Sprangers v. Greatway Ins. Co.

• Citation: 175 Wis.2d 60,498 N.W.2d 858
• Decision Date: 02 March 1993
• Docket Number: LEARMAN-SCHALLER,No. 92-1617,92-1617
• Parties: Jeffrey F. SPRANGERS, Plaintiff-Respondent, d v. GREATWAY INSURANCE COMPANY and Todd J. Zielke, Defendants, Threshermen's Mutual Insurance Company, Defendant-Petitioner,POST 2732, V.F.W. CLUBHOUSE, Defendant and Third-Party Plaintiff-Respondent, d v. The DIEDRICH AGENCY, INC., Third-Party Defendant-Petitioner, ABC Insurance Company, Curt Mc Sweyn, Vikki Mc Sweyn, and DEF Insurance Company, Third Party Defendants. Susan A. YOUNG, Individually and as personal representative for the Estate of Martin J. YOUNG, Plaintiff-Respondent, d v. GREATWAY INSURANCE COMPANY and Todd J. Zielke, Defendants, Threshermen's Mutual Insurance Company, Defendant-Appellant,POST 2732, V.F.W. CLUBHOUSE, Defendant-Third Party Plaintiff-Respondent, d v. The DIEDRICH AGENCY, INC., ABC Insurance Company, Curt Mc Sweyn, Vikki Mc Sweyn, and DEF Insurance Company, Third Party Defendants.
• Court: Wisconsin Court of Appeals

Page 858

498 N.W.2d 858

175 Wis.2d 60

Jeffrey F. SPRANGERS, Plaintiff-Respondent, ^d v. GREATWAY INSURANCE COMPANY and Todd J. Zielke, Defendants, Threshermen's Mutual Insurance Company, Defendant-Petitioner, LEARMAN-SCHALLER POST 2732, V.F.W. CLUBHOUSE, Defendant and Third-Party Plaintiff-Respondent,^d v. The DIEDRICH AGENCY, INC., Third-Party Defendant-Petitioner,

ABC Insurance Company, Curt Mc Sweyn, Vikki Mc Sweyn, and

DEF Insurance Company, Third Party Defendants.

Susan A. YOUNG, Individually and as personal representative for the Estate of Martin J. YOUNG, Plaintiff-Respondent, ^d v. GREATWAY INSURANCE COMPANY and Todd J. Zielke, Defendants, Threshermen's Mutual Insurance Company, Defendant-Appellant, LEARMAN-SCHALLER POST 2732, V.F.W. CLUBHOUSE, Defendant-Third Party Plaintiff-Respondent,^d v. The DIEDRICH AGENCY, INC., ABC Insurance Company, Curt Mc

Sweyn, Vikki Mc Sweyn, and DEF Insurance Company,

Third Party Defendants.

No. 92-1617.

Court of Appeals of Wisconsin.

Submitted on Briefs Feb. 2, 1993.

Opinion Released March 2, 1993.

Opinion Filed March 2, 1993.

Before CANE, P.J., and LaROCQUE and MYSE, JJ.

CANE, Presiding Judge.

Threshermen's Mutual Insurance Company appeals a nonfinal order ¹ denying its motion for summary judgment. Threshermen's Jeffrey Sprangers was injured and Martin Young was killed when a truck negligently operated by Todd Zielke collided with their motorcycles. Zielke had been drinking at the VFW before the accident. Both Young's estate and Sprangers sued the VFW, among others, and the two suits were consolidated. Each complaint alleged that the VFW was negligent in serving alcoholic beverages to Zielke, when it knew or should have known that he was under the legal drinking age, and that the VFW's negligence was a substantial factor in causing the accident and plaintiffs' injuries. The VFW's tavern is open to the public Thursdays, Fridays and most Saturdays from about two or three in the afternoon to two in the morning. Six of the VFW's eight employees are bartenders.

argues that it has no duty to defend or indemnify Learman-Schaller Post 2732, V.F.W. Clubhouse (VFW), against the claims for negligent distribution of liquor to a minor. Threshermen's claims that the plain language of the insurance policy's liquor liability exclusion excludes coverage. We agree that the policy provides no coverage. The VFW also argues that it is entitled to reform the policy and that Threshermen's is estopped from denying coverage [175 Wis.2d 65] because it failed to properly advise the VFW that it had no coverage for liquor liability. We reject these arguments and reverse the trial court's order denying Threshermen's motion for summary judgment.

Threshermen's refused to defend the VFW, citing a liquor liability exclusion in the policy that read:

EXCLUSIONS

... This insurance does not apply to:

....

c. "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. (Emphasis added

Threshermen's moved for summary judgment under the liquor liability exclusion. The trial judge denied the motion, stating that a better record on how the VFW was operated needed to be established to determine if the exclusion applied. Threshermen's petitioned for and received leave to appeal the nonfinal order denying its motion for summary judgment.

When reviewing a summary judgment decision, we follow the same methodology as the trial court. Kane v. Employer's Ins. of Wausau, 142 Wis.2d 702, 703, 419 N.W.2d 324, 325 (Ct.App.1987). The first step requires us to examine the pleadings to determine whether a claim for relief has been stated and a material issue of fact presented. Voss v. Middleton, 162 Wis.2d 737, 747, 470 N.W.2d 625, 628-29 (1991). If a claim for relief has been stated, inquiry then shifts to the moving party's affidavits or other proof to determine whether the moving party has made a prima facie case for summary judgment. Id. at 747-48, 470 N.W.2d at 629. If the moving party has made a prima facie case for summary judgment, we must examine the opposing party's affidavits and other proof to determine whether there exist disputed material facts or undisputed material facts from which reasonable alternative inferences may be drawn sufficient to entitle the opposing party to trial. Id. at 748, 470 N.W.2d at 629.

LIQUOR LIABILITY EXCLUSION

There is no dispute that the complaint states a claim for relief. Additionally, there are no disputed material facts. The first issue, therefore, is whether the policy's liquor liability exclusion applies to deny coverage for the VFW. Interpretation of an insurance contract is controlled It is fundamental that insurance policy language should be given its common everyday meaning and should be interpreted as a reasonable person in the insured's position would understand it. Paape v. Northern Assur. Co., 142 Wis.2d 45, 51, 416 N.W.2d 665, 668 (Ct.App.1987). When a policy's terms are unambiguous and plain on their face, the policy must not be rewritten by construction. Smith v. Atlantic Mut. Ins. Co., 155 Wis.2d 808, 811, 456 N.W.2d 597, 599 (1990). Although ambiguity in policy language exists when the policy is reasonably susceptible to more than one construction from the viewpoint of a reasonable person of ordinary intelligence in the position of the insured, Fletcher v. Aetna Cas. & Sur. Co., 165 Wis.2d 350, 355, 477 N.W.2d 90, 91 (Ct.App.1991), the fact that a word has more than one meaning does not make that word ambiguous if only one meaning comports with the parties' objectively reasonable expectations. United States Fire Ins. Co. v. Ace Baking Co., 164 Wis.2d 499, 503, 476 N.W.2d 280, 282 (Ct.App.1991).

by the general contract principles of construction, Lambert v. Wrensch, 135 Wis.2d 105, 115, 399 N.W.2d 369, 373 (1987), and is a question of law that we review independently of the trial court. Cunningham v. Metropolitan Life Ins. Co., 121 Wis.2d 437, 450, 360 N.W.2d 33, 39 (1985). The issue here is whether the liquor liability exclusion, which is limited to entities "in the business of ... distributing, selling, serving or furnishing alcoholic beverages," applies to a nonprofit business such as the VFW. This question is one of first impression in Wisconsin.

The VFW and the plaintiffs argue that the term "business" is ambiguous because it could be used in one of two senses: (1) in a broad sense to mean any regular activity that occupies one's time and attention, with or without a direct profit objective, or (2) in a narrow sense to mean an activity with a direct profit objective. Laconia Rod & Gun Club v. Hartford Acc. & Indem. Co., 123 N.H. 179, 459 A.2d 249, 251 (1983). In support of this perceived ambiguity, the VFW and plaintiffs cite the New Hampshire court in Laconia and American Legion Post No. 49 v. Jefferson Ins. Co., 125 N.H. 758, 485 A.2d 293, 294 (1984), where it construed the term "business" in the applicable exclusion to apply only to activity with a profit motive, and therefore found the liquor liability exclusion did not apply to nonprofit entities. See also Newell-Blais Post No. 443 v. Shelby Mut. Ins. Co., 396 Mass. 633, 487 N.E.2d 1371, 1373 (1986) (nonprofit veterans organization incorporated for charitable purposes was not engaged in the "business" of selling or serving alcoholic beverages); Zurich Ins. Co. v. Uptowner Inns, Inc., 740 F.Supp. 404, 407 (S.D.W.Va.1990) ("to 'engage in business' means to embark on an activity for profit on a regular basis"), aff'd (without published op, 904 F.2d 702 (4th Cir.1990).

However, courts in South Dakota and Washington have recently held that the liquor liability exclusion unambiguously includes as "businesses" nonprofit entities much like the VFW. In McGriff v. United States Fire Ins. Co., 436 N.W.2d 859 (S.D.1989), a plaintiff was injured in an auto accident caused by an individual who had just left the Eagles Club. The plaintiff alleged the club had served alcoholic beverages to the individual when he was already intoxicated and failed to prevent him from driving when he left the premises. The Eagles Club sought coverage, contending that because the liquor liability exclusion's reference to "business" was ambiguous, coverage should be afforded. The South Dakota court emphasized that the proper analysis was not on the character of the organization, but rather on the activities it performs. Id. at 863. It concluded that the policy on its face clearly and specifically excluded from coverage liability arising out of the activity of operating a tavern year-round, whether it be for-profit or nonprofit. Id.

A Washington appellate court agreed with the South Dakota court's focus on the insured's activities. In Fraternal Order of Eagles v. General Acc. Ins. Co., 58 Wash.App. 243, 792 P.2d 178 (1990), a plaintiff We agree with the rationale of the Washington and South Dakota courts. The VFW operates exactly as any other bar or tavern would with the exception of the use of the tavern's profits. The destination of profits, or even the existence of such profits, is irrelevant to the parties of this insurance contract. For the purpose of the insurance contract,...