Adopting the efficient and predominant cause analysis, the Indiana Supreme Court has found an insurance company did not have a duty to defend two Kokomo bars and their owner who are alleged to have continued serving alcohol to an inebriated patron who subsequently got into a drunken driving accident.
William and Michelle Ebert filed a lawsuit against Big Daddy’s, Little Daddy’s and Daniel Parks after they were hit in an intersection by William Spence in July 2015. Spence had consumed alcohol at Big Daddy’s Show Club and had a blood alcohol content of 0.195% at the time of the collision.
The Eberts claimed Big Daddy’s violated Indiana’s Dram Shop Act, Indiana Code § 7.1-5-10-15.5, by serving alcohol to Spence when the bar knew or should have know he was inebriated. Also, they claim the defendants continued serving alcohol to Spence, allowed him to drive, failed to notify law enforcement and failed to provide him with alternative transportation to prevent him from driving.
Illinois Casualty Company, which provided businessowners and liquor liability to each show club, asserted it did not owe a duty to defend or indemnify the defendants in the underlying lawsuit. The insurer pointed to the exclusion for claims of bodily injury caused by the intoxication of any individual or by furnishing alcoholic beverages to a person already under the influence.
The Howard Superior Court found Illinois Casualty did not owe the defendants “any duty to defend or duty to indemnify with respect to the underlying lawsuit” under the liquor policy issued to Little Daddy’s and the businessowners policies for both clubs. However, the insurer did owe a duty to defend and indemnify the defendants under Big Daddy’s liquor liability policy.
On appeal, the Court of Appeals of Indiana concluded Illinois Casualty had a contractual duty under the businessowners policies to defend the show clubs.
The insurance company turned to the Supreme Court, which affirmed the trial court’s grant of summary judgment in favor of Illinois Casualty.
In William Ebert, Michelle Ebert, Cora Ebert, Alexandra Ebert, Dan the Man LLC, Daniel Parks, and D&D Saloon LLC v. Illinois Casualty Company, 22S-PL-8, the justices ruled the businessowners policies either exclude or do not provide coverage for the remaining claims.
The Supreme Court relied on the “efficient and predominant cause analysis” as established in Prop.-Owners, Ins. Co. v. Ted’s Tavern, Inc., 853 N.E.2d 973 (Ind. Ct. App. 2006).
In the Kokomo case, the Eberts allege the bar served Spence alcohol, then Spence drove under the influence and caused the accident. Thus, the efficient and predominant case of the collision was Spence’s drunken driving after he was served alcohol at Big Daddy’s.
At the trial level, the Parks defendants countered that the plaintiff’s allegations were not “inextricably intertwined” with dram shop liability because the defendants could be liable regardless of whether they provided any alcohol to Spence.
The Supreme Court was not persuaded.
“Here, the claims that the Parks defendants were negligent in allowing Spence to leave Big Daddy’s in his vehicle and failing to call police ‘are so inextricably intertwined with the underlying negligence,’ and could not have resulted in injury but for Spence’s driving while intoxicated after Big Daddy’s served him alcohol,” Justice Steven David wrote for the court, citing Ted’s Tavern, Inc., 853 N.E.2d at 983. “Plainly, the Eberts essentially claim the Parks defendants were negligent for failing to intervene.
“But we cannot ignore the circumstance necessitating intervention in the first place: the service of alcohol to an intoxicated Spence,” David continued. “Therefore, like the trial court, we find that Spence’s intoxication was the efficient and predominant cause of the Eberts’ injuries.”