Insurer Obligated to Provide Coverage for DWI Accident Resulting from Fundraising Event

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In Philadelphia Indemnity Insurance Company v. Central Terminal Restoration Corp., 2018 WL 992312 (2d Cir. 2018), the Second Circuit found coverage existed for a car accident which resulted from the overserving of alcohol to a patron at an event because it held that the ensuing consequences were unintentional.

On April 1, 2013, Central Terminal Restoration Corp. (CTRC) held a fundraising event in association with Dyngus Day, a traditional post-Easter festival that attracts tens of thousands of Polish Americans to Buffalo, New York. In connection with the event, CTRC obtained a temporary liquor license. Thomas Gilray was one of the patrons who purchased liquor at the festival. After leaving, he struck two pedestrians with his car and seriously injured them. The pedestrians filed suit against CTRC, based upon violations of the New York Dram Shop statutes, alleging that Gilray was continuously served alcohol even after he was visibly intoxicated.  CTRC tendered its defense and indemnity in the suits to its insurance company.

CTRC purchased a primary policy which contained a CGL Part and a Liquor Liability Part. The CGL Part, with a $2 million per “occurrence” limit, also contained a fundraising endorsement to cover the Dyngus Day event that provided coverage for bodily injuries “arising out of” covered events. The Liquor Liability Part provided an additional $1 million for “injury” caused “by reasons of the selling, serving or furnishing or any alcoholic beverage.” CTRC likewise subscribed to an Excess Policy that provided an additional $1 million for bodily injury caused by an “occurrence.” The insurance company argued that no coverage existed because the injuries were expected or intended, there was no “occurrence” and the overserving of alcohol was intentional.

The Second Circuit opined that an “occurrence” did, in fact, take place under New York law.  Although CTRC intended to sell Gilray alcohol, it did not intend the car accident or the pedestrians’ injuries. According to the court, CGL Policies were designed to cover injuries where an accident “is the unintended result of an intentional act.” With regard to the fundraising endorsement, the Second Circuit found that the accident itself was a fortuitous event and the resultant injuries “arose out of” the Dyngus Day event. In addition, the Liquor Liability Part provided an additional $1 million in coverage since it did not limit the total amount of recovery under the policy to just one coverage part and coverage existed under the Excess Policy since the car accident was a covered “occurrence.”

The Second Circuit made it patently clear that although the events leading up to the accident were intentional, this was ultimately irrelevant for coverage purposes. The only determinative factor was whether the resultant accident was intentional or fortuitous.