The West Virginia Supreme Court of Appeals issued a recent decision finding no coverage under a homeowner's insurance policy for injuries resulting from underage drinking at an insured residence when the homeowner was present and aware of alcohol being served there.
The case is American Modern Home Insurance Company v. Corra, Case # 33861, December 15, 2008.
This case involved a party held at the Corra residence. The party was hosted by the Corras' 19 year old daughter. It lasted several hours. Mr. Corra (father and the insured homeowner) was present and aware that alcohol was being served and consumed by underage drinkers.
Four underage drinkers left the party in one vehicle. They were then involved in an automobile accident in which two passengers were killed and a third was seriously injured. The driver pled guilty to two (2) counts of DUI causing death. Mr. Corra was later convicted of four (4) counts of knowingly providing alcohol to underage persons.
The Corra's had a homeowner's policy issued by American Modern Home Insurance Company ("American Modern"). The estates of the deceased passengers filed claims against the homeowner's policy for damages on the basis that the driver was served and consumed alcohol as a social guest on the Corra's property. American Modern filed a declaratory judgment action in US District Court, asking the court to rule that the underage drinking party and subsequent automobile accident did not constitute a covered "occurrence" as defined by the policy.
The American Modern homeowner's policy provided coverage for an "occurrence", which was defined in the policy as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period in…….bodily injury or property damage."
The Federal Court sent this issue to the West Virginia Supreme Court of Appeals to be answered as a certified question under West Virginia law. The certified question asked: "Under West Virginia law, does knowingly permitting an underage adult to consume alcoholic beverages on a homeowner's property constitute an "occurrence" within the meaning of the …… policy at issue in this case?"
The Court answered in the negative. The Court stated: "it is obvious that where a homeowner engages in conduct knowingly, that the conduct cannot be said to be unexpected and unforeseen from the perspective of the homeowner. In other words, conduct engaged in knowingly is not an 'accident' and thus not an 'occurrence' under Mr. Corra's homeowner's policy."
The Court rejected numerous arguments aimed at establishing coverage. The plaintiffs argued that the automobile accident was not an "intentional act"; that the party activity was "negligence" which proximately caused the accident; and that the accident was "unforeseeable". The Court rejected each argument, finding that the conduct was knowing and the results were foreseeable, and therefore, there was no "accident" or "occurrence" under the policy.