2014 D e c i sion s O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit

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w . v i l l a no v a . e du/thir dc ir c uit_2014/396NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

____________ No. 12

- 2890

_____________ STATE AUTOMOBILE MUTUAL INSURANCE COMPANY

v. SCOTT LUCCHESI; COLLEGIATE SUBS, D/B/A Champs Sports Bar & Grill; STEPHANI E L

. KLETT; ZACHARY A. SPENCER; CLINTON BONSON

SCOTT LUCCHESI; COLLEGIATE SUBS, Appellant s

______________ No. 12

- 2891

______________ STATE AUTO MUT UAL INS URANCE CO MPANY

v. SCOTT LUCCHESI; COLLEGIATE SUBS, D / B / A Champs Sports Bar & Grill; STEPHANIE L

. KLETT; ZACHARY A. SPENCER; CLINTON BONSON
STEPHANIE L

. KLETT,

Appellant

______________ No. 12

- 3009

______________ STATE AUTO MUT UAL INS URANCE CO M PANY

v. SCOTT LUCCHESI; COLLEGIATE SUBS, D / B / A Champs Sports Bar & Grill; STEPHANIE L

. KLETT; ZACHARY A. SPENCER; CLINTON BONSON2 CLINTON BONSON,

Appellant

______________ APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE D ISTRICT OF PENNSYLVANIA

(D.C. Civil No. 11

- cv - 00735 ) District Judge: Honorable Yvette Kane

____________ Submitted Under Third Circuit LAR 34.1(a)

April 10 , 2014

____________ Before: RENDELL, HARDIMAN and BARRY, Circuit Judges

(Opinion Fil ed: April 11, 2014 )

____________ OPINION

____________ B ARRY, Circuit Judge State Automobile Mutual Insurance Company (“State Auto”) filed an action in the
U.S. District Court for the Middle District of Pennsylvania seeking a declaratory judgme nt that it had no obligation to defend nor indemnify C ollegiate Subs, Inc. d/b/a
C hamps Sports Bar & Grill ; its proprietor, Scott Lucchesi; and its former bartender s , Stephanie Klett and Zachary Spencer (together, the “Champs Defendants”) , against a tort

a ction filed by Clinton Bonson, a patron of Champs Sports Bar & Grill , who was hit by a
taxi after leaving the bar in toxicated

. T he Court f ound that the liquor liability exclusion
contained in the State Auto policy barr ed coverage , and granted summary judg ment

.3

Lucchesi, Collegiate Subs, Inc., Klett , and Bonson now appeal. W e will affirm.
I On the evening of October 24, 2009, Clinton Bonson had bee n drinking at Champs Sports Bar & Grill in State College, Pennsylvania

. He left the bar on foot , and procee ded

to cross North Atherton Street, a major thoroughfare in town . As he crossed, a speeding taxi hit him, and he was seriously injured . Bonson filed suit (the “Underlying Action”) in the Court of Common Pleas of Centre County, Pennsylvania against the Ch amps Defendants, the taxi driver , and the driver’s operating company.
A s claimed

- insureds of a commercial general liability policy issued by State Auto , the Champs Defendants submitted claims fo r defense and indemnification

. State Auto began provision a lly providing a defense , though it reserved its rights to deny coverage under the policy. O n April 18, 2011, it filed the above

- mentioned decl a ratory judgment action based on the policy’s liquor liability exclusion. 1 In relevant part, t he policy at issue provided that: [State Auto] will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property d amage” to which this insurance applies. [State Auto] 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.

1 We note with some dismay that the only documents in the Appendix are the Notice of Appeal and the Opinion and Order of the District Court. We have ha d to retrieve the two essential documents on this appeal from the record before the District Court. This should not have been necessary.4 * * *
Exclusions

. . .

c
. Liquor Liabili ty “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 person; (2) The furnishing of alcoholic beverages to a person under the legal drinking age or under th e influence of alcohol; or (3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.
Commercial Gen. Liab

. Coverage Form of Policy No. PBP

- 9405827

- 14 at 1

- 2 , attached
as Ex. A t o Dkt. No. 4 in 11

- cv - 735 (M.D. Pa.) , pp. 15

- 29 ( “CGL Form”)

. In th e Underlying Action , Bonson allege d that the Champs Defendants we re liable
for his injury for two princip a l reasons: (1) by failing to cut off service, they caused and
enhanced the degree of his intoxication , i n violation of both principles of common - law negligence and Pennsylvania’s Dram Shop Act, 47 Pa. Cons. Stat. Ann. § 4

- 492; and (2) they allowed him to leave the bar intoxicated , in vi olation of their common - law duty to monitor the premises for visibly into xicated persons and undertake appropriate precautions to ensure their safety

. State Auto moved for summary judgment

. T he Champs Defendants ( with the exception of Spencer, who never appeared ) and Bonson cross - moved , arguing that the liquor liability exclus ion did not apply to the claim that the Champs Defendants allowed5

Bonson to leave the premises intoxicated , because that claim wa s premised on a failure to monitor Bonson, and not on the service of alcoh ol to him.
T he District Court granted State Auto’ s mo tion, denied the cross

- motions, and entered judgment for State Auto. The Court found “ no support in law” for a duty to prevent a bar patron “from leaving the establishment while intoxicated” unless “the bar created the dangerous condition” by “having furn ished [the patron] with alcohol while he was visibly intoxicated.” (A13

- 14.) It therefore concluded that the two sets of claims were “inextricably intertwined,” and that “the sole basis for the claims raised” in the Underlying Action was “ the service of alcohol.” (A1 2, 1 4

- 15.) It also rejected as unpersuasive Penn

- Am. Ins. v. Peccadillos , 27 A.3d 259 (2011) (en banc), pet

. for allowance of appeal denied , 613 Pa. 669 (2011), a case in which the Pennsylvania Superior Court held against an insurer under fa cts similar to those presented here

. This timely appeal followed.
II
Th e D istrict C ourt had jurisdiction pursuant to 28 U.S.C. § 133 2 . We have jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review of a d istrict

c ourt’s order granting s ummary judgment and apply the same standard as the d istrict

c ourt. See Montone v. City of Jersey City , 709 F.3d 181, 189 (3d Cir. 2013). “S ummary judgment shall be granted where no genuine dispute exists as to any material fact, and the moving party is e ntitled to judgment as a matter of law.” Id.
III6

In determining State Auto’s obligations under the policy, we must consider the duty to defend separately from the duty to indemnify. S ee Erie Ins. Exch. v.
Transamerica Ins. Co. , 51 6 Pa. 574, 583 (1987) ( the duty to defend “ is a distinct obligation, sepa rate and apart from the insurer’ s duty to provide coverage ”). The insurer’s “ duty to defend is broader than the duty to ind emnify,” Kvaerner Metals Div. v.
Commercial Union Ins. Co. , 589 Pa. 317, 330 n.7 ( 2006) , in that an insurer must “ defend its insured if the factual allegations of the complaint on its f ace encompass an injury that

. . . is potentially ” within the scope of the policy

. Am. & Foreign Ins. Co. v. Jerry’s Sport Ctr., Inc. , 606 Pa. 584, 597 , 609 (2010)

. “ [S] o long as the complaint filed by the injured party covered an injury which might or might not fall within the coverage of the policy [,] the insurance company [ is ] obliged to defend. ” Casper v. Am. Guar. & Liab. Ins. Co. , 408 Pa. 426, 42 9 (1962) ( internal quotation marks omitted).
To determine whether a claim potentially falls within the scope of a policy , we compare “ the four corners of the insurance contract to the four corners of the complaint. ” Jerry’ s Sport Ctr., Inc. , 606 Pa. at 6 09. In so doing, we interpret the policy as we would any other contract. Thus, where the language of the policy is “clear and unambiguous,” we are “required to give effect to that language.” Prudential Prop. & Cas. Ins. Co. v.
Sartno , 588 Pa. 205, 212 ( 2006) (internal citation and quotation marks omitted)

. We also accept as true the “factual allegations of the underlying complaint , ” Jerry’s Sport Ctr., Inc. , 606 Pa. at 610 (internal citation and quotation marks omitted),
and “liberally construe [] ” the m to determine whether the y assert a potentially covered7

claim. Frog, Switch & Mfg. Co., Inc. v. Travelers Ins. Co. , 193 F.3d 742 , 746 (3d Cir. 1999). If the complaint contains “multiple causes of action,” one of which “would potentially constitute a claim within the scope of the policy’s coverage,” the insurer must
defend the entire action until it can “confine the claim to a recovery excluded from the policy.” Am. & Foreign Ins. Co. v. Jerry’s Sport Ctr., Inc. , 948 A.2d 834, 846 (Pa. Super. Ct. 2008) (in ternal citation and quotation marks omitted) , aff’d , 606 Pa. 584 (2010); see Peccadillos , 27 A.3d at 267 (the “obligation to defend remains unless [an] exclusion clearly defeats every cause of action averred in the underlying complaint”). Finally, we reso lve doubts regarding co verage “in favor of the insured. ” Frog, Switch & Mfg. Co

. , 193 F.3d at 74 6

. T h e language of the State Auto policy is unambiguous : there is no coverage for “damages” an insured becomes obligated to pay “because o f” a “bodily injur y . . . for which” the insured “may be held liable . . . by reason” of its “causing or contributing to the intoxication of any person, ” “furnishing of alcoholic beverages to a person . . . under

t he influence of alcohol,” or violating a “sta tute . . . rela ting to the sale, gift, distribut ion,

or use of alco holic beverages.” (CGL Form at 1

- 2 .) That language applies cleanly to the C omplaint in this case and leaves no doubt that coverage is barred

. Every claim asserted seeks damages for the “bodily injury ”
Bonson suffered when he was hit by the taxi

. According to the C omplaint, the Champs Defendants “may be held liable ” for that injury “by reason” of their “causing [Bonson] to be intoxicated . . . at the time he attempted to cross the street,” “continuing t o serve”8

Bonson “despite his visible intoxication,” and “violating the statutes and laws of the Commonwealth of Pennsylvania, including, but not limited to” Pennsylvania’s Dram Shop Act. See Compl. ¶¶ 43, 48, 52, attached as Ex. B to Dkt. No. 4 in 11

- cv - 7 35 (M.D. Pa.). N o portion of th at C omplaint “encompass[es] an injury” that “even potentially” falls within the scope of the policy, and S tate Auto ha d no duty to defend. Jerry’s Sport Ctr., Inc ., 606 Pa. at 597, 609

. It follows, therefore, that State Au to had no duty to indemnify. See Kvaerner at 330 n.7 (“[I] f [an insurer] does not have a duty to defend . . . neither does it have the duty to indemnify. ”).
The Champs Defendants concede that the l iquor liability exclu sion bars coverage
of the claim that they served Bonson to excess . They insist , however, that the exclusion

cannot bar coverage of the claim that they allowed Bonson to leave the premises
intoxicated . But under the policy, if coverage of the former claim is excluded, so is coverage of the latter, as both claims seek “ damages because of” the exact same “ bodily injury. ” ( CGL Form at 1 .)
T he Champs Defendants are quick to point out that , in theory, they could be held
liable for allowing Bonson to leave the premises even if he had been in tox icated before he got there and s topped drinking once he arrived . We must, however, accept as true the allegations of the C omplaint , which do not describe that version of the events

. T he
C omplaint unequivocally alleges that the Champs Defendants served Bo nson to excess and are liable to him for that conduct

. We also reject t he Champs Defendants reliance on Peccadillos , in which the9

Pennsylvania Superior Court ordered an insurer to defend a lawsuit seeking to hold a bar
accountable for a fatal drunk driving accident b ecause it had serv ed the driver to excess and eject ed him from the premises knowing he would drive home drunk

. The court , accepting the same reasoning advanced here by the Champs Def endants , held that the allega tions regarding the bar ’s ejectio n of the driver could in theory have been raised

“ regardless of whether [the] provision of alcohol had actually contributed to the [driver’s]
intoxication .” Peccadillos , 27 A.3d at 268

. The District Court “acknowledge[d] that Peccadillos is similar to the present action,” but concluded that “the Pennsylvania Supreme Court would not adopt such a
standard

. ” (A 11

- 12, 17 at n.7). We agree. Bedrock principles of Pennsylvania law require us t o rely on the facts alleged in the underlying C om plaint, and not on hypothetical scenarios that reach well beyond the C omplaint’ s “four corners.” Jerry’s Sport Ctr., Inc. , 606 Pa. at 609 ; see also , Gen. Acc. Ins. Co. of Am. v. Allen , 547 Pa. 693, 704 (1997) (“‘ [ T ] he obligation to defend an action brought against the insur ed is to be determined solely by the allegations of the complaint in the action .’”) (alteration in original ) (quoting Wilson v. Maryland Cas. Co. , 377 Pa. 588, 594 (1954)). So , too , must we give effect to the clear and unambiguous language of the policy a t issue here

. As
described in the C omplaint , Bonson’s injury is allegedly one for which the Champs Defendants “may be held liable . . . by reason” of serving him too much alcohol

. ( CGL
Form at 1 ). Under t he language of th e p olicy, all claims seeking dam ages for that injury are excluded from coverage.10 IV
We will affirm the order of the District Court

.