Opinion
No. C9-96-2618.
Filed July 22, 1997.
Appeal from the District Court, Hennepin County, File No. 9519019.
Richard A. Beens, Brad J. Miller, (for Respondent).
James P. Ashley, (for Appellant).
Considered and decided by Norton, Presiding Judge, Peterson, Judge, and Amundson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
In this appeal from a summary judgment requiring Credit General Insurance Company to defend and indemnify its insured, we conclude that the district court erred in determining that an assault and battery exclusion in the insurance policy as a matter of law does not apply to liquor liability claims. We reverse and remand.
FACTS
Respondent Scotties Mdewakanton, Inc., d/b/a Knickerbockers Bar and Cafe purchased a commercial general liability policy from appellant Credit General Insurance Company. Under the insuring agreement of the policy, which was in effect from March 16, 1994 to July 1, 1995, Credit General agreed to 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.
An endorsement to the policy contained the following assault and battery exclusion:
1. This insurance does not apply to "bodily injury" or "property damage" arising out of:
(a) the actual or threatened assault or battery or the failure to suppress or prevent such action by the insured or by anyone else for whom the insured is legally responsible, or
(b) the negligent:
(i) employment;
(ii) investigation;
(iii) supervision;
(iv) training;
(v) retention; of a person for whom any insured is or ever was legally responsible and whose conduct would be excluded by (a) above.
In addition, the original policy contained a liquor liability exclusion stating that the policy would not cover:
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.
For an additional premium, Knickerbockers purchased a liquor liability endorsement from Credit General, effective from July 1, 1994 to July 1, 1995. This endorsement deleted the liquor liability exclusion and replaced it with an exclusion stating that the policy would not cover:
c. "Bodily injury" or "property damage" for which the insured may be held liable by reason of causing or contributing to the intoxication of any person if such intoxicated person:
1. Was sold, served, or furnished with any alcoholic beverage while any required license is suspended or after such license expires, is cancelled or revoked; or
2. Was sold, served, or furnished with any alcoholic beverage not authorized to be sold; or
3. Was sold, served, or furnished with any alcoholic beverage either before or after operating hours allowed under any laws, license, or permit terms.
On August 1, 1995, Knickerbockers was served with a complaint from plaintiffs Daniel Loe and his wife, Kimberly Jennings. The complaint alleged that on July 28, 1994, Loe was a Knickerbockers customer, competing in a pool tournament hosted by Knickerbockers. Franco Doe, another customer and tournament contestant, was intoxicated, but Knickerbockers continued to sell him alcoholic beverages. Another patron reported Doe's threatening behavior (striking overhead lights with his pool cue and verbally abusing other patrons) to a bartender, and an employee briefly talked to Doe but took no further action. After the employee left, Doe confronted the patron who had reported him and punched the patron in the face. The complaint stated:
Plaintiff Daniel Loe, who was sitting nearby, was then attacked without provocation by Franco Doe, hit over the head with a pool cue and rendered unconscious.
The complaint contained a liquor liability claim alleged against Knickerbockers. Knickerbockers tendered defense of the action to Credit General, which denied coverage based on the assault and battery exclusion in the policy. Knickerbockers brought a declaratory judgment action against Credit General. The district court granted summary judgment directing Credit General to defend and indemnify Knickerbockers.
DECISION
The interpretation of an insurance policy is a question of law subject to de novo review. Seaway Port Authority v. Midland Ins. Co. , 430 N.W.2d 242, 247 (Minn.App. 1988). An insurer's duty to defend its insured is contractual in nature and is generally determined by comparing the allegations in the complaint with the language of the insurance policy. Republic Vanguard Ins. Co. v. Buehl , 295 Minn. 327, 332-33, 204 N.W.2d 426, 429-30 (1973). The insurer must defend any claim that is arguably within the scope of the insured's policy. Jostens, Inc. v. Mission Ins. Co. , 387 N.W.2d 161, 165 (Minn. 1986). The insurer has the burden of showing that it has no duty to defend by demonstrating that all parts of a cause of action fall outside the policy's coverage. Id. at 165-66.
Credit General argues that because the claims in the underlying action are for bodily injury arising out of an assault and battery, coverage is excluded under the assault and battery exclusion, and it has no duty to defend or indemnify Knickerbockers. Knickerbockers contends that the liquor liability endorsement provides coverage for all dram shop actions other than the three limited exceptions listed in the endorsement and, therefore, because none of the exceptions applies to this case, there is coverage for the liquor liability count in the complaint. The district court concluded that the liquor liability endorsement and the assault and battery exclusion cover two distinct situations and, therefore, the assault and battery exclusion does not apply to the liquor liability claim against Knickerbockers.
Based on the policy language, we cannot conclude that the assault and battery exclusion does not apply to the liquor liability claim against Knickerbockers. Knickerbockers's contention that the liquor liability endorsement provides coverage for all dram shop actions, which apparently was accepted by the district court, is not correct. The liquor liability endorsement did not add language to the policy stating that the policy covers dram shop actions with three exceptions. The endorsement simply removed policy language that broadly excluded coverage for injuries for which the insured may be held liable by reason of causing or contributing to the intoxication of a person and inserted language that excludes coverage for such injuries only under certain circumstances. The effect of the liquor liability endorsement was simply to narrow the original liquor liability exclusion so that fewer claims are excluded. Narrowing the liquor liability exclusion did not grant coverage for all liquor liability claims.
Both before and after the liquor liability endorsement was added to the policy, the assault and battery exclusion excluded coverage for bodily injury arising out of an assault and battery. Based on its language, we cannot conclude that the liquor liability endorsement, which provides that some claims that had been excluded as liquor liability claims are no longer excluded as liquor liability claims, also provides that some claims that had been excluded as assault and battery claims are no longer excluded as assault and battery claims. The liquor liability endorsement did not change the scope of the assault and battery exclusion.
Knickerbockers also argues that (1) the assault and battery exclusion does not preclude coverage because the liquor liability claim in the underlying action did not arise out of or derive from the alleged battery, and (2) even if the dram shop claim in the underlying action were subject to the assault and battery exclusion, Credit General would still have a duty to defend and indemnify because the express language of the exclusion precludes coverage only if an assault or battery is committed by Knickerbockers, by an employee or agent of Knickerbockers, or by someone for whom Knickerbockers was legally responsible. Because the district court determined that the assault and battery exclusion did not apply to liquor liability claims, it did not reach these arguments concerning application of the assault and battery exclusion to the facts of the underlying action. A reviewing court generally considers only those issues presented to and decided by the district court. Thiele v. Stich , 425 N.W.2d 580, 582 (Minn. 1988). We remand to the district court for its consideration of whether the assault and battery exclusion excludes coverage.
Reversed and remanded.
I respectfully dissent. Knickerbockers purchased additional liquor liability coverage to protect itself from exactly the type of claim that we see in the instant case. I agree with my colleagues that with the purchase of that additional coverage, the liquor liability exclusion of the general policy was replaced by the following:
c. "Bodily injury" or "property damage" for which the insured may be held liable by reason of causing or contributing to the intoxication of any person if such intoxicated person:
1. Was sold, served, or furnished with any alcoholic beverage while any required license is suspended or after such license expires, is cancelled or revoked; or
2. Was sold, served, or furnished with any alcoholic beverage not authorized to be sold; or
3. Was sold, served, or furnished with any alcoholic beverage either before or after operating hours allowed under any laws, license, or permit terms.
Where I disagree with my colleagues is in my interpretation of the liquor liability coverage. Whereas they regard the bodily injury exception to the policy as remaining binding in all cases, including those caused by intoxication, I read the above additional coverage to indicate that it covers bodily injury that occurs because of intoxication unless one of the three outlined circumstances (none of which is argued to apply here) applies. To my mind, it is clear from the language of the policy that Credit General has a duty to defend and indemnify Knickerbockers for the claims brought by Loe and Jennings. I would affirm the district court's grant of summary judgment.