The U.S. Court of Appeals for the Eleventh Circuit has affirmed a decision by the U.S. District Court for for the Southern District of Florida that an insurance company was obligated to defend the complete lawsuit against its insured where only some of the underlying plaintiff's claims were precluded by the “Total Liquor Liability” exclusion in the commercial general liability insurance policy that had been issued to the insured.
The Case
In January 2012, 20-year-old Alvin J. McMurty was killed in a motor vehicle-related incident. The wrongful death complaint filed later by his estate alleged that, prior to the fatal accident, Mr. McMurty had purchased alcohol illegally from a Sunoco gas station in which Alexar Oil Corp. had an interest.
In August 2013, Mr. McMurty's estate sent a pre-suit demand letter requesting a settlement of $10,000,000 to Alexar, VP Properties & Developments, LLP, Twin Oil Co., and Seneca Specialty Insurance Company, which had issued a commercial general liability insurance policy to Alexar.
Shortly after receiving the demand letter, Seneca filed a declaratory judgment action in district court, naming as defendants Mr. McMurty's personal representative, Alexar, VP Properties, and others. Seneca asserted that, due to the nature of Mr. McMurty's death and the “Total Liquor Liability” exclusion in the insurance policy, it had no duty to defend or indemnify any of the insureds in the wrongful death suit.
The district court held that under Florida law Seneca was required to defend the entire wrongful death action because there were claims that did not involve the provision of alcohol. The district court also ruled, however, that Seneca would not have to indemnify any judgments that arose out of the alcohol-related claims that fell within the scope of the “Total Liquor Liability” exclusion.
Seneca appealed to the 11th Circuit, arguing that the district court had erred in ruling that the “Total Liquor Liability” exclusion had negated coverage only for some, but not all, of the claims arising out of the underlying state court lawsuit.
The Seneca Policy
The Seneca policy contained a clause entitled:
Total Liquor Liability Exclusion
that excluded coverage for:
[c]ausing or contributing to the intoxication of any person
and for:
[t]he furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol.The Eleventh Circuit's Decision
The circuit court affirmed.
In its decision, the circuit court found that only Counts I-VII and Counts XXX-XXXVI of the wrongful death complaint fell within the scope of the “Total Liquor Liability Exclusion” clause of the Seneca policy. The remaining 28 counts of the complaint, the circuit court decided, all dealt with racing, the sale of fuel, and the alleged negligence involved with either allowing or encouraging such activity on commercial premises.
The Seventh Circuit then concluded that the “Total Liquor Liability” exclusion did not, “at this stage, bar these non-alcohol-related claims.”
The circuit court concluded that, under Florida law, an insurer was required to defend an entire suit even if there were some claims that it was not required to defend or indemnify, and, therefore, it declared that the district court had not erred in its ruling that the “Total Liquor Liability” exclusion did not at this juncture negate coverage for the entirety of the state wrongful death action.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].