In State Automobile Mutual Ins. Co. v. Lucchesi, ___ Fed. Appx. ___, 2014 WL 1395690 (3d Cir. Apr. 11, 2014), the U.S. Court of Appeals for the Third Circuit upheld summary judgment for State Auto and concluded that a liquor liability exclusion in a general liability policy precluded coverage for bodily injuries sustained by a bar patron hit by a taxi after leaving the bar.
State Auto issued a commercial general liability policy to the owners of Champs Sports Bar & Grill, located in State College, Pennsylvania. The policy contained a liquor liability exclusion precluding coverage for “damages” an insured became obligated to pay because of “bodily injury” for which the insured was held liable because of “causing or contributing to the intoxication of any person,” “furnishing of alcoholic beverages to a person … under the influence of alcohol,” or violating a “statute … relating to the sale, gift, distribution, or use of alcoholic beverages.”
One night, Clinton Bonson was drinking at Champs and left the bar on foot. While crossing a major thoroughfare, he was hit by a speeding taxi and seriously injured. Bonson sued Champs, its owner, and two former bartenders, alleging that Champs was liable for his injuries because it: (1) failed to cut Bonson off, which enhanced his degree of intoxication; and (2) allowed Bonson to leave the bar intoxicated. Although State Auto initially provided a defense subject to a reservation of rights, it filed a declaratory relief action in Pennsylvania federal court and sought summary judgment based on the liquor liability exclusion. Champs conceded that the liquor liability exclusion applied to the bar’s furnishing of alcohol to Bonson in excess, but argued that it did not apply to Bonson’s claim that Champs let Bonson leave the bar while intoxicated. The district court granted summary judgment in favor of State Auto, noting that the claims were inextricably intertwined, and that the sole basis for the claims was the service of alcohol.
On appeal, the Third Circuit noted that every claim in Bonson’s complaint sought damages for the bodily injury he suffered when he was hit by the taxi. Rejecting the same argument Champs made before the district court (i.e., that the exclusion did not apply to Bonson’s claim that he was allowed to leave the bar while intoxicated), the court stated that “if coverage of the former claim is excluded, so is coverage of the latter, as both claims see ‘damages because of’ the exact same ‘bodily injury.’”