Saylab v. Don Juan Restaurant, Inc.
| Decision Date | 19 August 2004 |
| Docket Number | No. CIV.A. 02-454(RMC).,CIV.A. 02-454(RMC). |
| Citation | 332 F.Supp.2d 134 |
| Parties | Malika SAYLAB, et al., Plaintiffs, v. DON JUAN RESTAURANT, INC., et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Quentin R. Corrie, Birch, Stewart, Kolasch & Birch, LLP, Falls Church, VA, for Plaintiffs.
Bryan Perilman, Dross, Levenstein, Perilman & Kopstein, Seabrook, MD, James Russell Schraf, Lipshultz & Hone, Chartered, Silver Spring, MD, John Jude Hathway, Whiteford, Taylor & Preston, L.L.P., Allen Hutter, Washington, DC, for Defendants/Cross-Claimants.
This case concerns insurance coverage and complements a liability suit that is pending in the Superior Court of the District of Columbia. The plaintiffs are Malika, Mumtaz, Haydathaulla and Ahmad Saylab (collectively, "Saylabs" or "Saylab family"), who lost two relatives, Sarvanna and Salma Saylab, in a traffic accident on August 2, 1998. The complaint alleges that Oscar Flores, after being served alcoholic beverages at Don Juan Restaurant, Inc. ("Don Juan") and/or El Tipico Restaurant, Inc., drove his car on the wrong side of a highway and collided head-on with a vehicle carrying Salma, Sarvanna, Malika and Ahmad Saylab.1 The Saylabs seek, inter alia, to hold Don Juan responsible for the fatal crash on the grounds that the restaurant failed to supervise and train its employees, who allegedly permitted Mr. Flores to consume alcohol to the point of inebriation and then to operate a motor vehicle.
In the instant case, Don Juan requests a judicial declaration that an insurance policy issued by Harford Mutual Insurance Company ("Harford") provides coverage and indemnification for all of the Saylab family's claims against the restaurant.2 In the alternative, Don Juan and the Saylabs ask the Court to declare that Don Juan's insurance broker, Associated Insurance Management, Inc. ("Associated"), breached tort and contract duties by not apprising Luis Alberto Ferrufino, Don Juan's owner, of the availability of liquor liability coverage for his restaurant. Don Juan, Harford, and Associated have submitted Motions for Summary Judgment on these two overarching issues.3
"The first insurance policy issued to [Don Juan] by Harford was in March 1994."4 St. of Mat. Facts in Supp. of Harford's Mot. for Summ. J. ¶ 5. Alberto Ferrufino and his wife acquired Don Juan in that same year, following the death of the prior owner. Don Juan asserts that Mr. Ferrufino had no experience operating a restaurant in the District of Columbia, and "only [a] moderate ability to speak English, and little ability to read or write in English." Mem. of Pts. & Auths. of Def. Don Juan Rest., Inc. at 5. According to Don Juan, Mr. Ferrufino "merely continued the existing commercial general liability insurance policies in place at Don Juan Restaurant when he purchased the restaurant in 1994." Id. With respect to the renewal of policies and payment of premiums, Mr. Ferrufino dealt with Jon Nosarino, a broker who is no longer with Associated, and Gloria Groover, another Associated employee. He began working with Judith Myers in January 2001. "Other than sending renewal notices to ... Associated and/or [Ms.] Myers, Mr. Ferrufino did not have any discussions about insurance coverage or lack of coverage." Don Juan's Mem. in Supp. of Mot. for Summ. J. at 12-13.
As of August 2, 1998, when Oscar Flores allegedly crashed into the Saylab family's automobile, the Harford insurance policy in effect was dated March 26, 1998, to March 26, 1999 ("Policy"). The Policy consisted of four coverage parts: commercial property, commercial general liability ("CGL"), commercial crime, and commercial inland marine. The CGL form was broken up into five sections: Section I described coverages for bodily injury and property damage, personal or advertising injury liability, and medical payments; Section II identified who was an insured; Section III specified limits of insurance; Section IV listed CGL conditions; and Section V provided definitions of key terms. The general aggregate limit of insurance (other than products/completed operations) was $2,000,000, and the aggregate limit of insurance for products/completed operations was $1,000,000.
Also included in the CGL policy under Section I were exclusions; as relevant here, the policy specifically stated that insurance did not apply to:
c. Liquor Liability
"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 business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.
CGL Coverage Form at 1 of 11, Harford's Mot. for Part. Summ. J. Ex. 3.
In addition, the Policy had an endorsement entitled "Products/Completed Operations Hazard Redefined" ("Endorsement"). The Endorsement specifically stated that it "modifie[d] insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART [and] PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART[.]" Endorsement, Harford's Mot. for Part. Summ. J. Ex. 3. In Section V, the Policy had originally defined the term "products/completed operations hazard" to "[i]nclude[ ] all `bodily injury' and `property damage' occurring away from premises you own or rent and arising out of `your product' or `your work' except: (1)[p]roducts that are still in your physical possession; or (2)[w]ork that has not yet been completed or abandoned...." CGL Coverage Form at 10 of 11, Harford's Mot. for Part. Summ. J. Ex. 3 (emphasis added). The Endorsement modified the Policy to read:
With respect to "bodily injury" or "property damage" arising out of "your products" manufactured, sold, handled or distributed:
1. On, from or in connection with the use of any premises described in the Schedule, or
2. In connection with the conduct of any operation described in the Schedule, when conducted by you or on your behalf Paragraph a. of the definition of "Products — completed operations hazard" in the DEFINITIONS Section is replaced by the following: "Products — completed operations hazard":
a. Includes all "bodily injury" and "property damage" that arises out of "your products" if the "bodily injury" or "property damage" occurs after you have relinquished possession of those products.
Endorsement, Harford's Mot. for Part. Summ. J. Ex. 3. The schedule as listed on the Endorsement provided, "Description of Premises and Operations: # 16816 — RESTAURANTS — WITH SALES OF ALCOHOLIC BEVERAGES THAT ARE LESS THAN 75% OF THE TOTAL ANNUAL RECEIPTS OF THE RESTAURANTS — WITHOUT DANCE FLOOR[.]" Id.
By letter dated October 1, 2001, Harford denied coverage for the Saylabs' claims against Don Juan. Harford opined that the liquor liability exclusion controlled and that the Endorsement "simply change[d] the definition of the products/completed operations hazard as stated in SectionV — Definitions." Harford's Mot. for Summ. J. Ex. 8 at 2. Subsequently, the Saylab family brought this declaratory judgment action in D.C. Superior Court against Harford, Associated, Don Juan, and Mr. Ferrufino. Harford and Associated removed the case to federal court. Mr. Ferrufino was voluntarily dismissed, and this Court found that the Saylab family had no standing to sue Harford but allowed Don Juan to advance the same coverage claim. Because factual questions remained to be developed and answered, the Court allowed the Saylabs and Don Juan to continue their claims against Associated. The Court ordered two distinct rounds of summary judgment motions, the first limited to the interpretation of the Policy and the second to address claims of negligence and breach of contract.
Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). This procedural device is not a "disfavored legal shortcut" but a fair and efficient method of resolving cases expeditiously. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether a genuine issue of material fact exists, the Court must view all facts and reasonable inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Tao v. Freeh, 27 F.3d 635, 638 (D.C.Cir.1994).
Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.... [S]ummary judgment will not lie if the dispute about a material fact is "genuine," that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.
Pending before the Court are four dispositive motions:
First, Harford filed a Motion for Partial Summary Judgment, to which Don Juan filed its opposition, and Harford filed a reply. Harford also submitted a Surreply Regarding Harford's Corporate Designee.5 These briefs examine the scope of insurance coverage under the Policy issued by Harford to Don Juan.
Next is the Motion of Defendant[ ] Associated Insurance Management, Inc. for Summary Judgment, which Don Juan and the Saylabs both oppose and to which Associated filed a reply. The primary issue is whether Associated had a contractual or tort duty to give Don Juan advice on the procurement of liquor liability coverage.
The third motion is Harford's Motion for Summary Judgment, which...
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