Plaintiff’s Attempt to Reserve Claims against Non-settling Dram Shop Defendant Felled by Circuity of Action

In Butt v. Independence Venture Club, Ltd., 453 S.W.3d 189 (Ky.  App. 2014), the Kentucky Court of Appeals held that the plaintiff’s entry into a settlement agreement including a hold harmless provision with a drunk driver and his insurance carrier precluded maintenance of a dram shop liability claim against the owner of a bar where the driver had consumed alcoholic beverages. The Court held under those circumstances that the dram shop claim, if successful, would create circuity of litigation, since the dram shop would have a right of indemnity from the driver, who would have a claim back against the plaintiff under the hold harmless. The decision was consistent with the prior Kentucky Supreme Court holding in DeStock #14 v. Logsdon, 993 S.W.2d 952 (Ky. 1999).

The decision highlights a pitfall for the plaintiff of attempting to settle a claim with one tortfeasor while attempting to reserve claims against others who have a right of indemnity against the settling party.

David Kramer is a Partner with Dressman Benzinger LaVelle psc with offices in Cincinnati, OH, Crestview Hills, KY and Louisville, KY