LIABILITY CHRONICLE. Editor: Stephen J. Marshall The Liability Newsletter of Franklin & Prokopik. Dram Shop Liability & Social Host Liability

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1 Fall 2016 LIABILITY CHRONICLE Editor: Stephen J. Marshall The Liability Newsletter of Franklin & Prokopik Dram Shop Liability & Social Host Liability The fall edition of the Liability Chronicle will focus on social host and dram shop liability claims. These claims arise from providing alcohol to guests in a social setting or in a restaurant or bar. Maryland: Appellate Courts Attempt to Define Claims for Allowing Under Age Drinking In Kiriakos v. Phillips, the Maryland Court of Appeals previously recognized that adults who violate a criminal statute that prohibited knowingly allowing underage drinkers to get intoxicated on their property may be sued civilly for resulting injuries. The Court of Appeals thereby recognized a limited form of civil social host liability based on a violation of a Maryland criminal statute. The standard applied in the Kiriakos case is whether the host knowingly and willfully allows an underage person to consume alcohol at their home. This standard is a predicate for the limited social host liability in Maryland. So what does a plaintiff need to prove to establish that a social host is negligent for allowing underage persons to consume alcohol on their property in Maryland? Under the Statute or Ordinance Rule, the violation of a statute may be considered evidence of negligence. To invoke the rule, the plaintiff must show (1) the violation of a statute was designed to protect a class of persons; and (2) the violation of the statute proximately caused the injury. After the violation is established, the fact-finder must determine whether the defendant acted reasonably under all of the circumstances. Upcoming Events April 25, 2017 Maryland Workers Compensation Seminar Hunt Valley Inn, Hunt Valley, MD May 18, 2017 Business Law Seminar Turf Valley, Ellicott City, MD June 6, 2017 Maryland Liability Seminar Turf Valley, Ellicott City, MD See our website for more details on all of our events. INSIDE THIS ISSUE Maryland Update... 1 Virginia Update... 2 Delaware Update... 3 West Virginia Update... 4 The Truth About Lawyers... 6 Liability Defense Group... 7 Franklin & Prokopik, P.C. The B & O Building, 2 North Charles St., Suite 600 Baltimore, MD P: F:

2 The statute cited in the Kiriakos case prohibits an adult from knowingly and willfully allowing a minor to possess or consume alcohol at a residence that he or she owns or leases and resides. In Kiriakos, the high court of Maryland found that because CR (b) holds adults criminally responsible for underage drinking in specific circumstances; the law was in fact designed to protect underage people exposed to alcohol. The Kiriakos holding was recently revisited in the case of Hansberger v. Smith in the Court of Special Appeals. This is first post- Kiriakos case where the intermediate court did not see fit to extend social host liability but rather read the Kiriakos case as limited to its facts and specific holdings. To distinguish, the Kiriakos case involved two unrelated incidents in which a third party was injured after a minor lost control of a vehicle while intoxicated. In one incident, a parent knew that friends of the minor were drinking in the garage and allowed the minor to drive home. Other teenagers expressed concern about the minor s ability to drive. In the other incident, an adult served alcohol to a minor at his house for a celebration. The minor was 18, and the adult knew the minor had driven and at some point would have to drive to leave. The adult knew that the minor had too much to drink. The 18 year old left in the early morning and struck and injured a woman walking her dog. In contrast, the Hansberger court found that plaintiffs did not allege any facts to show the mental state of the [adult property owners] but instead relied only on conclusory statements that the adults knew or should have known that minors were drinking alcohol on their property. In depositions, the owners denied any knowledge of the barn party and denied allowing minors to drink alcohol. The plaintiffs argued that the owners should have known because they admittedly had heard noise from other barn parties in the past. The Hansberger court upheld the trial court s dismissal and entry of summary judgment as the property owners. Thus, the Hansberger court required knowledge of the property owners mental state and proof beyond mere conclusory statements that they willfully allowed underage drinking to occur on their property. Evidence that the owners should have known about the barn party did not demonstrate the requisite willfulness. Further, the Hansberger court also upheld summary judgment as to Jefferson Valley, LLC, (the corporate owner of the property in question) because it did not reside at the property requiring strict proof that CR has been violated. In sum, the Hansberger court limited civil liability of social hosts for underage drinking to the factual scenarios found in Kiriakos involving knowing and willful allowance. Virginia: No Dram Shop Liability The Virginia Supreme Court has ruled that a person injured by an intoxicated individual cannot bring a civil claim for negligence against the vendor who provided the alcohol. In Williamson v. Old Brogue, the court stated that individuals, drunk or sober, are responsible for their own torts and that...drinking the intoxicant, not furnishing it, is the proximate cause of the injury. In other words, a person who drinks is responsible for the injuries he or she causes, and a business that sells or serves alcohol to that person does not share in that liability. Further, Virginia does not Liability Chronicle 2 Fall 2016

3 have any statutory provisions regarding dram shop liability. Notwithstanding Virginia s no liability for alcohol vendors, plaintiff s counsel may inquire the following information from an alcohol vendor: 1) surveillance cameras on the alcohol vendor s premises that illustrate the condition and/or demeanor of the customer/ driver; and 2) vendor receipts that illustrate the alcoholic beverage(s) purchased by the customer/driver. No Social Host Liability in Virginia Similar to no dram shop liability in Virginia, the Virginia Supreme Court has ruled that anyone who is injured by a social guest (i.e. the individual that is invited to one s home) cannot bring a civil claim for negligence for serving alcohol against the host (i.e. the landlord or tenant). The former rule holds true even in the context of minors the classic example - where a host serves alcohol to a minor. Although there is criminal liability for serving alcohol to a minor, no cause of action arises against the host for common law negligence. In Virginia, the issue of whether a landowner may be liable for an injury to someone that occurs on their property depends on the legal classification of the injured person at the time of the injury. There are three types of visitors that are used in the analysis of premises liability: trespasser, invitee, and licensee. The duties and responsibilities of a landowner are vastly different depending on the status of the person injured. A trespasser is someone that is on the premises without any right or permission from the landowner. Ordinarily, the owner owes no duty to a trespasser (though there are exceptions). A person is an invitee when the landowner has extended an express or implied invitation to the visitor and the visitor enters pursuant to that invitation. An invitation typically will be inferred where the visit is of common interest to the landowner and visitor, the premises is thrown open to the public, i.e. the typical business scenario. Most relevant for this article, a licensee is a person that has permission or consent from the landowner to enter the premises, not for a business purpose carried on by the landowner, but for his or her own convenience or benefit. A social guest, however cordially invited, is also only a licensee. Generally speaking, a landowner is only liable to a licensee for injuries caused by active negligence or by willful or wanton conduct. Specifically, Virginia case law has held, when the injury to the licensee is caused by a condition on the landowner s land, the landowner is subject to liability only if, (a) the landowner knows or has reason to know of the condition and should realize that it involves an unreasonable risk of harm and should expect the licensee will not realize the danger; (b) the landowner fails to use reasonable care to make the condition safe or warn the licensee of the condition; and (c) the licensee does not know or have reason to know of the risk involved. This is a high standard in order for plaintiff to prevail, he/she must demonstrate that the landlord engaged in some element of purposeful conduct. Delaware: No Dram Shop Liability The summer months have come to an end and college students have returned to school. This is a particularly timely article, as it will focus on Delaware alcohol laws and its refusal Franklin & Prokopik 3 A Professional Corporation

4 to recognize dram shop liability. Dram shop liability refers to liability of bars or public establishments for negligence in serving alcohol. The typical example involves liability of a bar or restaurant for negligently serving alcohol to a customer (i.e., serving alcohol to a minor or serving alcohol to someone who is visibly intoxicated), who later causes a drunk driving car accident. The Delaware Supreme Court has long held that there is no cause of action against suppliers of alcohol for persons injured as a result of the torts of intoxicated patrons, even underage patrons on the ground that it was a matter better suited for legislative consideration. Delaware Courts also extended this ban to intoxicated persons who injure themselves. Likewise, Delaware courts will not recognize liability of a homeowner for negligence in serving alcohol to a house guest who later causes a DUI auto accident. In 2007, the Delaware Supreme Court considered both of these issues when a surviving spouse brought a case against a bar and homeowner in Shea v. Matassa et al. In that case, the drunk driver first attended a party at a relative s home where he consumed alcohol and later drank more alcohol at a bar in Rehoboth Beach. He then caused a serious car accident with an on-duty state police officer. Both were killed in the collision. The officer s widow brought a lawsuit against both the homeowner who hosted the party and the bar owner. At the trial level, her case was dismissed. On appeal, the widow argued that the court should recognize both causes of action (dram shop and social host liability). Noting that dram shop liability and social host liability issues are better left to the legislature, the court refused to recognize either cause of action. Since the Shea case, the Delaware legislature considered whether to enact a dram shop law. Proposed in 2010, Senate Bill 243 would have created dram shop liability of bars and restaurants in specific situations. However, the bill never passed. Plaintiffs attorneys are endlessly trying to circumvent the fact that the Delaware Courts do not recognize dram shop liability and are formulating their Complaints in such a way to disguise the actual issues. If you have additional questions on Delaware law please contact our Delaware office. West Virginia: Common Law Addresses Dram Shop Liability Currently, there is no dram shop liability legislation codified in the state of West Virginia. Rather, the basis utilized for such actions in West Virginia is a common law approach that relies upon the violation of a specific alcohol related statute. Namely, West Virginia Code provides that any person injured by the violation of any statute may recover from the offender such damages as he may sustain by reason of the violation. In turn, West Virginia Code prohibits the sale of alcoholic liquors and nonintoxicating beer to a person who is: (1) Less than twenty-one years of age; (2) An habitual drunkard; (3) Intoxicated; (4) Addicted to the use of any controlled substance as defined by any of the provisions of chapter sixty-a of this code; or (5) Mentally incompetent. Liability Chronicle 4 Fall 2016

5 Therefore, in West Virginia, a third party injured by a tortfeasor, who purchased alcoholic liquor and nonintoxicating beer from a licensed vendor, has a valid cause of action against the tortfeasor and the vendor who sold the alcoholic liquor and/or nonintoxicating beer to the tortfeasor in violation of West Virginia Code Consequently, the West Virginia Supreme Court of Appeals has published several opinions that have analyzed the imposition of liability relative to the sale of alcoholic beverages in violation of state law. To begin, the Court has held that the Legislature did not intend for West Virginia Code to apply to anyone except a seller of alcoholic beverages. Moreover, the West Virginia Supreme Court of Appeals, in the context of analyzing insurance coverage regarding the sale of alcoholic beverages in violation of state law, held that there is no dram shop or social host liability legislation in West Virginia, and that there are also no statutory enactments directed specifically towards imposing liability upon the owners of property upon which alcoholic beverages are served. Finally, the West Virginia Supreme Court of Appeals was presented with the issue of whether a landlord was liable to a third party for injuries where it was alleged that the landlord knew or reasonably should have known that his tenant sold alcoholic beverages in violation of state law. In one case, the plaintiff s complaint alleged that the landlord knew or reasonably should have known that its tenant sold alcoholic beverages in violation of State law to the tortfeasor, and that the landlord was liable to the plaintiff for the injuries sustained by his decedent. In its analysis, Court stated that West Virginia Code has been interpreted to apply only to sellers of alcoholic beverages and that there are no statutory enactments directed specifically towards imposing liability upon the owners of property upon which alcoholic beverages are served. The Court further reasoned that since no liability has been legislatively imposed upon owners of real estate, who simply rent or lease real estate to a bar which may violate the State laws, the Court must next look to the common law theories which plaintiff relies upon for support of its claim. Additionally, the Court found that the only duty established by the plaintiff that was owed by the landlord was the duty to maintain a reasonably safe physical condition of the property. Moreover, the Court found no authority establishing the liability of a landlord to third parties for the failure of a tenant to lawfully conduct an otherwise lawful business involving the sale of alcoholic beverages. To that end, the Court held that [a]lthough there are certain circumstances in which a landlord will be liable to individuals injured due to the physical condition of his property, there is no liability of a landlord to third parties for the failure of a tenant to lawfully conduct an otherwise lawful business involving the sale of alcoholic beverages. West Virginia Limits Social Host Liability Turning to social host liability, the West Virginia Supreme Court of Appeals analysis of the same mirrors that of dram shop liability. To begin, the Court has established that there is no social host liability legislation in West Virginia. Thus, absent legislation, the only other way to impose social host liability would be by using a common law negligence approach. Franklin & Prokopik 5 A Professional Corporation

6 The Court decided not to create a new cause of action because at common law the rule was that no tort cause of action lay against one who furnished, whether by sale or gift, intoxicating liquor to a person who thereby voluntarily became intoxicated and in consequence of his intoxication injured the person or property either of himself or of another. The reason generally given for the rule was that the proximate cause of the intoxication was not the furnishing of the liquor, but the consumption of it by the purchaser or donee. The rule was based on the obvious fact that one could not become intoxicated by reason of liquor furnished him if he did not drink it. Finally, the Court noted that public policy favors legislative control of commercial settings and any limit of social providers should be left to the sound discretion of the legislature. Therefore, the West Virginia Supreme Court of Appeals held that absent a basis in either common law principles of negligence or statutory enactment, there is generally no liability on the part of the social host who gratuitously furnishes alcohol to a guest when an injury to an innocent third party occurs as a result of the guest s intoxication. Speakers Available! We can provide presentations tailored to your specific needs and can satisfy your annual training requirement. To make arrangements, contact Lauren Murphy, our Manager of Marketing & Events, at The Truth About Lawyers A lawyer and an engineer were fishing in the Caribbean when they got to talking. The lawyer mentioned, I m here because my house burned down and everything got destroyed by the fire. The insurance company paid for everything. That s quite a coincidence, remarked the engineer. I m here because my house and all my belongings were destroyed by a flood. My insurance company, too, paid for everything. There was a brief pause, and hen the puzzled lawyer asked, How do you start a flood? FRANKLIN & PROKOPIK 24-HOUR EMERGENCY RESPONSE Because accidents don t always happen during business hours, Franklin & Prokopik has a 24-hour emergency response system in place for those situations where immediate action is needed to protect your interests. If you would like copies of our emergency response cards, please contact Lauren Murphy, our Manager of Marketing and Events, at lmurphy@fandpnet.com or call her at and she will be happy to provide them to you Maryland District of Columbia Delaware Virginia West Virginia Liability Chronicle 6 Fall 2016

7 Liability Practice Group Arnsdorf, Ralph A. (CA, DC, MD) Akpan, Imoh E. (DC, MD) Bell, Colin (MD, NY) Banach, Jennifer L. (MD) Crawford, William (Skip) A. (DE, MD) Hoffman, Joshua M. (DC, MD, VA) Ayd, Jessica J. (DC, MD) Bowen, Renee L. (MD) Chiarizia, Emily M. (MD) Evens, Lauren E. (DC, MD) Hetzel, James K. (MD) Dannenberg, Rebecca L. (DC, VA, WV) Dwyer Ami C. (MD) Kennedy, Gregory E. (WV) Goorevitz, Tamara B. (DC, MD) Marshall, Stephen J. (MD) Miller, Kara M. (MD) Neighbors, Helen D. (DC, VA) Randall, Jr., Albert B. (MD) Thompson, Eric Scott (DE, NJ, PA) Lewis, Lindsey A. (DC, VA) Janowski, Brittany L. (MD) O Brien, Carrie V. (DC, MD) Rahi, Simran (DC, VA) Rice, Heather A. (MD) Salamoun, Kristina F. (VA) Shevlin, Krista E. (DE, PA) Tepe, Justin E. (MD) Torrice, Noelle B. (DE, NJ, PA) Skomba, David A. (MD) Vu, Katelyn P. (MD) Stephenson, Andrew T. (MD, NY) Wachter, Patrick M. (MD) Walburn, Ryan M. (MD) firstinitiallastname@fandpnet.com Franklin & Prokopik 7 A Professional Corporation

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