Court Opinion

ID: 9939812
Source: CourtListenerOpinion
Date Created: 2024-02-12 20:05:37.679857+00
Date Added: 2024-06-11T13:41:59.912065
License: Public Domain

FILED
                                                                Feb 12 2024, 1:16 pm

                                                                    CLERK
                                                                Indiana Supreme Court
                                                                   Court of Appeals
                                                                     and Tax Court

                            IN THE

      Indiana Supreme Court
               Supreme Court Case No. 23S-CT-184

WEOC, Inc. d/b/a Wings, Etc. and Romo, LLC d/b/a El
                    Cantarito,
                              Appellants

                                 –v–

Leah Niebauer, Special Representative of the Estate of
            Nathan Blount, Deceased,
                               Appellee

       Argued: September 27, 2023 | Decided: February 12, 2024

        Interlocutory Appeal from the LaPorte Superior Court
                       No. 46D02-2107-CT-1342
            The Honorable Richard R. Stalbrink, Jr., Judge

      On Petition to Transfer from the Indiana Court of Appeals
                          No. 22A-CT-1869

                   Opinion by Chief Justice Rush
          Justices Massa, Slaughter, Goff, and Molter concur.
Rush, Chief Justice.

   A “dram shop” is a bar, tavern, or store that sells alcohol. This
antiquated term comes from the historical practice of selling alcohol by the
dram—an eighteenth-century British unit measuring three fourths of a
teaspoon. Though “dram shop” may be an unfamiliar term to many
today, it survives in the legal field. For over a century, Indiana’s dram
shops have faced criminal liability for various conduct. And for nearly
sixty years, they have faced civil liability under principles of common-law
negligence for providing alcohol to intoxicated individuals who later
cause injury. But in 1986, the Legislature passed the Dram Shop Act,
which limited civil liability to those with actual knowledge of the injury-
causing person’s visible intoxication. This case presents an issue of first
impression: the Dram Shop Act’s impact on common-law liability against
entities that serve alcohol.

    Here, an intoxicated driver crashed his car into another vehicle, killing
its driver. The deceased’s estate sued two restaurants that had served the
intoxicated driver and included a negligence claim. The restaurants
moved to dismiss only that claim, arguing that the Dram Shop Act
eliminated any independent common-law liability, and thus the claim
failed as a matter of law. The trial court denied the motion.

   We affirm. The Dram Shop Act modified but did not eliminate
common-law liability against entities that furnish alcohol. And at this
early stage of the proceedings, we hold that the estate’s negligence claim
satisfies the Dram Shop Act’s requirements and alleges facts capable of
supporting relief.

Facts and Procedural History
  Nathan Blount suffered fatal injuries when an intoxicated driver, Eric
Adair, crossed the center line and crashed his car into Blount’s vehicle.
Before the accident, Adair was served alcohol at both Wings, Etc. Grill &
Pub and El Cantarito.

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024      Page 2 of 14
    Leah Niebauer, as special representative of Blount’s estate (“Estate”),
filed a wrongful death complaint that included two counts against the
restaurants’ respective owners: WEOC, Inc. and Romo, LLC (collectively,
“Restaurants”). In Count II, the Estate alleged the Restaurants “knew or
should have known” that Adair was “visibly intoxicated at the time” they
served him alcohol, in violation of Indiana Code section 7.1-5-10-15. And
in Count III, the Estate incorporated those assertions and brought a
negligence claim. The Estate alleged the Restaurants were negligent by (1)
failing “to exercise reasonable care under the circumstances when they
furnished alcoholic beverages” to Adair, (2) allowing him to drive away
from their premises when they “knew or should have known” that he was
intoxicated, (3) failing “to notify law enforcement” that he drove away
intoxicated, and (4) failing to obtain “alternative transportation” for him.

   The Restaurants moved to dismiss only Count III under Indiana Trial
Rule 12(B)(6), asserting that the Estate seeks recovery on common-law
“theories that aren’t recognized under Indiana law.” The Restaurants
argued that the Dram Shop Act, codified at Indiana Code section 7.1-5-10-
15.5, is the only path to civil liability for furnishing alcoholic beverages to
someone who later causes injury. After a hearing, the trial court denied
the motion and certified the order for interlocutory appeal. The Court of
Appeals accepted jurisdiction and affirmed the trial court. WEOC, Inc. v.
Niebauer, 206 N.E.3d 411, 413–14 (Ind. Ct. App. 2023).

  The Restaurants petitioned for transfer, which we granted, vacating the
Court of Appeals’ opinion. Ind. Appellate Rule 58(A). 1

Standard of Review
  We review a trial court’s decision on a Trial Rule 12(B)(6) motion de
novo. Residences at Ivy Quad Unit Owners Ass’n v. Ivy Quad Dev., LLC, 179

1 We held oral argument in Steuben County at Trine University. We thank the university for
its outstanding hospitality, the parties for their travel and excellent advocacy, and the
students and other guests for their courtesy and insightful questions following the argument.

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024                   Page 3 of 14
N.E.3d 977, 981 (Ind. 2022). We accept the facts alleged in the complaint as
true and view all inferences in the light most favorable to the nonmoving
party. Id. Dismissal under Rule 12(B)(6) is “rarely appropriate.” State v.
Am. Fam. Voices, Inc., 898 N.E.2d 293, 296 (Ind. 2008) (quotations omitted).
Indeed, dismissal is appropriate only when “it appears to a certainty on
the face of the complaint that the complaining party is not entitled to any
relief.” Id.

Discussion and Decision
    The Restaurants argue that the Estate’s negligence claim in Count III
must be dismissed because the Dram Shop Act eliminated common-law
liability against businesses that furnish alcoholic beverages to someone
who later causes injury. Alternatively, the Restaurants contend that Count
III must be dismissed because Indiana law does not recognize the “duties”
alleged by the Estate. We reject both arguments at this stage.

   A historical review of dram-shop regulation in Indiana is instructive to
determine the Dram Shop Act’s impact on common-law liability against
entities that provide alcohol. And we conclude the statute modified, but
did not eliminate, common-law liability. In reaching this conclusion, we
review the Dram Shop Act and find it did not abrogate the common law
in either express terms or by unmistakable implication. Rather, the statute
provides additional requirements—actual knowledge of visible
intoxication and specific proximate causation—to establish liability in any
civil action. We then hold that the Estate’s negligence claim in Count III
satisfies these requirements and alleges facts capable of supporting relief.
As a result, the trial court properly denied the Restaurants’ motion to
dismiss.

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024    Page 4 of 14
I. The history of Indiana’s dram-shop regulation
   guides our determination of the Dram Shop Act’s
   effect on common-law liability.
   In the late nineteenth century, the Legislature enacted several statutes
to protect Hoosiers “against evils resulting from any sale” of “intoxicating
liquors.” 1872–1873 Ind. Acts 151, 151–58; see also William Hurst, The Dram
Shop: Closing Pandora's Box, 22 Ind. L. Rev. 487, 488 (1989). One early
statute made it a misdemeanor to “sell, barter, or give away” alcohol “to
any person at the time in a state of intoxication.” 1875 Ind. Acts 55, 58.
This criminal prohibition, now codified in Indiana Code section 7.1-5-10-
15, makes it a Class B misdemeanor for a person to knowingly provide an
intoxicated person with alcohol. Ind. Code § 7.1-5-10-15(a). Additionally,
since the 1960s, entities have faced civil liability for serving alcohol to
individuals who cause injury under “general principles of common-law
negligence.” Elder v. Fisher, 217 N.E.2d 847, 853 (Ind. 1966).

   As a result, Indiana’s dram shops traditionally could be liable for
negligently serving alcohol to an intoxicated person who later causes
injury in two ways: (1) through negligence-per-se claims for violating the
criminal statute; and (2) through traditional negligence claims for failing
to exercise reasonable care. But Elder’s recognition that common-law
principles apply “[i]n the absence of special statutory provision” created
confusion about whether common-law liability existed apart from, or was
limited to, statutory violation. Id.

   And so, in the late 1980s, this Court ended that confusion by clarifying
Elder and holding that the criminal statute did not preempt the common
law. Picadilly, Inc. v. Colvin, 519 N.E.2d 1217, 1219–20 (Ind. 1988); Gariup
Constr. Co. v. Foster, 519 N.E.2d 1224, 1227 (Ind. 1988). Picadilly explained
that Elder “did not intend to limit common law dram shop liability to the
absence of statute, but rather to recognize the common law liability
notwithstanding the existence of such statute.” Picadilly, 519 N.E.2d at
1220. Gariup likewise recognized that the criminal statute did “not
preclude the possibility of independent common law liability.”519 N.E.2d
at 1227. Rather, the criminal statute simply designated “certain minimal

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024     Page 5 of 14
duties” that did not “relieve persons from otherwise exercising reasonable
care.” Id. And so, litigants could seek recovery against dram shops under
both a negligence-per-se theory and a traditional negligence theory.

   Around this same time, in 1986, our Legislature enacted another
statute—the Dram Shop Act—that was not applicable in Picadilly and
Gariup. That statute provides in relevant part:

       (a) As used in this section, “furnish” includes barter, deliver,
       sell, exchange, provide, or give away.

       (b) A person who furnishes an alcoholic beverage to a person is
       not liable in a civil action for damages caused by the
       impairment or intoxication of the person who was furnished
       the alcoholic beverage unless:

                  (1) the person furnishing the alcoholic beverage had
                  actual knowledge that the person to whom the
                  alcoholic beverage was furnished was visibly
                  intoxicated at the time the alcoholic beverage was
                  furnished; and

                  (2) the intoxication of the person to whom the alcoholic
                  beverage was furnished was a proximate cause of the
                  death, injury, or damage alleged in the complaint.

I.C. § 7.1-5-10-15.5. 2

    Since its enactment, this Court has not considered the Dram Shop Act’s
impact on the common law. But other courts have. Our Court of Appeals
is split on whether the Dram Shop Act precludes independent common-

2 We acknowledge that our Court of Appeals has at times referred to the Dram Shop Act as
either Section 7.1-5-10-15, see, e.g., Nat’l R.R. Passenger Corp. v. Everton by Everton, 655 N.E.2d
360, 364 (Ind. Ct. App. 1995), trans. denied, or as both Sections 7.1-5-10-15 and 7.1-5-10-15.5, see,
e.g., Vanderhoek v. Willy, 728 N.E.2d 213, 215–16 (Ind. Ct. App. 2000). But we have consistently
used this term only in reference to Section 7.1-5-10-15.5. Ebert v. Ill. Cas. Co., 188 N.E.3d 858,
862 (Ind. 2022); Rogers v. Martin, 63 N.E.3d 316, 327 (Ind. 2016); Outback Steakhouse of Fla., Inc.,
v. Markley, 856 N.E.2d 65, 74 (Ind. 2006); Delta Tau Delta v. Johnson, 712 N.E.2d 968, 974 (Ind.
1999). To promote clarity going forward, Section 7.1-5-10-15.5 is Indiana’s Dram Shop Act.

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024                          Page 6 of 14
law liability against those furnishing alcohol. Compare Rauck v. Hawn, 564
N.E.2d 334, 337 (Ind. Ct. App. 1990) (concluding “liability for negligence
in the provision of alcoholic beverages is restricted to cases involving the
breach of a statutory duty”), Baxter v. Galligher, 604 N.E.2d 1245, 1248 (Ind.
Ct. App. 1992) (same), Thompson v. Ferdinand Sesquicentennial Comm. Inc.,
637 N.E.2d 178, 180 (Ind. Ct. App. 1994) (same), and Vanderhoek v. Willy,
728 N.E.2d 213, 216 n.1 (Ind. Ct. App. 2000) (same), with Est. of Cummings
by Heck v. PPG Indus., Inc., 651 N.E.2d 305, 309 n.8 (Ind. Ct. App. 1995)
(concluding litigants can bring a “common law negligence claim despite
Indiana’s Dram Shop Act”), trans. denied, and Weida v. Dowden, 664 N.E.2d
742, 750 (Ind. Ct. App. 1996) (same), trans. denied. However, both of
Indiana’s federal district courts have found that the Dram Shop Act does
not “preclude common law liability.” Buffington v. Metcalf, 883 F. Supp.
1190, 1194 (S.D. Ind. 1994); see also Kludt v. Majestic Star Casino, LLC, 200 F.
Supp. 2d 973, 981 n.6 (N.D. Ind. 2001).

  With this historical context in hand, we now determine the Dram Shop
Act’s effect on the common law.

II. The Dram Shop Act modified but did not
    eliminate common-law liability for furnishing
    alcohol to an intoxicated person who later causes
    injury.
   We first conclude the Dram Shop Act did not eliminate common-law
liability against entities that furnish alcohol. In reaching this conclusion,
we review the statute’s text and find nothing in either its express terms or
by unmistakable implication that reveals it was intended to preempt the
common law. But we then recognize and explain how the Dram Shop Act
modified the common law by imposing additional requirements to
establish liability.

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024       Page 7 of 14
   A. The Dram Shop Act neither explicitly nor implicitly
      abrogated common-law liability.
   Our Legislature has the authority to enact statutes that eliminate
common-law rights and remedies. See, e.g., State v. Rendleman, 603 N.E.2d
1333, 1336 (Ind. 1992). But we presume it did not intend to do so unless a
statute declares otherwise “in either express terms or by unmistakable
implication.” Caesars Riverboat Casino, LLC v. Kephart, 934 N.E.2d 1120,
1123 (Ind. 2010). Abrogation by unmistakable implication occurs only if
the statute was either “clearly designed as a substitute for the common
law” or is so comprehensive that it and the common law cannot exist
simultaneously. Gunderson v. State, 90 N.E.3d 1171, 1182 (Ind. 2018)
(quotation omitted).

   To determine whether the Dram Shop Act abrogated the common law,
we first consider whether the statute is clear and unambiguous. KS&E
Sports v. Runnels, 72 N.E.3d 892, 898–99 (Ind. 2017). If so, we interpret the
statute “consistent with its plain meaning, by giving effect to” both what it
says and does not say. Id. at 907.

   The Dram Shop Act is unambiguous, and its plain language does not
preempt the common law in express terms. Under the statute, any “person
who furnishes an alcoholic beverage” to someone who causes injury is
“not liable in a civil action for damages” unless (1) the person had “actual
knowledge” of the injury-causing individual’s visible intoxication, and (2)
that individual’s intoxication “was a proximate cause of the death, injury,
or damage.” I.C. § 7.1-5-10-15.5(b). The Dram Shop Act does not mention
common-law rights. And it neither identifies elements of an independent
statutory cause of action nor criminalizes conduct. We thus disapprove of
cases stating otherwise. Rauck, 564 N.E.2d at 337; Baxter, 604 N.E.2d at
1248; Thompson, 637 N.E.2d at 180; Vanderhoek, 728 N.E.2d at 216 n.1. Also,
unlike other statutes, the Dram Shop Act does not include language
establishing it as an exclusive remedy or means of recovery. Cf. I.C. § 22-3-
2-6 (stating that the Worker’s Compensation Act “shall exclude all other
rights and remedies . . . at common law or otherwise”); I.C. § 34-20-1-1
(stating that the Product Liability Act “governs all actions . . . regardless of

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024       Page 8 of 14
the substantive legal theory or theories upon which the action is
brought”).

   Likewise, the plain language of the Dram Shop Act does not
unmistakably imply an intent to abrogate the common law. Nothing
suggests the statute was designed to replace the common law or the
statute is so comprehensive that it and the common law cannot exist
simultaneously. Indeed, the statute explicitly refers to “a civil action for
damages” and merely provides the conditions under which a person who
furnishes alcohol cannot be liable in such an action. Cf. Caesars Riverboat
Casino, 934 N.E.2d at 1123–24 (holding that statutes regulating riverboat
gambling abrogated the common law because the “statutory scheme”
covered “the entire subject of riverboat gambling” and was “so
incompatible” with the plaintiff’s common-law claim that both could not
“occupy the same space”). In this way, the Dram Shop Act presumes the
existence of independent common-law liability, subject to the statute’s
requirements.

   In sum, the Dram Shop Act does not expressly or by unmistakable
implication eliminate common-law liability against entities that furnish
alcohol. And thus, a plaintiff is not precluded from bringing a negligence
claim premised on a business’s common-law duty to exercise ordinary
and reasonable care when providing alcoholic beverages. But the Dram
Shop Act impacted these claims by limiting the scope of liability.

   B. The Dram Shop Act added requirements to common-
      law claims seeking damages against those who furnish
      alcohol.
   As noted above, providers of alcohol historically faced civil liability
through traditional negligence claims and negligence-per-se claims. A
traditional negligence claim consists of (1) a duty, (2) a breach of that duty,
(3) an injury proximately caused by the breach, and (4) damages. See
Robertson v. B.O., 977 N.E.2d 341, 344 (Ind. 2012). Though similar,
negligence-per-se claims differ in that a violation of certain statutes or
ordinances “serves to satisfy the breach element.” Stachowski v. Est. of

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024      Page 9 of 14
Radman, 95 N.E.3d 542, 544 (Ind. Ct. App. 2018). And for both, businesses
have the common-law “duty to exercise ordinary and reasonable care in
the conduct of their operations . . . for the safety of others whose injuries
should reasonably have been foreseen or anticipated.” Picadilly, 519
N.E.2d at 1220.

   The Dram Shop Act modified these common-law claims by imposing
two requirements that limit the scope of liability. First, the person
furnishing alcoholic beverages must have “actual knowledge” that the
individual “was visibly intoxicated.” I.C. § 7.1-5-10-15.5(b)(1). And
second, that individual’s intoxication must be “a proximate cause of the
death, injury, or damage.” Id. § -15.5(b)(2).

   Thus, common-law claims against entities that furnish alcohol must
satisfy the Dram Shop Act’s requirements: actual knowledge of visible
intoxication and specific proximate causation. We now turn to the Estate’s
negligence claim in Count III and assess its legal sufficiency.

III. The Estate alleged facts capable of supporting
     relief in Count III.
   Recall that the Estate brought two negligence claims against the
Restaurants: Count II is a negligence-per-se claim based on a violation of
Indiana Code section 7.1-5-10-15; and Count III is a traditional negligence
claim. Despite the similar aspects of these two counts, the Restaurants
have moved to dismiss only Count III under Trial Rule 12(B)(6).

   Under our notice-pleading rules, Count III need only include “a short
and plain statement of the claim showing that the pleader is entitled to
relief.” Ind. Trial Rule 8(A)(1); see also Trail v. Boys & Girls Clubs of Nw.
Ind., 845 N.E.2d 130, 135 (Ind. 2006). The purpose of this rule “is to inform
a defendant of a claim’s operative facts so the defendant can prepare to
meet it.” ResCare Health Servs., Inc. v. Ind. Fam. & Soc. Servs. Admin. – Off. of
Medicaid Pol'y & Plan., 184 N.E.3d 1147, 1153 (Ind. 2022) (quotations
omitted). Because Count III satisfies the Dram Shop Act’s requirements
and includes operative facts that are capable of supporting relief, the trial
court properly denied the motion to dismiss.

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024       Page 10 of 14
   Count III includes the Dram Shop Act’s two requirements. For the
actual-knowledge requirement, the Estate incorporated into that count the
allegation that the Restaurants “both knew or should have known” Adair
was “visibly intoxicated” at the time he was served alcoholic beverages.
Unquestionably, if the Estate had alleged only that the Restaurants
“should have known” Adair was intoxicated, dismissal would be
appropriate. But by alleging that the Restaurants “knew” that Adair was
“visibly intoxicated,” the Estate sufficiently pleaded actual knowledge.
And the Estate also satisfied the specific proximate-cause requirement.
Indeed, the Estate incorporated into Count III the allegation that Adair’s
intoxication resulted in the car crash that “proximately caused” Blount’s
death.

    Beyond the Dram Shop Act’s requirements, the parties dispute the
Estate’s allegations that the Restaurants were negligent by failing “to
exercise reasonable care under the circumstances” in serving alcohol to
Adair, allowing him to drive away in an intoxicated state, failing to notify
law enforcement about his conduct, and failing to provide him with
alternative transportation. Ultimately, the interplay between Counts II and
III in this case supports denying the Restaurants’ motion to dismiss. As
both sides acknowledged at oral argument, dismissing the allegations in
Count III at this stage makes no difference because the Restaurants are not
liable in either Count II or Count III without actual knowledge of Adair’s
visible intoxication that was the proximate cause of Blount’s death. So, if
the Estate prevails on Count II, Count III adds nothing to the Estate’s
recovery; and if it does not prevail on Count II, it cannot win on Count III
either.

  We also acknowledge the Restaurants’ argument that Count II and
Count III improperly seek “multiple recoveries for a single wrong.”
Though they are correct that the Estate cannot recover twice for the same
wrong, the factual allegations in Count III will not necessarily lead to
double recovery. For example, some may be relevant to comparative fault.
And our rules explicitly permit the Estate to plead alternate theories for
recovery. T.R. 8(E)(2). Further, the Restaurants do not argue that leaving
Count III in the complaint at this juncture impacts the scope of
discovery—their only practical concern is that permitting duplicative

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024   Page 11 of 14
claims may confuse the jury. If Count III does not support an alternative
claim, or if there is some risk of double recovery, those concerns can be
addressed at a later stage.

   In short, Count III puts the Restaurants on notice of a factual scenario in
which a legally actionable injury has occurred: an act (or acts) of common-
law negligence that include the Dram Shop Act’s requirements. Thus, the
trial court properly denied the Restaurants’ motion to dismiss.

Conclusion
   The Dram Shop Act modified but did not eliminate common-law
liability for entities that furnish alcohol. And the Estate’s negligence claim
in Count III satisfies the Dram Shop Act’s requirements and includes
operative facts capable of supporting relief. We therefore affirm the trial
court’s denial of the Restaurants’ motion to dismiss. 3

Massa, Slaughter, Goff, and Molter, JJ. concur.

3We thank amici—Defense Trial Counsel of Indiana, Restaurant Law Center and Indiana
Restaurant & Lodging Association, and the Indiana Trial Lawyers Association—for their
helpful briefs.

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024               Page 12 of 14
ATTORNEYS FOR APPELLANT ROMO, LLC
Jonathan E. Halm
Kightlinger & Gray, LLP
Merrillville, Indiana

Crystal G. Rowe
Kightlinger & Gray, LLP
New Albany, Indiana

ATTORNEYS FOR APPELLANT WEOC, INC.
J. Thomas Vetne
Chester Law Office
Elkhart, Indiana

Brian R. Gates
Hunt Suedhoff Kearney, LLP
South Bend, Indiana

James H. Whalen
Lipe Lyons Murphy Nahrstadt & Pontikis Ltd.
Chicago, Illinois

ATTORNEYS FOR APPELLEE
Jon Frederic Schmoll
Steven L. Langer
Sara Anne Langer
Langer & Langer
Valparaiso, Indiana

ATTORNEYS FOR AMICUS CURIAE DEFENSE TRIAL COUNSEL OF
INDIANA
William J. Brinkerhoff
Olivia N. Daily
Jeselskis Brinkerhoff and Joseph, LLC
Indianapolis, Indiana

Lucy R. Dollens
Quarles & Brady, LLP
Indianapolis, Indiana

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024   Page 13 of 14
ATTORNEYS FOR AMICI CURIAE RESTAURANT LAW CENTER
AND INDIANA RESTAURANT & LODGING ASSOCIATION
Melissa M. Root
Gabriel K. Gillett
Jenner & Block LLP
Chicago, Illinois

ATTORNEY FOR AMICUS CURIAE THE INDIANA TRIAL
LAWYERS ASSOCIATION
James P. Barth
Pfeifer, Morgan & Stesiak
South Bend, Indiana

Indiana Supreme Court | Case No. 23S-CT-184 | February 12, 2024   Page 14 of 14