respectfully request that this court to reverse the trial court's decision that the liquor liability exclusion in question was ambiguous and instead remained the case with directions that virginia sureties motion for summary judgment be granted that being that the liquor liability exclusion did in fact apply to the underlying wrongful death case so that virginia surety owed no duty to defend or indemnity to its insured kentucky speedway i think the court understands the interesting legal issue in this case is is that based upon the liquor liability exclusion that the insured is in the business of manufacturing selling serving furnishing alcohol whether that exclusion applied to the particular facts of this wrongful death case where this gentleman had come to the speedway are insured and have been served alcohol by a vendor a non employee of the insured became intoxicated was intoxicated and should have been cut off so as to not then end up injuring and killing this other person i think the key component here is your honor is that an insurance company has to look at the threshold four corners of the  wrongful death complaint and determine does this complaint if taken as true allege allegations against the insured that would fall within this exclusion and that's where they have to stand and in significantly in this wrongful death case it allege that the insured speedway that the folks who sold that the alcohol deejays they were an agent of speed well they were a joint venture or speedway company representing speedways so why don't you have a duty to consider things somewhat from your client's perspective and two you have the duty to defend issue and you have the ultimate  there is the ultimate question if speedway is found or settles whether or not you your insurance covers them so i'm not it seems to me that it's hard to say well we just look at the person complaint where the person died there are states complain and see what they're alleging and that that would be dispositive in the end of your what the scope of your exclusion is insurer i understand the court's concern but once again the law in kentucky and in all these other jurisdictions that we've relied upon this threshold decision do we go with a duty to defend is based upon the allegations as made in the complaint and we're sure other information you know about well you're right your honor in this case we had some other information such as we looked at the concessionaire agreement itself but the law tells us that it's not up to the insurance company to then make this threshold decision on the merits of whether this is a valid claim it's a good claim the claims going to survive summary judgment even with the knowledge of what the agreements themselves say the cases tell us that our duty to determine this defense is based on the allegations in the complaint that and i raise that because if the opposite was true if an insurance company looked at the face of the complaint and  said i don't think that their plane of sever going to be able to prove negligence i don't think they're ever going to be able to prove causation and therefore i'm not going to cover this the insured would say wait a minute you've got to take the face of the complaint and you will be a defense you can't become the judge and jury on whether or not one day they're going to succeed or not and that's what they've done here it just happened that we do that in the face of not only playing coverage but to the exclusion applies and i will say that everybody all looked really hard and trying to find a case that was right on point where somebody used a vendor to sell alcohol we don't have those but we cited two different cases that applied the very same liquor liability exclusion so courts have been asked to apply this and in the essex versus tri area amusement case federal district judge in west virginia same provision they are there was a power over they serve alcohol and a fellow that provided pool tables dart boards in juke boxes well there the court found that because the plaintiff alleged what the plaintiff in the wrongful death case said the jukebox salesman was a joint venture ended that bar owner was his agent on the face of the complaint that it was appropriate for the insurance company to determine as a matter of law that the amusement company was in the business of selling furnishing and supply now the home that the bar owner was his agent honor as it relates to the duty to defend that's the threshold decision we make now for example your honor in this just when it is me that means then that any time there is a complaint filed that makes an allegation you escape having to defend so when would you defend if there were allegations ultimately made in this case that would take it outside of this exclusion ultimately made what do you mean if well for an amended complaint or if the case starts developing is that what you mean for example your honor if through the course of this case there was an amended complaint and there actually had been an allegation made that took it outside of this exclusion then we would continue to evaluate that and in for example in this case we continued to talk to the insurance lawyer is basically kind of left open because remember the insurers lawyer even said give me a pullin every decision don't make a final yet and through the course of this matter even once this firm was defending the insured or the insured they service another letter and said there's a potential claim that we had negligence security at the racetrack but that was never alleged in the complaint in there was them gave them a second shot at that in my claims counsel reevaluated that coverage counsel did and said no that still doesn't take us outside of this exclusion i was surprised to claim the use or was limited to look liability i can foresee all sorts of claims apply to a general liability policy that you use or you say the law in kentucky if you look at the complaint that's the way we do it michigan they weren't serving alcohol but they had vendors who were they made sure that they were made an additional insured on the vendors policies of the vendor does have a liquor liability bender had a liquor liability policy the vendor got sued the vendor paid the vast majority of this claim think what happened liability claims in our folks kept saying to the insured well you know tender this to the liquor liability folks the folks serving the alcohol that you're an additional insured ok we asserted a claim against the liquor libel no sir they did not defend them that's correct or they did not the only folks they came after even after saying to us we're making a tender to the to the vendors insurance company and even after it was denied the only folks they came after ensued and said we acted in bad faith were my folks who had a specific look or a liability exclusion when in fact they were named additional insured on two different people's policies outback steakhouse deejays those folks said not going to defend you and they didn't go after this and that's who paid the majority of the settlement in the wrongful death case as it should have been are going to start from the i don't these that they want to i guess the law how much is at stake here is your honor i mean it strikes me that there is a what's involved here is almost not worked setting foot in this courthouse i understand your honor the underline they paid ten thousand to settle accumulated because you haven't paid it i'm just trying to understand why is your concern if i was sitting in the district court i turn the microphones off and say what's going on here why why are you worried isn't so it doesn't pay to litigate a case in federal court over this amount of money understand your ideal is costing your client a considerable amount it is your honor it is the court is well aware there's a whole settlement process through the six  did our parties respectfully exhausted those efforts you know i've got an insurance company who's really pretty serious about the application of this as i said there's not a lot of wall directly on point as a relates to this vendor issue over principle i mean i'm pretty sure what i'm going to understand what what's really going to appreciate that i know you're saying i was a little confused by the ruling judge bertelsmann he said that the exclusion was ambiguous and therefore speedway isn't title to summary judgment and i would think if there's issues of fact that rather than summary judgment for the plaintiff that it would go to trial for resolution of the issues what i was the ruling that because it's ambiguous and it's because that was drafted by the insurance company it's construed against the insurance company is that is that how i read it that's right your honor basically without saying whether it does apply or doesn't apply he said it's a big he was faced not because a factual the distinction of whether whether there's some facts that would control it but the language itself as if it was at the root he was saying of course there's no definition of what it means to be in the business of main affection or first alcohol and he said based upon these facts with this vendor involved it doesn't define it so i'm going to find all this to be ambiguous err on the side ruled construe against the insurance company then he granted their summary judgment on the whole coverage question but you're right your honor whether that means we ought to have a subtribe on what all that means on the americas would be a way to reverse that also thank you  please the court richard myers here for kentucky speedway and i'd like to begin by answering your question judge griffin as to why we went after virginia surety rather than the  deejays i think you know who those parties are the reason is basically that the liquor liability policy was liquor liability only and not premises liability we were the additional insured didn't pay a premium we were the additional insured on that policy where that named insured on this policy and we paid the premium for this policy the position that virginia surety put us in was who do we sue should a never ever been in that position of who do we sue to get insurance coverage here's why there is a debate in the law as to whether you can look outside the policy for known facts in determining the duty to defend it's not an issue in kentucky but it's an issue nationally you have to  if you simply look inside the complaint is the what the various allegations and claims were that were made against speedway you'll see right off the bat in order for you drafted as it was that there are dram shop claims based on an agency or joint venture allegation between the speedway and deejays on the one hand and on the other hand there are premises liability to the premises liability claim  i see a breach of a duty not to serve this guy alcohol ever tell me where it says there's a breach of duty as to premises liability that's independent of serving alcohol that is independent of serving alcohol that's a different that's a different question it's  paragraph you walk you coin a breach of duty other than dram shop i'll wait for  that allegation to the contents of the exclusion and the contents of the exclusion do not say may be held liable the insured may be held liable by reason of controlling somebody else who's selling alcohol it says for the exclusion to apply the insured must be in a position to be held liable by reason of serving or furnishing an alcoholic  seven does not meet the description of the exclusion now we can talk broadly about dream shop liability but this exclusion is on its face narrow in secondly by kentucky law must be construed narrowly and granted your honor that's exactly what the s i did from day one was to say because this complaint talks about alcohol therefore any claim must be excluded i ask you to consider seriously the testimony of the people who hindle this crime wayne but we get the corporate representative of the assize that that is not the way we do crimes just because it involved alcohol does not make this exclusion  secondly he said you must look at each allegation of the complaint match it to the exclusion to see whether or not the exclusion is applicable this is when do we get here's the corporate representing the company saying we did it wrong and yes they did do it wrong they took a very broad brush approach to what an exclusion is and you know what you know that's contrary to kentucky law it's country and almost anywhere in the united states exclusions are to be construed narrowly not expansively as there are exclusion says the exclusion applies only if you are in the business of selling servicing three selling serving or furnishing alcoholic beverages so is a key part of your contention that there is not a showing that you are in the business of selling serving or furnishing yes your honor that's true but i don't want to jump right to the in the business of because that skips right over the first prong of the exclusion and this company can't get over the first prong of the exclusion but yes i would say we are not in the business of selling alcohol where the basis would that be a factual determination that should not be ruled by summary judgment which is what factual matter i don't know he said the facts point to different directions and because this exclusion must be because just because the facts go into different directions doesn't mean the plaintiff or the insurer is a title to summary judgment if the facts go into directions there's a there's an issue for the trier of fact i think what he's saying is under insurance of all if an exclusion is in big us either in its terms or is applied to a given set of facts one or the other if it's a big  revenue on liquor sales that's correct and even though i control the hours that liquor can be sold what it vents they can be sold that i'm not in that business you don't have to report to actions on that or have to what speedway doesn't have to report taxes on their liquor sales because they're not getting any business revenues are just having income is not sufficient to put you in the business of selling alcohol so what test do you think kentucky you are requires us to apply to decide what it means when it says in the business of selling or furnishing alcohol the test is not clear that's what judge said it isn't clear the policy doesn't say what it is these facts point in both directions but isn't there some minimum standard of what it means to be in th them in the business of selling alcohol they didn't find one we haven't found one there is no case out there so for me to sit in a period say oh i've got the answer i know what being in the business means i don't have an answer that's the whole problem with this exclusion in the circumstances of this case that's the problem with the exclusion so your position is if the law in kentucky isn't clear about what being in the business is and if the contract insurance contract doesn't have a definition in the business then you automatically you started off by saying if the law in kentucky doesn't have a definition i'm sorry i don't think that's part of the equation if the insurance policy uses a term which it does not define in particular circumstances of a case you could argue both ways then there's coverage yes because then you can talk insurance law not business fall been under insurance law if an exclusion is in big us is to be narrowing applied to the insured in order to promote coverage that's been on kentucky for fifty years so we have a question then how can you argue that you're not in the business of selling alcohol simply when you subcontracted out to somebody else but you're quite happy that that somebody else is doing the selling of alcohol on your premises contracting it out to somebody else you escape being in the business there to make to my knowledge there's no bright line rule i will say this if you look at the agreement but they think about it as a matter of principle why should you not be in the business of selling alcohol when you just give it to somebody else to sell because that i will say does not say but i'm not asking that the policy i'm i'm asking is a matter of principle it's a matter of thinking about  it why should you not be in the business if you hire someone else to do it i'm asking you to live in a state of tension i understand that without a conclusion as to what in the business means but that's not the insurance problem that's the if there's an exclusion for example other policies say if you are in the business or if you lease or provide space for someone else to sell alcohol then the exclusion applies  the business of writing these policies that you're powerless it says this exclusion applies only if you are in the business of selling serving or for issuing alcoholic beverages so suppose you hire an now we've got a contract that says to zero as you build the facility for selling off your search you maintain the facility for serving alcohol you put your name on it you hire the people you fire the  people we have no control over your people when you have an agreement that says that an end ends up with the statement that they're not our agency which is merely a summary statement of all of the things that you've given to us which was then assumed by d in those circumstances there's no agency relationship but didn't you have the right to step in in any given instance and say don't sell to this particular person if we knew about a specific incident i would say under our right to supervise what goes on at our facility not a drip not a dram shop crime but if we have the right to supervise our facility to make sure that our customers were free from harm absolutely we can step intensive fact examination to determine if there was an agency relationship or not i say you do not have to you simply read the documents there are certain known facts in this case in which the decision should have been made regard to the cross appeal bad faith claim that judge bertelsmann granted summary judgment for the insurance companies are you aware of a recent opinion that i wrote philadelphia insurance indemnity insurance vs youth alive yes ok do you think that impacts this case i think that the facts in this case if if understood by the way we re cite them that you can't turn consecutive all on its head that you can't ignore all the allegations in the complaint but only look at those that fall within the exclusion if you give a very broad interpretation to an exclusion kondraty kentucky law if your own people and your honors i ask you very strongly read the deposition of bullies get an ice embargo of the people that handle these claims this claim was not handled the way b s i normally handles claims that's in there they say we do allegation by allegation we do not we look at both prongs of the exclusion and not just at the in the business of and if there's any doubt we defend and then see what happens if in the end they did just the opposite in this case in this case as opposed to your case there was a conscious mix that disregard the procedures in law they did it a different way why is a bad faith i'm sorry but they didn't follow they did it a different way why does that make it bad faith because the question is whether they were just merely negligent which is not a bad faith claim or where they consciously doing what they ordinarily did not do and what is contrary to the  principles that they're supposed to follow so it's a high standard for bad faith and as you pointed out but the standard is it has to be conscious and not mere negligence and it has to be for some motive it's the benefit of the company not to the insured that motive is this well let's just sit back and let this other company defend or we're just going to sit back and make speedway prove that there's coverage with them or with us and that's taken a great deal of money and that's a reckless indifference to the rights of the insured thank you a couple of points your honour's judge moore to your question of is there a definition out there of what it means to be in the business of there is this kentucky court of appeals case auto owners versus the v f w same policy exclusion is we got here and the court went ahead and tried to find ways to define in the business of any regular activity of currying that one's time intention and activity was the direct prop profit objective i'm sorry so so sure they the speedway want to have alcohol served it is these that these races their president basically admitted i can't imagine one where we wouldn't want to have alcohols serve and the only difference is they use an independent contractor to do it right but the real question is is that a critical difference in defining whether they are in the business of serving alcohol because you know i was arguing it one way with him and i mean argue the other way with you and then everyone will have to guess which way i will come out but the question is why not be able to say we don't want to have to deal with alcohol problems we know that our customers want alcohol so we're going to make it available to them but we're going to have the x y z company doing everything having to do with alcohol so how could we possibly be in the business of serving alcohol under that somewhat hypothetical situation understand it's still to their benefit this is being and to their benefit it's not as if the vendor but that doesn't make them in the business because it's for their benefit i think it does it puts them in the business of having alcohol provided at their facility if if i were at the dinner at the mcgovern boathouse last night in the bar they would sort of to drink and they said no you're bartenders an independent contractor she gets a ten ninety nine and not a double to we're not in the business it's still of the both houses benefit that i'm in the having alcohol with dinner work the reds baseball game so i think that just because you use an independent contractor you can be in the business of serving alcohol even if they're not on your payroll here there's actual elements of control of this sub contractor right that there's a lot of there's a lot of control i mean they get to approve who the manager is they get to talk about how they're trained they get to have them do other things for the speedway the speedway decides when we serve alcohol when we shut off alcohol so there is this level of control and and as your honour's indicated it if we're really going to get into this discussion about agency law we all know that agency is very fact intensive and yet the they hear their story they just ought to get summary judgment on because i'm not an agent are you is anyone disputing factual issues or is it not the legal conclusions that are to be drawn from the knowledge facts but i don't know that there's a dispute about how much money they make or who controls on i mean so we have we take this set of facts as a given and then decide is the exclusion applicable or not that's true now and then once again to finish up yeah  that he's saying it's not clear right that's correct and i will say that the direction never once again on this very question in this essex case in this b p federated insurance company case both cited same policy exclusion question but in both cases b p who just has their sign in a convenience store they were alleged that the seller of the alcohol was b p s agent in the clinic once again said by the allegation in the wrongful death that the seller the alcohol was beatty's agent that that was good enough to say they were a server of alcohol as a matter of law under this policy you know in that case b p ultimately got directed verdict at trial and that wrongful death case just like i suspect the speedway said if i'd gone to trial i might get directed verdict but on the insurance coverage part the south carolina court of appeal said as a matter of law when they were alleged to be an agent then they were the server of alcohol for purposes of this liquor liability exclusion on this very question we're talking about so could you could you hypothetically win the duty to defend claim but lose on the payment of the ten thousand dollars that was paid i mean that's a question yes ma'am no i don't think so i think if we don't owe a duty to defend then we don't have any obligation to pay the duty to indemnify would happen after there was a jury verdict hypothetically it was your duty to defend your saying you just looking at the my complaint so there are two different sets of facts that govern whether you have a duty to defend on the one hand and the duty to pay on the other am i missing something you're right on indemnification you can also look to the ultimate judicial determination to help you then determine do i dentity you could alter we look at everything that is presented at the trial the case for example or in a judicial determination but these folks had to make the threshold question do i owe this ensured a defense based on the four corners of this complaint you're familiar with this lemming versus commercial insurance company case of the six circuit which said that i believe construe in kentucky law that the terminations of whether a defense is required must be made at the outset of the litigation by reference with the complaint and known facts i saw that last night your honor i did and it i'm aware of that it made reference to a kentucky appellate case and i saw that i when i read the kentucky appellate case i didn't see it talk about and known facts i saw talk about the four corners of the document what are we bound by our own construction of kentucky law the kentucky case i think this this panel has the opportunity to interpret what it believes to kentucky to be just as that panel interpreted what they thought kentucky law was if kentucky large changed at all since that panel decision i don't know if it's published or not it's unpublished law if there is any intervening change in syria so we have to look at the current state status of kentucky law that's why all we often don't publish opinions that construe state law because the state law  evolves as the state like changed since two thousand and one no ma'am i'm not aware of any cases that would have changed this law in kentucky that the threshold question of a duty to defend is based upon a review of the album geishas made in the four corners of the complaint some kind of still struggle you're saying into that the lemming lending case was wrong when it was decided but the problem that you run into then is that the sixth circuit is bound by prior published opinions unless the law has changed so even if we were to agree with you totally that lending case is absolutely wrong we the best we could do would be to say this is even with if and known facts is the standard if that's the standard i would submit that with the facts that we know the speedway is still in the business of serving in furnishing alcohol by and through its vendors is a matter of will thank you for your