations not covered by an insurance policy do not require a defense. See Zanco, Inc. v. Michigan Mut. Ins. Co. (1984), 11 Ohio St.3d 114, 11 OBR 413, 464 N.E.2d 513.
Willoughby Hills simply does not assist the defendant. As the syllabus states:
"Where the insurer's duty to defend is not apparent from the pleadings in the action against the insured, but the allegations do state a claim which is potentially or arguably within the policy coverage, or there is some doubt as to whether a theory of recovery within the policy coverage has been pleaded, the insurer must accept the defense of the claim."
As Auto-Owners itself acknowledges in its brief in opposition:
"Any liability which may attach to Dale's Bar and Grill, Inc. would come as a result of allegations having to do with the serving of alcohol to Alan [ sic] A. Vargo at their [ sic] establishment on the night that Mr. Haney was killed."
Auto-Owners would have a duty to defend, irrespective of any duty to indemnify, if allegations in the underlying complaint "potentially or arguably" fell within policy coverage. Where, as here, the claim is not one to which the coverage applies, the insurer has no obligation to defend. See Preferred Risk Ins. Co. v. Gill (1987), 30 Ohio St.3d 108, 114, 30 OBR 424, 429-430, 507 N.E.2d 1118, 1123. The Gill case also clarifies that an insurer may maintain a declaratory judgment to establish its obligations as long as it proceeds in good faith.
Because the court finds Auto-Owners' policy clearly excludes coverage for the allegations against Dale's, it also follows that Auto-Owners need not defend the underlying tort action. Plaintiff Auto-Owners is entitled to the declaratory relief it requests.
Judgment Entry
It is ORDERED that judgment be entered in favor of plaintiff Auto-Owners Mutual Insurance Company and against defendant Dale's Bar Grill, Inc, Allen A. Vargo, Andrew Vargo and Marjorie Vargo as follows:
(1) That Policy No. 874603 05371207 00 88 does not apply to damages sought in case No. 90-3330 by Franklin D. Haney, Administrator of the Estate of Matthew D. Haney;
(2) That Policy No. 874603 05371207 00 88 does not apply to punitive damages sought in case No. 90-3330 by Franklin D. Haney, Administrator of the Estate of Matthew D. Haney;
(3) That plaintiff Auto-Owners Mutual Insurance Company has no duty or obligation to defend or indemnify defendant Dale's Bar Grill, Inc. in case No. 90-3330; and
(4) That the parties bear their own costs.
Judgment accordingly.