Epsom House of Pizza v. Comm. Union CV-98-464-JD 07/16/99

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Epsom House of Pizza, Inc.

v. Civil No. 98-464-JD

Commercial Union Insurance Co.,

O R D E R

The plaintiff, Epsom House of Pizza, Inc. ("Epsom Pizza"),

brought this declaratory judgment action against the defendant.

Commercial Union Insurance Company ("Commercial Union"), in the

Merrimack County Superior Court in the state of New Hampshire.

The defendant removed the action to this court on August 4, 1998,

on the basis of diversity jurisdiction. On September 22, 1998,

Eric Sylvester intervened as a matter of right under Federal Rule

of Civil Procedure 24(a) (2) .1 Before the court is the motion for

summary judgment of Commercial Union (document no. 12).

1As discussed further below, in Erich Sylvester by his m/n/f Cindy Sylvester v. Epsom House of Pizza Inc., d/b/a The Sports Bar, 98-C-066 (Merrimack County Superior C t ., Feb. 18, 1998), Eric Sylvester brought suit against Epsom Pizza asserting claims of negligent or reckless service of alcohol. Sylvester's intervention as a matter of right stems from his interest in Epsom Pizza's insurance policy and its coverage of the claims at issue in the underlying case. Background

On November 2 9 , 1 9 9 1 , Tricia Reeves consumed alcohol at the

Epsom House of Pizza, Inc., in Epsom, New Hampshire. After

leaving the establishment Reeves struck Erich Sylvester while

driving her vehicle along Route 4 in Chichester, New Hampshire,

seriously injuring Sylvester.

Sylvester, by his mother and next of friend, brought an

action against Epsom Pizza for negligent and reckless service of

alcoholic beverages. At the time Epsom Pizza was insured under

an insurance policy issued by Commercial Union. Based upon a

liguor liability exclusion clause, the defendant refused to

provide coverage or defend Epsom Pizza. On July 1, 1998, Epsom

Pizza filed this action in the Merrimack County Superior Court

seeking a declaratory judgment that Commercial Union must defend

Epsom Pizza in the underlying suit brought by Sylvester against

Epsom Pizza. Epsom Pizza also seeks a declaratory judgment that

it is entitled to liguor liability coverage.

Standard

The role of summary judgment is "to pierce the boilerplate

of the pleadings and assay the parties' proof in order to

determine whether trial is actually reguired." Snow v.

2 Harnischfeger Corp.,

(1st Cir. 1993) (quoting

Wynne v. Tufts Univ. Sch. of Med . ,

(1st Cir.

1992)). The court may only grant a motion for summary judgment

where the "pleadings, depositions, answers to interrogatories,

and admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of

law." Fed. R. Civ. P. 56(c). The party seeking summary judgment

bears the initial burden of establishing the lack of a genuine

issue of material fact. See Celotex Corp. v. Catrett,

(1986); Quintero de Quintero v. Aponte-Rogue,

(1st Cir. 1992). The court must view the entire

record in the light most favorable to the plaintiff, "'indulging

all reasonable inferences in that party's favor.'" Mesnick v.

General Elec. Co.,

(1st Cir. 1991) (quoting

Griqqs-Ryan v. Smith,

(1st Cir. 1990)).

However, once the defendant has submitted a properly supported

motion for summary judgment, the plaintiff "may not rest upon

mere allegation or denials of [her] pleading, but must set forth

specific facts showing that there is a genuine issue for trial."

Anderson v. Liberty Lobby, Inc.,

(1986) (citing

Fed. R. Civ. P. 56(e)).

3 Discussion

Commercial Union moves for summary judgment arguing that the

insurance policy unambiguously excludes from coverage liability

that arises from alcohol sales. The plaintiff objects, arguing

that even when a policy unambiguously excludes coverage, coverage

may still be found to exist if the insured reasonably believed

that there was such coverage based upon prior dealings between

the parties or their representatives.2 The defendant counters

that consideration of the prior dealing between the parties is

relevant only when an ambiguity has been found to exist in the

insurance policy.

Contrary to the defendant's interpretation of New Hampshire

law, the New Hampshire Supreme Court has determined:

Where the terms of [an insurance] policy are clear and unambiguous an insured may not reasonably expect coverage unless the parties prior dealings would lead the insured to form a reasonable belief that the policy provided him the claimed coverage, or unless the insured's reliance on the (insurer's) agent's assurances was reasonable so as to estop the company from denying coverage.

Trefethen v. New Hampshire Ins. Group,

(1994)

(guoting Robbins Auto Parts, Inc., v. Granite State Ins. Co . , 121

2In its objection, Epsom Pizza does not appear to contest the lack of ambiguity in the liguor liability exclusion clause.

, 762-63 (1981)) (internal citations and quotations

omitted). In Trefethen, the insured, store owners, requested

that they be insured for "everythinq" and the aqent responded he

would add coveraqe immediately.

. There was no

specific mention of liquor liability, and althouqh the aqent was

aware that alcohol was sold by the store, the policy that was

issued contained a liquor liability exclusion. See i d .

Thereafter, two teens who had alleqedly bouqht alcohol at the

store were involved in a vehicular accident and the store owners

were sued.

The insurance company denied coveraqe and the store owners

brouqht a declaratory judqment action seekinq a judqment that

coveraqe existed and requirinq the insurance company to defend

the underlyinq action. In rejectinq the insurance company's

arqument premised upon the liquor liability exclusion clause, the

New Hampshire Supreme Court affirmed the lower court's

conclusions that coveraqe existed, holdinq

that the plaintiffs' reasonable expectations of coveraqe based on prior dealinqs with [the insurance company's] aqent may be enforced despite clear and unambiquous policy lanquaqe to the contrary.

.3

3In Trefethen, the court's holdinq was also premised in part upon the non-delivery of the insurance policy.

.

5 Similarly, in Bovce v. Concord Gen. M u t . Ins. Co , ,

(1981), the insured asked an agent to replace his

existing policy, which covered a trailer, with a duplicate

policy. However, the replacement policy did not cover the

trailer and the agent did not inform the insured of this fact.

I d . at 780. The New Hampshire Supreme Court determined that the

insured was entitled to coverage, despite unambiguous policy

language to the contrary, because the insured reasonably believed

coverage existed given the prior dealings between the parties.

See i d .

Manchester Security Serv, Inc. v. London & Edinburgh Ins.

C o ., No. 94-193-JD (Mar. 18, 1996), relied upon by the defendant,

is not to the contrary. Manchester stands for the proposition

that prior dealings may be used to clarify ambiguity found in a

policy. See

slip op. at 2-3.

In this case the owner of Epsom House of Pizza, Dimakarakos,

attested to the following: (1) in 1993 he asked Sclarin, an

insurance agent at Epsom Insurance Agency, to provide Dimakarakos

with insurance coverage for "Epsom House of Pizza's operations,"

Dimakarakos Aff. at 1; (2) Sclarin knew that beer and wine were

sold at Epsom Pizza; (3) Sclarin never mentioned any liguor

liability exclusion in the Commercial Union policy or offered

separate liguor liability coverage; (4) in 1995, the dining area

6 of Epsom Pizza was expanded and Dimakarakos requested coverage

for the additional space and operations;4 (5) at this time

Sclarin did not state that liquor liability coverage was needed,

nor did he mention the availability of liquor liability coverage,

although he knew that Epsom Pizza sold beer and wine;5 (6) the

first time liquor liability coverage was discussed was after the

Reeves accident when Dimakarakos requested that Sclarin review

the existing liability policy and Sclarin informed him Epsom

Pizza was not covered for liquor liability; and (7) prior to this

date Dimakarakos believed he was insured for liquor liability.6

On these facts, a genuine issue of material facts exists as

to whether Dimakarakos reasonably believed based upon the prior

dealings of the parties that he was insured for liquor liability.

The discrepancies between the affidavits of Sclarin and

4The record indicates that the expansion involved the addition of "The Sports Bar" as a part of Epsom Pizza's operations.

5The record indicates that Sclarin altered the existing policy to provide for additional coverage, although the liquor liability cause was extant.

6These do not constitute findings of fact of the court.

7 Dimakarakos create a triable issue.7

Conclusion

In light of the above discussion, the defendant's motion for

summary judgment is denied (document no. 12).

SO ORDERED.

Joseph A. DiClerico, Jr. District Judge

July 16, 1999

cc: Paula T. Rogers, Esguire Andrew D. Dunn, Esguire Robert A. Stein, Esguire

7In support of its motion. Commercial Union offers the affidavit of Michael Sclarin, an agent of the Epsom Insurance Agency, who sold the insurance policy to Epsom Pizza. Sclarin attests that he explicitly discussed coverage for alcohol sales with Anthony Dimakarakos, the owner of Epsom Pizza, but Dimakarakos declined the coverage as it was too expensive and it reguired training his bartenders. In his affidavit Dimakarakos expressly denied Sclarin's statements concerning conversations regarding liguor liability coverage.