Excelsior Ins. Co. v. Pomona Park Bar & Package Store

Decision Date08 March 1979
Docket NumberNo. 52195,52195
Citation369 So.2d 938
CourtFlorida Supreme Court
PartiesEXCELSIOR INSURANCE COMPANY, Petitioner, v. POMONA PARK BAR & PACKAGE STORE, Respondent.

Cliff B. Gosney, Jr. and J. Walsh of Gosney, Cameron, Parsons & Marriott, P.A., Daytona Beach, for petitioner.

William L. Townsend, Jr. and William E. Butler of Walton & Townsend, Palatka, for respondent.

Joseph C. Jacobs and Thomas M. Ervin, Jr. of Ervin, Varn, Jacobs, Odom & Kitchen, Tallahassee, for American Ins. Association, amicus curiae.

ADKINS, Justice.

This cause is before the Court on petition for writ of certiorari to review the decision of the First District Court of Appeal in Pomona Park Bar & Package Store v. Excelsior Insurance Co., 347 So.2d 136 (Fla.1st DCA 1977), which directly conflicts with United States Fidelity and Guaranty Co. v. Hazen, 346 So.2d 632 (Fla.2d DCA 1977). In those decisions the district courts of appeal construed identical language in separate insurance contracts but reached contrary conclusions as to its legal effect. We have jurisdiction under Article V, Section 3(b)(3) of the Florida Constitution. See Gibson v. Maloney, 231 So.2d 823 (Fla.1970); Griffin v. Speidel, 179 So.2d 569 (Fla.1965). The respondent's motion to discharge the writ as improvidently granted is denied.

Respondent Pomona Park Bar & Package Store and its insurer (Excelsior Insurance Company) were named as defendants along with two convenience stores and their insurers in a suit filed by a minor and his mother. The complaint alleged that in violation of Florida law, Pomona Park and the two other stores had sold alcoholic beverages to the minor and his two minor-age companions, proximately resulting in an automobile accident in which the minor-age plaintiff was seriously injured. Excelsior initially responded for itself and Pomona Park. But Excelsior later moved to withdraw as counsel for Pomona Park and for summary judgment on its own behalf, contending that its insurance contract with Pomona Park specifically excluded coverage for injuries resulting from sale of alcoholic beverages in violation of statute.

The trial judge seems to have understood exclusion (1) of paragraph (h) of the insurance policy (discussed below) as entirely excluding Pomona Park from coverage because it was engaged in the business of selling and serving alcoholic beverages. The motions to withdraw as counsel and for summary judgment were granted. Excelsior was thus relieved of liability and of its parallel contractual obligation to defend Pomona Park.

The First District Court of Appeal reversed. The court interpreted exclusion (h)(1) of the policy as excluding coverage for any bodily injury for which Pomona Park might be held liable while engaged in the business of selling alcoholic beverages. Since that was Pomona Park's business, the court regarded the exclusion as irreconcilable with the general provision of the contract for coverage to the insured. Confronted by a seeming inconsistency based on an assumption that the exclusion is all-encompassing, the court construed the contract in favor of the insured by deleting paragraph (h) and ordered Excelsior to provide coverage and a defense to Pomona Park.

In United States Fidelity and Guaranty Co. v. Hazen, supra, the Second District Court of Appeal apparently also construed exclusion (h)(1) in an identical policy as completely eliminating a nominally insured bar operator from coverage. The court therefore found in favor of the insurer against a claim by the insured for indemnification for alleged liability for an intoxicated patron's injuries.

Thus we are confronted by essentially similar interpretations of paragraph (h) by a trial court and two appellate courts which nevertheless made conflicting decisions.

The insurance contract in question requires Excelsior to pay (within the dollar limits of the policy) all sums which the insured becomes legally obligated to pay for bodily injury or property damage. It also states that Excelsior has a right and a duty to defend Pomona Park. There are a series of exclusions, however. The paragraph containing the disputed exclusion reads as follows:

"(h) to bodily injury or property damage for which the insured or his indemnitee may be held liable

(1) as a person or organization engaged in the business of manufacturing, distributing, selling or serving alcoholic beverages, or

(2) if not so engaged, as an owner or lessor of premises used for such purposes, if such liability is imposed

(i) by, or because of the violation of, any statute, ordinance or regulation pertaining to the sale, gift, distribution or use of any alcoholic beverage, or

(ii) by reason of the selling, serving or giving of any alcoholic beverage to a minor or to a person under the influence of alcohol or which causes or contributes to the intoxication of any person; but part (ii) of this exclusion does not apply with respect to liability of the insured or his indemnitee as an owner or lessor described in (2) above;"

Excelsior contends the exclusions in paragraph (h) apply when: the insured is either engaged in the business of manufacturing, distributing, selling, or serving alcohol, or owns or leases the premises upon which such activity is conducted; And the insured violates a statute, ordinance, or regulation pertaining to liquor sales or distribution, or transfers liquor to a minor, an intoxicated person, or to one who is thereby rendered intoxicated; And such an act is the proximate cause of the plaintiff's injuries or damages. Excelsior concludes that an owner or lessor is covered when he has not violated an alcoholic beverage statute, ordinance, or regulation, and a bar or package store operator is covered even when he has violated such a law but the injuries or damages were not proximately caused by the violation. The policy therefore covers, for example, injuries to a minor who tripped on loose flooring and fell through a plate glass window at the package store after having been illegally sold a bottle of liquor by the insured.

Respondent Pomona Park argues that exclusions (h)(1) and (h)(2) are disjoined and the qualifying clauses (i) and (ii) do not apply to those described in (h) (1), that is, to those "engaged in the business" of making, distributing, selling or serving alcoholic beverages. Under that interpretation, since Pomona Park is a package store it is entirely excluded from coverage. Even when an injury had no connection with liquor sales, Pomona Park believes it would still be denied coverage because it is in the business which is excluded. Pomona Park concludes that exclusion (h)(1) is repugnant and should be deleted because it converts the insurance policy into a device for channeling premiums to Excelsior without creating a corresponding duty to provide coverage.

Pomona Park also urges that if the Department of Insurance does not disapprove an insurance policy form which is defective under Section 627.411, Florida Statutes (1977), then Section 627.418, Florida Statutes (1977), requires the courts to extend coverage so as to protect policy holders against the defect. Pomona Park asserts that the contract is inconsistent and that we must therefore extend coverage.

Our understanding of paragraph (h) is that it sets out two categories of persons excluded from coverage: (h)(1), those actively "engaged in the business" and (h)(2), owners and lessors of the premises such business is conducted upon. But the two qualifying clauses limit the scope of the exclusion "if such liability is imposed", (i) because of a violation of an alcoholic beverage law or (ii), by reason of the dispensing of an alcoholic beverage to a minor or an intoxicated person.

Pomona Park's argument is misconceived in focusing exclusively on exclusion (h)(1) and representing that it completely eliminates bar operators from coverage. Rather, the provisions of paragraph (h) should be construed together. See generally King v. Sturge, 113 So.2d 257 (Fla.3d DCA 1959); New Amsterdam Casualty Company v. Addison, 169 So.2d 877 (Fla.2d DCA 1...

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