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Essex Insurance Co. v. Café Dupont

December 16, 2009

ESSEX INSURANCE COMPANY, PLAINTIFF,
v.
CAFÉ DUPONT, LLC T/A CAFÉ CITRON DC, AND ANNETTE THURSTON LILLROSE, AS GUARDIAN AND CUSTODIAN FOR ERIC K. THURSTON, DEFENDANTS.



The opinion of the court was delivered by: Ellen Segal Huvelle United States District Judge

MEMORANDUM OPINION

Plaintiff Essex Insurance Company ("Essex") seeks a declaration under the Declaratory Judgment Act, 28 U.S.C. § 2201, that it has no duty to defend or indemnify defendant Café Dupont, LLC ("Citron") in an action pending in D.C. Superior Court. Essex has now moved for summary judgment, arguing that the exclusions in Citron's insurance policy exempt Citron's claims from coverage.*fn1 For the reasons stated, plaintiff's motion will be granted.

BACKGROUND

Essex first agreed to provide Citron, the operator of Café Citron, a Washington D.C. bar and nightclub, with "Commercial General Liability Coverage" from November 10, 2004, to November 10, 2005. (Pl.'s Mot., Citron 2004 Policy, Ex. A.1, at 1.) In November 2004, Citron also purchased a separate "liquor liability" policy from another insurance company. (Pl.'s Mot., Deposition of Sherry Fantacci ["Fantacci Dep."], Ex. B at 52-53.) This liquor liability policy was cancelled in April 2006 and was not renewed until December 2008. (Id. at 56, 61.) Essex, however, annually renewed its agreement with Citron and continued to provide general liability coverage. (Pl.'s Mot. at 3.) To date, Essex has paid $190,000 in indemnity payments and $243,102 in defense fees on Citron's behalf. (Pl.'s Reply, Decl. of C. Kyte ["Kyte Decl."], Ex. A at 1-2.)

The Essex policy at issue in this case provided general liability coverage from November 10, 2007, to November 10, 2008. (Pl.'s Mot., Citron Insurance Policy, Ex. A.2 [the "Policy"] at 1.) The Policy requires Essex to "pay those sums that" defendant is "legally obligated to pay as damages" and gives Essex the "right and duty to defend the insured against any 'suit' seeking those damages." (Id. at 16.) "Where there is no coverage," however, Essex has "no duty to defend." (Id. at 7.) Even when Essex has a duty to defend, it is not responsible for paying "punitive or exemplary damages." (Id. at 6.) The Policy also excludes "any injury . . . arising out of . . . use, or entrustment to others of any 'auto'" or any "negligence or other wrongdoing in the hiring, training, placement, supervision, or monitoring of others by insured." (Id. at 6.) The Policy's "[l]iquor [l]iability" section further excludes damages or injuries that arise out of "caus[ing] or contribut[ing]" to someone becoming intoxicated, out of failing to detain anyone, and out of failing to provide transportation for intoxicated persons. (Id. at 14.)

The scope of these exclusions became an issue after an early-morning car crash on January 4, 2008.*fn2 After being "served" and "permitted to consume" alcoholic beverages at Citron, Rogelio Gamino left the premises, entered his car and drove off, despite being "intoxicated and/or appear[ing] to be intoxicated." (Pl.'s Mot., Lillrose's Second Am. Compl., Ex. A.8 ["Lillrose Compl."] ¶¶ 8-10.) Gamino, who later was found to have a blood alcohol level of .22, lost control of his car, jumped the median strip and crashed into another car head-on. (Id. ¶¶ 12-13.) Eric Thurston, the driver of the other car, suffered severe injuries. (Id. ¶ 16.)

Annette Thurston Lillrose, acting as guardian and custodian for Eric Thurston, brought suit in D.C. Superior Court against Citron on October 28, 2008, and filed her second amended complaint on November 5, 2009. (Pl.'s Mot., Superior Court Docket, Ex. A.5 at 1.) Lillrose seeks fifteen million dollars in compensatory damages, five million dollars in punitive damages, pre-judgment interests and costs from Café Citron and its employees. (Id. at 13 (prayer for relief).) On December 9, 2008, Citron submitted a claim for coverage in Lillrose's action to Essex. (Pl.'s Mot. at 9.)

Essex filed a complaint with this Court on February 4, 2009, seeking a declaration that it had no duty to defend or indemnify Citron. (Compl. at 14 (prayer for relief).) The Complaint cites the "duty to defend" provision of the Policy, which states that "[w]here there is no coverage under this [P]olicy, there is no duty to defend." (Id. ¶ 48.) It refers to six different sections in the Policy and argues that each excludes the claims against Citron from coverage and relieves Essex of its duty to defend. Specifically, it cites the liquor liability exclusion (Compl. ¶¶ 19-23), the automobile exclusion (id. ¶¶ 28-31), and exclusions for "criminal acts," expected or intended injuries, and injuries away from the "premises" (id. ¶¶ 32-37, 41-43), as well the Policy's definition of "occurrence." (Id. ¶¶ 38-40.) The Complaint also contends that the exclusion for "negligent hiring, training and supervision" relieved Essex of any duty to defend Citron on Count III. (Id. ¶¶ 24-27.) Finally, plaintiff claims that the "punitive damages exclusion" bars Citron from seeking coverage for any award of punitive damages. (Id. ¶¶ 44-46.) On November 6, Essex moved for summary judgment, arguing that the liquor liability, automobile, "negligent hiring, training and supervision" and punitive damages exclusions applied, and therefore, it is entitled to a declaration that it has no duty to defend or indemnify defendant.*fn3

ANALYSIS

I. INSURANCE COVERAGE

A. Exclusions

"[W]here [insurance] contract language is not ambiguous, summary judgment is appropriate because a written contract duly signed and executed speaks for itself and binds the parties without the necessity of extrinsic evidence." Travelers Indem. Co. of Ill. v. United Food & Commercial Workers Int'l Union, 770 A.2d 978, 985 (D.C. 2001) (quoting Byrd v. Allstate Ins. Co., 622 A.2d 691, 693 (D.C. 1993)).*fn4 Furthermore,

[s]ince insurance contracts are written exclusively by insurers, courts generally interpret any ambiguous provisions in a manner consistent with the reasonable expectations of the purchaser of the policy. However, when such contracts are clear and unambiguous, they will be enforced by the courts as written, so long as they do not violate a statute or public policy.

Smalls v. State Farm Mut. Auto. Ins. Co., 678 A.2d 32, 35 (D.C. 1996) (internal citations and quotation marks omitted). "Whether an insurance contract is ambiguous is a question of law," Travelers Indem. Co. of Ill., 770 A.2d at 986, and "otherwise clear language in an insurance agreement is not to be deemed ambiguous 'merely because the parties do not agree' on its meaning." ...


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