Mustard v. Owners Ins. Co., 2014 Ohio 865

Appellants (Mustard, Whitley, and their minor son) obtained a $500,000 stipulated judgment against Luther Giffin Post No. 14, American Legion (the Post) for serving alcohol to an intoxicated patron who later caused a car crash.
The Post had little assets, so appellants sued the Post’s insurer, Owners Insurance Company, in a supplemental statutory action seeking indemnification.
Owners moved for summary judgment based on a policy "liquor liability" exclusion that bars coverage if the insured is "in the business of" selling or serving alcoholic beverages.
Appellants argued the exclusion is ambiguous as applied to a nonprofit and should be read to mean only entities with an underlying profit motive; thus the Post (a nonprofit) was not "in the business of" selling alcohol.
Owners argued the exclusion targets the insured’s activities (regular commercial alcohol sales) regardless of corporate form and therefore excludes coverage.
The trial court granted summary judgment for Owners; the appellate court affirmed, holding the exclusion unambiguously applies when an insured systematically sells alcohol and derives significant revenue, even if organized as a nonprofit.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the policy's liquor-liability exclusion applies when the insured is a nonprofit that sells alcohol regularly	Appellants: phrase is ambiguous; "in the business of" means a direct profit motive tied to for-profit status, so Post (nonprofit) is not covered by the exclusion	Owners: focus is on activity, not corporate status; systematic, revenue-generating alcohol sales bring nonprofit within "in the business of" language	The exclusion is unambiguous in context; because the Post regularly sold alcohol and derived substantial revenue, it was "in the business of" selling/serving alcohol and coverage is excluded
Whether contractual-liability exclusion independently bars coverage for the stipulated judgment	Appellants: argue contractual-liability exclusion should not apply	Owners: argued contractual-liability exclusion also applies to the stipulated judgment	Court declined to reach this claim as moot because the liquor-liability exclusion already barred coverage

American Legion Post No. 49 v. Jefferson Ins. Co., 485 A.2d 293 (N.H. 1984) (held exclusion ambiguous for a nonprofit with regular liquor sales)
Newell-Blais Post No. 443, Veterans of Foreign Wars v. Shelby Mut. Ins. Co., 487 N.E.2d 1371 (Mass. 1986) (construed "business" to require profit motive; nonprofit not excluded)
Grain Dealers Mut. Ins. Co. v. Lower, 979 F.2d 1411 (10th Cir. 1992) (exclusion unambiguously includes nonprofits with ongoing liquor sales)
Cormier v. Travelers Ins. Co., 618 So.2d 1185 (La. App. 1993) (focus on nature of activity, not organizational purpose)
Sprangers v. Greatway Ins. Co., 514 N.W.2d 1 (Wis. 1994) (meaning of "business" determined by insured’s activities, not corporate form)
Auto Owners Ins. Co. v. Sugar Creek Memorial Post No. 3976, 123 S.W.3d 183 (Mo. Ct. App. 2003) (analyzed risks and activities rather than nonprofit status)
McGriff v. United States Fire Ins. Co., 436 N.W.2d 859 (S.D. 1989) (interpreting ‘‘in the business of’’ to exclude liability from regular, profit-oriented liquor sales)