Auto Owners Ins. v. Sugar Creek Mem. Post

• Decision Date: 30 September 2003
• Docket Number: No. WD 62120.,WD 62120.
• Citation: 123 S.W.3d 183
• Parties: AUTO OWNERS (MUTUAL) INSURANCE COMPANY, Respondent, v. SUGAR CREEK MEMORIAL POST NO. 3976, Veterans of Foreign Wars of the United States, Inc., Olivia Rogers, a minor, Monica Sweet and Douglas Sweet, Appellants.
• Court: Missouri Court of Appeals

123 S.W.3d 183

AUTO OWNERS (MUTUAL) INSURANCE COMPANY, Respondent, v. SUGAR CREEK MEMORIAL POST NO. 3976, Veterans of Foreign Wars of the United States, Inc., Olivia Rogers, a minor, Monica Sweet and Douglas Sweet, Appellants.

No. WD 62120.

Missouri Court of Appeals, Western District.

September 30, 2003.

Motion for Rehearing and/or Transfer to Supreme Court Denied November 25, 2003.

Application for Transfer Denied January 27, 2004.

Gary R. Bradley, Lexington, for appellant Rogers.

John W. Kurtz, Kansas City, for appellants Sweet.

Thomas C. Locke, Nancy Jackson, Independence, for Appellant Sugar Creek Memorial Post No. 3976, Veterans of Foreign Wars of the United States, Inc.

Charles H. Stitt, Gregory P. Forney, Kansas City, for respondent.

Before: ULRICH, P.J., SPINDEN and HOWARD, JJ.

VICTOR C. HOWARD, Judge.

Sugar Creek Memorial Post No. 3976, Veterans of Foreign Wars of the United States, Inc. (the "VFW"), Olivia Rogers, and Monica and Douglas Sweet (collectively, "Appellants") appeal from the Circuit Court of Jackson County's grant of Auto Owners' Mutual Insurance Company's ("Auto Owners'") Motion for Summary Judgment and Petition for Declaratory Relief. Appellants raise two points on appeal. In their first point, they argue the trial court erred in finding no liability coverage under the VFW's policy with Auto Owners, because the liquor liability exclusion and exception were ambiguous, in that Auto Owners' own managers and policy guidance documents, as well as persuasive opinions nationwide, acknowledge the ambiguity of the undefined policy terms. Appellants allege in their second point that the trial court erred in finding no liability coverage because their other viable allegations of negligence qualified for coverage in that neither the liability policy nor case law precluded recovery on these alternative grounds. We affirm the trial court's judgment.

Background

Olivia Rogers and Monica and Douglas Sweet filed petitions against the VFW alleging that, on June 6, 2001, an automobile driven by Dana Rogers was struck by a vehicle driven by Harry Bruce ("Bruce"), killing both occupants of the Rogers vehicle (Rogers and Elton Sweet). The petitions claimed that, prior to the collision, Bruce had been drinking alcohol served to him at a bar operated by the VFW. Rogers and the Sweets argued the VFW was negligent in serving alcohol to Bruce, when he was already obviously intoxicated, and that this negligence caused the deaths of Dana Rogers and Elton Sweet. Additionally, they alleged the VFW was negligent in failing to take certain steps to prevent the automobile accident, such as failing to take Bruce home or prevent him from driving.

Since 1975, the VFW has operated a bar open to the public. The bar held a liquor license and charged patrons for alcoholic beverages. The VFW employed a bartender and a club room manager. There was some evidence, disputed by Appellants, that the bar generated approximately $5,000 per month in gross revenues. At the time of the accident, the VFW carried a Commercial General Liability Policy with Auto Owners', but no separate liquor liability policy. The provision of the policy at issue, provided:

2. 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 business¹ of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.

Auto Owners' filed a petition for declaratory judgment seeking a declaration that each theory of liability asserted against the VFW was either (a) excluded from coverage by the exclusion above or (b) beyond the scope of cognizable tort liability under Missouri law. On October 28, 2002, the circuit court granted declaratory relief to Auto Owners' and granted its Motion for Summary Judgment. This appeal follows.

Standard of Review

ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371 (Mo. banc 1993) controls the standard of review for an appeal from a grant of summary judgment. Quaker Oats Co. v. Stanton, 96 S.W.3d 133, 136-37 (Mo.App. W.D.2003). Appellate review of a grant of summary judgment is essentially de novo. Id. at 137. Our criteria for ascertaining the propriety of summary judgment are the same as those used initially by the trial court. Id. We will not defer to the trial court's order granting summary judgment because the judgment of the trial court is based on the record submitted and amounts to a decision on a question of law. Id. This court reviews the record in the light most favorable to the party against whom judgment was entered and gives the benefit of all reasonable inferences from the record to that party. Wilkes v. St. Paul Fire & Marine Ins. Co., 92 S.W.3d 116, 120 (Mo.App. E.D.2002). We take as true all evidence presented in support of the motion, unless contradicted by the non-moving party's response to the motion. Id. "The moving party bears the burden of proving that it is entitled to judgment as a matter of law and that no genuine issues of material fact exist." Id.

I.

In their first point on appeal, Appellants argue the circuit court erred in finding no liability coverage under the VFW's policy, because the exclusion and exception at issue were ambiguous, in that Auto Owners' managers and policy guidance documents, as well as persuasive opinions nationwide, acknowledge the ambiguity of the provision. The policy issued to the VFW by Auto Owners' excluded coverage for "bodily injury" or "property damage" for which the VFW might be held liable by reason of: (1) causing or contributing to the intoxication of any person; or (2) furnishing alcoholic beverages to a person under the legal drinking age or under the influence of alcohol. The exclusion applied only if the policy holder was "in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages." We must determine if, at the time of the accident, the VFW was in the business of selling, serving, or furnishing alcoholic beverages so as to defeat coverage.

This court will give the language in an insurance contract its plain meaning. Melton v. Country Mut. Ins. Co., 75 S.W.3d 321, 324 (Mo.App. E.D.2002). "An insurance policy will be held ambiguous if there is duplicity, indistinctness, or uncertainty in the meaning of words used in the contract." Id. Whether or not the language of an insurance contract is ambiguous is a question of law. Haggard Hauling & Rigging Co. v. Stonewall Ins. Co., 852 S.W.2d 396, 399 (Mo.App. W.D.1993). If we find no ambiguity, we will enforce the insurance policy according to its terms. Melton, 75 S.W.3d at 324. "A court may not use its inventive powers to create an ambiguity where none exists or rewrite a policy to provide coverage for which the parties never contracted, absent a statute or public policy requiring coverage." Id. at 325.

Neither the parties nor this court found a Missouri case analyzing whether a provision in a commercial general liability policy excluding coverage for liquor liability to organizations "in the business of" serving or furnishing alcoholic beverages is ambiguous when applied to a non-profit organization such as the VFW. Both parties cite opinions from other jurisdictions that have addressed the issue. Appellants cite a line of cases holding the phrase "in the business of" in a liquor liability exclusion clause of an insurance policy is ambiguous when the insured is a non-profit organization. See, e.g., Newell-Blais Post # 443, Veterans of Foreign Wars of the United States, Inc. v. Shelby Mut. Ins. Co., 396 Mass. 633, 487 N.E.2d 1371 (1986); American Legion Post # 49 v. Jefferson Ins. Co. of New York, 125 N.H. 758, 485 A.2d 293 (1984); Laconia Rod & Gun Club v. Hartford Accident & Indem. Co., 123 N.H. 179, 459 A.2d 249 (1983).

In Laconia, a patron of a non-profit club sued it for personal injuries she sustained allegedly due to the club serving her alcohol until she was exceedingly intoxicated and allowing her to leave without knowing if she were properly escorted. 459 A.2d at 250, 123 N.H. 179. The club's insurer refused to defend the suit based on a policy exclusion that read, "This insurance does not apply: (h) to bodily injury ... for which the insured ... may be held liable (1) as a person or organization engaged in the business of manufacturing ... selling or serving alcoholic beverages...." Id. After noting that the word "business" can be used in a broad sense to mean any regular activity occupying one's time, with or without a profit motive, or more narrowly to mean an activity with a direct profit motive, the New Hampshire Supreme Court found the phrase "in the business of" as used in the policy was ambiguous. Id. at

251, 123 N.H. 179. Without any further reasoning, the court held the club was not in the business of selling or serving alcoholic beverages. Id.

In American Legion, the New Hampshire Supreme Court elaborated on the Laconia opinion. American Legion involved the operation of a bar by a non-profit veterans' association. 485 A.2d at 294, 125 N.H. 758. The Legion had an insurance policy with a liquor liability exclusion like the one in Laconia. Id. Under the holding of Laconia, the court found the term "in the business of" was ambiguous and resolved the ambiguity in favor of the insured. It held the Legion, a non-profit organization, did not have a direct profit motive in operating its bar and, therefore, was not "in the business of" selling alcoholic beverages. Id. The fact that the Legion derived substantial revenues from the operation of its bar did not alter the court's...