Court holds homeowners insurer owed no duty to defend claim for illegal service of alcohol

Three young people died when a drunken minor drove his car into a tree, leaving an East Lansing party.  The families of the victims sued the party host, arguing that his negligence in serving alcohol to a minor was the cause of the wrongful deaths.  Depositors Insurance Company provided homeowners insurance to the host, but declined to defend the case or pay its policy limits to the families.  After much procedural maneuvering, the insurer filed a Declaratory Judgment action against the families, asking a court to rule that it had excluded coverage for an incident of this nature.

The trial judge agreed with the insurer that it had excluded coverage for liability for this event, both because the policy excluded any damages resulting from use of a motor vehicle, but also because the intentional provision of alcohol to a minor eliminated any claim of an "accident" or "occurrence."  Relying on the policy's definitions, the Court of Appeals upheld the summary disposition of the families' claims.  It ruled that a drunken vehicle accident and wrongful death was foreseeable at the time alcohol was provided to minors, and therefore the event could not be deemed "accidental."