Transportation Insurance Co v. Heathland Hospitality ( 2019 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______________
No. 17-3683
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TRANSPORTATION INSURANCE CO;
CONTINENTAL CASUALTY CO
v.
HEATHLAND HOSPITALITY GROUP LLC;
HEATHLAND HOSPITALITY GROUP LP;
JUDITH M. SERRATORE, As Administratrix of the
Estate of Frank J. Serratore and Ms. Serratore Individually,
Appellants
______________
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-15-cv-04525)
District Judge: Hon. Nitza I. Quiñones Alejandro
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Submitted under Third Circuit L.A.R. 34.1(a)
May 23, 2019
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Before: McKEE, SHWARTZ, and FUENTES, Circuit Judges.
(Opinion filed: July 26, 2019)
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OPINION*
______________
*
This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7, does not
constitute binding precedent.
FUENTES, Circuit Judge.
Transportation Insurance Company and Continental Casualty Company
(collectively, “T&C”) brought this declaratory judgment action against their insureds
Heathland Hospitality Group, LLC, and Heathland Hospitality Group, LP (collectively,
“Heathland”), and Judith M. Serratore, individually and as Adminstratrix of the Estate of
Frank J. Serratore. At the summary judgment stage, the District Court concluded that
T&C does not have a duty to defend and indemnify Heathland in a lawsuit brought by
Mrs. Serratore against Heathland in Pennsylvania state court. Heathland and Mrs.
Serratore now appeal that decision.
We conclude that the Court properly determined that the liquor liability exclusions
in Heathland’s insurance policies apply, and therefore T&C does not have a duty to
defend and indemnify Heathland in Mrs. Serratore’s suit. For the following reasons, we
will affirm the District Court’s order granting summary judgment in favor of T&C.
I.
In November 2010, Mrs. Serratore, individually and as Administratrix of the
Estate of Frank J. Serratore, sued Woodbury Country Club, Heathland, and Michael
Whittingham in Pennsylvania state court.1 She later filed an amended complaint,
asserting a common law negligence claim against Heathland.
1
Mrs. Serratore also filed a nearly identical lawsuit in New Jersey state court. However,
she subsequently withdrew that lawsuit. The only difference between the Pennsylvania
state court action and the New Jersey state court action is that the New Jersey action was
brought against additional defendants. On appeal, Heathland’s briefing only cites to, and
discusses, the claims made in the Pennsylvania state court action. Accordingly, we will
only refer to the Pennsylvania state court action.
2
As alleged in the complaint, on November 16, 2008, Mrs. Serratore’s husband was
fatally injured when the car that he was driving was struck by another car in Gloucester
Township, New Jersey. The other car was driven by Whittingham, who was allegedly
intoxicated at the time of the accident. According to the complaint, earlier that day,
Whittingham became intoxicated at the Woodbury Country Club, “a business
establishment that sold alcoholic beverages.”2 “At all times relevant,” Defendant
Heathland “provided management, training, supervision and other services to and for
Woodbury Country Club including food and beverage sales and services.”3
In particular, the complaint alleged that the Country Club and/or Heathland (1)
“sold or gave”4 alcohol to Whittingham, who “became intoxicated,”5 and (2) continued to
serve him alcohol while he was “visibly intoxicated.”6 Whittingham then left the Country
Club “visibly intoxicated,” got into his car, and drove away from the Club.7 At some
point after leaving the Club, Whittingham was involved in the car accident that resulted
in Mr. Serratore’s death.
In her lawsuit, Mrs. Serratore alleged that Heathland was responsible for
Whittingham’s intoxication and her husband’s resulting death because, among other
things, Heathland (1) served and/or permitted alcohol to be served to Whittingham “to the
2
Ohio App. 240 ¶ 6. See id. at 260 ¶ 33 (incorporating paragraphs 1 through 26 of the initial
complaint into the amended complaint).
3
Id. at 241 ¶ 7.
4
Id. at 241 ¶ 8.
5
Id. at 241 ¶ 9.
6
Id.
7
Id. at 241 ¶ 10.
3
point where he became visibly intoxicated,”8 and also served and/or permitted alcohol to
be served to Whittingham “when he was visibly intoxicated;”9 (2) “fail[ed] to train,
manage, supervise and oversee the sale of alcohol;”10 and (3) failed to institute policies
and procedures governing the “use and consumption of alcohol.”11
Pursuant to the insurance policies that T&C had issued to Heathland,12 Heathland
sought a defense and indemnification from T&C for the claims asserted in the state court
actions. By letter, T&C denied insurance coverage based on the policies’ liquor liability
exclusions.
In April 2015, Heathland and Mrs. Serratore entered into a settlement agreement
entitled “Confidential Assignment and Covenant of Cooperation.”13 Under the
agreement, Heathland consented to a $6 million judgment and assigned its rights against
T&C to Mrs. Serratore. Heathland and Mrs. Serratore also entered into a Stipulated
Judgment. In August 2015, a Pennsylvania court approved and entered the Stipulated
Judgment against Heathland.
8
Id. at 261 ¶ 35(a). The amended complaint includes two paragraphs which are labeled as
paragraph 35. We are citing to the paragraph which appears on pages 3 through 5 of the
complaint and includes subparagraphs (a) through (y).
9
Id. at 261 ¶ 35(b).
10
Id. at 263 ¶ 35(w).
11
Id. at 261–62 ¶ 35(i).
12
Specifically, Transportation Insurance Company had issued a commercial general
liability policy to Heathland, while Continental Casualty Company had issued a
commercial umbrella policy to Heathland.
13
Ohio App. 740–50.
4
Thereafter, T&C filed this suit under the Declaratory Judgment Act,14 seeking a
declaration that it had no duty to defend and indemnify Heathland because the policies’
liquor liability exclusions exempted it from those duties. The District Court granted
T&C’s motion for summary judgment, and denied Heathland’s cross-motion for
summary judgment. This appeal followed.
II.15
We review the District Court’s grant of summary judgment de novo.16 Summary
judgment is warranted if the moving party “shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”17 We view
all facts “in the light most favorable to the non-moving party” and draw all reasonable
inferences in that party’s favor.18
III.
Under Pennsylvania law, to determine whether an insurer has a duty to defend its
insured in a suit, we must compare “the four corners of the insurance contract to the four
corners of the complaint.”19 Notably, “the particular cause of action that a complainant
14
28 U.S.C. § 2201.
15
The District Court had jurisdiction under 28 U.S.C. §§ 2201(a) and 1332. We have
jurisdiction under 28 U.S.C. §§ 2201(a) and 1291.
16
Jutrowski v. Twp. of Riverdale, 904 F.3d 280, 288 (3d Cir. 2018).
17
Fed. R. Civ. P. 56(a).
18
Jutrowski, 904 F.3d at 288 (internal quotation marks and citation omitted).
19
Am. & Foreign Ins. Co. v. Jerry’s Sport Ctr., Inc., 2 A.3d 526, 541 (Pa. 2010) (citation
omitted).
5
pleads is not determinative of whether coverage has been triggered. Instead it is necessary
to look at the factual allegations contained in the complaint.”20 Those factual allegations
“are to be taken as true and liberally construed in favor of the insured.”21
Here, the general liability policy issued by Transportation Insurance Company
contains a “Liquor Liability” exclusion, which provides:
[t]his insurance does not apply to . . . ‘[b]odily injury’ . . . 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.22
Furthermore, the umbrella policy issued by Continental Casualty Company also
includes a nearly identical “Liquor Liability Limitation,” which states:
[t]his insurance does not apply to . . . ‘[b]odily injury’ . . . 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.
20
Mut. Ben. Ins. Co. v. Haver, 725 A.2d 743, 745 (Pa. 1999).
21
Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742, 746 (3d Cir. 1999).
22
Ohio App. 176–77 (emphasis added).
6
Unless, and then only to the extent that coverage is provided by ‘scheduled
underlying insurance.’23
On appeal, Heathland renews its argument that the liquor liability exclusions do
not apply because it was not “in the business of . . . selling, serving, or furnishing
alcoholic beverages” at the Country Club.24 We disagree. The allegations in the
complaint are that (1) Woodbury Country Club “was a business establishment that sold
alcoholic beverages;”25 (2) Heathland managed the Country Club’s “food and beverage
sales and services,” and trained and supervised the Country Club’s employees as to those
sales and services;26 and (3) the Country Club and/or Heathland “sold or gave alcoholic
beverages to Defendant[] Whittingham who consumed the beverages on the premises of”
the Country Club.27 The complaint unequivocally alleges that Heathland was “in the
business of . . . selling, serving or furnishing” alcohol at the Country Club.28
We likewise reject Heathland’s contention that the liquor liability exclusions only
apply to some of Mrs. Serratore’s negligence-related theories of liability.29 As
23
Id. at 199–204. The general liability policy is one of the insurance policies defined in
the umbrella policy as “scheduled underlying insurance.” Id. at 193.
24
Id. at 177.
25
Id. at 240 ¶ 6.
26
Id. at 241 ¶ 7.
27
Id. at 241 ¶ 8.
28
Id. at 177.
29
Heathland’s reliance on the Pennsylvania Superior Court’s decision in Penn-America
Ins. Co. v. Peccadillos, Inc. is misplaced. 27 A.3d 259 (Pa. Super. Ct. 2011) (en
banc), pet. for allowance of appeal denied, 34 A.3d 832 (Pa. 2011). “Pennsylvania’s
Supreme Court tells us that an insurer’s duty to defend turns on the allegations within
the four corners of a complaint matched against the terms of the insurance policy.” Lupu
v. Loan City, LLC, 903 F.3d 382, 395 (3d Cir. 2018) (citing Kvaerner Metals Div. of
Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888, 896 (Pa. 2006)). Here,
the complaint alleges that Whittingham “consumed” alcohol while on the premises of the
7
acknowledged by the District Court, while it is true that some of the claims do not
explicitly refer to the provision of alcohol,30 those claims are not independent from the
provision of alcohol. Rather, all of Heathland’s allegedly negligent acts and/or omissions
are closely linked to Heathland and/or the Country Club’s negligent furnishing of alcohol
to Whittingham – conduct that is plainly covered by the exclusions.
The liquor liability exclusions thus apply and bar insurance coverage of all of Mrs.
Serratore’s claims against Heathland.31 Accordingly, the District Court did not err by
holding that T&C has no duty to defend and indemnify Heathland.32 Moreover, contrary
to Heathland’s assertion, the District Court did not improperly decide genuine issues of
material fact in reaching that holding. The Court’s detailed opinion demonstrates that, in
Country Club, App. 241 ¶ 8, and not only “became intoxicated” but was also “served
alcohol while visibly intoxicated,” Id. at 241 ¶ 9. It further alleges that the Country Club
and/or Heathland “sold or gave” the alcohol to Whittingham. Id. Thus, based on the
allegations in the complaint, Mr. Serratore’s fatal bodily injury is one for which
Heathland “may be held liable by reason of . . . [c]ausing or contributing to the
intoxication of” Whittingham, or “by reason of . . . furnishing” alcohol to Whittingham
when he was “under the influence of alcohol.” Id. at 176–77. Accordingly, under the four
corners rule, all of Mrs. Serratore’s negligence claims fall squarely within the liquor
liability exclusions.
30
For example, Mrs. Serratore alleges that Heathland was negligent for, among other
things, “allowing the Defendant, Whittingham to exit the Woodbury Country Club after
he became intoxicated and visibly intoxicated.” Id. at 262 ¶ 35(m).
31
Given our conclusion that the claims asserted in the state court actions fall within the
liquor liability exclusions, we need not address whether the general liability policy’s
“Professional Services” exclusion applies. Id. at 179.
32
Because the duty to defend is broader than the duty to indemnify, Heathland’s claim
for indemnification also fails. See Kvaerner, 908 A.2d at 896 n.7.
8
applying Pennsylvania’s four corners rule, it correctly considered the plain meaning of
the language in the exclusions.33
IV.
For the reasons stated above, we affirm the District Court’s order granting T&C’s
motion for summary judgment.
33
See Lupu, 903 F.3d at 393 (recognizing that in Pennsylvania, “[g]enerally, an insurance
policy’s plain meaning controls” (citation omitted)).
9