Liquor Store Liability

Texas High Court Reverses Direction on Liquor Liability John
Council – Texas Lawyer

The Texas Supreme Court recently dealt a blow to third-party
plaintiffs who file dram shop suits against alcohol retailers by
reversing a decision the court made just two years earlier.

On Sept. 3, 2004, the court originally affirmed a $35 million judgment
against a liquor store in F.F.P. Operating Partners v. Xavier Duenez et
al., but seven months later, after three justices who voted with the
majority left the court, the justices voted to rehear the case.

As a result of the rehearing, on Nov. 3 the court released another
opinion in Duenez, which some plaintiffs lawyers believe guts the Texas
Dram Shop Act and protects alcohol retailers from liability to innocent
third parties, such as victims of drunk drivers. But some appellate
lawyers say the high court merely interpreted the 1987 law the way the
Legislature intended.

According to the opinion, the facts are as follows: The Duenezes filed
a negligence suit against F.F.P. Operating Partners and F.F.P.’s store,
Mr. Cut Rate #602, after a clerk in the store sold a 12-pack of beer to
Roberto Ruiz. Ruiz had entered the store after consuming a case and a
half of beer. He then got into his truck, opened a beer, drove down the
highway and swerved, hitting the Duenezes’ car. Police arrested Ruiz at
the scene of the accident. He subsequently pleaded guilty to intoxication
assault and was sentenced to prison, according to the opinion.

The Duenezes sued F.F.P., Ruiz and several other parties but
eventually nonsuited all of the defendants except F.F.P.

F.F.P filed a cross-action naming Ruiz as a responsible third party,
and the trial court severed the cross-action from the Duenezes’ suit.

The Duenezes obtained a partial summary judgment, in which the trial
judge ruled that Texas Civil Practice & Remedies Code Chapter 33’s
proportionate responsibility statute did not apply to their innocent
third-party plaintiff suit and that the Dram Shop Act’s exclusive remedy
provision did apply.

Chapter 33 governs the apportionment of responsibility generally and
applies to “any cause of action based on tort in which a defendant,
settling person, or responsible third party is found responsible for a
percentage of harm.” It makes parties responsible only for their
proportionate share of damages awarded. The Dram Shop Act’s exclusive
remedy provision assigns all liability to providers of alcohol “for the
actions of their employees, customers, members or guests who become
intoxicated … in lieu of common law or other statutory law.”

At trial, the jury found for the Duenezes, awarding $35 million. Since
Chapter 33 did not apply, under the Dram Shop Act, F.F.P. was liable for
the full amount of the judgment, even though Ruiz caused the

The 13th Court of Appeals affirmed the trial court ruling, holding
that Chapter 33’s proportionate responsibility statute did not apply to
the case, and upheld the jury verdict.

In its September 2004 opinion, a 5-4 high court found that the
proportionate responsibility statute did apply in an innocent third-party
case such as Duenez. Under Chapter 33, that would have meant F.F.P. was
only liable for its share of the verdict, Justice Harriet O’Neill wrote
for the majority. But the jury never apportioned responsibility.

The majority concluded that the trial court should have submitted the
question of Ruiz’s percentage of responsibility to the jury. O’Neill
found that the fact-finder should apportion responsibility between the
dram shop and the intoxicated patron, but with a caveat: “The resulting
judgment should aggregate the dram shop’s and driver’s liability so that
the plaintiff fully recovers from the provider without assuming the risk
of the driver’s insolvency. The dram shop may then recover from the
driver based upon the percentages of responsibility that the jury
assessed between them.”

Nonetheless, the majority affirmed the trial court’s ruling, because
F.F.P. “is responsible to the Duenezes for its own percentage of the
liability and that of Ruiz and because there is nothing that would
prevent a jury from fairly apportioning responsibility between F.F.P. and
Ruiz in the severed action.”

Although the high court majority agreed with the first Duenez decision
that Chapter 33 applied, on Nov. 3 it rejected how the original majority
applied proportionate responsibility to the Dram Shop Act — points that
were hotly debated in dissents by O’Neill and Chief Justice Wallace

“The legislative intent to protect the public and provide a potential
remedy against an alcohol provider does not equate to a guarantee of
recovery against a provider by an injured party,” Justice Dale Wainwright
wrote for the 7-2 majority. “While the dissents’ positions might express
sound public policy, we are constrained to conclude that neither
correctly applies the legislature’s statutory proportionate
responsibility scheme. Both read more into the Dram Shop Act than the
words chosen by the legislature can bear.”

In her dissent, O’Neill pointed out the curious circumstances in which
the court reversed her 2004 majority opinion — including that the court
voted to rehear the case only months after three justices who voted with
her in that majority left the court. The three departing justices were
Chief Justice Thomas Phillips and Justices Michael Schneider and Steven
Wayne Smith.

“The motion for rehearing raises no new issues; every point was
thoroughly considered by the court in its prior decision,” O’Neill wrote.
“While the motion for rehearing was pending, the legislature convened
without taking any action to alter this court’s original interpretation.
Nevertheless, the court today withdraws the prior opinion, reaches the
opposite result, and accomplishes judicially what the legislature itself
declined to do.”

In his dissent, Jefferson noted that the Legislature intended for
alcohol providers to pay for the damages caused by a drunk driver when it
created the Dram Shop Act.

“The dram shop thus has a perverse incentive to establish at trial
that its customer was in such a drunken state that selling him ‘one for
the road’ could not have contributed to the harm his intoxication later
caused,” Jefferson wrote. “I cannot agree that the legislature intended
as a defense to liability proof that the dram shop complete a sale that
the statute quite sensibly forbids.”


John Griffin, a partner in Victoria, Tex.’s Houston, Marek &
Griffin who represents the Duenezes, believes that the high court has
rendered the Dram Shop Act ineffective as applied to alcohol

“They’ve made it virtually impossible for them to be liable under the
statute,” says Griffin, who plans to ask the court to reconsider the case
a third time. “The liquor store can always say, ‘It’s the drunk’s fault.’
I’m not sure the majority has an appreciation for how this is going to
work. Because you don’t think they want to judicially veto a carefully
worded statute.”

But Russell “Rusty” McMains, a Corpus Christi solo who represents
F.F.P., says the opinion will take the Dram Shop Act back to how courts
viewed it two years ago when applied to innocent third parties.

He believes the decision will not have a dramatic effect at the trial
court level, because juries found alcohol providers liable before the
first Duenez opinion, and they will continue to do so in the future.

“Juries didn’t have any trouble at all allocating responsibility in
part to the provider — including sometimes more than 50 percent,”
McMains says.

While O’Neill’s dissent questioned why the court reconsidered the case
when there were no new issues presented, the high court was free to do
exactly what it did, says Alan Daughtry, an appellate partner in Jackson
Walker’s Houston office who is not involved in the case.

“It’s not like they are reversing course on prior law. They still have
plenary power, and they are still considering this case,” says Daughtry,
who notes that the reversal on rehearing is not a sign the high court is
willing to ignore stare decisis, which requires a court to abide by its
previous rulings.

“Stare decisis is not terribly compelling in that type of
circumstance. They are always free to change their mind on rehearing,”
Daughtry says. “And sometimes they do when more compelling arguments and
practical points are raised in amicus briefs.”

The court heard from numerous amici in Duenez. Many were alcohol
sellers who feared they would lose their insurance coverage if the
original 2004 opinion stood. One of the only amici to urge the court to
stand by its previous decision was Mothers Against Drunk Driving

Oscar H. Villarreal, a partner in San Antonio’s Villarreal &
Moreno who filed MADD’s amicus brief, is disappointed the court changed
its opinion.

Notes Villarreal, “It’s come to the point where the law is only what
five guys say it is at any given time.”


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