What the court held
Case: Nichols v. Progressive Northern Ins. Co., No. 2006AP364
Issue: Can defendants who allowed underage drinking to occur on their property be held liable to an injured third party, even if the defendants did not provide the alcohol?
Holding: Yes. Public policy factors do not preclude imposition of liability.
Counsel: For Appellant: Knutson, Jason J., Madison; For Respondent: Mundt, Rick J., Madison; Anderson, Arnold P., Madison
Public policy does not bar injured third parties from pursuing negligence actions against adults who permit high school students to drink alcohol on their property, the Wisconsin Court of Appeals held on Jan. 25.
According to the allegations in the complaint, in 2004, Ed-ward and Julie Niesen allowed a group of high school students to hold a party on their property, knowing that the underage party guests were consuming alcohol, and did not supervise or prevent alcohol consumption on their property.
Beth Carr was one of the underage drinkers who attended the party, and while driving while intoxicated afterwards, she collided with another vehicle occupied by Shannon, Lee, Brooke, and Brittney Nichols.
Carrs insurance company settled with the Nichols for the policy limits, and the Nichols filed a negligence action against the Niesens. Columbia County Circuit Court Judge Richard Rehm dismissed the action, and the Nichols appealed.
The court of appeals reversed, in a decision written by Judge Charles P. Dykman, and joined by Judge Paul B. Higginboth-am. Judge David G. Deininger dissented.
The court began by finding that the Niesens are neither immune from civil liability, nor were they negligent per se.
Section 125.035(2) provides immunity from civil liability arising out of the act of procuring alcohol beverages for or selling, dispensing or giving away alcohol beverages to another person.
The court found the statute inapplicable, however, because the Niesens did not provide the alcohol for the party. In addition, subsec. (4)(b) of the statute states that subsec. (2) does not apply if the defendant knew or should have known that he was providing alcohol to an underage person.
The court thus found that neither the statutory immunity, nor the exception to immunity, applies to this case.
However, the court also found that the Niesens were not negligent per se.
Section 125.07(1)(a)(3) provides, No adult may knowingly permit or fail to take action to prevent the illegal consumption of alcohol beverages by an underage person on premises owned by the adult or under the adults control.
However, the definition of premises in Chapter 125 is limited to licensed property; thus, the court held that the Niesens cannot be negligent per se.
Instead, the court held that the case could proceed only as a common law negligence claim.
The court began with a lengthy discussion of duty, ultimately concluding that the Niesens had a duty to refrain from knowingly permitting underage high school students to drink alcohol on their property, and that the complaint sufficiently alleged a breach of that duty.
The court then turned to whether public policy factors preclude liability, and concluded that they did not.
The court noted that, until 1984, it was not an actionable wrong to sell or give alcohol to an able-bodied person, because the act was considered too remote from any injury the intoxicated person might cause.
In 1984, the rule was abrogated where the defendant sold alcohol to a minor. In 1985, the abrogation was extended to social hosts, as well as venders.
Subsequently, in Smith v. Kappell, 147 Wis.2d 380, 433 N.W.2d 588 (Ct.App.1988), the court of appeals held that an injured third party could not pursue a negligence claim against a minor who allowed another minor to drink alcohol in her parents home. The court concluded that, if the common law rule against liability is to be abrogated in any individual case, only the Supreme Court should do so.
However, in Paskiet v. Quality State Oil So., Inc., 164 Wis.2d 800, 476 N.W.2d 871 (1991), the Supreme Court overruled the conclusion by the court of appeals that it had no authority to analyze public policy factors in cases that would go beyond prior decisions of the Supreme Court in abrogating the common law.
Accordingly, the court of appeals in this case concluded that it had authority to consider public policy factors, and held that none of the relevant public policy factors bar liability.
The six factors are: (1) the injury is too remote from the negligence; (2) the injury is too wholly out of proportion to the tortfeasors culpability; (3) in retrospect it appears too highly extraordinary that the negligence should have resulted in the harm; (4) allowing recovery would place too unreasonable a burden on the tortfeasor; (5) allowing recovery would be too likely to open the way for fraudulent claims; and (6) allowing recovery would enter a field that has no sensible or just stopping point. Hoida, Inc. v. M&I Midstate Bank, 2004 WI App 191, par. 18 n.5, 276 Wis. 2d 705, 688 N.W.2d 691.
Addressing the first factor, the court wrote, The injuries that the Nichols suffered were directly connected to Carrs intoxication. An underage person has the opportunity to become intoxicated if permitted to do so in an unsupervised location that the underage person may not otherwise have. More so, allowing students to congregate on ones property to consume alcohol is directly related to a resulting automobile accident.
The court found none of the other factors preclude liability either. Addressing the fourth factor, the court observed, recovery will not place too unreasonable a burden on the Niesens. Adults who allow underage drinking on their property should expect to be held accountable for the injuries that result, and doing so will discourage adults from allowing this behavior to take place.
As for the sixth factor, the court found, recovery will not enter a field with no sensible or just stopping point. The facts of this case limit its application. If adults do not knowingly permit underage drinking on their property, they will not become liable for the injuries resulting from underage intoxication.
Accordingly, the court reversed the dismissal of the case, and remanded for further proceedings.
Judge Deininger dissented, for three reasons. First, he argued that the court of appeals should not extend liability for conduct immune under the common law, beyond what prior decisions of the Supreme Court allow.
Second, Deininger concluded that permitting recovery in this case will put Wisconsin law on a path that has no sensible or just stopping point the sixth public policy factor that precludes liability.
Noting that liability has previously been imposed only when the adult engages in the affirmative act of providing alcohol, Deininger wrote, If this cause of action is permitted to proceed, I fail to see why a claim should not also be permitted against parents who should have known what was going on in their home while they were absent, based perhaps on past occurrences or even on common knowledge of the proclivities of teenagers in the community.
Deininger concluded that allowing liability because the defendant should have known drinking was occurring is only a short step away from … strict liability on those who own or control property on which underage drinking occurs for any injuries that might befall or be caused by an underage drinker.
Finally, Deininger argued that imposition of liability does impose an unreasonable burden.
Deininger wrote, Having parented three children through adolescence and early adulthood, I question whether it is reasonable to impose liability premised simply on a parents failure to take reasonable steps to supervise and monitor the activities on their property, which is the claim the majority allows to proceed in this case.
Deininger added, if liability is permitted to extend to parents and property owners who fail to supervise and monitor the activities on their property, then parents or other owners of property occupied by sixteen- to 20-year-olds will be well-advised to never leave home, or if they must, to ensure that all underage persons go elsewhere as well.
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David Ziemer can be reached by email.