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Hanover unit not obligated to defend club in driving fatality


A Hanover Insurance Group unit is not obligated to defend a club in a case where one of its patrons was involved in a fatal drunk driving incident because of a liquor liability exclusion in its policy, says a federal appeals court Wednesday, in upholding a lower court ruling.

In 2017, a patron allegedly drank too much at a night club of Fort Lauderdale, Florida-based Members Only Agreement LLC, which caused her to lose control of her vehicle and crash it on her way home, killing two of her passengers, according to Wednesday’s ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in AIX Specialty Insurance Co. v. Members Only Management LLC.

The estate of one of the passengers sued Members Only for violating Florida’s Dram Shop Act, claiming that although the club does not sell alcohol, it allows patrons to bring their own alcohol and provides staff to help serve it, according to the ruling.

It also alleged Members Only knowingly furnished alcohol to a patron who was habitually addicted to alcohol, causing the passenger’s death.

AIX, a unit of Worcester, Massachusetts-based Hanover Insurance Group, agreed to defend the case subject to a reservation of rights, then filed suit in U.S. District Court in Miami, seeking a declaration its coverage was barred under its policy’s “absolute liquor lability exclusion” and that it had no duty to defend or indemnify the club.

The U.S. District Court granted AIX summary judgment, which was unanimously affirmed by a three-judge appeals court panel.

“Because the Absolute Liquor Liability Exclusion unambiguously bars coverage, we affirm,” said the ruling.

The exclusion “generally excludes coverage for ‘bodily injury’ related to alcohol,” it said. “The language is clear: There is no coverage for, among other things, a claim seeking recovery for bodily injury under “(a)ny statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.’

“The sole count alleged against Members Only is a negligence claim brought under Florida’s Dram Shop Act. As the Dram Shop Act is a statute relating to the ‘distribution or use of alcoholic beverages,’ the claim unambiguously falls outside coverage.”

“Members Only does not meaningfully dispute this straightforward application of the exclusion,” said the ruling. Instead, it claims that this exclusion is so broad that it renders coverage illusory.”

The decision said, “That argument fails, though, because this exclusion does not eclipse coverage.”

“Ours is not a novel reading of this exclusion,” said the ruling. “Florida courts have repeatedly upheld liquor liability exclusions with identical or substantially similar language,” it said, in affirming the lower court ruling.

AIX attorney Scott A. Markowitz, a partner with Torres Victor PA in Fort Lauderdale, said, “It was the correct decision and correctly applied Florida law to the issues presented.”

A Members Only attorney could not be reached.






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