Auto-Owners Insurance v. Seils
310 Mich. App. 132
| Mich. Ct. App. | 2015Background
- FOPA (a nonprofit police fraternal group) staffed one beer tent at the annual Detroit Hoedown under a concession agreement with Olympia Entertainment; FOPA received an 8% commission and obtained a temporary liquor license for fundraising.
- Auto-Owners issued FOPA a commercial general liability (CGL) policy that contained liquor-liability and contractual-liability exclusions, each with exceptions (liquor exclusion inapplicable "if you are in the business of ... selling, serving or furnishing alcoholic beverages"; contractual exclusion excepts liabilities assumed in an "insured contract" that "pertain[s] to your business").
- In May 2010, Todd Pink, after attending the Hoedown, murdered and severely injured members of Carrie Seils’s family. Chad Seils sued FOPA and Olympia under Michigan’s dramshop statute (MCL 436.1801).
- Trial court: ruled Auto-Owners must defend/indemnify FOPA and Olympia (denying Auto-Owners’ summary disposition) because FOPA was not "in the business" of selling alcohol and the concession agreement "pertained" to FOPA’s fundraising business; but denied FOPA’s and Olympia’s summary-disposition motions on Seils’s dramshop claim (proximate-cause question left to jury).
- Court of Appeals: affirmed the declaratory ruling on insurance coverage (Docket No. 315891), but reversed the trial court’s denial of summary disposition on the dramshop claims (Docket Nos. 315901, 316511), holding Seils failed to show proximate cause; additionally held Olympia not vicariously liable under the dramshop statute and that Seils failed to provide Olympia the statutory 120-day written notice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liquor-liability exclusion: whether FOPA was "in the business" of selling alcohol so exclusion applies | Seils/Auto-Owners: FOPA’s sale at Hoedown exposed insurer to dramshop risk; exclusion applies | FOPA: sales were occasional fundraising activity under temporary license, not an ongoing commercial business; exclusion inapplicable | Held: exception applies — FOPA not "in the business" of selling alcohol given limited, temporary fundraising sales; coverage stands |
| Contractual-liability exclusion: whether concession agreement is an "insured contract" "pertaining to your business" | Auto-Owners: concession is about alcohol sales and does not pertain to FOPA’s civic/charitable business; exclusion applies | FOPA: concession related to fundraising for its charitable business; qualifies as "pertaining to your business" exception | Held: concession "pertained" to FOPA’s fundraising business; contractual-liability exclusion exception applies; coverage for Olympia also required |
| Proximate cause under dramshop statute (MCL 436.1801): whether serving visibly intoxicated Pink was a proximate cause of later premeditated murders | Seils: furnishing alcohol contributed to Pink’s intoxication and the crimes; proximate cause is for jury | FOPA/Olympia: Pink’s deliberate, premeditated crimes were unforeseeable superseding intervening acts that break causal chain | Held: reversed — Seils failed to present evidence that Pink’s premeditated killings were a reasonably foreseeable consequence of the alleged statutory violation; proximate cause lacking as a matter of law |
| Olympia liability: vicarious liability and statutory notice | Seils: Olympia can be liable (trial court denied dismissal) | Olympia: not the liquor licensee so dramshop liability does not vicariously extend; plus Seils failed to give Olympia the 120-day written notice required by statute | Held: alternative bases to grant summary disposition for Olympia — (1) dramshop statute imposes liability only on retail licensee (no broad vicarious liability), and (2) Seils did not provide Olympia the required written notice within 120 days; both support dismissal |
Key Cases Cited
- DeFrain v. State Farm Mut. Auto. Ins. Co., 491 Mich. 359 (2012) (summary-disposition and insurance-contract interpretation standards)
- Rory v. Continental Ins. Co., 473 Mich. 457 (2005) (insurance-policy interpretation rules; plain-meaning/contract-as-whole)
- Auto-Owners Ins. Co. v. Churchman, 440 Mich. 560 (1992) (exclusions strictly construed against insurer; give effect to clear exclusions)
- Weiss v. Hodge, 223 Mich. App. 620 (1997) (dramshop statute can support liability for an AIP’s intentional assault where furnishing alcohol is a proximate cause)