Alea London Ltd v. Canal Club Inc, 107139.Released for Publication by Order of the Court

• Decision Date: 18 December 2009
• Docket Number: Division No. 3.,No. 107139.Released for Publication by Order of the Court,107139.Released for Publication by Order of the Court
• Citation: 2010 OK CIV APP 33,231 P.3d 157
• Parties: ALEA LONDON LTD., Plaintiff/Appellant,v.CANAL CLUB, INC., d/b/a The Wild Coconut, an Oklahoma Corporation; Charlena J. Kennedy, Individually; and Erica L. Gilmore, Individually, Defendants/Appellees,andTanya Wistrand, Individually; Stephen Wistrand, Individually; Diversified Historic Properties, Inc., an Oklahoma Corporation, Defendants.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

231 P.3d 157

2010 OK CIV APP 33

ALEA LONDON LTD., Plaintiff/Appellant,v. CANAL CLUB, INC., d/b/a The Wild Coconut, an Oklahoma Corporation; Charlena J. Kennedy, Individually; and Erica L. Gilmore, Individually, Defendants/Appellees,andTanya Wistrand, Individually; Stephen Wistrand, Individually; Diversified Historic Properties, Inc., an Oklahoma Corporation, Defendants.

No. 107139.Released for Publication by Order of the Court

of Civil Appeals of Oklahoma, Division No. 3.

Court of Civil Appeals of Oklahoma Division No. 3.

Oct. 23, 2009.

Rehearing Denied Dec. 18, 2009.

Appeal from the District Court of Oklahoma County, Oklahoma; Honorable Carolyn R. Ricks, Trial Judge.

REVERSED AND REMANDED.

Robert W. Hayden, Speck & Hayden, Oklahoma City, OK, for Plaintiff/Appellant.

Mort Goodwin Welch, Welch & Smith, P.C., Oklahoma City, OK, for Defendant/Appellee, Canal Club, Inc.

Gary B. Homsey, Kevin E. Hill, Homsey, Cooper, Hill & Associates, Oklahoma City, OK, for Defendants/Appellees, Charlena J. Kennedy and Erica L. Gilmore.

CAROL M. HANSEN, Presiding Judge.

¶ 1 Alea London Ltd.¹ (Plaintiff) appeals a judgment which found the commercial general liability policy (CGL policy) it issued provided coverage for a damage award in another lawsuit (the underlying lawsuit) in favor of Erica L. Gilmore (Gilmore) and Charlena J. Kennedy (Kennedy) against Canal Club, Inc., d/b/a The Wild Coconut (Canal Club). We conclude the CGL policy does not provide such coverage under the circumstances presented, reverse the judgment of the trial court, and remand the case for entry of an order granting judgment in favor of Plaintiff.

¶ 2 The parties raise no disputes concerning the following events which underlie this appeal. George Romon Valle (Valle) was intoxicated when he entered Canal Club's business, The Wild Coconut. Once there, he had an altercation with another customer, and an employee escorted him outside the premises. Later, very early the next day, Gilmore's stalled car was on the right shoulder of I-40 near the Agnew exit in Oklahoma City, Oklahoma, when it was struck from behind by a car driven by Valle. Gilmore and Kennedy each suffered serious injuries. Valle was legally intoxicated at the time of the accident and later entered a plea of guilty to the charge of causing an accident with great bodily injury.

¶ 3 Gilmore and Kennedy filed a petition on December 26, 2006, which alleged Valle had been served liquor while he was noticeably intoxicated. They named Canal Club, Canal Club's sole shareholder Stephen Wistrand, and his wife Tanya Wistrand, also known as Tongyoo Wistrand (the Wistrands) and Valle as defendants in the underlying lawsuit. Canal Club tendered its defense in the underlying lawsuit to Plaintiff, which refused the tender because of liquor liability exclusions in the CGL policy. Canal Club had liquor liability coverage of $100,000 under a commercial liability policy with United States Liability Insurance Group's Mount Vernon Fire Insurance Company (Mount Vernon). Mount Vernon provided Canal Club's defense in the underlying lawsuit.

¶ 4 On July 19, 2007, Plaintiff filed a petition seeking a declaratory judgment determining its CGL policy did not provide coverage for Gilmore and Kennedy's claims and it had no duty to defend the underlying lawsuit. Plaintiff filed an Amended Petition for Declaratory Judgment on October 8, 2007 in which it claimed the policy excluded coverage for the claims in the Amended Petition filed on July 26, 2007 in the underlying lawsuit, and it had no duty to defend a lawsuit seeking damages to which its CGL policy did not apply or pay the amount of any judgment Gilmore and Kennedy might obtain in their favor. The first cause of action in the Amended Petition in the underlying lawsuit continued to claim liability existed based upon service of alcohol to Valle when he was noticeably intoxicated. The second cause of action alleged Valle became intoxicated before entering Canal Club's premises, its employees escorted him from those premises while he was still in an intoxicated state, and those employees negligently breached a duty of reasonable care when they “failed to make sure” Valle did not leave the area outside its premises, get into his car, and drive while he was intoxicated. On October 19, 2007, Canal Club and the Wistrands answered and filed a counterclaim in Plaintiff's declaratory judgment lawsuit which argued Plaintiff had breached the CGL policy by refusing to participate in the defense of the underlying lawsuit and its liability under the second cause of action of the Amended Petition.

¶ 5 By the time of a December 17, 2007 non-jury trial limited to the issue of damages, the following occurred: (1) Gilmore and Kennedy had dismissed without prejudice all claims against the Wistrands, Brewer Entertainment, Inc., Bricktown Canal Properties, and Diversified Historic Properties, Inc., and claims against Canal Club in the first cause of their amended petition which alleged it had served Valle alcohol while he was intoxicated; (2) Diversified dismissed without prejudice cross-claims against Canal Club and the Wistrands in the underlying lawsuit; and (3) Plaintiffs dismissed without prejudice Diversified and the Wistrands from its declaratory relief action. The day after trial, Gilmore and Kennedy dismissed without prejudice all claims against Valle. Following Valle's dismissal, only resolution of liability under the second cause of action in the Amended Petition remained pending.

¶ 6 The trial court entered judgment against Canal Club and in favor of Gilmore and Kennedy in the underlying lawsuit. It awarded Gilmore judgment for a total of $2,201,643.41 (a $2,000,000 judgment, $1,973.52 for attorney fees, and $199,669.89 in prejudgment interest), and awarded Kennedy judgment for a total of $1,651,725.95 (a $1,500,000 judgment, $1,973.52 for attorney fees, and $149,752.43 in prejudgment interest). By an agreed order filed on March 6, 2008, Gilmore and Kennedy each filed a counterclaim in Plaintiff's declaratory judgment action which alleged Plaintiff was liable under its CGL policy for the judgment against Canal Club in their underlying lawsuit.

¶ 7 Canal Club moved for summary judgment in Plaintiff's declaratory relief action and argued the liquor liability exclusion in the CGL policy did not apply and Plaintiff was liable for the judgment in the underlying lawsuit. The same day, Gilmore and Kennedy also moved for summary judgment. They incorporated Canal's motion into their own and presented only arguments regarding the application of the per occurrence coverage limits, liability for pre-judgment and post judgment interest, and liability for costs in light of Plaintiff's refusal to defend in the underlying lawsuit. Plaintiff filed a supplemental response and motion for summary judgment in which it argued the trial court could consider whether Canal Club had a legally cognizable duty to deny an intoxicated person access to his vehicle and it had no duty to defend or indemnify Canal Club for the claims because its policy did not apply.

¶ 8 The trial judge entered an order on April 28, 2009 which denied Plaintiff's motion for summary judgment and granted the motions for summary judgment of Canal Club, Gilmore, and Kennedy (Defendants). The judgment found the CGL policy provided coverage for Canal Club's liability to Gilmore and Kennedy. The trial judge ordered Plaintiff to pay the $1,000,000 per occurrence limit of the CGL policy and allocated $571,428 to Gilmore and $428,572 to Kennedy. Gilmore and Kennedy also received a joint and several judgment for $1,973.53 in taxable costs, and judgment for prejudgment interest and post-judgment interest. Canal Club also was granted judgment in the amounts awarded to Gilmore and Kennedy which totaled, respectively $882,355.36 and $661,824.97.

¶ 9 When considering Plaintiff's appeal, we first address the scope of the issues properly before us. Canal Club's liability was determined in the underlying lawsuit and is not before us. The only issue presented on appeal is whether the CGL policy provided coverage and Plaintiff therefore was liable to pay available policy limits to Gilmore and Kennedy as a result of the judgment against Canal Club.

¶ 10 Summary judgment is only appropriate when there is no substantial controversy as to any material fact, and the moving party is entitled to judgment as a matter of law. Lowery v. Echostar Satellite Corporation, 2007 OK 38, 160 P.3d 959. The interpretation of an insurance contract and whether it is ambiguous is determined by the court as a matter of law. Haworth v. Jantzen, 2006 OK 35, 172 P.3d 193. Issues of law are reviewed de novo. Kluver v. Weatherford Hospital Authority, 1993 OK 85, ¶ 14, 859 P.2d 1081, 1084. That is, the appellate court exercises plenary, independent and non-deferential authority to re-examine a trial court's legal rulings. Manley v. Brown, 1999 OK 79, 989 P.2d 448.

¶ 11 Insurance is a contract, and an insurer's liability to its insured is defined by the contract. Roads West, Inc. v. Austin, 2004 OK CIV APP 49, 91 P.3d 81. Parties to an insurance contract are at liberty to cover such risks as they see fit, they are bound by the terms of their contract, and the courts are not at liberty to rewrite those terms. American Economy Ins. Co. v. Bogdahn, 2004 OK 9, 89 P.3d 1051. The general declaration of insurance coverage determines an insurance company's liability and the insured's rights under the contract by identifying what risks are covered and excluded by the policy. Dodson v. St. Paul Insurance Company, 1991 OK 24, 812 P.2d 372. “The policy exclusions are read seriatim; each exclusion eliminates coverage and operates independently against the general declaration of insurance coverage and all prior exclusions by specifying other occurrences not covered by the policy.” 1991 OK 24, ¶ 13, 812 P.2d at 377.

¶ 12 There is no dispute Plaintiff issued a CGL policy to Canal Club which had a...