CAN INSURER DUCK LIABILITY FOR DRUNK-DRIVING DEATHS?

Commercial General Liability	Insuring Agreement
Liquor Liability Exclusion	Duty To Defend

Jacob Latta and Matthew Maisner celebrated St. Patrick's Day by patronizing several bars and drinking heavily at each. The final bar was Peccadillos, where they continued to purchase and consume alcohol. Peccadillos ejected them from the premises when they became rowdy and were involved in a physical altercation with another patron. Latta (with Maisner as his passenger) drove his car on a two-lane state highway. While attempting to pass another car, Latta lost control of his vehicle, crossed over into the opposite lane, and slammed into a car driven by Heidi Spicer.

Spicer had three passengers in her car. Megan Ann Watson was in the front passenger seat and Heidi's two minor daughters were in the back seats. Latta, Maisner, Spicer, and Watson were all killed in the accident. The two minors survived but they suffered emotional trauma and physical injuries.

The injured parties and the estates of the decedents sued Peccadillos for negligence, specifically for:

· Ejecting Latta from its premises in a dangerously inebriated condition,

· Failing to arrange alternate transportation for him, and

· Failing to summon police after the altercation.

Peccadillos was insured under a commercial general liability policy issued by Penn-America Insurance Company (Penn-America). Penn-America denied coverage based on the policy's liquor liability exclusion. It then asked the trial court to declare that it was not required to defend Peccadillos. The trial court denied Penn-America's request and a three-judge appellate panel affirmed that decision. Penn-America then sought reconsideration by the Superior Court of Pennsylvania.

On appeal, Penn-America argued that the negligence allegations fell squarely within the liquor liability exclusion. The Superior Court disagreed. It found that the Insuring Agreement clearly recognized the insurance company's duty to defend and that the obligation remained unless the liquor liability exclusion defeated every cause of action in the complaint. While the court recognized that the liquor liability exclusion excluded Peccacillos’ liquor liability it did not limit the other allegations.

The court noted that Pennsylvania law recognizes that the duty to defend is broader than the duty to indemnify It concluded that the allegations in the negligence complaint were sufficient to state a claim subject to coverage under the policy, triggering Penn-America's duty to defend.

The lower court’s decision was affirmed.

Penn-America Insurance Company vs. Peccadillos, Inc.-Superior Court of Pennsylvania-August 19, 2011-2011 WL 3633265 (Pa. Superior)