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United States Fidelity and Guaranty Co. v. Country Club of Johnston County7/5/1995
GREENE, Judge.
The Country Club of Johnston County, Incorporated (defendant) appeals from an order entered 17 May 1994, sustaining United States Fidelity and Guaranty Company's (plaintiff) objection to the affidavit of defendant's expert witness and allowing plaintiff's motion for summary judgment in its action for declaratory judgment concerning whether it has any obligation under an insurance policy to afford defendant coverage in a pending lawsuit.
Defendant is a private club open to members and guests only. It is a nonprofit corporation that owns and operates a golf course, and its facilities include a pro shop, a swimming pool, tennis courts, a dining room and supporting kitchen facilities. On 18 October 1991, Stephen Richard Upton, III (Mr. Upton), a member of defendant, consumed several mixed drinks while attending a Friday night dinner preceding a member-member golf tournament held at defendant's facilities. After the dinner, Mr. Upton left the facilities and was operating his vehicle in Smithfield, North Carolina, when he struck another vehicle, killing the driver and seriously injuring her younger brother. Mr. Upton, whose blood alcohol level at the time of the accident was greater than 0.10%, was subsequently indicted, tried and convicted of involuntary manslaughter for which he received an active prison term.
In July 1993, the family of the driver killed in the accident initiated a lawsuit against Mr. Upton and defendant for wrongful death and personal injuries, Sanders, et al. v. Upton, 93 CVS 4415 (the Sanders lawsuit). On the date of the accident, plaintiff insured defendant under a master insurance policy including commercial general liability coverage which provided in pertinent part:
COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement.
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" . . . .
2. Exclusions.
This insurance does not apply to: . . . c. "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 the influence of alcohol; or
(3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.
This exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.
Plaintiff defended the Sanders lawsuit on behalf of defendant under a reservation of rights pending a determination regarding coverage.
On 9 July 1993, plaintiff filed a complaint for a declaratory judgment "relieving plaintiff of any obligation to defend or afford coverage to defendant under the policy at issue in the pending" Sanders lawsuit. On 14 September 1993, defendant filed an answer admitting it "contends that it is entitled to a defense and coverage" to the Sanders lawsuit. Defendant also asserted estoppel as a defense alleging that although plaintiff was informed of defendant's practices with respect to acquisition and consumption of alcohol on defendant's premises, plaintiff continued coverage "without change, without requested change, and without informing the Defendant of any contended applicability of exclusions from coverage based upon the acquisition and consumption of alcohol on the Defendant's premises," and defendant "with justification, reason and in good faith, acted in reliance upon the continued coverage . . . and did not reques
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