Lanoue v. Fireman's Fund Am. Ins. Companies
| Decision Date | 09 May 1979 |
| Docket Number | No. 48272.,48272. |
| Citation | 278 NW 2d 49 |
| Parties | Roger LANOUE, Individually and d. b. a. Rog & Jim's Superette, and Rog & Jim's, Inc., Appellants, v. FIREMAN'S FUND AMERICAN INSURANCE COMPANIES, Respondent, State Automobile and Casualty Underwriters, Respondent, Donald L. Anderson et al., Respondents, Richard D. Taaffe, Individually and d. b. a. Pixie Liquors, Respondent, Speedy Market Incorporated, Respondent, Jeffrey Lindsholm et al., Respondents, Daniel O'Brien et al., Respondents, Greg Orthun et al., Respondents. |
| Court | Minnesota Supreme Court |
Meyer, Nelson & Miller, Rolf T. Nelson and Roger N. Eye, Robbinsdale, for appellants.
Barnett, Ratelle, Hennessy, Vander Vort, Stasel & Herzog, and W. Scott Herzog, Minneapolis, for Fireman's Fund American Ins. Companies.
Murnane, Murnane, Conlin & White and Lance B. Nyberg, St. Paul, for State Automobile and Casualty Underwriters.
Meagher, Geer, Markham, Anderson, Adamson, Flaskamp & Brennan, Minneapolis, for Anderson et al.
George S. Roth, Minneapolis, for Taaffe et al.
Paul G. Donlin, St. Paul, for Speedy Market, Inc.
Mark A. Fonken, St. Paul, for Lindsholm et al.
Thomas F. Meany, Minneapolis, for O'Brien et al.
David F. Fitzgerald, Minneapolis, for Orthun et al.
Heard before KELLY, TODD, and SCOTT, JJ., and considered and decided by the court en banc.
This is an appeal by the insureds, Roger Lanoue and Rog and Jim's Inc., from a declaratory judgment holding that the insurers, Fireman's Fund American Insurance Companies and State Automobile and Casualty Underwriters, were not obligated to defend a suit on behalf of the insureds and that the insureds were not entitled to the attorneys fees, costs, and disbursements incurred in their defense. We reverse and remand.
Roger Lanoue, through Rog and Jim's, Inc., owned and operated Rog and Jim's Superette. Lanoue maintained a "Coverall" policy on his business issued by State Automobile and Casualty Underwriters (hereinafter State Auto). He also maintained a "Homeowner's Policy" issued by Fireman's Fund American Insurance Companies (hereinafter Fireman's Fund).
On December 20, 1974, Lanoue had several bottles of whiskey in his locked, private office which was located in the back room of the superette. The bottles were Christmas gifts from several of Lanoue's wholesale suppliers but Lanoue had not yet taken them home. The superette did not sell whiskey, though it did sell 3.2 beer.
Daniel O'Brien, then a minor, was an employee of the superette. At approximately 11 p. m., while the superette was open for business, O'Brien, who was then off duty, entered the superette. He went to the back room of the superette, removed four 6-packs of 3.2 beer from a cooler and placed them outside the back door, which was latched from the inside. O'Brien then jimmied the lock on Lanoue's office door, removed one of the bottles of whiskey from the office and placed it outside the back door of the superette, with the beer. O'Brien returned to the front of the store and purchased several items, paying by check. He added enough to the check to cover the cost of the beer he had placed outside the back door, stating to the clerk that he was repaying money owed Lanoue. Neither of the two employees on duty apparently noticed O'Brien's actions with the whiskey and the beer. O'Brien left the superette by the front entrance and then recovered the beer and whiskey he had left outside the back door.
Although conflict existed in the testimony, the trial court found as a matter of fact that later than night Jeffrey Anderson, who was then a minor, drank some of the liquor. No evidence presented indicated that Jeffrey drank any of the beer. Thereafter while Jeffrey was driving a vehicle, he was involved in a 1-car accident.
In September 1975, the parents of Jeffrey Anderson initiated legal proceedings against Lanoue, individually and d/b/a Rog & Jim's Superette. The Andersons alleged that Lanoue, through his agents, servants or employees, had furnished intoxicating beverages to Jeffrey Anderson and, as a result, Jeffrey Anderson was injured. The complaint, which alleged only dram shop facts, asked for $750,000 in damages.
Upon learning of the complaint Lanoue called the agent who had sold him the State Auto policy. Lanoue had learned of O'Brien's theft of the beer and whiskey from O'Brien on the day following the theft but he was not aware of any connection between O'Brien's taking the beer and whiskey and Jeffrey Anderson's accident until he was served with the summons and complaint. Lanoue related the entire story concerning both the beer and the whiskey to his insurance agent who relayed it to State Auto.
Lanoue tendered the defense of the claim to State Auto which declined to defend. The policy issued by State Auto excluded coverage where the cause of action resulted from the selling or serving of alcoholic beverages either as a business or illegally. Tender was thereafter made to Fireman's Fund on the basis of a Homeowner's insurance policy which Lanoue carried. The policy had both a "business purposes" exclusion and an "other premises" exclusion and provided excess coverage to any other insurance. Fireman's Fund also declined to defend.
As a result Lanoue engaged counsel to defend the Anderson action and to initiate a declaratory judgment action against State Auto and Fireman's Fund. Shortly before trial of the declaratory judgment action, the complaint in the Anderson action was amended to allege a claim of negligence against Lanoue. Thereafter, at the trial of the declaratory judgment action, both insurance companies agreed to defend the second cause of action added by the amended complaint on a basis limited to their policy provisions.
At the conclusion of the declaratory action the trial court found that neither of the insurers was obligated to defend the initial Anderson cause of action and that the insurers were not liable for costs, disbursements, or attorneys fees until the complaint was amended to include an allegation of negligence.
Plaintiffs, Lanoue and Rog and Jim's, Inc., appeal from this judgment. Plaintiffs argue that facts not stated in the Anderson complaint but known to the insurers indicated that the incident upon which the cause of action was based was within insurance coverage. As a result plaintiffs contend that the insurers were obligated to defend and should be required to indemnify plaintiffs for legal fees incurred in their defense as well as for legal fees incurred in prosecuting the present declaratory judgment action.
An insurer may avoid defending a complaint alleging a cause of action within policy coverage if actual facts outside the complaint would exclude the cause of action from coverage. Weis v. State Farm Mutual Automobile Ins. Co., 242 Minn. 141, 64 N.W.2d 366 (1954). Similarly, an insurer is required to defend its insured against a complaint alleging a cause of action excluded from policy coverage if the insurer is aware of facts outside the complaint which would bring the cause of action within coverage.
In Crum v. Anchor Casualty Co., 264 Minn. 378, 119 N.W.2d 703 (1963), Crum, an apartment owner, was sued by one of his tenants, a part-time employee of Crum's, for negligence in maintaining a common stairway. Later the tenant's complaint was amended to allege only a cause of action under the Workman's Compensation Act. Crum's insurance policy had an exclusion as to employees whose injuries arose out of the course of their employment or who had rights under the Workman's Compensation Act. But the insurance company had already deposed the tenant and had information which indicated that the tenant was not engaged in the course of her employment when the accident occurred. Nevertheless the insurer withdrew from the defense of the amended complaint. After settling with the tenant, Crum sued for attorney fees and settlement costs. The insurer was held to a duty to defend under these circumstances even after the complaint was amended to state a cause of action which was not covered by the policy.
The insurer's duty to defend is not invoked solely by the nature of the complaint. Further, the insurer has the burden of showing that no duty to defend exists.
In F. D. Chapman Const. Co. v. Glens Falls Ins. Co., 297 Minn. 406, 211 N.W.2d 871 (1973), several businessmen sued a construction company for negligently obstructing access to their businesses during construction of a sewer. The construction company's liability insurer refused to defend arguing that the damage did not arise out of an "occurrence" and that the injury claimed was not within policy coverage because it was not an "injury to real property." This court framed the issue of an insurer's duty to defend by stating "The sole question is whether, from the pleadings and stipulated facts, it clearly appears that the businessmen's claim fell outside the terms of the policy." 297 Minn. 408, 211 N.W.2d 872. The court held that the requirement of an occurrence had been met. As to the injury to real property this court stated:
297 Minn. 408, 211 N.W.2d 872.
This court in Chapman did not indicate that the pleadings and facts must clearly establish an obligation to defend, but rather that they must clearly establish that the claim falls outside the policy terms or the duty to defend...
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