# COLONY INSURANCE COMPANY v. ASPEN SPECIALTY INSURANCE COMPANY

> District Court, D. New Jersey · September 30, 2021

URL: https://www.frixlaw.com/law-library/cases/10271678

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** September 30, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

COLONY INSURANCE COMPANY Civil Action No. 20-cv-09446-JHR-JS

Plaintiff,

v.
Opinion
ASPEN SPECIALTY INSURANCE
COMPANY; AMERICAN
GUARANTEE AND LIABILITY
INSURANCE COMPANY;
HOSPITALITY SUPPORTIVE
SYSTEMS, LLC; DIVE BAR DIVA,
LLC t/a THE ALIBI ROOM

Defendants.

Defendant Aspen Specialty Insurance Company (“Aspen”) issued an insurance policy to
Defendant Hospitality Supportive Services, LLC (“HSS”) stating that $1 million is “the most that
[Aspen] will pay” to insure liquor liability claims (the “Aspen Policy”). In the motions for
judgment on the pleadings presently before the Court, excess insurers Colony Insurance
Company (“Colony”) and American Guarantee and Liability Insurance Company (“AGLIC”) ask
the Court to declare that Aspen must insure more than $1 million in liquor liability claims. [Dkt.
43; Dkt. 46]. For the reasons set forth below, the Court declines to do so and will deny both
motions.
I. Background
Colony, Aspen, and AGLIC issued insurance policies to HSS, an insurance purchasing
group that administers a shared-risk insurance program for hospitality and restaurant industry
businesses (the “Shared Risk Program”). [Dkt. 1, Compl. ¶ 21]. Approximately 205 businesses
subscribe to and receive insurance coverage through the Shared Risk Program (“Subscribers”).
[Dkt. 6 at 7]. For the period from June 13, 2015 to December 13, 2016, Aspen provided the
primary insurance policy for the Shared Risk Program, Colony provided an excess insurance
policy (the “Colony Policy”), and AGLIC provided a third policy excess to both the Aspen
Policy and the Colony Policy (the “AGLIC Policy”). [Compl. ¶ 31; Dkt. 43-2 at 15 n.1]. Each
policy requires the respective insurer to defend and indemnify Shared Risk Program participants

in litigation concerning certain covered events. [Compl. ¶¶ 24, 27, 32]. The Colony Policy
states that Colony’s coverage obligations kick in after “proper exhaustion of the limits of the
underlying Aspen Policy.” [Compl. ¶ 31]. Likewise, AGLIC’s obligations begin when the
Colony Policy’s limits are exhausted. [See Dkt. 46-2 at 15]. The parties disagree on the Aspen
Policy’s coverage limits.
a. The Aspen Policy
Three components of the Aspen Policy are relevant to the present dispute. First is the
“Commercial General Liability Declarations” and the “Commercial General Liability Coverage
Form,” which the Court will refer to collectively as the “Base Policy.” The Base Policy

establishes a $1 million coverage limit for “each occurrence” and a $2 million “general
aggregate” coverage limit for covered events. [Dkt. 43-2 at 4]. The Base Policy’s “Commercial
General Liability Coverage Form” defines events and injuries to which the Base Policy’s
coverage limits apply. Section I- Coverage A of the “Commercial General Liability Coverage
Form” contains an exclusion which states
2. Exclusions
This insurance does not apply to:

***

c. Liquor Liability
“Bodily injury” or “property damage” for which any insured may be held liable
by reason of:
(1) Causing or contributing to the intoxication of any person;

(2) The furnishing of alcoholic beverages to a person under the legal
drinking age or under the influence of alcohol; or

(3) Any statute, ordinance or regulation relating to the sale, gift, distribution
or use of alcoholic beverages.

This exclusion applies even if the claims against any insured allege
negligence or other wrongdoing in:

(a) The supervision, hiring, employment, training or monitoring of
others by that insured; or

(b) Providing or failing to provide transportation with respect to any
person that may be under the influence of alcohol; if the “occurrence”
which caused the “bodily injury” or “property damage”,
involved that which is described in Paragraph (1), (2) or (3) above.

(“Liquor Exclusion”). [Dkt. 43-2 at 11].
The other two relevant components are endorsements that amend the Base Policy. The
Liquor Liability Extension Endorsement (“Liquor Endorsement”) amends the Base Policy’s
Liquor Exclusion specifically. It states that the Liquor Exclusion “shall not apply to the extent of
the coverage provided by this Endorsement.” [Dkt. 43-2 at 84]. It further states the following:
Additional Paragraph 1.
The Liquor General Aggregate Limit set forth in the Schedule of
this Endorsement is the most we will pay under this policy for all
damages because of all “bodily injury” and “property damage”
included within the “liquor hazard” that is sustained by one or
more persons or organizations.

Additional Paragraph 2.

Subject to Additional Paragraph 1. above, the Liquor Each
Location Aggregate Limit set forth in the Schedule of this
Endorsement is the most we will pay under this policy for all
damages because of “bodily injury” and “property damage”
included within the “liquor hazard” that is sustained by one or
more persons or organizations as the result of the selling, serving
or furnishing of any alcoholic beverage(s) at a location to which
this insurance applies.

Additional Paragraph 3.

Subject to Additional Paragraph 1. & 2. above, the Liquor Each
Location Occurrence Limit set forth in the Schedule of this
Endorsement is the most we will pay under this policy for damages
because of “bodily injury” and “property damage” included within
the “liquor hazard” at each location to which this insurance
applies, that is sustained by one or more persons or organizations
as the result of the selling, serving or furnishing of any alcoholic
beverage(s) to any one person.

“Liquor hazard” means all “bodily injury” and “property damage”
arising out of the selling, servicing or furnishing of any alcoholic
beverage(s).

[Dkt. 43-2 at 84–85]. The Liquor Endorsement also contains the following schedule:
SCHEDULE
LIQUOR EACH LOCATION OCCURRENCE LIMIT: $1,000,000
LIQUOR EACH LOCATION AGGREGATE LIMIT: $1,000,000
LIQUOR GENERAL AGGREGATE LIMIT: $1,000,000 [sic]
ALL OTHER TERMS, CONDITIONS, AND EXCLUSIONS REMAIN UNCHANGED.
[Id.].
Finally, the “Designated Location(s) General Aggregate Limit” endorsement (“All
Subscribers Aggregate”) sets aggregate coverage limits for each Subscriber and for all
Subscribers collectively. It states
A. Limits of Insurance in the General Liability Declarations are amended to
include the following Limit: Combined Total Aggregate Limit Cap:
$10,000,000

B. For all sums which the insured becomes legally obligated to pay as damages
caused by "occurrences" under Section I- Coverage A … which can be
attributed only to operations at a single designated "location" shown in the
Schedule above:

1. A separate Designated Location General Aggregate Limit applies
to each designated "location", and such limit is equal to the amount
of the General Aggregate Limit shown in the Declarations,
provided that the Combined Total Aggregate Limit Cap is the most
we will pay under this Coverage Part for the sum of all Limits of
Insurance as set forth in SECTION III, regardless of the number of
your designated "locations" shown above in the schedule.

….

[Dkt. 43-2 at 86]. The “Designated Locations” are defined by reference to “bordereaus on file
with company.” [Id.]. The parties agree that the bordereau is the list of Subscribers. [Dkt. 43-1
at 13; Dkt. 52 at 23]. The parties also agree that, under the All Subscribers Aggregate, Aspen
must cover $10 million at most for all claims against all Subscribers, and up to $2 million in
aggregate claims against each Subscriber.1
b. The Underlying DBD Litigation and the Present Dispute
One Subscriber was Defendant Dive Bar Diva (“DBD”) which owns and operates The
Alibi Room, a bar located on the White Horse Pike in Waterford, New Jersey. [Compl ¶ 7].
Since October 17, 2019, DBD has been the defendant in a wrongful death and survival action in
the New Jersey Superior Court (the “DBD Litigation”). [Compl. ¶ 13]. Plaintiff in the DBD
Litigation is the surviving wife of a deceased Alibi Room patron. She alleges that, on February
19, 2016, Alibi Room staff served her husband past the point of intoxication, and that DBD’s

1 Paragraph B.1 states that the “separate Designated Location General Aggregate Limit” which
applies to each Subscriber is “equal to the amount of the General Aggregate Limit shown in the
Declarations.” As noted above, the “General Aggregate Limit” in the “Commercial General
Liability Declarations” is $2 million. Thus, the aggregate per-Subscriber limit is $2 million.
conduct caused her husband to crash his car in a fatal accident after leaving the Alibi Room.
[Compl. ¶¶ 14–19]. Trial in the DBD Litigation commences on March 21, 2022. [Dkt. 61].2
Pursuant to the Aspen Policy, Aspen has defended the DBD Litigation and claims against
other Subscribers. [See Compl. ¶¶ 38–39]. In an August 29, 2019 letter to Colony, Aspen
advised that “the $1 million liquor liability aggregate limit of the Aspen Policy is nearing

exhaustion in connection with various liquor liability claims throughout the HSS Program.”
[Dkt. 4, Compl. Exh. D]. Aspen advised Colony, HSS, and other insureds that they should begin
to coordinate “further handling of the [DBD Litigation] and other pending liquor liability
claims….” [Id.]. Central to this matter is Aspen’s position that it must only insure the first
$1,000,000 in aggregate liquor liability claims against all 205 Subscribersf.
Colony responded by stating that the Aspen Policy requires Aspen to insure “each
location” for the first $1,000,000 in liquor liability claims and must provide $10,000,000 in
aggregate liquor liability coverage. [Dkt. 4, Compl. Exh. F]. Aspen repeated its position in a
November 18, 2019 response letter to Colony and indicated that “the coverage available under

the Aspen Policy appears to be insufficient to fully cover the [DBD Litigation].” [Dkt. 4, Compl.
Exh. G].
Colony filed this lawsuit seeking, among other things, a declaration that Aspen must
provide $1 million in liquor liability coverage for each Subscriber, and that this $1 million per-
Subscriber limit applies to the DBD Litigation. [Count I, Compl. ¶¶ 50–59]. On April 23, 2021,
the Court denied Aspen’s motion to dismiss Colony’s complaint for lack of subject matter
jurisdiction after rejecting Aspen’s argument that the case is not ripe for adjudication. [Dkt. 19,

2 The parties’ briefing indicates that trial would commence in October 2021, but Counsel later
indicated that trial has been delayed until March 21, 2022. [Dkt. 61].
20]. Colony then filed an amended complaint, adding HSS and AGLIC as parties after omitting
them from the original complaint. [Dkt. 21].
On July 23, 2021, Colony filed the present Motion for Judgment on the Pleadings.
Colony seeks an order stating that the claims alleged in the DBD Litigation “are subject to a $1
Million limit under the Aspen Policy’s General Commercial General Liability Coverage Part”

and that Colony “has no obligation to provide excess liability coverage” until the DBD Litigation
exhausts Aspen’s $1 million in per-Subscriber liquor liability coverage. [Dkt. 43-3]. In its
response and cross motion, AGLIC agrees that Aspen must provide $1 million in liquor liability
coverage in the DBD Litigation, but also argues that AGLIC has no coverage obligations until
Aspen’s $1 million liquor liability coverage limit and Colony’s $2 million coverage obligations
have been exhausted. [Dkt. 46-2 at 14–18]. Aspen does not opine on Colony’s or AGLIC’s
coverage obligations but maintains that the Aspen Policy only requires Aspen to cover $1 million
in aggregate liquor liability claims against all Subscribers, which have been exhausted in part by
liquor liability claims against other Subscribers. [Dkt. 52].

II. Legal Standard
“A motion for judgment on the pleadings under Rule 12(c) ‘is analyzed under the same
standards that apply to a Rule 12(b)(6) motion.’” Wolfington v. Reconstructive Orthopaedic
Assocs. II PC, 935 F.3d 187, 195 (3d Cir. 2019) (Revell v. Port Auth. of N.Y. & N.J., 598 F.3d
128, 134 (3d Cir. 2010)). “A motion for judgment on the pleadings will be granted ... if, on the
basis of the pleadings, the movant is entitled to judgment as a matter of law.” DiCarlo v. St.
Mary Hosp., 530 F.3d 255, 262 (3d Cir. 2008) (citing Allah v. Brown, 351 F. Supp. 2d 278, 280
(D.N.J. 2004)). Under Rule 12(c) “‘judgment will not be granted unless the movant clearly
establishes that no material issue of fact remains to be resolved and that [the movant] is entitled
to judgment as a matter of law.’” Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008)
(quoting Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289, 290–91 (3d Cir. 1988)).
“[The Court] must view the facts presented in the pleadings and the inferences to be drawn
therefrom in the light most favorable to the nonmoving party.” Id.
III. Analysis

a. Choice of Law
Before reviewing the merits of Colony’s motion and AGLIC’s cross motion, the Court
must conduct a choice-of-law analysis to determine which state’s law applies to the present
dispute. “A federal court exercising diversity jurisdiction is to apply the choice-of-law rules of
the forum state.” Gen. Ceramics Inc. v. Firemen's Fund Ins. Cos., 66 F.3d 647, 652 (3d Cir.
1995) (citing Shuder v. McDonald's Corp., 859 F.2d 266, 269 (3d Cir. 1988)). Here, the Court
must apply New Jersey’s choice-of-law rules. “New Jersey courts apply the two-pronged ‘most
significant relationship’ test of the Restatement (Second) of Conflict of Laws.” Curtiss-Wright
Corp. v. Rodney Hunt Co., 1 F. Supp. 3d 277, 283 (D.N.J. 2014) (citing P.V. v. Camp Jaycee,

962 A.2d 453 (N.J. 2008)).
The first step in this two-part test “is to determine whether an actual conflict exists”
between the law of the states with an interest in the case. P.V., 962 A.2d at 460. “That is done
by examining the substance of the potentially applicable laws to determine whether ‘there is a
distinction’ between them.” Id. (quoting Lebegern v. Forman, 471 F.3d 424, 430 (3d Cir.
2006)). “If there is no actual conflict, the analysis ends and the law of the forum state applies.”
Curtiss-Wright Corp, 1 F. Supp. 3d at 283 (citing Rowe v. Hoffman–La Roche, Inc., 917 A.2d
767 (N.J. 2007)). If a conflict exists, step two requires courts to “determine which jurisdiction
has the ‘most significant relationship’ to the claim.” Id. (citing P.V., 962 A.2d 453). New Jersey
courts apply the factors set forth in Sections 63 and 1884 of the Restatement (Second) of Conflict
of Laws to determine the most significant relationship. See Cont'l Ins. Co. v. Honeywell Int'l,
Inc., 188 A.3d 297, 315 (N.J. 2018). Section 193, which applies to “contracts of fire, surety or
casualty insurance,” is also relevant.5 See Gilbert Spruance Co. v. Pa. Mfrs. Ass'n Ins. Co., 629
A.2d 885, 888 (N.J. 1993).

3 Section 6 provides

[T]he factors relevant to the choice of the applicable rule of law include

(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the
relative interests of
those states in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be
applied.

4 Section 188 applies where parties to a contract have “not made an effective choice of law”
determination in the contract. Cont'l Ins. Co., 188 A.3d at 315. Section 188 instructs courts to
consider the following contacts when applying § 6 factors:

(a) The place of contracting,
(b) The place of negotiation of the contract,
(c) The place of performance,
(d) The location of the subject matter of the contract, and
(e) The domicil, residence, nationality, place of incorporation and
place of business of the parties.

5 Section 193 states

The validity of a contract of fire, surety or casualty insurance and
the rights created thereby are determined by the local law of the
state which the parties understood was to be the principal location
of the insured risk during the term of the policy, unless with
respect to the particular issue, some other state has a more
significant relationship under the principles stated in § 6 to the
transaction and the parties, in which event the local law of the
other state will be applied.
Colony and AGLIC agree that “two states that arguably have an interest in having their
law applied to the interpretation of the Aspen Policy are New Jersey and Pennsylvania.” [Dkt.
43-1 at 17; see also Dkt. 46-2 at 9]. Both argue that New Jersey law should govern because
relevant New Jersey and Pennsylvania contract law do not conflict. [Dkt. 43-1 at 17; Dkt. 46-2
at 9].

Aspen argues that a choice-of-law analysis is premature because Aspen’s contract with
HSS implicates a “complex” web of relationships between HSS and the Shared Risk Program’s
200+ members which are located in New Jersey, New York, Pennsylvania, and elsewhere. [Dkt.
52 at 16–17]. Aspen argues that discovery concerning these other Subscribers is required before
the Court can determine which state has the most significant relationship to this litigation. [Id.].
Alternatively, Aspen argues that Pennsylvania has the most significant interest in this case and
that Pennsylvania law should govern. [Id.].
The Court rejects Aspen’s argument. Aspen does not identify an interested state whose
contract law conflicts with New Jersey law, and therefore skips the first step of New Jersey’s
choice-of-law analysis altogether.6 Instead, Aspen improperly analyzes Restatement factors

Comment B to § 193 states, in part

The location of the insured risk will be given greater weight than
any other single contact in determining the state of the applicable
law provided that the risk can be located, at least principally, in a
single state. Situations where this cannot be done, and where the
location of the risk has less significance, include … where the
policy covers a group of risks that are scattered throughout two or
more states.

6 This omission is glaring because Aspen acknowledges that it maintains a “bordereau” of
Subscribers as described in the Aspen Policy and acknowledges that these Subscribers reside in
New Jersey, Pennsylvania, New York, and elsewhere. [Dkt. 52 at 23 n.5]. Despite having
Subscriber locations available to it, Aspen does not explain why it could not locate an interested
state whose contract law conflicts with New Jersey contract law.
relevant to a “most significant relationship” determination which are properly considered at step
two of the analysis. Because Aspen fails to affirmatively show an “actual conflict” exists, the
Court cannot consider the state interest factors relevant step two of the conflict-of-law analysis.
Curtiss-Wright Corp., 1 F. Supp. 3d at 283 (“If there is no actual conflict, the analysis ends and
the law of the forum state applies.”).

Similarly, Aspen has not identified a single point of law that varies from state to state that
could affect the outcome of the present issue. Aspen does not dispute that the Court’s task here
is to determine Aspen’s coverage obligations by interpreting the Aspen Policy’s plain language.
This is a straight-forward contract interpretation issue based on the parties’ intent “as manifested
by the terms used in the written insurance policy.” Donegal Mut. Ins. Co. v. Baumhammers, 938
A.2d 286 (Pa. 2007) (citing 401 Fourth Street, Inc. v. Investors Ins. Grp., 879 A.2d 166, 171 (Pa.
2005)); Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc., 247 F.3d 79, 92 (3d Cir. 2001)
(observing that it is “‘firmly settled’” that “‘the intent of the parties to a written contract is
contained in the writing itself.’” (quoting Krizovensky v. Krizovensky, 624 A.2d 638, 642 (Pa.
Super. 1993))).7 The Court need not consider nuanced legal rules or exceptions adopted in some

states but not others. Cf. Pfizer, Inc. v. Emps. Ins. of Wausau, 712 A.2d 634, 640 (N.J. 1998)
(explaining how state-specific interpretations of “sudden and accidental” exceptions to pollution
exclusion clauses in insurance contracts created a conflict of law issue). The Court will not
delay consideration of the present dispute based on the mere possibility that a Subscriber resides
in a state that does not apply “firmly settled” contract interpretation principles.8 See Pfizer, 879

7 See also Crawford v. New Jersey Transit Employee's Ret. Plan, No. A-4855-09T3, 2011 WL
1675090, at *3 (N.J. Super. Ct. App. Div. May 5, 2011); Pacifico v. Pacifico, 920 A.2d 73, 77
(N.J. 2007); First Montauk Sec. Corp. v. Menter, 26 F. Supp. 2d 688, 689 (S.D.N.Y. 1998).

8 It is worth noting that DBD is the only Subscriber party to this litigation. Aspen has not cited a
case stating that, at step one of the choice-of-law analysis, courts must consider potential
A.2d at 640–41 (acknowledging that potentially interested states in an insurance dispute
concerning toxic waste included New Jersey, New York, and “the states where the waste has
come home to rest” and acknowledging conflict between relevant New Jersey and New York
law, but conducting choice-of-law analysis based on New Jersey and New York law alone after
observing that “[a]lthough there are variations on these views, we may assume that the laws of

the waste sites will be similar to either New York law or New Jersey law.”).
The contract law of New Jersey, Pennsylvania, and New York—which Aspen has cited
as states where Shared Risk Programs reside—support the Court’s approach. The law of each of
these states requires courts to interpret insurance contracts by focusing on their plain language,
as with any other contract. Porco v. Lexington Ins. Co., 679 F. Supp. 2d 432, 435 (S.D.N.Y.
2009) (“Insurance policies are, in essence, creatures of contract, and accordingly, subject to
principles of contractual interpretation.”) (quoting In re Covert, 761 N.E.2d 571, 576 (N.Y.
2001))); Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 948 A.2d 1285, 1289 (N.J. 2008)
(“In attempting to discern the meaning of a provision in an insurance contract, the plain language

is ordinarily the most direct route.” (citing Zacarias v. Allstate Ins. Co., 775 A.2d 1262 (N.J.
2001))); Donegal Mut. Ins. Co., 938 A.2d 286. See also Walters v. Am. Home Assur., No.
CIV.A. 09-4637 FLW, 2011 WL 4409170, at *12 (D.N.J. Sept. 21, 2011) (“Thus, there is no
actual conflict regarding how [New Jersey and Pennsylvania] interpret[] policies.”).
Aspen also directs the Court to ongoing litigation between Aspen and HSS in the Eastern
District of Pennsylvania where Judge DuBois recently declined to rule on a choice-of-law issue
concerning Aspen’s contracts with HSS on a motion for partial summary judgment. [Dkt. 52 at

conflicts with the law of states where non-parties with a remote interest in the outcome of the
litigation reside. The Court is not aware of any such case.
16]; Aspen Specialty Ins. Co. v. Hosp. Supportive Sys., LLC, No. CV 16-1133, 2021 WL
3403416 (E.D. Pa. Aug. 3, 2021). According to Aspen, Judge DuBois declined to rule on the
issue in part because the record was too sparse to decide the choice-of-law issue. [Dkt. 52 at 16].
Aspen argues that the Court here should follow Judge DuBois’s approach.
Aspen’s argument is specious. First, the summary judgment motions at issue in that case

concerned whether Aspen was legally required to notify “additional named insured” parties of
Aspen’s intent to cancel its coverage to HSS. Aspen, 2021 WL 3403416 at *1. They did not
involve an interpretation of the Aspen Policy or Aspen’s coverage requirements as outlined in
that policy. Second, Judge DuBois had granted leave to file summary judgment motions on this
single issue based an assumed agreement among the parties that Pennsylvania law would govern
the inquiry. Id. at *4. Judge DuBois declined to consider the choice-of-law issues because they
exceeded the scope of his order. Third, and most importantly, Aspen argued that Pennsylvania
law should apply in that case. Id. at *3 (“Aspen argues that … Pennsylvania law applies to the
cancellation of all policies….”).

Ultimately, “‘[a] court has to make a choice of law decision in an actual case only …
when the laws of the involved states differ on the point in issue.’” Pfizer, 712 A.2d at 640
(quoting Robert A. Sedler, A Real World Perspective on Choice of Law, 48 Mercer L. Rev. 781,
783 (1997)). Because Aspen has not shown that such a conflict exists, and because no conflict
exists between New Jersey law and the contract law of New Jersey or New York, the Court will
apply New Jersey law to the present dispute.
b. Contract Interpretation
As noted above, the present dispute concerns Aspen’s liquor liability coverage
obligations under the Aspen Policy. Colony and AGLIC argue that the Liquor Endorsement and
the All Subscribers Aggregate provisions of the Aspen Policy require Aspen to insure up to $1
million in liquor liability claims for each Subscriber, including DBD. Aspen disagrees.
Resolving this dispute requires the Court to interpret the Aspen Policy. “Contract
interpretation is a question of law” for courts. Hess Corp. v. ENI Petroleum US, LLC, 86 A.3d
723, 727 (N.J. Super. Ct. App. Div. 2014) (citing Selective Ins. Co. of Am. v. Hudson E. Pain

Mgmt. Osteopathic Med. & Physical Therapy, 46 A.3d 1272 (N.J. 2012)). When interpreting an
insurance contract, like any other contract, “courts first look to the plain meaning of the language
at issue.” Oxford Realty Grp. Cedar v. Travelers Excess & Surplus Lines Co., 229 N.J. 196, 207,
160 A.3d 1263, 1270 (2017) (citing Chubb Custom Ins. Co., 948 A.2d 1285). “If the language is
clear, that is the end of the inquiry.” Chubb Custom Ins. Co., 948 A.2d at 1289 (citing Zacarias,
775 A.2d 1262). Language in an insurance contract is “clear,” and therefore not ambiguous,
unless “‘the phrasing of the policy is so confusing the average policy holder cannot make out the
boundaries of the coverage.’” Pennbarr Corp. v. Ins. Co. of N. Am., 976 F.2d 145, 151 (3d Cir.
1992) (quoting Am. White Cross Lab., Inc. v. Continental Ins. Co., 495 A.2d 152, 157 (N.J.

Super. Ct. App. Div. 1985)). Courts must strive “to give effect to the whole policy, not just one
part of it. A construction that gives reasonable meaning to all of the contract's provisions is
preferred to one which leaves a portion of the writing useless or inexplicable.” Id. (citations and
quotations omitted).
i. Liquor Endorsement
Colony and AGLIC argue that the Liquor Endorsement’s $1 million “liquor each location
occurrence” limit and $1 million “liquor each location aggregate” limit require Aspen to provide
$1 million worth of coverage in the DBD Litigation.9 [Dkt. 43-1 at 21–22; Dkt. 46-2 at 13–14].
Aspen argues that Colony and AGLIC improperly ignore the Liquor Endorsement’s third
limit, namely, the $1 million “liquor general aggregate limit.” [Dkt. 52 at 24–25]. According to

Aspen, the “liquor general aggregate limit” sets a $1 million total coverage limit for all liquor
claims against any and all Subscribers. Aspen maintains that other Subscribers incurred liquor
liability which exhausted some of the $1 million in aggregate coverage available to all
Subscribers and, therefore, to DBD. [Id. at 29]. Aspen emphasizes that this arrangement is part
and parcel “shared risk” that HSS’s clients undertake when they join the Shared Risk Program.
[Id.].
The Liquor Endorsement is comprised of three “Additional Paragraphs” and a coverage
limit schedule. Additional Paragraph 1 of the Liquor Endorsement states that the $1 million
“liquor general aggregate limit” listed in the coverage limit schedule “is the most we will pay

under this policy for all damages … included within the ‘liquor hazard’ that is sustained by
one or more persons or organizations.” [Dkt. 43-2 at 84] (emphasis added). By its plain
meaning, Additional Paragraph 1 establishes a maximum amount of coverage that Aspen may
have to provide for “all damages … included within the ‘liquor hazard’” because it states that $1
million is “the most” that Aspen will pay. Most, Merriam-Webster, https://www.merriam-
webster.com/dictionary/at%20most (“the greatest amount;” “an extreme limit”). In other words,
“the most” that Aspen must pay for “all” liquor liability claims is $1 million.

9 To be clear, there is no dispute that the injuries alleged in and costs associated with the DBD
Litigation qualify as insurable “liquor hazards” under the Liquor Endorsement. The parties only
dispute the amount of liquor liability coverage available under the Aspen Policy.
The remaining paragraphs in the Liquor Endorsement are equally clear that the $1 million
“liquor general aggregate limit” set forth in Additional Paragraph 1 caps the liquor coverage
available to each Subscriber and for each occurrence. Additional Paragraph 2 of the Liquor
Endorsement states that the $1 million “liquor each location aggregate limit” listed in the
coverage limit schedule is “the most we will pay under this policy for all damages … included

within the ‘liquor hazard’ at each location to which this insurance applies….” [Dkt. 43-2 at
85] (emphasis added). By its plain meaning, Additional Paragraph 2 establishes a maximum
amount of liquor liability coverage that Aspen may have to provide for each Subscriber because
it states that $1 million is “the most” that Aspen will pay for “liquor hazards” at any single
location. Most, Merriam-Webster, https://www.merriam-webster.com/dictionary/at%20most
(“the greatest amount;” “an extreme limit”).
However, Additional Paragraph 2 does not guarantee $1 million in liquor coverage to
each Subscriber or establish a per-Subscriber liquor coverage minimum. Instead, Additional
Paragraph 2 states that the $1 million per-Subscriber limit is “subject to” the $1 million “liquor

general aggregate limit” set forth in Additional Paragraph 1. The dictionary definition and
ordinary meaning of “subject to” is “affected by or possibly affected by.” Subject To, Merriam-
Webster, https://www.merriam-webster.com/dictionary/subject%20to. See also Mildenhall, LLC
v. Higginbotham, 83 Va. Cir. 256 (2011) (interpreting “subject to” to mean “contingent upon”).
Thus, Additional Paragraph 2 plainly acknowledges that the $1 million maximum liquor
coverage available to each Subscriber is “subject to” and may be “affected by” the $1 million
maximum available to all Subscribers in the aggregate. Though the Liquor Endorsement does
not say so explicitly, liquor claims against one Subscriber necessarily reduce the amount of
liquor liability coverage available to that Subscriber and to all other Subscribers.10 This
interpretations gives logical and “reasonable meaning” to the “the most” language in Additional
Paragraphs 1 and 2, and the “each location” and “subject to” language in Additional Paragraph 2.
Pennbarr Corp., 976 F.2d at 151 (citations and quotations omitted).
Additional Paragraph 3 of the Liquor Endorsement extends this logical relationship to

individual liquor hazard occurrences. Additional Paragraph 3 states that the $1 million “liquor
each location occurrence limit” “is the most we will pay under this policy for damages …
included within the ‘liquor hazard’ at each location to which this insurance applies … as the
result of the selling, serving or furnishing of any alcoholic beverage(s) to any one person.” [Dkt.
43-2 at 85]. As with Additional Paragraph 2, Additional Paragraph 3, sets a $1 million per-
occurrence coverage maximum, but does not guarantee $1 million in per-occurrence coverage.
Additional Paragraph 3 further states that this “each location occurrence limit” is “[s]ubject to
Additional Paragraphs 1. & 2. above.” As in Additional Paragraph 2, this “subject to” language
means that the $1 million maximum coverage available per occurrence may be affected by the $1

million per-Subscriber and $1 million aggregate limits. Thus, if a single Subscriber incurs
liability through multiple “occurrences,” the coverage provided in earlier occurrences will reduce
the amount of coverage available to that same Subscriber under Additional Paragraph 2 and all
other Subscribers in the aggregate under Additional Paragraph 1.11 Likewise, a Subscriber will

10 For example, assume Bar A and Bar B are the only Subscribers under the same terms
discussed above. On day 1 of the policy coverage period, Bar A incurs $100,000 in liquor
liability. Aspen covers the event. Because Bar B’s $1 million per-location liquor limit is
“subject to” the $1 million aggregate liquor limit, only $900,000 of liquor liability coverage is
available to Bar B. The contract’s plain language requires this result even though Bar B did not
itself exhaust any aggregate or per-location coverage.

11 For example, Bar A incurs $100,000 in liquor liability in Occurrence 1 and $100,000 in liquor
liability in Occurrence 2. Occurrence 3 occurs which will result in liquor liability to Bar A.
have less than $1 million available in per-occurrence coverage if that same Subscriber or any
other Subscriber previously incurred liquor liability.
As this analysis demonstrates, the Court agrees with Aspen that the Liquor Endorsement
only requires Aspen to provide $1 million in total liquor liability coverage, and that liquor
liability costs incurred by one Subscriber erode the amount of liquor liability coverage available

to all other Subscribers.
Colony and AGLIC resist this interpretation. They argue that the $1 million “liquor
general aggregate limit” set forth in Additional Paragraph 1 of the Liquor Endorsement does not
limit the “liquor each location” or “liquor each location occurrence” limits set forth in Additional
Paragraphs 2 and 3, respectively. [Dkt. 43-2 at 21–24; Dkt. 46-2 at 12–14]. They argue that
Aspen’s interpretation deprives the $1 million “each location” and “each location occurrence”
liquor liability limits of their plain meaning.
The Court disagrees. The “subject to” language in Paragraphs 2 and 3 expressly qualifies
the liquor liability coverage available to “each location” and for “each occurrence.” This

language clarifies that the per-Subscriber and per-occurrence limits are “subject to” the $1
million is total liquor coverage available to all Subscribers in the aggregate. While it may be
counterintuitive that $1 million per-occurrence and per-subscriber limits do not guarantee $1
million in liquor liability coverage to each Subscriber or for each event, Liquor Endorsement’s
plain language requires this interpretation. To find otherwise would strip the “subject to”
language in Additional Paragraphs 2 and 3 of its effect. See Penbarr Corp., 976 F.2d at 151

Only $800,000 in coverage is available to Bar A for Occurrence 3—despite the $1 million per-
occurrence limit—because Occurrences 1 and 2 reduced the per-location and aggregate liquor
coverage available. Likewise, after Occurrences 1 and 2, only $800,000 in liquor coverage is
available to Bar B for a single occurrence or multiple occurrences.
(“[I]t is [the court’s] responsibility to give effect to the whole policy, not just one part of it.”
(citations and quotations omitted)).
Colony and AGLIC also argue that only the $10 million general aggregate limit created
by the All Subscribers Aggregate restricts the amount of liquor liability coverage that Aspen
must provide for all Subscribers in the aggregate. [Dkt. 54 at 12; 46-2 at 14]. Under this

interpretation, ten Subscribers could incur $1 million each in liquor liability and exhaust all
coverage available under the Aspen Policy. Likewise, a single Subscriber could incur $1 million
of liquor liability in each of ten occurrences and exhaust Aspen’s coverage.
This interpretation violates a black-letter principle of contract interpretation. Additional
Paragraph 1 states that $1 million “is the most we will pay under this policy for all damages …
included within the ‘liquor hazard’….” [Dkt. 43-2 at 84], and Additional Paraphs 2 and 3 state
that the $1 million per-Subscriber and per-occurrence liquor limits are “subject to” this $1
million aggregate limit. Colony and AGLIC’s position would invalidate the “the most” language
in Additional Paragraph 1’s by requiring Aspen to cover more than $1 million in total liquor

liability claims. It would also invalidate the “subject to” language in Additional Paragraphs 2
and 3 by releasing per-Subscriber and per-occurrence liquor limits from the $1 million aggregate
limit. But contract law requires the Court to interpret contracts “‘to give meaning to all [their]
terms.’” In re Energy Future Holdings Corp., 842 F.3d 247, 256 (3d Cir. 2016) (quoting Barrow
v. Lawrence United Corp., N.Y.S.2d 363 (N.Y. App. Div. 1989)); accord Com. ex rel. Kane v.
UPMC, 129 A.3d 441, 464 (Pa. 2015) (“[A] contract must be interpreted to give effect to all of
its provisions. Thus, our Court will not interpret one provision of a contract in a manner which
results in another portion being annulled.” (citations and quotations omitted)); Heffron v. Adamar
of New Jersey, Inc., 270 F. Supp. 2d 562, 572 (D.N.J. 2003) (“[A]n interpretation [of an
agreement] which gives reasonable ... and effective meaning to all [of its] terms is preferred to an
interpretation which leaves a part unreasonable ... or of no effect.” (quoting Restatement
(Second) of Contracts, § 203(a))). This principle compels the Court to reject Colony and
AGLIC’s suggestion that Additional Paragraphs 2 and 3 guarantee $1 million in liquor liability
coverage to each Subscriber and for each occurrence, subject only to the All Subscriber

Aggregate’s $10 million cap on all liability claims.
ii. All Subscribers Aggregate
Colony and AGLIC also argue that Aspen’s interpretation of Liquor Endorsement
conflicts with the All Subscribers Aggregate, which establishes a $2 million aggregate coverage
limit for all claims against each Subscriber, and a $10 million aggregate limit for all claims
against all Subscribers. They argue that Aspen cannot square its proposed $1 million aggregate
liquor liability with its $2 million aggregate per-Subscriber coverage obligations. [Dkt. 43-1 at
23–27]. The Court disagrees and finds that the limits established in the All Subscribers
Aggregate harmonize with the limits set forth in the Liquor Endorsement.

Although the parties agree that the All Subscribers Aggregate establishes a $2 million
per-Subscriber aggregate coverage limit and a $10 million coverage limit for all claims against
all Subscribers, the Court must parse this endorsement’s language to demonstrate how it
comports with the Liquor Endorsement. The All Subscribers Aggregate amends the Base Policy
to include a $10 million “Combined Total Aggregate Limit Cap.” [Dkt. 43-2 at 86]. Paragraph
B of the All Subscribers Aggregate states that
For all sums which the insured becomes legally obligated to pay as
damages caused by “occurrences” under Section I – Coverage A
…. A separate Designated Location General Aggregate Limit
applies to each designated “location”, and such limit is equal to the
amount of the General Aggregate Limit shown in the Declarations,
provided that the [$10 million] Total Aggregate Limit Cap is the
most we will pay under this Coverage Part for the sum of all
Limits of Insurance….

[Dkt. 43-2 at 86].12
Critically, Paragraph B applies to liability incurred under “Section I – Coverage A” of the
Base Policy. Section I – Coverage A contains the Liquor Exclusion which, again, states that
“[t]his insurance does not apply to … Liquor Liability.” [Dkt. 43-2 at 11]. The All Subscribers
Aggregate does not explicitly refer to or modify the Liquor Exclusion. Nor does it expressly
state that it applies to liquor liability claims. Thus, the only way that the $2 million “Designated
Location General Aggregate Limit” could apply to liquor hazard claims at all is through the
Liquor Endorsement, which provides the sole basis for liquor hazard coverage in the Aspen
Policy by amending the Liquor Exclusion. But, as discussed above, the Liquor Endorsement
states that $1 million is “the most” that Aspen will pay for all liquor hazard claims against all
Subscribers. Reading the All Locations Aggregate and Liquor Endorsement together, each
Subscriber has a $2 million aggregate coverage limit and may exhaust up to $1 million of this
aggregate through liquor hazard claims, but liquor hazard claims against any Subscriber will
erode the amount of liquor liability coverage available. Aspen supports this interpretation. [See
Dkt. 52 at 26–27].
Colony’s disagreement with this reading of the All Subscribers Aggregate relies on an
unreasonable interpretation of the term “separate” in Paragraph B. Colony argues that, under
Paragraph B, “each [Subscriber] has a separate [$2 million] general aggregate limit … that

cannot be eroded or exhausted by payments for the liquor liabilities of other insureds at other
locations.” [Dkt. 43-1 at 26 (emphasis in original)]. On this interpretation, the word “separate”

12 The “General Aggregate Limit shown in the Declarations” is $2 million, so Paragraph B
establishes a $2 million “Designated Location General Aggregate Limit” for each Subscriber.
in Paragraph B creates a $2 million per-Subscriber coverage limit “separate” and apart from the
$1 million aggregate liquor liability limit set forth in the Liquor Endorsement, but which applies
to liquor liability claims. The Base Policy’s $1 million general per-occurrence limit would then
require Aspen to cover $1 million in the DBD Litigation.
Colony’s interpretation of the word “separate” invents a basis for liquor hazard coverage

where none exists in the contract’s plain language. The All Subscribers Aggregate does not
define the scope of coverage or list covered events “separate” from the Base Policy. Neither Part
B nor any other language in the All Subscribers Aggregate provides a “separate” contractual
basis for liquor liability coverage. Instead, the All Subscribers Aggregate refers explicitly to
“Section I – Coverage A,” which only covers liquor liability because of the Liquor Endorsement.
The Liquor Endorsement “modifies” the Base Policy’s Liquor Exclusion to include liquor hazard
coverage, but only “to the extent of the coverage provided by this Endorsement.” [Dkt. 43-2 at
84]. The Liquor Endorsement includes a $1 million aggregate liquor liability limit for all claims
against all Subscribers, which Paragraph B does not modify.

Thus, whether Colony interprets “separate” to mean that Paragraph B provides an
independent basis for $1 million per-Subscriber liquor liability, or to sidestep the Liquor
Endorsement’s $1 million aggregate liquor limit, its interpretation finds no support in the Aspen
Policy’s plain language. The Court cannot rewrite the All Subscribers Aggregate to require
Aspen to exceed the Liquor Endorsement’s $1 million aggregate liquor liability limit. Kieffer v.
Best Buy, 14 A.3d 737, 743 (N.J. 2011) (“The judicial task is simply interpretative; it is not to
rewrite a contract for the parties better than or different from the one they wrote for themselves.”
(citations omitted)); see also Pennbarr Corp. 976 F.2d at 151 (“A construction that gives
reasonable meaning to all of the contract's provisions is ‘preferred to one which leaves a portion
of the writing useless or inexplicable.’” (quoting Caruso v. John Hancock Mut. Life Ins. Co., 57
A.2d 359, 360 (N.J. Ct. App. 1948)).
iii. Ambiguity
Finally, Colony argues that “to the extent that Aspen intended to provide liquor liability
coverage with a single $1 Million limit to be shared jointly by more than 205 insureds on a ‘first

come, first served’ basis, the onus was on Aspen to draft a policy that clearly communicated that
intent.” [Dkt. 43-2 at 24]. Similarly, Colony and AGLIC argue that, at best, the Aspen Policy is
ambiguous with respect to Aspen’s liquor liability coverage obligations. [Dkt. 43-1 at 23–24];
Dkt. 46-2 at 14]. They argue that any uncertainty must be resolved in favor of coverage. [Dkt.
43-2 at 24; Dkt. 46-2 at 14].
The Court agrees that piecing together the Aspen Policy’s various coverage limits and
endorsements is no simple task. But “[a]n insurance policy … is not ambiguous merely because
it is complex.” Pennbarr Corp., 976 F.2d at 151 (citing Transamerica Ins. Co. v. Keown, 451 F.
Supp 397, 400 (D.N.J.1978)); accord Sayles v. G & G Hotels, Inc., 57 A.3d 1129, 1134 (N.J.

Super. Ct. App. Div. 2013) (“The general principle that ambiguous contractual … agreements
should be construed against [one party] does not require a search for ambiguity in every complex
provision.”). The pieces ultimately come together to form a coherent whole that clearly
establishes a $1 million aggregate liquor hazard limit, a limit which caps Aspen’s per-occurrence
and per-Subscriber liquor hazard coverage obligations and qualifies Aspen’s $2 million per-
Subscriber aggregate coverage obligations. Consequently, the Court declines to “‘engage in a
strained construction to support the imposition of liability’ or write a better policy” for HSS,
Colony, or AGLIC’s benefit. Oxford Realty Grp. Cedar, 160 A.3d at 1270 (quoting Chubb
Custom Ins. Co., 948 A.2d 1285).
Moreover, AGLIC and Colony are incorrect that the Court must resolve any doubt in
favor of coverage in this case. “Ordinarily, our courts construe insurance contract ambiguities in
favor of the insured… Sophisticated commercial insureds, however, do not receive the benefit of
having contractual ambiguities construed against the insurer.” Oxford Realty Grp. Cedar, 160
A.3d at 1270–71 (citations and quotations omitted)). AGLIC and Colony are not “insureds”

under the Aspen Policy and are therefore not entitled to deference. Moreover, HSS, as the
administrator of a complex and pooled interstate insurance program, undoubtedly qualifies as a
“sophisticated commercial insured” that is not entitled to benefit from any ambiguity.
Ultimately, the Court agrees with Aspen that the Aspen Policy only requires Aspen to
provide $1 million in aggregate coverage for all “liquor hazard” claims against all Subscribers.
The Court also agrees that the amount of liquor hazard coverage that Aspen must provide in the
DBD Litigation depends on the amount of liquor hazard coverage exhausted through claims
against other Subscribers. At this juncture, it is unclear how much of the $1 million in aggregate
liquor liability coverage remains for the policy period at issue, or if liquor hazard claims other

than the DBD Litigation may deplete the policy limits. Thus, the Court will not decide the
amount of coverage that Aspen must provide in the DBD Litigation.
c. Aspen’s Reformation Argument
Aspen argues that “significant issues of reformation [would] arise” if the Court agrees
with Colony’s and AGLIC’s interpretation of the Aspen Policy and finds that Aspen must
provide up to $1 in million liquor liability coverage in the DBD Litigation. [Dkt. 52 at 30]. In
the event of an adverse ruling, Aspen argues that it is entitled to discovery to investigate these
reformation issues. [Id. at 35]. However, because the Court agrees with Aspen’s interpretation
of the Aspen Policy, the Court need not consider this issue.
d. Colony’s and AGLIC’s Requests for Relief
Colony and AGLIC have asked the Court to decide when their respective coverage
obligations begin under the Colony Policy and the AGLIC Policy, respectively.13 However, both
requests generally assume that Aspen must pay $1 million in coverage in the DBD litigation, and
the parties’ briefing on the Colony and AGLIC Policies is minimal. Colony only analyzes the

Aspen Policy. AGLIC only briefly addresses its own policy and does not analyze the Colony
Policy. [Dkt. 46-2 at 15–18]. The Court will therefore limit its ruling to the Aspen Policy and
declines to determine Colony’s and AGLIC’s coverage obligations until those issues have been
fully briefed.
IV. Conclusion
For the reasons discussed above, the Court will deny Colony’s Motion for Judgment on
the Pleadings and AGLIC’s Cross-Motion for Judgment on the Pleadings. An appropriate order
will follow.

September 30, 2021 /s/ Joseph H. Rodriguez
Joseph H. Rodriguez, USDJ

13 For example, Colony asks the Court to find that “Colony has no obligation to provide excess
liability coverage, if at all, unless and until the $1 Million limits of the Aspen Policy have been
exhausted by payments in connection with claims asserted against DBD.” [Dkt. 43-1 at 22].

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10271678. Public record. Not legal advice.