Monday, December 22, 2014

Dram Shop Action Barred by Plaintiff’s Settlement with the Drunk Driver

Dram Shop Action Barred by Plaintiff’s Settlement with the Drunk Driver

            A decision rendered last Friday by the Kentucky Court of Appeals upheld a dismissal of a dram shop action on the basis that the plaintiffs’ settlement with the at-fault driver’s insurer eliminated the possibility of a recovery against the club.  Butt v. Independence Club Venture, No. 2013-CA-001400-MR (Ky. App. Dec. 19, 2014).

            Nathan King, after drinking at the Electric Cowboy, was driving a car in which the plaintiffs were passengers.  An accident ensued, and three of the plaintiffs were killed; a fourth passenger was injured.  The plaintiffs settled their respective cases against King and his insurer, expressly reserving the right to bring a dram shop action against Electric Cowboy on the basis that it continued serving King after he was intoxicated, but stating inter alia that they have no further claim against King/the insurer. 

            Electric Cowboy sought and was awarded summary judgment, which was upheld by the Court of Appeals, on the basis that (i) Electric Cowboy would have a claim for indemnification from King to the extent that it was responsible to the plaintiffs, (ii) the plaintiffs had released King of any further liability and therefore (iii) the plaintiffs could have no further recovery.  In support of this determination the Court of Appeals relied upon DeStock #14 v. Logsdon, 993 S.W.2d 952 (Ky. 1999) for the proposition that under Kentucky’s dram shop statute “the tortfeasor remains primarily liable for injuries while the dram shop is secondarily liable with a right of indemnity against the tortfeasor. Butt, slip op. at 7, citing DeStock #14, 993 S.W.2d at 957.

            In that the release deprived Electric Cowboy of its legal capacity to demand the King make it whole should it have any liability to the plaintiffs, the plaintiffs could not proceed against Electric Cowboy.

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