Thornhill v. Houston General Lloyds

• Decision Date: 16 January 1991
• Docket Number: No. 2-90-117-CV,2-90-117-CV
• Citation: 802 S.W.2d 127
• Parties: James THORNHILL and Thornhill Enterprises, Inc., Appellants, v. HOUSTON GENERAL LLOYDS, Appellee.
• Court: Texas Court of Appeals

Page 127

802 S.W.2d 127

James THORNHILL and Thornhill Enterprises, Inc., Appellants, v. HOUSTON GENERAL LLOYDS, Appellee.

No. 2-90-117-CV.

Court of Appeals of Texas Fort Worth.

Jan. 16, 1991.

Staples, Foster & Hampton, Kenneth C. Curry, Hurst, for appellants.

Riddle & Brown, Phillip W. Gilbert, Dallas, for appellee.

Before JOE SPURLOCK, II, FARRIS and DAY, JJ.

OPINION

DAY, Justice.

This is an appeal from a summary judgment in which the trial court held that Houston General Lloyds (hereinafter Houston), insurer and appellee, had no duty to defend a suit instituted against James Thornhill (hereinafter Thornhill) and Thornhill Enterprises, Inc. (hereinafter Thornhill, Inc.), insureds and appellants (hereinafter Thornhill defendants). In this case of first impression, we must determine whether the allegations which form the basis of a separate pending litigation govern a disputed issue of coverage between an insurer and the defendant of that pending suit. We answer in the affirmative.

James and Rita Thornhill organized Thornhill Enterprises, Inc. in 1985 and have been the sole officers, directors, and shareholders of Thornhill Enterprises, Inc. since its inception. Shortly after its incorporation, Thornhill Enterprises, Inc. purchased a convenience store known as the Watauga Beer Barn. Thornhill Enterprises, Inc. employs James Thornhill as President and General Manager and in such capacity Thornhill directed the daily operation of the Watauga Beer Barn. James Thornhill was also responsible for the employment, termination, and training of employees of Thornhill Enterprises, Inc.

Houston issued a Texas Commercial Multi-Peril Policy to the Watauga Beer Barn effective from February 1, 1987 to February 1, 1988. The policy provides:

The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use of the insured premises and all operations necessary or incidental to the business of the named insured conducted at or from the insured premises and the Company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the Company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the Company's liability has been exhausted by payment of judgments or settlements.

The policy contained an express "liquor liability" exclusion, as follows:

This insurance does not apply:

....

(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

(a) 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

(b) 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 (b) 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; ... [Emphasis added.]

In a separate cause of action, Geneva Davis, individually and on behalf of the estate of Denese Davis, filed suit against James Thornhill, d/b/a the Watauga Beer Barn, and Thornhill Enterprises, Inc., alleging that on December 31, 1987, Denese Davis was a passenger in an automobile which was struck by a pickup truck driven by Kenneth Richard Sherrell. Denese Davis died as a result of the injuries incurred in the accident. Geneva Davis's petition alleged:

Defendant, JAMES THORNHILL d/b/a, THE WATAUGA BEER BARN, and/or Defendant, THORNHILL ENTERPRISES, INC., by and through its agents, servants or employees was guilty of negligence in the following respects:

a. In selling alcoholic beverages to Defendant, KENNETH RICHARD SHERRELL, when it was apparent that said Defendant, KENNETH RICHARD SHERRELL, was obviously intoxicated to the extent that he presented a clear danger to himself and others;

b. In selling alcoholic beverages to Defendant, KENNETH RICHARD SHERRELL, a minor;

c. In entrusting a minor employee with an employment or agency position which allows him to sell alcoholic beverages;

d. In failing to properly supervise their employees with regard to the sale of alcoholic beverages; and

e. In failing to properly train their employees with regard to the sale of alcoholic beverages.

f. In entrusting a minor employee with an employment or agency position pursuant to which he sold alcoholic beverages when they knew or in the exercise of ordinary care should have known that said minor employee was unfit and/or unskilled to sell alcoholic beverages.

g. In entrusting a minor employee with an employment or agency position pursuant to which he sold alcoholic beverages when they knew or in the exercise of ordinary care should have known that other minors would attract [sic] to Defendant's place of business for the purpose of...