Aetna Casualty v. Holsten ( 1996 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
AETNA CASUALTY & SURETY
COMPANY, a corporation,
Plaintiff-Appellee,
v.
STEVEN P. HOLSTEN, Individually and
as Administrator of the Estate of
Angela E. Holsten,
No. 95-3035
Defendant-Appellant,
and
INVESTMENT OPPORTUNITIES,
INCORPORATED, a corporation, d/b/a
M&M Convenient Mart, a/k/a
M&M Quick Stop,
Defendant.
Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
John T. Copenhaver, Jr., District Judge.
(CA-94-755-2)
Argued: September 26, 1996
Decided: November 7, 1996
Before WILKINSON, Chief Judge, LUTTIG, Circuit Judge, and
SMITH, United States District Judge for the
Eastern District of Virginia, sitting by designation.
_________________________________________________________________
Affirmed by unpublished opinion. Judge Smith wrote the opinion, in
which Chief Judge Wilkinson and Judge Luttig joined.
COUNSEL
ARGUED: Cynthia Morrone Salmons, RANSON LAW OFFICES,
Charleston, West Virginia, for Appellant. Joseph E. Starkey, Jr.,
ANSTANDIG, LEVICOFF & MCDYER, P.C., Pittsburgh, Pennsyl-
vania, for Appellee. ON BRIEF: Jerry Michael Ranson, RANSON
LAW OFFICES, Charleston, West Virginia, for Appellant. Avrum
Levicoff, ANSTANDIG, LEVICOFF & MCDYER, P.C., Pittsburgh,
Pennsylvania, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
SMITH, District Judge:
Aetna Casualty & Surety Company, the Appellee, instituted this
action in the United States District Court for the Southern District of
West Virginia, seeking a declaration that it had no obligation to pro-
vide liability coverage under an insurance policy it had underwritten
for the benefit of Investment Opportunities, d/b/a M&M Convenient
Mart, a/k/a M&M Quick Stop, with respect to certain liquor liability
claims that had been brought against M&M by Steven P. Holsten, the
Appellant here. The district court found that M&M's policy unam-
biguously excluded from coverage liability arising out of the negli-
gent sale of alcohol to an intoxicated patron, and hence ruled in
Aetna's favor. The parties stipulated to the relevant facts in the lower
court, leaving only matters of law to be determined by this court. For
the reasons stated below, we affirm the decision of the district court.
I.
On April 15, 1993, the Appellant's wife was struck and killed in
a head-on collision with a drunk driver. Prior to the accident, although
while already intoxicated, the drunk driver purchased beer from the
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M&M Convenient Mart. The drunk driver then consumed this beer
before colliding with Appellant's wife's car.
Holsten instituted a civil action on October 6, 1993, in the Circuit
Court of Boone County, West Virginia, seeking damages from M&M,
among others. In August, 1994, Holsten and M&M reached a settle-
ment agreement in which M&M conceded that it was liable in the
death of Holsten's wife. The parties agreed to the entry of a judgment
in the amount of $1 million, and M&M assigned its rights under its
liability policy to Holsten. After Holsten made a demand on Aetna for
payment, Aetna filed a declaratory judgment action on February 22,
1995.
The parties stipulated to the material facts, and filed cross-motions
for summary judgment. In its motion Aetna argued that insurance
coverage for Holsten's stipulated judgment was excluded by reason
of the policy's liquor liability exclusion. Holsten insisted, in his
motion, that an ambiguity was created in the policy because of the
existence of both a liquor liability exclusion and a products-
completed operations hazard provision. As a result, Holsten asked the
court to construe the policy in favor of the insured. The district court
granted Aetna's Motion for Summary Judgment in a Memorandum
Order filed on October 30, 1995.
This court reviews the entry of summary judgment de novo, apply-
ing the same standard applicable to the district court. M & M Medical
Supplies & Service, Inc. v. Pleasant Valley Hosp., Inc., 981 F.2d 160,
163 (4th Cir.), cert. denied, 508 U.S. 972 (1993). Because this is a
diversity action, the court follows Erie R. Co. v. Tompkins, 304 U.S.
64 (1938), and applies the substantive law of West Virginia.
Relevant provisions of M&M's insurance policy are as follows:
SECTION I - COVERAGES
COVERAGE A. BODILY INJURY AND PROPERTY
DAMAGE LIABILITY
1. Insuring Agreement.
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a. We will pay those sums that the "insured"
becomes legally obligated to pay as dam-
ages because of "bodily injury" or "property
damage" to which this insurance applies.
...
2. 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 intoxica-
tion of any person . . . .
This exclusion applies only if you are in the
business of manufacturing, distributing, sell-
ing, serving or furnishing alcoholic bever-
ages. . . .
SECTION III - LIMITS OF INSURANCE
2. The General Aggregate Limit is the most we
will pay for the sum of: . . .
b. Damages under Coverage A and B, except
damages because of injury and damage
included in the "products-completed opera-
tions hazard" . . . .
3. The Products-completed Operations Aggre-
gate Limit is the most we will pay under Cov-
erage A for damages because of "bodily
injury" and "property damage" included in the
"products-completed operations hazard." . . .
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SECTION V - DEFINITIONS
11. a. "Products-completed operations hazard"
includes all "bodily injury" and "property
damage" occurring away from premises you
own or rent and arising out of "your prod-
uct" or "your work" except:
(1) Products that are still in your physical
possession; or
(2) Work that has not yet been completed
or abandoned. . . .
14. "Your product" means:
a. Any goods or products, other than real
property, manufactured, sold, handled,
distributed or disposed of by:
(1) You;
(2) Others trading under your name; or
(3) A person or organization whose busi-
ness or assets you have acquired; and
b. Containers (other than vehicles), materi-
als, parts or equipment furnished in con-
nection with such goods or products.
"Your product" includes:
a. Warranties or representations made at
any time with respect to the fitness, qual-
ity, durability, performance or use of
"your product"; and
b. The providing of or failure to provide
warnings or instructions.
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II.
Holsten struggles in vain to convince the court that M&M's policy
is ambiguous and hence must be interpreted broadly so as to provide
coverage in this instance. He contends that the policy's products-
completed operations hazard ("PCOH") provision provides coverage
for all liability arising out of the sale of any product, despite the liquor
liability exclusion, and that the district court erred in holding that no
ambiguity exists in a policy which contains both a liquor liability
exclusion, which bars coverage, and the PCOH provision, which
grants it. Holsten concludes his presentation by observing that, when
a policy is ambiguous, an interpreting court must honor the insured's
reasonable expectations and construe the policy to provide coverage.
Aetna observes correctly, however, that this court need not concern
itself with the reasonableness of M&M's expectations, if it first
decides that the policy unambiguously excluded from coverage liabil-
ity arising out of the negligent sale of alcohol. See Eggleston v. West
Virginia Dept. of Highways, 429 S.E.2d 636 (W. Va. 1993) (provid-
ing that the question of whether an insurance contract is ambiguous
on its face is a question of law to be determined by the court);
National Mut. Ins. Co. v. McMahon & Sons, 356 S.E.2d 488 (W. Va.
1987) (limiting the doctrine of reasonable expectations to those
instances in which the policy language is ambiguous). When the pro-
visions of an insurance contract are clear and unambiguous, they are
not subject to judicial construction; rather, full effect must be given
to the policy's plain meaning. Arndt v. Burdette , 434 S.E.2d 394, 399
(W. Va. 1993); Ward v. Baker, 425 S.E.2d 245, 251 (W. Va. 1992);
Buckhannon-Upshur County Airport Auth. v. R. & R. Coal Contr.,
Inc., 413 S.E.2d 404, 409 (W. Va. 1991).
No ambiguity exists in M&M's policy because its liquor liability
exclusion expressly excludes from coverage any #7F 79AD#b]odily injury' or
`property damage' for which [M&M] may be held liable by reason of
[c]ausing or contributing to the intoxication of any person." Given
that M&M's negligent sale of beer undisputedly contributed to the
intoxication of its already besotted patron, this exclusion provision
clearly applies. By simply applying the policy's language, this court
concludes that the district court correctly held that Aetna had no obli-
gation to pay Holsten's claim.
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Holsten's argument to the contrary is simply unavailing. He
attempts to read an ambiguity into the policy by contending that the
PCOH provision eviscerates the liquor liability exclusion and thereby
creates a conflict which must be read in his favor. Whether or not the
PCOH provision would provide liquor liability coverage if standing
alone,* the obvious intent of the liquor liability exclusion is to bar
such coverage. Moreover, when interpreting a contract, a court should
follow the interpretive philosophy that specific language trumps gen-
eral text. United States v. Marietta Mfg. Co. , 339 F. Supp. 18, 27
(S.D.W. Va. 1972). Because it is the policy's only provision that spe-
cifically addresses the issue of liability for alcohol related injuries, the
specific, clearly worded liquor liability provision controls.
III.
Based on the foregoing discussion, we conclude that M&M's pol-
icy unambiguously barred coverage for liability arising out of the neg-
ligent sale of alcohol to an intoxicated patron. Accordingly, the
district court's decision to grant Aetna's motion for summary judg-
ment is
AFFIRMED.
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*The district court, relying on the authority of 7A Appelman, Insur-
ance Law and Practice 4508 (Berdal ed.) (1976), believed that the
PCOH provision was intended merely to provide defective products lia-
bility coverage. Counsel for Aetna conceded at oral argument, however,
that in his opinion, the PCOH provision could be interpreted as providing
liquor liability coverage as well, absent a specific liquor liability exclu-
sion such as the one in M&M's policy. This court does not decide this
question.
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