A golf course was insured by an insurance policy which included "Liquor Liability Coverage". The parents of a 17-year-old girl working at a golf course brought a lawsuit against the golf course and its manager for allegedly providing alcohol to their daughter following a golf tournament. The girl attempted to drive after consuming a substantial amount of alcohol, crashed her vehicle into a tree, and sustained serious injuries to her spinal cord resulting in paraplegia.
The insurance policy provision obligated the insurance company to pay sums owed by the golf course if they were incurred "by reason of the selling, serving or furnishing of any alcoholic beverage." The insurance policy liability limits were set at $2 Million for the "Aggregate Limit" and $1 Million for "Each Common Cause Limit".
The insurance company subsequently filed a declaratory judgment action in Federal court asking the court to establish the maximum insurance coverage available to the golf course. A summary judgment was filed requesting the court rule that $1 Million was the applicable limit since all claimed damages arose from the injuries to one person and fell under "Each Common Cause". The girl’s parents argued the limit should be $2 Million.
The Federal court granted summary judgment in favor of the insurance company finding the maximum limit of liability was established at $1 Million for the pending county district court case and reasoned that an insurance policy is considered a contract governed by the rules for interpretation of contracts. The plain language of the policy set the limit in this circumstance at $1 Million. The court further declared that, since it did not have the ability to rewrite the policy, it must proceed based on the agreement therein. American Economy Ins. Co. v. Rutledge, et al., 833 F.Supp.2d 1320 (W.D. Okla. 2011).