Commerce Ins. v. Ultimate Livery Service

Decision Date26 November 2008
Docket NumberSJC-10149
PartiesCOMMERCE INSURANCE COMPANY v. ULTIMATE LIVERY SERVICE, INC., & others<SMALL><SUP>1</SUP></SMALL> (and four companion cases<SMALL><SUP>2</SUP></SMALL>).
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

Michael B. Bogdanow, Boston, for Sharlene Waters.

Kenneth F. Rosenberg, Worcester, for Ultimate Livery Service, Inc., & another.

John F. Hurley, Jr., Worcester, for Commerce Insurance Company.

Darin L. Wessell, for Taxicab, Limousine & Paratransit Association, amicus curiae, submitted a brief.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, CORDY, & BOTSFORD, JJ.

GREANEY, J.

In the early morning of August 12, 2001, several people were seriously injured, and one man killed, in an automobile accident caused by an intoxicated driver, William Powers (Powers).3 Powers, along with five other men, had attended a bachelor party prior to the accident. To get to the party, the group hired a private carrier, Ultimate Livery Service, Inc. (Ultimate),4 which drove them from a sports bar in the South Boston section of Boston to a "strip club" in Rhode Island, and then back to the sports bar. When the group was returned to the sports bar by Ultimate's driver, Richard Broderick (Broderick), Powers, joined by two of his friends who had attended the party, got into an automobile loaned to Powers by his girl friend and, with Powers driving, left the bar. The automobile never made it to the intended destination, and instead was involved in a violent intersection collision.

A wrongful death action was brought by the estate of Sean C. Waters (an off-duty Boston police officer who had been a passenger in the other automobile), and tort actions were brought by the injured occupants of both automobiles (collectively, tort action or tort claims). Some of the tort claims assert that Ultimate and Broderick negligently furnished alcohol to Powers (social host theory of liability or social host liability claims). Other claims (wrongful death and negligence claims) assert that Ultimate and Broderick were negligent in permitting Powers to leave the van at the Boston bar when they knew, or should have known, that Powers was likely to operate an automobile while intoxicated (negligence claims).

In addition to the tort action, Ultimate's insurer, Commerce Insurance Company (Commerce), filed a complaint seeking a declaratory judgment that neither of the two policies it had issued to Ultimate provides coverage for the injuries of the plaintiffs in the tort action (insurance coverage action or insurance coverage claims). The tort action and the insurance coverage action were consolidated.

A Superior Court judge granted summary judgment in favor of Ultimate and Broderick on all the tort claims, concluding that (1) no social host liability existed because there was no evidence that Ultimate or Broderick had provided alcohol to Powers; and (2) Ultimate and Broderick owed no duty to the plaintiffs to protect them from the conduct of an intoxicated passenger once the passenger was returned to the drop-off point. Separate and final judgments, pursuant to Mass. R. Civ. P. 54(b), 365 Mass. 820 (1974), entered dismissing the tort claims against Ultimate and Broderick.5 In the insurance coverage action, a judgment entered declaring that (1) Commerce's business owner policy did not provide coverage for the plaintiffs' claims in the tort actions; (2) Commerce is required under its automobile policy to defend and indemnify Ultimate with respect to the social host liability claims; and (3) Commerce is not required under its automobile policy to indemnify Ultimate with respect to the negligence claims that are based on discharging Powers in an intoxicated state.

The plaintiffs in the tort action (plaintiffs) appealed. Commerce filed a cross appeal with respect to its obligation under the automobile policy to defend and indemnify Ultimate on the social host liability claims. We transferred the cases here on our own motion to determine whether (1) Ultimate and Broderick owed a duty to the plaintiffs to avoid discharging its intoxicated passenger at a location from which it was likely he would drive; and (2) Commerce is required to cover the claims made in the tort action under either of its two policies issued to Ultimate. We conclude that such a duty exists, and that the commercial automobile policy provides coverage for the plaintiffs' claims in the tort action.

The relevant facts established for summary judgment purposes are contained in statements, depositions, and other materials in the record. In setting out the facts, we resolve any conflicts in the summary judgment materials, and we make all logically permissible inferences, in favor of the plaintiffs in the tort actions. Ulwick v. DeChristopher, 411 Mass. 401, 402, 582 N.E.2d 954 (1991). During the evening of August 11, 2001, Powers was part of a group of men who rented a vehicle from Ultimate for the purpose of obtaining transportation for the members of a bachelor party. The arrangements were made by Brian Masse, also a member of the bachelor party, through his friend Broderick, who was a driver for Ultimate and would drive the vehicle on the evening of the party. The men engaged Ultimate because they planned to drink and wanted someone else to drive so they "wouldn't have to worry about driving home." The group consisted of Powers, Powers's brother Brian, James Podolske, Masse, Kenny Lee, and the groom, Anthony McNeil.

Among other activities, Ultimate provides transportation services for social events, including bachelor parties. Ultimate's owner, Robert Landry, expected that passengers transported during social occasions would become intoxicated. Landry understood that the use of the service by intoxicated persons reduced the risk to those persons, as well as to the general public, of being injured or killed in an automobile accident caused by drunk driving. Landry expected his drivers to drop off passengers at a safe location. He did not expect his drivers to handle intoxicated persons any differently from sober ones. If Broderick thought a passenger was intoxicated, he would drive him home.

Ultimate permitted its passengers to provide their own alcohol and to consume it in its vehicle and had no restrictions on the amount, or type, of alcohol its passengers could provide for themselves or consume. Ultimate did not have any policies, guidelines, or training for its drivers to make them aware of the extent of passenger alcohol consumption.

Masse arranged for the members of the bachelor party to be picked up and dropped off at the same location, namely, the Sports Connection in South Boston. After being picked up, Broderick would drive them to the strip club in Rhode Island, and he would later return them to the Sports Connection.

Powers drove the automobile of his girl friend to the Sports Connection on the evening of the party.6 With him were Brian and Podolske. The men arrived at the bar between 6 and 6:30 P.M. Powers parked the automobile beside the bar. The men went inside the bar, where Powers drank as many as seven beers and two "woo-woos" (an alcoholic beverage containing peach schnapps, vodka, and cranberry juice).

Broderick arrived at the bar at approximately 8 P.M. He was operating a fifteen-passenger van owned by Ultimate. Broderick went inside the bar, learned that all members of the bachelor party were present, and observed that everyone in the party had been drinking. Broderick stayed inside the bar for about fifteen minutes, while the men "finish[ed] up what they were drinking." The members of the bachelor party were intent on getting drunk and having a good time.

Shortly after the group left the bar, Masse asked Broderick to stop at a liquor store. Broderick took them to a nearby liquor store and accompanied Masse and one of the other passengers into the store. Either Masse or the other passenger, or both men together (but not Broderick), purchased at least one thirty-pack of beer, some ice, and a cooler, all of which was loaded into the van.7 The passengers drank some of the beer in the van on the way to the Rhode Island club. Powers consumed three or four beers in the van.

The group arrived at the club at about 9 P.M., where the men continued to drink. Powers consumed three beers or more and up to two "shots." Broderick was in the club and saw members of the bachelor party drinking. At approximately 1 A.M. on August 12, the men boarded the van to return to Boston. Once inside, they continued to drink beer with Powers consuming another three "or so" beers.

The group arrived at the Sports Connection at about 2:10 A.M. Broderick parked the van by the curb outside the bar, which was closed and dark with no one else around. A nearby subway station was closed. About ten minutes later, Broderick left with Masse and Lee in the van. The other passengers had left the van. Broderick took Masse and Lee to another party which Broderick planned to attend. Before leaving, Broderick did nothing to determine whether the passengers were capable of getting home on their own.8

Powers, along with his brother and Podolske, returned to the automobile of Powers's girl friend. Powers drove and shortly thereafter, his automobile violently collided with an automobile operated by Lillie Paquette. The passengers of Paquette's vehicle were Waters, Linda Stevens, Amber Seaton, and Gennes Seaton. Occupants of both automobiles incurred very serious injuries. Waters died. Powers was transported to a nearby hospital. A toxicology screen of Powers's blood, taken at 3:55 A.M., established his blood alcohol level at three times the legal limit.

At the time of the accident, Ultimate had two polices of insurance with Commerce, a commercial automobile policy and a business owners policy. The commercial automobile policy, with limits of $1,000,000, provides liability coverage for "all sums an `insured' legally must pay as damages because of `bodily...

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