Nautilus Insurance Company v. Roberts et al

Filing 19

MEMORANDUM AND ORDER Plaintiff Nautiluss insurance policy with American Legion excludes coverage for the claim brought against American Legion by Regina Roberts and Derek Fox. Summary judgment shall be granted to plaintiff and against defendants. Signed by District Judge Stephen N. Limbaugh, Jr on 4/8/13. (MRS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION
NAUTILUS INSURANCE COMPANY,
Plaintiff,
vs.
REGINA ROBERTS, et al.,
Defendants.

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Case No. 1:12-CV-22-SNLJ

MEMORANDUM AND ORDER
This matter arises out of an insurance coverage dispute. Plaintiff Nautilus Insurance
Company seeks a declaratory judgment against its insured, David M. Robertson American
Legion Post No. 87 (“American Legion”), and two tort claimants Regina Roberts and Derek Fox,
stating that it does not owe American Legion a defense or indemnity as a result of the claims of
Roberts and Fox. Plaintiff has filed a motion for summary judgment (#9). American Legion is
currently in default, and neither Roberts nor Fox has responded to plaintiff’s motion.
I.

Background
The underlying facts are not disputed. On November 8, 2009, Robert Steele was a patron

and guest at American Legion’s bar. American Legion, through its agents, servants and
employees, served, is alleged to have sold and dispensed alcohol to Robert Steele while he was
visibly intoxicated. Immediately after leaving the American Legion, Robert Steele drove home,
caused his motor vehicle to cross the center line of the road, and struck a motor vehicle operated
by Roberts and occupied by Derek and Devin Fox. As a result of the above-described motor

vehicle collision, Devin Fox suffered severe injuries which resulted in his death. Roberts and
Fox sustained personal injuries and subsequently brought a lawsuit against American Legion
alleging that American Legion was liable for serving liquor to Mr. Steele, who later caused the
accident resulting in their injuries.
At the time of the above-described accident on November 8, 2009, American Legion was
insured under Commercial General Liability policy number NC832290 with Nautilus Insurance
Company. The Nautilus Policy contains the following insuring agreement with respect to
Commercial General Liability coverage:
COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as
damages because of “bodily injury” or “property damage” to which this insurance
applies. We will have the right and duty to defend the insured against any “suit”
seeking those damages. However, we will have no duty to defend the insured
against any “suit” seeking damages for “bodily injury” or “property damage” to
which this insurance does not apply. We may at our discretion investigate any
“occurrence” and settle any claim or “suit” that may result. But:
1) The amount we will pay for damages is limited as described in Section III Limits of Insurance; and
2) Our right and duty to defend end when we have used up the applicable limit of
insurance in the payment of judgments or settlements under Coverages A or B or
medical expenses under Coverage C. No other obligation or liability to pay sums
or perform acts or services is covered unless explicitly provided under
Supplementary Payments - Coverages A and B.
The Nautilus policy also includes an exclusion for “Total Liquor Liability,” which excludes from
coverage
“Bodily injury” or “property damage” for which any insured or his indemnitee
may be held liable by reason of:

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1) Causing or contributing to the intoxication of any person;
2) The furnishing of alcoholic beverages to a person under the legal
drinking age or under the influence of alcohol; or
3) Any statute, ordinance, or regulation to the sale, gift, distribution or
use of alcoholic beverages.
As of November 8, 2009, American Legion was licensed to sell alcohol through the State of
Missouri and through the County of Ripley in the State of Missouri. At that time, American
Legion charged patrons for alcoholic beverages sold at the bar, employed two bartenders, and
was open from 3:00 p.m. until at least 9:00 p.m. seven days per week, which totaled a minimum
of 42 hours per week.
II.

Summary Judgment Standard
Pursuant to Federal Rule of Civil Procedure 56(c), a district court may grant a motion for

summary judgment if all of the information before the court demonstrates that “there is no
genuine issue as to material fact and the moving party is entitled to judgment as a matter of law.”
Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 467 (1962). “Because the
interpretation and construction of insurance policies is a matter of law, the issue of whether the
duty to defend or indemnify exists under a policy is particularly amenable to summary
judgment.” Newyear v. Church Ins. Co., 155 F.3d 1041, 1043 (8th Cir. 1998).
III.

Discussion
Nautilus seeks a declaratory judgment that its policy with American Legion does not

cover Roberts and Fox’s claims against American Legion.1 Roberts and Fox’s claims against
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The Court notes that plaintiff seeks summary judgment against all defendants, and, at the
same time, it seeks a default judgment against defendant American Legion. Nothing in Federal
Rule of Civil Procedure 56 appears to prevent a party from seeking summary judgment against a
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American Legion stem from their allegation that American Legion served alcohol to Robert
Steele while Mr. Steele was visibly intoxicated, and that, later, Mr. Steele caused a motor vehicle
accident that resulted in the death of Devin Fox and injuries to Roberts and Derek Fox.
Nautilus contends that its insurance policy with American Legion specifically excludes
from coverage claims like those brought by Roberts and Fox, and that, as a result, Nautilus owes
American Legion neither indemnification nor a defense against Roberts and Fox’s claims.
As an initial matter, in a diversity case arising out of a Missouri state court action such as
this one, Missouri substantive law governs. Freeman v. State Farm Mutual Auto Ins. Co., Inc.,
436 F.3d 1033, 1034 (8th Cir. 2006). Under Missouri law, insurance coverage is a question of
law. Keisker v. Farmer, 90 S.W.3d 71, 74 (Mo. banc 2002). Generally, a liability insurance
policy binds an insurer to two potential obligations: the duty to defend and the duty to
indemnify. An insurer’s duty to defend exists when the petition states some grounds of liability
covered by its insurance policy. Woods v. Safeco Ins.Co. of America, 980 S.W.2d 43, 46 (Mo. Ct.
App. 1998). The duty to defend is determined by comparing the language of the insurance
contract with the allegations of the petition. Standard Artificial Limb, Inc. v. Alliance Ins. Co.,
895 S.W.2d 205, 210 (Mo. Ct. App. 1995). If the petition alleges facts which state a claim that is
potentially within the policy’s coverage, a duty to defend exists. Woods, 980 S.W.2d at 47.

party in default, and other district courts in this Circuit have done so, even without proof of
service of the motion on the party in default. See, e.g., Allstate Ins. Co. v. Davis, No.
5:08-CV-00039-WRW, 2008 WL 2428871, *1 (E.D. Ark. June 12, 2008) (holding that no
insurance coverage existed and no duty to defend existed, and thus granting summary judgment
against a party in default). Here, plaintiff certifies that it has served American Legion with its
motion for summary judgment.
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A liability insurer has a duty to defend an insured when the insured is exposed to potential
liability to pay based on the facts known at the outset of the case, no matter how likely it is that
the insured will be found liable and whether or not the insured is ultimately found liable. King
Construction, Inc. v. Continental Western Ins. Co., 123 S.W.3d 259, 264 (Mo. Ct. App. 2003).
To extricate itself from a duty to defend the insured, the insurance company must prove that there
is no possibility of coverage. Id. Coverage is principally determined by comparing the language
of the insurance policy with the allegations in the pleadings. Id. Where there is no duty to
defend, there is no duty to indemnify. Id.
An insured bears the burden of showing that a loss and damages are covered under an
insurance policy. American States Ins. Co. v. Herman C. Kemper Construction Co., Inc., 71
S.W.3d 232, 235 (Mo. Ct. App. 2002) (citing American States Ins. Co. v. Mathis, 974 S.W.2d
647, 649 (Mo. Ct. App. 1998)). However, with respect to the applicability of the exclusions, the
insurance company seeking to avoid coverage by reason of a policy exclusion has the burden of
proving the applicability of that exclusion. State Farm Fire & Casualty v. D.T.S., 867 S.W.2d
642 (Mo. Ct. App. 1993).
The general rules for interpretation of contracts apply to the interpretation of an insurance
policy. Peters v. Employers Mutual Casualty Co., 853 S.W.2d 300, 301-302 (Mo. banc 1993). If
the language of the policy is ambiguous, it is construed against the insurer. Id. at 302. However,
construction of insurance policies is unnecessary when the policy provision is clear and
unambiguous. State Farm Mutual Auto Ins. Co. v. Balmer, 899 S.W.2d 523, 525 (Mo. banc
1995). When the language of a policy is unequivocal, it should be given its plain meaning, even
if it restricts coverage. Jasper v. State Farm Mutual Auto Ins. Co., 875 S.W.2d 954, 956-957
(Mo. Ct. App. 1994).

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Here, the plain language of the insurance policy excludes coverage for “bodily injury” for
which the insured is “held liable by reason of...(1) causing or contributing to the intoxication of
any person; [or] (2) The furnishing of alcoholic beverages to a person...under the influence of
alcohol.” Roberts and Fox’s claim against American Legion seeks to hold American Legion
liable for those very acts with respect to Mr. Steele. The policy thus excludes from coverage any
claim American Legion may (or did) make under its insurance policy with Nautilus for coverage
related to claims brought by Regina Roberts and Derek Fox. Missouri courts have upheld
provisions like the Nautilus policy’s Liquor Liability exclusion in situations similar to this one.
See, e.g., Auto Owners (Mut.) Ins. Co. v. Sugar Creek Memorial Post. No. 3976, 123 S.W.3d
183, 190 (Mo. Ct. App. 2003). Notably, defendants Roberts and Fox have not filed a
memorandum in opposition to plaintiff’s motion for summary judgment. It is also pertinent that,
although defendant American Legion is in default, that defendant American Legion’s current
Adjutant and former Commander, Jim Huffman, provided the affidavit on which plaintiff relies
for many of its facts regarding American Legion’s business.
No party has opposed plaintiff’s motion for summary judgment, and the insurance policy
makes clear that it excludes any claim for indemnification related to Roberts and Fox’s state
court action. As a result, plaintiff is entitled to the declaratory judgment it seeks.

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IV.

Conclusion
Plaintiff Nautilus’s insurance policy with American Legion excludes coverage for the

claim brought against American Legion by Regina Roberts and Derek Fox. Summary judgment
shall be granted to plaintiff and against defendants.
Dated this 8th day of April, 2013.

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STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE

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