Jimmy's Diner, Inc. v. Liquor Liability Joint Underwriting Ass'n of Massachusetts

• Decision Date: 08 May 1991
• Parties: JIMMY'S DINER, INC. 1 v. The LIQUOR LIABILITY JOINT UNDERWRITING ASSOCIATION OF MASSACHUSETTS.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 4

571 N.E.2d 4

410 Mass. 61

JIMMY'S DINER, INC. ¹ v. The LIQUOR LIABILITY JOINT UNDERWRITING ASSOCIATION OF MASSACHUSETTS.

Supreme Judicial Court of Massachusetts Suffolk.

Argued March 6, 1991.

Decided May 8, 1991.

James E. Grumbach (James L. Rogal with him), Boston, for plaintiff.

Steven L. Schreckinger (Ellen B. King with him), Boston, for defendant.

Before LIACOS, C.J., and ABRAMS, NOLAN and LYNCH, JJ.

NOLAN, Justice.

In March, 1989, one Preston Gardner commenced an action against the plaintiff, Jimmy's Diner, Inc. (Jimmy's), alleging that he had been the victim of an assault and battery at the hands of an employee of Jimmy's. At the time of the alleged incident, Jimmy's had a liquor liability insurance policy from the defendant, The Liquor Liability Joint Underwriting Association of Massachusetts (LLJUA). Jimmy's promptly notified the LLJUA of the Gardner complaint, requesting that the LLJUA defend the claim pursuant to the policy provisions. The LLJUA declined to defend, stating that the action was not covered under the policy.

Jimmy's then brought this action, seeking a declaration of the rights and liabilities of the parties, as well as damages under G.L. c. 93A (1988 ed.). The judge correctly ruled that there was no genuine issue of any material fact, and the Superior Court entered judgment in favor of the LLJUA. We now affirm the judgment of the Superior Court.

It is well settled that "the question of the initial duty of a liability insurer to defend third-party actions against the insured is decided by matching the third-party complaint with the policy provisions: if the allegations of the complaint are 'reasonably susceptible' of an interpretation that they state ... a claim covered by the policy terms, the insurer must undertake the defense." Continental Casualty Co. v. Gilbane Bldg. Co., 391 Mass. 143, 146, 461 N.E.2d 209 (1984), quoting Sterilite Corp. v. Continental Casualty Co., 17 Mass.App.Ct. 316, 318, 458 N.E.2d 338 (1983). We therefore turn to a comparative examination of the terms of the policy and the allegations in the Gardner complaint.

The policy states, in relevant part, that the LLJUA "will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as 'damages' because of 'bodily injury' to any person, caused by an occurrence, if such liability is imposed upon the Insured by reason of the negligence of the Insured in the distribution, sale or serving of any alcoholic beverage at the Insured premises. We [LLJUA] shall have the right and duty to defend any suit against the Insured seeking such 'damages,' even if the allegations of the suit are groundless, false, or fraudulent" (emphasis added). An "occurrence" is defined in the policy as an "accident" which is "neither expected nor intended from the standpoint of the Insured." Under the policy, an employee qualifies as an "Insured." ²

The Gardner complaint alleges that on or about May 16, 1987, Gardner had gone to Jimmy's for the purpose of purchasing and consuming alcoholic beverages. The complaint further alleges that an employee of Jimmy's asked Gardner to leave the premises and, as Gardner was leaving, repeatedly punched and kicked him about the head, face, and body, causing injury. There is no allegation in the complaint that the employee had been drinking prior to the incident. Gardner's answers to interrogatories more extensively described the incident, alleging that the conflict between Gardner and the employee occurred when Gardner, then allegedly forty-five years old, refused to produce identification proving himself to be of legal drinking age.

The Superior Court judge held in favor of the LLJUA for two reasons. First, the judge held that the Gardner action did not seek to impose liability on Jimmy's "by reason of the negligence of the Insured in the distribution, sale or serving of alcoholic beverages." Second, the judge held that, because the conduct alleged in the complaint, assault and battery, was intentional, it was therefore "expected or intended" by the insured, and was not an "occurrence" under the policy.

Jimmy's argues that the conduct alleged in the Gardner complaint could describe a negligent occurrence. ³ Jimmy's asserts that its employee had a limited privilege to use force to eject Gardner from the premises, because he had refused to produce identification demonstrating that he was of legal drinking age. Jimmy's further asserts that the employee could have lost this privilege by negligently using more force than was necessary to effect the removal of the patron. In such a case, Jimmy's argues, the bodily injury would be neither expected nor intended from the standpoint of the insured.

Even conceding, arguendo, that the employee could have negligently used excessive force, but see Newton v. Krasnigor, 404 Mass. 682, 685, 536 N.E.2d 1078 (1989) (intent to cause any injury, no matter how slight, excluded from coverage), to be covered under the policy, such negligence must be "in the distribution, sale or serving of any alcoholic beverage." Jimmy's asserts that, as an incident to serving alcoholic beverages, it was required to ensure that no such beverages were served...