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Dram-shop plaintiffs reach safe harbor

A dram-shop claim was revived by the Supreme Court on April 4 when it said that the bar was on timely inquiry notice of a possible claim. It also said that the bar had notice of sufficient facts of a possible claim and that notice to the bar’s dram shop attorney satisfied the statute.

The claim is by the family of Mary Jo Meyer-Buskey for her death in a car accident allegedly caused by a drunk driver who, the plaintiffs also assert, was illegally served at American Legion Post #270 in Buffalo. The court split 5-2, with Justice G. Barry Anderson writing a concurrence/dissent, joined by Chief Justice Lorie Gildea. Justice Margaret Chutich wrote the majority opinion.

The court said that the dram-shop law, Minn. Stat. sec. 340A.02, subd. 2, is a safe-harbor provision for claimants who do not comply with the actual notice requirement in subdivision 1 of the statute. It says, “Actual notice of sufficient facts reasonably to put the licensee…on notice of a possible claim complies with the notice requirement.”

The plaintiffs’ attorney, Kay Nord Hunt, said that the importance of the case is that it delineates the interpretation of actual notice. “Now we have a clear holding,” she said.

The court’s opinion is consistent with the purpose of the dram shop law, Hunt said, because the whole idea of the law is to provide time to investigate a claim. Contrary to the dissent’s position, the case does not eviscerate the notice requirement, she said, but implements the safe-harbor provision that the Legislature enacted.

Over the line

Buskey was killed when the other driver, Zachary Jennings, crossed the center line and struck her vehicle. Then a third vehicle struck her car. Three passengers were injured. The passengers brought claims for their injuries and Buskey’s husband and five children asserted their own cause of action.

The bar learned of the accident from its own independent investigation, the Supreme Court said, and obtained a written statement from the waitress who served Jennings. The two attorneys for the passengers gave written notice to the American Legion, which caused the insurer to open a file and investigate. Her investigation included finding that attorney Guy Mattson represented the Buskeys and she also talked with Mr. Buskey.

The insurance company then hired attorney Joseph Nilan. In April of 2013, Nilan wrote to Mattson and asked that Mattson send all correspondence to him and not to the American Legion. The case was sued out in the fall of 2014. The District Court granted summary judgment to the American Legion and the Court of Appeals affirmed.

Actual notice of facts

The Supreme Court said that statute does not require that the liquor licensee have “actual notice of a possible claim,” as the Court of Appeals determined.

The Supreme Court said that the Court of Appeals apparently relied on the 1976 opinion in Donahue v. W. Duluth Lodge No. 1478 of Loyal Order of Moose where the court found “actual notice of a possible claim” sufficed. But that is not what the statute requires because that reading eliminates the “sufficient facts” element of the law, the court said. “The actual-notice provision is unambiguous in requiring only “actual notice of sufficient facts,” not actual notice of a possible claim,” Chutich wrote.

The actual notice received by the bar must put the licensee on inquiry notice of a possible claim, Chutich wrote. Inquiry notice means that a person has actual knowledge of facts which would put one on further inquiry, the justice continued.

Continuing, the Court of Appeals said that the actual-notice provision of the statute required the bar to have actual notice of each claimant’s identity and intent to pursue a claim but the Supreme Court disagreed. Although subdivision 1 of the statute says that actual notice must be given of the identities of individual claimants, subdivision 2 does not mention identity, the court said. The Legislature did not enumerate the notice requirements in subdivision 2 or import them from subdivision 1, the court noted. In some cases the identity of a claimant may be required for notice to be “sufficient” but that is a case-by-case determination, the court said.

Agency principles

The bar conceded at oral argument that agency principles apply to the case and thus the court determined that notice to a defendant’s liquor-liability attorney is tantamount to notice to the licensee. The bar received timely written notice from the injured passengers in the vehicle but not from the Buskeys’ attorney. From notice supplied by the passengers, the bar’s dram-shop insurer learned of the claim and hired a defense attorney.

That convinced the court that agency principles applied. “When a licensee’s attorney has actual notice of certain facts, it is reasonable to conclude that this knowledge would be passed on to the licensee, giving the licensee inquiry notice of the possible claims, as the statute requires. Indeed, attorney Nilan’s own letter to the Buskeys’ attorney instructed him to direct all correspondence intended for American Legion to Nilan instead,” Chutic wrote.

The court did not determine whether notice to the licensee’s general attorney, as opposed to its dram-shop attorney, would suffice.

Agency principles

The American Legion did not have actual notice of the dram shop claim, but its attorney did, the court determined. The court acknowledged that there must be something more than a liquor licensee’s mere knowledge of the serving of alcoholic beverages and a subsequent accident in order to reasonably put a licensee on notice of a possible claim from injured parties or heirs. That “something more” came from Nilan, the court said. Nilan had knowledge of sufficient facts about the claim and his knowledge could be imputed to the American Legion.

The 2013 letter established that Nilan knew that Mattson’s client was the Buskey family and knew the date of loss, which sufficed to put the American Legion on Inquiry notice.

Additionally, he had received a file from the insurance company and had reached out to Mattson. “If Nilan had any doubt about who Mattson represented, he could have asked,” the court observed.

The formal notices of claim from the passengers provided ample essential details about liability to trigger an investigation, the court continued.

Nilan had notice of enough facts to give his client, American Legion, an opportunity to investigate the accident (which it promptly did); to pursue pre-suit negotiations and settlement; to correct any defects revealed by the occurrence before more people suffer injury; and to prevent the claims from going stale, the court said.

Summary judgment standard stretched

Anderson and Gildea agreed with the court’s interpretation of the dram shop statute but disagreed with its application to the facts, saying that American Legion did not have notice of sufficient facts to put it on inquiry notice of a claim.

“The court’s holding today is flawed for two primary reasons. First, the court stretches the summary-judgment standard beyond what it can bear, allowing the facts of this case — or rather, the lack thereof — to make bad law. Second, the court erroneously applies the actual-notice provision in subdivision 2 so as to render the written-notice requirement essentially meaningless and to expand the burdens on licensees. Because I believe American Legion was entitled to summary judgment, I would affirm the court of appeals on different grounds,” Anderson wrote.

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