By Steven A. Meyerowitz, Esq.
ADelaware court has ruled that insureds were in the business of “furnishing alcoholic bev- erages” within the meaning of
a liquor liability exclusion in an insurance
policy even if they did not actually pour
drinks but only arranged for alcohol to be
served at events.
Capozzoli Catering of Delaware, Inc.,
planned and catered various social events
at the Executive Banquet and Confer-
ence Center, located in Newark, Delaware.
Capozzoli leased the center from Plumbers
& Pipe Fitters Local No. 74. The lease agree-
ment between Capozzoli and Local No. 74
stated that Local No. 74, “shall maintain the
sole liquor license for the Premises and, in
accordance therewith, will be solely respon-
sible for distributing any and all alcohol ...
from the bar.”
On October 17, 2013, Capozzoli catered
an event for the Alpha Epsilon Phi sorority
at the Center. Local No. 74 provided bar-
tenders to serve alcohol at the event. Ethan
Connolly, a minor, allegedly attended the
event and was served alcohol at the bar.
Connolly allegedly left the event intoxicated
and attempted to cross the road when he
was fatally struck by oncoming traffic.
Connolly’s parents filed a wrongful death
lawsuit against Capozzoli and the Center,
contending the defendants had proximately
caused their son’s death due to their neg-
ligence in failing to maintain the prem-
ises and ensure underage patrons were not
Harleysville Preferred Insurance Company and Nationwide Mutual Insurance Company, which had issued commercial general
liability insurance policies to Capozzoli and
the Center, filed a declaratory judgment action contending that they were not obligated
to defend Capozzoli and the Center in the
underlying suit because a liquor liability exclusion applied.
The insurers moved for summary judgment, arguing that Capozzoli and the Center were in the business of furnishing alcohol
because they advertised bar options online,
negotiated them directly with customers,
and collected money from customers for
alcohol and bartenders. The insurers also
contended that Capozzoli and the Center
were in the business of furnishing alcohol
because they admitted that their ability to
provide alcohol at events was “integral” to
their business success.
Capozzoli and the Center argued that
the liquor liability exclusion should be con-
strued in their favor because they did not
serve alcohol – Local No. 74 hired bartend-
ers who served alcohol. Capozzoli and the
Center said they did not hold the liquor
license, and received none of the proceeds
from the sale of alcohol on the premises.
The policies provided insurers had the:
Duty to defend the insured against any
“suit” seeking damages for…“bodily injury.”
The liquor liability exclusion removed
coverage for bodily injury when an insured
may be held liable for:
1)Causing or contributing to the intoxi-
cation 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, distri-
bution or use of alcoholic beverages.
This exclusion applied only if the insured
was: in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.
The court’s decision
The court granted summary judgment in
favor of the insurers and declared that “fur-
nishing” something was “not limited to one
physically handing something to another”
but that one could furnish something to an-
other “by providing the means for that per-
son to obtain it.”
The court concluded an important part
of Capozzoli and the Center’s business was
contracting with interested customers about
the bar services that would be offered at
events. Therefore, Capozzoli and the Center
were in the business of furnishing alcohol
because part of their business was to arrange
for alcohol to be served at events, and the
exclusion applied to preclude coverage.
Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief
of the Insurance Coverage Law Report,
and the founder and president of
Meyerowitz Communications Inc. Origi-nally published on FC&S Legal: The
Insurance Coverage Law Information
Center. FC&S Legal is the industry’s
only single-source, comprehensive
portal developed specifically for insurance coverage law professionals.
To find out more, visit www.fcandsle-gal.com.
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