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American Automobile Insurance Co. v. Murray

December 15, 2008


The opinion of the court was delivered by: Robert F. Kelly, Sr. J.


Presently before this Court are Cross-Motions for Summary Judgment, pursuant to Fed. R. Civ. P. 56, filed by Plaintiff American Automobile Insurance Company ("AAIC") and Defendant James S. Easter, Jr. ("Easter"). For the following reasons, AAIC's Motion will be granted, and Easter's Motion will be denied.


On or about October 25, 2006, Easter filed a Complaint styled James S. Easter Jr., individually and as Administrator of the Estate of Jessica Lynne Easter v. Ennie, Inc. d/b/a Sam's Beer Distributor and Steven L. Meloni, in the Philadelphia County Court of Common Pleas, October Term, 2006, No. 003439 (the "Easter Lawsuit" or "Easter Complaint"). (Pl.'s Mot. Summ. J. Ex. A.) In his Complaint, Easter alleges that on March 23, 2006, Ennie, Inc. ("Ennie") illegally sold alcohol to Gary Grato, Jr., then nineteen years old. Grato then supplied that alcohol to Stephen Meloni, also then nineteen years of age. (Id. ¶¶ 13-18.) The Complaint further alleges that, on March 24, 2006, after consuming alcohol, Meloni negligently drove a vehicle while intoxicated and hit a pole, causing the death of one of his passengers, Jessica Lynne Easter. (Id. ¶¶ 35-38.)

Ennie subsequently tendered its defense and indemnity to the Easter Lawsuit to its general liability insurer, Century Surety Company ("Century"). (Pl.'s Mot. Summ. J. Ex. B ¶¶ 24-25.) Century provided Ennie with a defense under a reservation of rights and filed a declaratory judgment complaint against Ennie in the United States District Court for the Eastern District of Pennsylvania. (Pl.'s Mot. Summ. J. Ex. B.) On July 6, 2007, the court granted summary judgment in favor of Century, declaring that Century owed Ennie no defense or indemnification for the Easter Lawsuit because the Century insurance policy in effect for the period December 9, 2005 to December 9, 2006 contained a liquor liability exclusion. See Century Sur. Co. v. Ennie, Inc., No. 06-5281, 2007 U.S. Dist. LEXIS 49565 (E.D. Pa. July 6, 2007).

Consequently, on or about November 27, 2007, Ennie filed a Complaint against Tyrone Murray ("Murray") styled Ennie, Inc. d/b/a Sam's Beer Distributor v. Tyrone Murray and Tyrone Murray d/b/a Olney Business Center, in the Philadelphia County Court of Common Pleas, November Term, 2007, No. 003083 (the "Ennie Lawsuit"). (Pl.'s Mot. Summ. J. Ex. D.) In its Complaint, Ennie alleges that Murray negligently failed to place liquor liability insurance coverage for Ennie. (Id. at 3-4.) Ennie alleges that, on or about August 23, 2000, through its principal, Thai Poeng ("Poeng"), Ennie consulted Murray for the purpose of obtaining insurance that would protect it against all risks arising from the operation of a beer distributorship where alcoholic beverages are sold to the public. (Id. ¶ 5.) Ennie further alleges that Murray sold it an insurance policy issued by Century which Murray represented protected Ennie from all risks that might arise from operating such a business. (Id. ¶ 6.) Ennie asserts that Murray caused the same or similar policy to be renewed with identical coverages on the anniversary date of the policy, December 9, up to and including the December 9, 2005 renewal of the Century policy that was in effect on March 24, 2006. (Id. ¶ 7.) In an affidavit submitted in support of Century's Motion for Summary Judgment against Ennie, a representative from insurance broker USG Insurance Services ("USG") confirmed that USG placed commercial general liability insurance with Century for Ennie from 2002 to 2006, and that all communication related to the placement of Century insurance for Ennie occurred between USG employees and Murray. (Pl.'s Mot. Summ. J. Ex. E ¶¶ 3-4.)

Ennie alleges that it delivered the Easter Complaint to Murray and that Murray advised Ennie that the Century insurance policy placed by Murray adequately covered Ennie. (Pl.'s Mot. Summ. J. Ex. D ¶ 11.) Because the court determined that Century owed no defense or indemnity to Ennie for the Easter Lawsuit, Ennie alleges that Murray, as a licensed commercial insurance agent, assumed the duty to properly advise his clients as to potential risks that might arise from the operation of their respective businesses against which insurance was available and necessary. Furthermore, it alleges that Murray breached his duty when he failed to advise Ennie of the necessity or availability of liquor liability coverage. (Id. ¶¶ 14-16.) Ennie further asserts that, as a direct result of Murray's actions, Ennie was (1) required to pay the costs of its own defense to the Easter Complaint; (2) has been subjected to a potential adverse judgment arising out of the Easter Lawsuit; and (3) may potentially be ordered to repay any fees and costs which Century expended on Ennie's behalf. (Id. ¶ 16.)

AAIC's Interrogatory No. 5 to Ennie in this matter is as follows:"State the dates that you had any communications with Murray, identify all such communications, identify all persons that participated in any such communications, and describe all facts of such communications." (Pl.'s Mot. Summ. J. Ex. F 8.) Ennie's response to AAIC's Interrogatory No. 5 confirms that Poeng consulted with Murray for placement of liability coverage from 2000 to 2006. (Pl.'s Mot. Summ. J. Ex. G ¶¶ 5-6.) Murray, when deposed in the Century declaratory judgment action and again in the present matter, confirmed that he personally spoke with Poeng every year at renewal. (Pl.'s Mot. Summ. J. Ex. H 82, 97-98; Ex. I 21.) Murray confirmed that Poeng renewed the Century policy that was in effect during March 2006 in December 2005, and confirmed that he did not sell Ennie liquor liability coverage at the December 2005 renewal. (Pl.'s Mot. Summ. J. Ex. I 65-66.) Murray further confirmed that Poeng visited him on December 7, 2005, and identified a receipt Murray authored, verifying that Ennie paid a portion of the 2006 Century policy premium on that date. (Pl.'s Mot. Summ. J. Ex. I 79-80; Ex. J.) Murray testified that he and Poeng never discussed liquor liability coverage in 2005, and that the first time they discussed it was in 2006. (Pl.'s Mot. Summ. J. Ex. I 59, 100-01.)

AAIC issued Policy No. 8-17 ME 07318264, a "claims made and reported" errors and omissions liability policy, to The Agents & Brokers of Infinity Property Casualty Corp. ("Infinity"), effective from January 1, 2007 to January 1, 2008. (Pl.'s Mot. Summ. J. Ex. L.) The AAIC policy was a renewal of Policy No. 8-17 ME 07318222, issued to Infinity for the period from January 1, 2006 to January 1, 2007 (the "AAIC Policy"). (Pl.'s Mot. Summ. J. Ex. M.) AAIC's Interrogatory No. 7 to Murray in this matter is as follows: "Identify all errors and omissions insurance policies issued to you from January 1, 2000 through January 1, 2008, and state the dates that such policies were in effect." (Pl.'s Mot. Summ. J. Ex. N.) Murray's testimony and his response to Interrogatory No. 7 confirm that he was first insured by AAIC under the policy in effect from January 1, 2006 to January 1, 2007. (Pl.'s Mot. Summ. J. Ex. I 31; Ex. O ¶ 7.) Murray enrolled for coverage under the AAIC Policy on-line and pursuant to his contract as an insurance agent with Infinity. (Id.) The AAIC Policy contains the following language:


A. Insuring Agreements

1. Agents Errors and Omissions Liability

We will pay on the Agent's behalf all Loss which such Agent is legally obligated to pay as a result of a Claim first made against such Agent or its Agency/Agency Staff and reported to Us during the Policy Period in accordance with Section VI. Conditions 1.2., provided that such Claim is for a Wrongful Act in the rendering of or failure to render Professional Services in ...

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