Forsman v. Blues Brews and Bar-B-Ques Inc.
2017 ND 266
| N.D. | 2017Background
- Forsman was injured at a private February 2010 party at Muddy Rivers bar and sued Muddy Rivers and Amanda Espinoza for dram shop, assault, and premises‑negligence claims.
- Muddy Rivers tendered defense to its insurer United Fire & Casualty (United Fire); United Fire denied defense and indemnity relying on assault-and-battery and liquor‑liability exclusions in its CGL policy.
- After a 2011 trial resulted in JMOL dismissing Forsman, this Court in Forsman I reversed and remanded, holding disputed facts existed on dram‑shop liability and that Forsman could pursue a premises‑liability claim under N.D.C.C. § 9‑10‑06.
- Before retrial, Forsman and Muddy Rivers entered a Miller‑Shugart settlement in which Muddy Rivers admitted liability and limited collection to insurer proceeds; judgment was entered against Muddy Rivers and later proved reasonable.
- Forsman brought garnishment against United Fire; district court granted partial summary judgment holding policy covered Forsman’s negligence claim and United Fire had a duty to defend, and later entered judgment for $249,554.30 against United Fire.
- On appeal, the Supreme Court held genuine fact issues precluded summary judgment on coverage (assault and liquor exclusions), but affirmed that United Fire had a duty to defend under the complaint’s allegations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether assault-and-battery exclusion bars coverage for Forsman’s premises‑negligence claim | Forsman: no clear evidence of an intentional assault; her claim is ordinary premises negligence under §9‑10‑06 | United Fire: injury "caused by or arising out of" an assault by Espinoza, so exclusion applies and negates coverage | There are material fact disputes about whether an assault occurred; summary judgment on exclusion inappropriate |
| Whether liquor‑liability exclusion bars coverage | Forsman: party was private with free drinks; exclusion’s last clause (serving without charge) means exclusion shouldn’t apply | United Fire: Muddy Rivers is a licensed bar that serves alcohol as a business, so liquor exclusion may apply | Genuine issues of fact (whether Muddy Rivers caused/contributed to intoxication) preclude summary judgment on this exclusion |
| Whether United Fire had a duty to defend Muddy Rivers | Forsman: complaint alleged separate premises‑negligence claim and other facts creating a possibility of coverage | United Fire: underlying harm is tied to excluded assault and intoxication, so no duty to defend | Court: duty to defend exists because complaint alleges a separate negligence claim and there was potential for coverage; insurer must defend absent a declaratory judgment |
Key Cases Cited
- Forsman v. Blues, Brews & Bar‑B‑Ques, Inc., 820 N.W.2d 748 (N.D. 2012) (reversed JMOL and remanded, allowing premises‑liability claim to proceed)
- Miller v. Shugart, 316 N.W.2d 729 (Minn. 1982) (permitting insured to stipulate judgment collectible only from insurer — Miller‑Shugart settlements)
- Medd v. Fonder, 543 N.W.2d 483 (N.D. 1996) (Miller‑Shugart judgment not conclusive against insurer; plaintiff must show settlement reasonableness)
- Tibert v. Nodak Mut. Ins. Co., 816 N.W.2d 31 (N.D. 2012) (insurer’s duty to defend is broader than duty to indemnify and is determined by complaint’s allegations)