United States District Court, E.D. Kentucky, Southern Division, London
MEMORANDUM OPINION AND ORDER
L Bunnina United States District Judge.
Nationwide Mutual Insurance Company
(“Nationwide”) brought this action pursuant to
the Declaratory Judgment Act, 28 U.S.C. § 2201, against
Defendants Pierce Dant Hamblin Post No. 3167 Veterans of
Foreign Wars of the Unites States, Incorporated
(“VFW”) and Margie Woodruff, as administratrix of
the Estate of Richard Perkins. Nationwide seeks a declaration
that it has no obligation to defend or indemnify Defendant
VFW in an underlying lawsuit filed by Woodruff. (Doc. # 1).
Before reaching the substantive issue, the Court must
consider whether to exercise its discretionary jurisdiction
under the Declaratory Judgment Act (“Section
2201"). To that end, Defendants Woodruff and VFW have
filed Motions to Dismiss, or in the alternative, to
abstain. (Docs. # 8 and 12). Having reviewed the
parties' briefings, and carefully considering the issues
in this case, the Court finds it appropriate to decline
jurisdiction in this case pursuant to Section 2201.
Accordingly, Nationwide's Complaint will be dismissed
FACTUAL AND PROCEDURAL BACKGROUND
Pierce Dant Hamblin Post No. 3167 VFW is a non-profit
corporation located in Williamsburg, Kentucky. (Doc. # 8-3 at
¶ 3). On or about April 13, 2016, Adam Childress was
served alcoholic beverages while at the VFW. Id. at
¶ 6. Despite being intoxicated, Childress attempted to
drive home from the VFW. Id. at ¶ 10. On route
home, Childress swerved, and his vehicle struck a pedestrian,
Richard Perkins. Id. Perkins died as a result of his
as administratrix of Perkins's estate, sued both
Childress and the VFW in Whitley County Circuit Court.
Id. Woodruff brought negligence claims against the
VFW pursuant to Kentucky's “dram shop”
statute, KRS § 413.241. Id. at ¶¶
20-26. Specifically, Woodruff alleges that VFW negligently
trained and/or supervised its members, employees, or agents
who sold and/or served alcohol to Childress on April 13,
2016, and that the agents were negligent because they served
alcohol to Childress when he was visibly intoxicated.
has multiple insurance policies through Nationwide. (Doc. # 1
at ¶ 25). Nationwide is defending VFW in the underlying
action pursuant to a Commercial General Liability
(“CGL”) policy and Liquor Liability policy.
Id. at ¶¶ 3-4. The defense Nationwide is
providing to VFW in the underlying action is subject to a
reservation of rights letter dated May 2, 2016. Id.
at ¶ 36.
filed the instant declaratory judgment action on July 18,
2016. Id. According to the complaint, Nationwide
does not have a duty to defend or indemnify VFW for any
claims asserted in the underlying action. Id. First,
Nationwide argues that the “Liquor Liability”
exclusion contained in the CGL applies to the underlying
claims, thus precluding coverage. Id. at ¶ 59.
Next, Nationwide claims that the “Liquor License Not in
Effect” exclusion prohibits coverage under the Liquor
Liability Coverage Form. Id. at ¶ 66. Finally,
Nationwide contends that VFW made a material
misrepresentation in its application for Liquor Liability
Coverage because it failed to indicate that it did not
possess a valid liquor license. Id. ¶¶
position in this matter implicates the following provisions
and definitions within the CGL policy:
Section I - Coverages ...
This insurance does not apply to:
a. Expected Or Intended Injury “Bodily injury” or
“property damage” expected or intended from the
standpoint of the insured. This exclusion does not apply to
“bodily injury” resulting from the use of
reasonable force to protect persons or property.
c. Liquor Liability “Bodily injury” or
“property damage” for which any insured may be
held liable by reason of:
(1) Causing or contributing to the intoxication of any
(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 relating to the
sale, gift, distribution or use of alcoholic beverage.
This exclusion applies even if the claims against any insured
allege negligence or other wrongdoing in:
(a) The supervision, hiring, employment, training or
monitoring of others by that insured; or
(b) Providing or failing to provide transportation with
respect to any person that may be under the influence of
if the “occurrence” which caused the
“bodily injury” or “property damage”
involved that which is described in Paragraph (1), (2) or (3)
However, this exclusion applies only if you are in the
business of manufacturing, distributing, selling, serving or
furnishing alcoholic beverages. For purposes of this
exclusion, permitting a person to bring alcoholic beverages
on your premises, for consumption on your premises, whether
or not a fee is charged or a license is required for such
activity, is not by itself considered the business of
selling, serving or furnishing alcoholic beverages.
(Doc. # 1-2 at 20). Nationwide's position also implicates
the following provisions from the Liquor ...