Opinion ID: 891684
Heading Depth: 3
Heading Rank: 2

Heading: Status of Common Law Dram Shop Claims Following Enactment of Section 41-11-1

Text: {16} Having determined that state court jurisdiction is proper, we next address whether Respondents stated a claim upon which relief may be granted. Respondents seek to impose liability on the Casino as a result of both Michael's and Desiree's deaths. The complaint does not state which of the siblings was driving the vehicle at the time of the crash, but we do not consider this a fatal flaw. See Petty v. Bank of N.M. Holding Co., 109 N.M. 524, 526-27, 787 P.2d 443, 445-46 (1990) (Under our rules of `notice pleading,' it is sufficient that defendants be given only a fair idea of the nature of the claim asserted against them sufficient to apprise them of the general basis of the claim; specific evidentiary detail is not required at this stage. . . .); Mendoza, 2010-NMCA-074, ¶ 13, 148 N.M. 534, 238 P.3d 903. We construe the complaint as alleging a common law third-party claim with respect to the passenger of the vehicle involved in the fatal crash, and a common law patron claim with respect to the driver of the vehicle. We now proceed to determine whether our common law recognizes such claims following the Legislature's enactment of Section 41-11-1. We begin with third-party claims.
{17} At the outset of our analysis, we examine the effect of Section 41-11-1, which codified, at least partially, dram shop liability in this state. As discussed below, the parties disagree whether Section 41-11-1 completely preempted common law dram shop liability. The common law scheme which operated prior to the enactment of Section 41-11-1 provides a backdrop to our statutory interpretation, so we begin our discussion there. {18} We first recognized a common law action in favor of a third party injured by the tavernkeeper's over service of alcohol to a patron in Lopez v. Maez, 98 N.M. 625, 631, 651 P.2d 1269, 1275 (1982). There, we examined the history of dram shop liability and concluded that traditionally the common law imposes no liability on the seller of intoxicating liquor for damages that resulted from the intoxication of a patron. Id. at 628, 651 P.2d at 1272. We noted that many states had adopted statutes in order to change the existing common law, such that it permitted an action against the tavernkeeper; however, no such statute existed in New Mexico. Id. Even though our Legislature had not acted to change the common law, we held that the traditional common law view that the tavernkeeper was not liable for a third party's injuries from an intoxicated patron was outmoded, and that it was within the province of the judiciary to change the common law. Id. at 629-30, 651 P.2d at 1273-74. Therefore, we validated a common law action premised upon breach of a statutory or regulatory duty not to serve alcohol to an intoxicated patron. See id. at 631, 651 P.2d at 1275. {19} In Lopez, we noted that the statute providing a duty not to serve alcohol, NMSA 1978, Section 60-10-27 (repealed 1981), [did] not define or qualify the type of person who sells, serves or gives any alcoholic liquor. Lopez, 98 N.M. at 631, 651 P.2d at 1275. Section 60-10-27 was repealed by NMSA 1978, Section 60-7A-16 (1981) (as amended through 1993), the version currently in force. Section 60-7A-16 delineates a duty not to serve alcohol to intoxicated individuals, and akin to its predecessor, it is a broadly applicable duty, which does not limit or qualify the person who serves the liquor. Specifically, Section 60-7A-16 provides: It is a violation of the Liquor Control Act . . . for a person to sell or serve alcoholic beverages to or to procure or aid in the procurement of alcoholic beverages for an intoxicated person if the person selling, serving, procuring or aiding in procurement, knows or has reason to know that he is selling, serving, procuring or aiding in procurement of alcoholic beverages for a person that is intoxicated. (Emphasis added.) Thus, the common law action was premised upon a broad duty, applicable to any person  who sold or served alcohol. {20} In 1983, however, the Legislature enacted Section 41-11-1, which provides a statutory cause of action applicable to a tavernkeeper who is licensed to serve liquor under New Mexico law. See 1983 N.M. Laws, ch. 328, § 1(A), (C); § 41-11-1(A), (D)(1) (version in force). The Legislature made Section 41-11-1 the exclusive remedy for breach of Section 60-7A-16 by a licensee which, as mentioned above, provides a broad duty not to serve alcohol to intoxicated persons. See § 41-11-1(H) (No person may seek relief in a civil claim against a licensee or a social host for injury or death or damage to property which was proximately caused by the sale, service or provision of alcoholic beverages except as provided in this section.). {21} We note that, in this case, Respondents cannot proceed under Section 41-11-1 because the Casino is not a licensee within the meaning of the section. Section 41-11-1(D)(1) defines a licensee as a person licensed under the provisions of the Liquor Control Act and the agents or servants of the licensee. The Casino does not fall within this definition because it is not licensed to sell liquor under New Mexico law; rather, it is licensed by the Pueblo. Thus, the Court of Appeals addressed whether the common law cause of action, originally recognized in Lopez, survived subsequent legislative enactments, namely Section 41-11-1. The Court concluded that there is a recognized common law cause of action for an injured, third-party passenger. Mendoza, 2010-NMCA-074, ¶ 19, 148 N.M. 534, 238 P.3d 903. {22} The Casino contests this conclusion, arguing that Section 41-11-1 provides an exclusive remedy against tavernkeepers, such that there can be no common law alternative. The Casino argues that if there is a common law alternative to Section 41-11-1, then Section 41-11-1's limitations on dram shop liability are rendered meaningless, and therefore urges that we reverse the Court of Appeals. {23} In response, Respondents maintain that when the Legislature codified dram shop liability it limited the scope of the legislation as to licensees; however, it did not abolish a cause of action. Baxter v. Noce, 107 N.M. 48, 50, 752 P.2d 240, 242 (1988). Respondents also point out that the original common law cause of action recognized in Lopez was based on the duty derived from the broadly worded Section 60-7A-16, which is applicable to persons, not just licensees. See § 60-7A-16 (prohibiting any person from serving alcohol to intoxicated individuals (emphasis added)). Thus, Respondents argue that Section 41-11-1 is the exclusive remedy against licensees; however, it is not the exclusive remedy against non-licensees, such as the Casino. Respondents claim that the Legislature could have chosen to make Section 41-11-1 applicable to any person, but it did not elect to do so. Accordingly, Respondents argue that this Court should affirm the judgment of the Court of Appeals, recognizing a common law cause of action for injured third-parties. {24} In order to determine whether Section 41-11-1 preempts common law third-party claims, we first examine the plain language of the statute. Oldham, 2011-NMSC-007, ¶ 10, 149 N.M. 215, 247 P.3d 736. Section 41-11-1 applies to licensees. See § 41-11-1(A), (H). As discussed above, a licensee is a person licensed under the provisions of the Liquor Control Act and the agents or servants of the licensee. Section 41-11-1(D)(1). Therefore, the plain language of Section 41-11-1 limits its reach to those individuals licensed pursuant to the Liquor Control Act; it is not applicable to all individuals. See § 41-11-1(A), (D), (H). Subsection H provides that no person may maintain a civil claim against a licensee . . . except as provided in this section. Section 41-11-1(H) (emphasis added). Similarly, Subsection A limits its reach to licensees; it provides that [n]o civil liability shall be predicated upon the breach of Section 60-7A-16. . . by a licensee, except in the case of the licensee  who serves alcohol to an intoxicated individual. Section 41-11-1(A)(1) (emphasis added). Because Section 41-11-1 explicitly limits its scope to licensees, we conclude that it only supplanted the common law cause of action against licensees. It did not change the common law's recognition of third-party claims against non-licensees. Because the Casino is not a licensee, Respondents may pursue a common law third-party claim. {25} Our interpretation is confirmed by our prior cases. As discussed above, in Lopez, we modified the common law so as to permit an injured third party to maintain an action against a tavernkeeper. 98 N.M. at 632, 651 P.2d at 1276. Following Lopez, the Legislature enacted Section 41-11-1 in 1983. See 1983 N.M. Laws, ch. 328, § 1 (enacting section later codified as Section 41-11-1). We had the opportunity to examine the 1983 version of Section 41-11-1 in Baxter, 107 N.M. at 50, 752 P.2d at 242. There, we concluded that Section 41-1-11 did not create or abolish a cause of action; instead it narrowed the liability of tavernkeepers . . . and set out the elements which would constitute a breach of the duty established in [ Lopez ]. Baxter, 107 N.M. at 50, 752 P.2d at 242. Therefore, according to Baxter, Section 41-11-1 did not supplant the common law cause of action originally recognized in Lopez. Our interpretation of Section 41-11-1 places it in harmony with Lopez and Baxter. {26} Because Section 41-11-1 does not preempt all common law claims, our common law permits a third-party claim against a tavernkeeper. Accordingly, we hold that the factual allegations in Respondents' complaint are sufficient to state a third-party common law claim with respect to the passenger of the vehicle.
{27} We next address whether the common law permits patron claims, which are those brought by an intoxicated patron to recover for his own injuries. Section 41-11-1(B) permits a patron action against a licensee where the licensee is determined to have acted with gross negligence and reckless disregard for the safety of the person who purchased or was served the alcoholic beverages. As we have previously noted, Respondents may not proceed under the statutory cause of action provided in Section 41-11-1(B) because the Casino is not a licensee. Therefore, for Respondents' complaint to state a claim upon which relief may be granted, it must do so pursuant to a common law patron action. {28} In our discussion above, we concluded that the plain language of Section 41-11-1 limits its reach to licensees, and as a result, the section does not preempt all common law third-party claims. This analysis of Section 41-11-1 is equally applicable as to common law patron claims, and therefore, we need not restate it here. Rather, we proceed from the conclusion that Section 41-11-1 does not supplant all common law claims. {29} Even though we have settled that the enactment of Section 41-11-1 did not preempt all common law claims, there remains an important issue for our consideration. We must address whether our common law recognizes patron claims. Our opinion in Lopez, which was issued prior to the enactment of Section 41-11-1, recognized a common law cause of action in favor of third parties. Lopez, 98 N.M. at 632, 651 P.2d at 1276. Accordingly, in our consideration of whether Section 41-11-1 preempts third-party claims, we were able to proceed knowing that the background principles of our common law supported a cause of action for third parties. We are unable to proceed in such fashion here; we did not have occasion to address the existence of a common law patron cause of action prior to the enactment of Section 41-11-1. {30} The Court of Appeals concluded that our common law recognizes a patron cause of action. Mendoza, 2010-NMCA-074, ¶¶ 20-22, 148 N.M. 534, 238 P.3d 903. The Court analyzed the Casino's duty pursuant to Section 184 of the Pueblo Liquor Ordinance and determined that the Casino owed a duty to patrons. Mendoza, 2010-NMCA-074, ¶ 22, 148 N.M. 534, 238 P.3d 903. In determining that the Casino owed a duty to patrons, the Court relied upon the Compact's policy concern of casino visitor protection, noting that the Compact specifies that safety and protection of visitors is a priority of the Pueblo. Mendoza, 2010-NMCA-074, ¶ 22, 148 N.M. 534, 238 P.3d 903 (internal quotation marks and citation omitted). Because the Court determined that the Casino's duty under the Pueblo Liquor Ordinance extended to patrons, it concluded that Respondents stated a claim upon which relief may be granted. Mendoza, 2010-NMCA-074, ¶ 22, 148 N.M. 534, 238 P.3d 903. {31} The Casino disagrees with the Court's conclusion and submits that we should not adopt a common law patron action. The Casino argues that, if we were to adopt a common law patron action, every plaintiff would elect the less stringent common law theory, which presumably would require only proof of simple negligence, rather than Section 41-11-1(B)'s stricter requirement of gross negligence and reckless disregard for the safety of the person who purchased or was served the alcoholic beverages on the part of the alcohol purveyor. Alternatively, if the common law alternative to Section 41-11-1 only applies where the claimant proceeds against a tribal gaming facility, then the Casino argues there is a violation of equal protectiontribal facilities would be held to a much higher legal standard than non-tribal facilities. {32} In Lopez, we recognized our ability to revise the common law when the policy concerns which undergirded a common law doctrine no longer reflected modern realities. 98 N.M. at 629-30, 651 P.2d at 1273-74. There, we noted it was within our province to elect not to adhere to ancient common law doctrines when those doctrines [become] out of tune with today's society. Id. at 629, 651 P.2d at 1273. Thus, we revised the outmoded common law in order to permit an injured third party to pursue an action against the seller of liquor. Id. at 630, 632, 651 P.2d at 1274, 1276. {33} Traditionally, the common law reflected a belief that patrons should not be able to seek relief from a tavernkeeper for injuries arising out of their intoxication. Smith v. Sewell, 858 S.W.2d 350, 352 (Tex. 1993). The rationale was that the proximate cause of the injury was not the furnishing of the liquor, but the drinking of it. Lopez, 98 N.M. at 628, 651 P.2d at 1272. This view holds the patron alone responsible for injuries arising out of his liquor consumption and does not require the tavernkeeper to bear any responsibility. {34} Just as we recognized in Lopez that the policy considerations concerning third-party claims were no longer valid, we recognize that the policy considerations concerning patron claims no longer stand on solid ground. Two factors lead to this conclusion. First, our statutory laws evidence a change in the prevailing view regarding the responsibility of the tavernkeeper. In 1985, the Legislature amended Section 41-11-1 to recognize a patron cause of action. See 1985 N.M. Laws, ch. 191, § 1(B). Pursuant to Section 41-11-1(B), a patron who is served alcohol while intoxicated and injured as a result may obtain relief from the licensee who served him. As we have discussed, the statutory patron cause of action requires proof beyond simple negligence; the claimant must show that the licensee acted with gross negligence and reckless disregard for the safety of the patron. Id. This statute articulates a policy in favor of holding the tavernkeeper responsible for the patron's injuries, where it is clear that the tavernkeeper's actions were reckless. Thus, the Legislature's recognition of a patron cause of action undermines the common law's view that only the patron can be held responsible for injuries resulting from his alcohol consumption. {35} Second, a patron cause of action can be a catalyst which promotes important social goals. New Jersey courts have recognized the senseless havoc and destruction caused by intoxicated drivers and have permitted a patron cause of action in order to discourage drunk driving. See Voss v. Tranquilino, 413 N.J.Super. 82, 992 A.2d 829, 836 (N.J.Super.Ct.App.Div.2010), aff'd, 206 N.J. 93, 19 A.3d 470 (2011) (internal quotation marks and citation omitted). In our state, where tragedies too often result from drunk driving, this policy consideration certainly strikes a chord. See, e.g., State v. Roper, 1996-NMCA-073, ¶ 17, 122 N.M. 126, 921 P.2d 322 (taking account of severe drunk-driving problems in New Mexico). {36} This important policy consideration, in conjunction with Section 41-11-1(B), persuades us that the common law's bar on patron actions does not reflect the realities of our modern times. See Lopez, 98 N.M. at 632, 651 P.2d at 1276 (revising outmoded common law doctrine). Accordingly, because Section 41-11-1 does not preempt all common law claims, we hold that the common law recognizes an action by a patron against a tavernkeeper for over service of alcohol. {37} While the Court of Appeals concluded that the common law permitted a patron cause of action, it did not subject this patron cause of action to a more demanding standard akin to the requirements of Section 41-11-1(B) that the liquor licensee acted with gross negligence and reckless disregard for the safety of the patron. Mendoza, 2010-NMCA-074, ¶ 22, 148 N.M. 534, 238 P.3d 903. The common law must reflect modern policy considerations. These considerations are best encapsulated in the balance struck by our Legislature in Section 41-11-1(B), which allows a patron cause of action, yet demands proof of gross rather than simple negligence. We revise the common law and adopt the standard articulated in Section 41-11-1(B). Thus, the common law recognizes an action by an injured patron against a tavernkeeper who served the patron alcohol while intoxicated; in such an action, the claimant must show that the tavernkeeper acted with gross negligence and reckless disregard for the safety of the patron in order to recover. This standard ensures that the common law reflects modern policy considerations, and additionally, because the standard mirrors Section 41-11-1(B), it resolves the potential equal protection concerns brought to light by the Casino. {38} We clarify the application of the distinct standards required by common law third-party claims as distinguished from common law patron claims. Because third-party claims require proof of simple negligence while patron claims require proof of gross negligence, it is necessary to distinguish who may seek relief as a third party and who must seek relief as a patron. Where, as here, an intoxicated passenger seeks relief, it may be unclear to courts and litigants whether the intoxicated passenger should be treated as a patron or as an injured third party. {39} We construe Respondents' complaint as alleging a third-party claim with respect to the intoxicated passenger. We do so based on Baxter and Murphy v. Tomada Enterprises, Inc., 112 N.M. 800, 819 P.2d 1358 (Ct.App.1991). Both Baxter and Murphy involve claims by intoxicated passengersindividuals who drank liquor and were subsequently injured when they rode as passengers in vehicles driven by their drinking partners. Baxter, 107 N.M. at 48, 752 P.2d at 240; Murphy, 112 N.M. at 801, 819 P.2d at 1359. In Baxter, we permitted the intoxicated passenger's claim to proceed on the basis that she was an injured third party in relation to the tavern. 107 N.M. at 50, 752 P.2d at 242. Similarly, in Murphy, the Court of Appeals treated an intoxicated passenger's cause of action as a third-party claim. 112 N.M. at 802, 819 P.2d at 1360. {40} Murphy made clear that the proximate cause of the plaintiff's injuries is the key element which distinguishes a patron claim from a third-party claim. See id. (noting that the statutory patron claim, found in Section 41-11-1(B), extends only to injuries proximately caused by the patron's own intoxication, not by the intoxication of another patron). Murphy made this distinction in the context of statutory dram shop claimsthose maintainable against licensees pursuant to Section 41-11-1. {41} The Casino expresses concerns regarding disparate treatment between non-licensee taverns, which are subject to common law dram shop claims, and licensee taverns, which are subject to statutory claims under Section 41-11-1. However, if the common law dram shop claim mirrors the statutory claim, no potential for disparate treatment existsnon-licensee taverns will be subject to the same standards as licensee taverns. Thus, in order to ensure that common law claims mirror statutory claims, we extend Murphy 's rationale to the common law context. {42} Therefore, a passenger sues as a third party, whether under Section 41-11-1 or the common law. The passenger must prove that the tavern was negligent and that the passenger's damages were proximately caused by the tavern. An intoxicated driver sues as a patron, whether under Section 41-11-1 or the common law. The intoxicated driver must prove that the tavern acted with gross negligence and in reckless disregard of the driver's safety and that the driver's damages were proximately caused by the tavern. Accordingly, the factual allegations in the complaint regarding the driver are sufficient to state a patron claim.