Kentucky’s Supreme Court has ruled that a commercial umbrella policy did not cover liquor liability claims after a fatal DUI crash tied to restaurant service.
On Sept. 18, the Supreme Court of Kentucky issued its decision in Georgetown Chicken Coop, LLC v. Grange Insurance Company, settling a dispute over insurance coverage following a fatal accident involving an intoxicated driver.
The case began after Joey Lee Bailey was served food and alcohol at Roosters in Georgetown and later visited Horseshoes in Lexington. In the early hours of Jan. 6, 2019, Bailey drove the wrong way on Interstate 75 in Fayette County, colliding with a vehicle carrying the Abbas family. The crash killed Bailey and all five Abbas family members. The estates of the Abbas family brought dram shop claims against the restaurants and their operators.
At the time, the Roosters entities were insured by Grange Insurance Company under both a business owners policy (BOP) and a commercial umbrella policy (CUP). The BOP provided a $1,000,000 limit for bodily injury and property damage arising from the selling, serving, or furnishing of alcoholic beverages. The central question was whether the CUP also provided liquor liability coverage.
The dispute focused on the interpretation of the CUP’s liquor liability exclusion, specifically as modified by Endorsement CU 47. The original policy excluded liquor liability but made an exception for liability arising from the insured’s business of serving alcohol, following the primary policy unless otherwise directed. Endorsement CU 47 replaced the liquor liability exclusion.
The circuit court initially found CU 47 ambiguous and granted summary judgment in favor of the Roosters entities, reasoning that the umbrella policy was intended to supplement the underlying policy when its limits were exhausted. The Court of Appeals reversed, holding that CU 47 unambiguously replaced the liquor liability exclusion, thereby excluding such coverage under the CUP.
The Supreme Court of Kentucky affirmed the Court of Appeals, holding that CU 47 was unambiguous and that the endorsement replaced the entirety of the liquor liability exclusion in the umbrella policy. The court stated that when an endorsement deletes language from a policy, the deleted language should not be considered in interpreting the remaining agreement. The court rejected the insureds’ arguments that the endorsement was ambiguous or only partially replaced the exclusion.
The court also declined to address an argument raised late by the Roosters entities regarding coverage for negligent supervision claims, noting that the argument was not preserved for review.
The Supreme Court’s decision is final.
