Declarations and Exclusions

When the Night Wind Howls in the Chimney Cowls

The Halloween-themed tableau infernal above, by Irfan Khan, is included in an extraordinary portfolio of photos from last week's wildfires posted by Matt Welch* on the Los Angeles Times' Opinion LA Blog.  The entire selection is worth a look, as it captures the sublime unreality of life in Southern California, where fires such as these are a possibility through much of any given year.

Often enough, surprisingly, California wildfires will scorch vast acreages without loss to life or structures.  This past week's fires were not that kind.  A Reuters report, posted today at Business Insurance, puts the current losses at 12 lives,  with 78 persons injured and the destruction of some 2,300 structures:

Roughly 14,000 insurance claims have been filed from last week's fire and wind storms in California, according to a research group for the property casualty insurance industry.

The New York-based Insurance Information Institute said insurers may have to pay up to $1.6 billion in claims for fires that ravaged the state's homes, farms, vehicles and businesses.

Every year when one or more major fires burn in and around hillside residential developments, the question arises: why encourage construction in obviously imperiled areas?  The East Coast variant -- when we aren't benefiting from a two-year string of subnormal Atlantic hurricane seasons -- is to ask why we build and rebuild beach front homes when we know they are just waiting to be swept away to sea. 

As the latest fires neared control yesterday, the LA Times' well-respected architecture critic, Christopher Hawthorne, slipped from the arts pages to Page One to opine that "Ignoring Nature, We Build Our Way Into Fire's Path" [the online version of the article receives a somewhat more tabloid-y title: "New developments mask wild land's deadly threat"].  Hawthorne typically leans Green on the subject of development, and this essay is consistent with that approach:   

Since the middle of the 20th century, this is how we have developed much of our new housing in the U.S., and particularly in Southern California: by pushing deep into canyons and deserts and onto flood plains.  We build reassuringly familiar-looking subdivisions, decorated with vaguely Spanish or Mediterranean accents, in locations that by land-use standards -- and by common-sense standards -- are truly exotic.

We build with the unstinting belief that growth is good and that progress in the form of various kinds of technology -- new building materials, military-style firefighting, a vast system of pumps and levees -- will continue to make it possible to construct new pockets of nostalgic architecture virtually anywhere. But maybe our nostalgia should extend beyond red-tile roofs to include earlier lessons about how and where it is safe to build. . . . 

One of the success stories of the last week has been Stevenson Ranch near Santa Clarita, which narrowly averted destruction in part because its houses were built with concrete roof tiles and heat-resistant windows.  But to celebrate this neighborhood as a model for escaping fire is itself a kind of escapism.  The question is never, why am I building here on this hillside that predictably catches fire every few years in the fall (and maybe now in spring or summer too)?  It is, instead, how can technology and new materials -- how can progress -- protect me from the dangers inherent in living where I have chosen to live?

Although Hawthorne is not stating them in that way, these are really no more than classic risk management questions.  We are presented with a known peril -- wildfire -- and must ask ourselves how best to address it.  One answer is to assume that the loss will occur, but to cushion the blow by purchasing insurance.  Another approach is risk prevention: utilize technology in order to limit the damage the peril will cause when it comes calling.  Hawthorne's preferred approach, plainly, would be risk avoidance: there's a serious risk over there, so let's just not go there in the first place.

The answer to the question "why are you building here" is usually a simple one, whether we build in the hills or put down floor at the shore: "I'm building here because I want to live here, because the air seems cleaner, because the view is delightful, and because I am (if I have my wits about me) prepared accept the risks and to take the actions or bear the costs necessary to build and live in this risky place." 

That answer does not address concerns for the preservation of wilderness qua wilderness -- which is undoubtedly a significant additional factor in Hawthorne's critical view of hillside development -- but it is a reasonable and prudent response from the standpoint of facing and managing risk.  If you don't ask for a subsidized or free ride -- insurance, for example, that is artificially underpriced in the name of "affordability" -- feel free to build your house on sand or in the canyons. 

Just remember, and be prepared to accept in some fashion, that the rule in southern California is well settled: "If you build it, the fires will surely come."

~~~

* UPDATE [1132 PDT]:  It seems that Matt Welch is becoming a fixture of fire-related discussions here at Decs&Excs.  In addition to his Opinion LA post linked above, I cited his 2003 Reason article on the California FAIR Plan last week here.  One more citation is essential:

On today's Los Angeles Times opinion page, in an item smolderingly yclept "Burn, burn, burn, burn, burn the rich," Matt takes note of a creative and effective response to the wildfire peril -- the AIG insurance plan, to which I alluded in this post, that provides its admittedly well-heeled insureds with benefits that include a private fire response team -- and is bemused by the howling outrage it inspires in some quarters:

You would think that the cheap availability of potent fire retardant, and the creation of supplementary firefighting capability — with costs borne entirely by the homeowners who choose to live in fire zones, instead of everyday taxpayers — would be a cause for at least mild enthusiasm.  Instead, it was greeted with howls of class warfare.

Numerous colorful examples -- and at least one suggestion that class-based arson would be a laudable social policy -- make the whole thing worth reading, if you can keep your eyes on it while shaking your head in disbelief.  Hot stuff indeed.

~~~

Post title, in the spirit of Halloween, from "The Ghosts' High-Noon" in Gilbert & Sullivan's Ruddigore.

Insurers After the Fires: Liked, But Not Well-Liked

As the fires of this past week are brought increasingly to heel, and as residents and business owners return to assess what the fire has left behind, two articles from Wednesday's Los Angeles Times provide a reminder of the ambivalence so many feel toward their insurers.  "Sure," they seem to say, "insurance companies are there then you need them -- but you've gotta watch 'em like a hawk."

In Section A, as part of the paper's comprehensive fire coverage, we find the headline "Insurers roll even before smoke clears."  The story begins well for insurers: they are on the move, allocating resources with abundance and speed to begin to get their insureds back on their feet.  State Farm and Farmers have moved "mobile claims command centers" in to the field, the better to be close and responsive.  Upper-crust insureds get upper-crust claims handling:

A third insurer, American International Group Inc., was even more proactive.  Its Private Client Group subsidiary dispatched six special trucks to spray retardant on the vegetation and wood portions of policyholders' multimillion-dollar homes threatened by fast-moving fires.

'We think it provides enhanced protection from extensive damage,' said Stan Rivera, the company's director of wildfire protection.

By article's end, however, the focus has shifted from praise of insurers' response to the grim spectre of future rate increases or policy cancellations.  Allstate comes in for particular opprobrium:

The latest fires are just the sort of catastrophe that prompted third-ranked Allstate Corp. in May to stop writing new policies for homeowners.

The insurer also is seeking a major rate increase for current policyholders, citing danger from fires.

That could spell trouble for California homeowners "if other insurance companies choose to look at it like that," warned Douglas Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

State Farm and Farmers said emphatically this week that they had no plans to follow Allstate's lead.

'Southern California is Farmers' home and its territory,' CEO Hopkins said. Los Angeles-based Farmers is a unit of Switzerland's Zurich Financial Services. 'I hope other carriers don't look at this as a time to try to take on horrendous rate increases or try to leave the state.'

Insurers are hastening to reassure the public that cancellation, at least, is not a probable result of a loss in these most recent fires, as Insurance Journal reports:

Insurance industry associations are hoping to quell concerns stirred up they said by the media and politicians that indicated policies would be canceled.

According to the Association of California Insurance Companies, Personal Insurance Federation of California and American Insurance Association emphasized that a law is in place to address the issues of cancellation and nonrenewal.  Besides that, there is no history of widespread non-renewals, as evidenced by data produced by the Insurance Information Network of California, the associations said. In fact, [Cal. Insurance Code §675.1] prohibits an insurer from cancel a policy because of a claim prior to reconstruction, and requires the insurer to offer to renew the policy immediately following a disaster.

Meanwhile, back in the LA Times, the front page of the Wednesday Business section featured a "Consumer Confidential" column by David Lazarus under the title, appropriate to late October, "Insurance claims could haunt houses."  The subject: those wicked insurers are actually gathering information about risk and (horrors!) using it in making underwriting decisions:

If past history is any measure, many homeowners affected by the wildfires burning throughout Southern California will find that claims they submit to insurers will result in higher rates or even dropped policies.

What they, and you, may not know is that virtually all such claims also will end up in vast, privately run databases that are routinely accessed by the insurance industry to determine what rates they'll charge -- or if they'll cover you at all.

In other words, a claim filed with one insurer can be used by another insurer to jack up premiums, even though your record with that other insurer may be spotless.

Pause to consider the topsy-turvy notion of causation underlying that last sentence.  In Lazarus' world, it seems Insurer B is expected to have selective amnesia and to overlook the risk factors surrounding a property so long as prior losses came to rest on Insurer A -- even though the likelihood of loss is exactly the same no matter which particular insurer is covering the property.  If the only change is that State Fire Casualty covered my house last week and Shifting Sands Mutual covers me today, Shifting Sands has every reason to want to know what happened on State Fire's watch.

Lazarus may not be thinking clearly, but he goes to the head of the class in comparison to Amy Bach, executive director of the "San Francisco-based advocacy group" United Policyholders:

Although the databases may help insurers make educated decisions about risks posed by potential customers, they also can be abused by insurance firms seeking any rationale for charging higher rates, Bach said.

'Why should supposedly competing companies get to access your history?' she asked. 'Insurance requires a certain amount of risk on the part of insurance companies. That's just the way it is.'

At the risk of restating the resoundingly obvious, Ms. Bach:

(1)    Any insurance company that wants to charge higher rates for their own sake will do so.  If the rate charged is calculated based on the risk actually being undertaken, then it is an "educated decision" and should be respected as such.  (And someone at the LAT needs to open up a dictionary and rediscover the distinction between a rationale and a rationalization.)

(2)     It isn't exactly fair competition among insurers if the competing companies don't have access to equally accurate information.  [Insurer: "So, has this house ever burned before?"  Applicant: "That would be telling."]

(3)   Yes, insurance "requires a certain amount of risk" -- but the insurer is certainly entitled to know what that "certain amount" is, given that the insurer is kindly (in exchange for payment of the stated premium) taking that risk off the shoulders of the policyholder. 

Fair is fair: While insurers are fully within their rights to gather as comprehensive a database of relevant information as they are able, insurance buyers are entitled to be informed that that sort of data gathering is going on.  The Lazarus column provides a valuable service to that extent, by alerting insurance consumers that they are entitled to free access to their loss history files once a year and by including links for that purpose to the two major database providers -- CLUE and A-PLUS.  The column would have provided a more valuable service, however, had it not wrapped itself in all that conspiracy-theorizing. 

As they say: "That's just the way it is."

~~~

FOR FURTHER LISTENING:  A somewhat more sophisticated discussion of these issues can be had by tuning in to the RiskProf himself, Martin Grace, earlier this week on NPR's Marketplace:

• Marketplace: Once burned, twice shy?

~~~

FOR FURTHER READING:

• At Overlawyered, Walter Olson points to burgeoning discussions of the forestry management issues raised by large Western wildfires.

• Writing on Cato-at-liberty, Randal O'Toole looks at the imbalance between pre-fire risk reduction measures and price-is-no-object suppression efforts after fires have started:

In fact, President Bush’s signing of the Healthy Forests Act in 2003 seemed to signal a huge increase in fires. In the decades prior to 2003, an average of about 4 million acres burned each year and only one year had topped 8 million. Since then, the number of acres burned has never been less than 8 million.

The real problem is too much money: Congress has given the Forest Service a virtual blank check for fire suppression.  The agency — perhaps subconsciously realizing that it needs a sustained number of homes burned each year to keep Congress’ interest in giving it money — has not adopted policies aimed at cost-effectively protecting homes.  Instead, it merely promises that it will save homes through fire suppression — a promise that it cannot keep.

An extended version of that post -- with charts and illustrations! -- is available at The Antiplanner weblog, as is a report on the apparent success of firewise "shelter in place" communities in northern San Diego County.  Unreasonable expectations were a topic alluded to in my earlier fire post.

Smokey Despair, or, "My Momma Told Me, 'You'd Better Chaparral'" [now with Updates]

In the past 48 hours, it seems that all of Southern California has begun to go up in flames.  Especially in an extra-dry year such as this one has been, this is no surprise, but it is far from a welcome development -- especially for those in or near the fire areas.  While Los Angeles County has seemingly drawn the most national attention -- the "celebrity-filled Malibu" angle probably accounts for that -- matters are as bad or much worse in San Bernardino and San Diego counties.  Today's issue of the Los Angeles Daily Journal (our local legal newspaper, unfortunately not available online to non-subscribers) reports that so many judges, lawyers and staffers in San Diego have been affected by fire that the county's entire court system was shut down yesterday.  (San Diego courts remain closed today, per the courts' website.)

• The Los Angeles Times has linked an Interactive Google Map of the fires throughout the region, with updates on size, containment (of which there is still very little) and damage.

• The NASA photo above gives an idea of the extent of fires around Los Angeles at mid-afternoon on Sunday.  At the NASA website, you can compare that photo side by side with another from three hours earlier, for an inkling of how speedily the conflagrations spread once they got started.

One of the key problems with California wild fires is the intermix of natural fuels -- uncleared brush and foliage, particularly in the chaparral-type ecosystems that dominate the region -- and man-made commercial and residential structures.  Back in May, early on in this year's fire season, Insurance Journal published a story ("High Expectations Create Hazard for Firefighters in the Wild") examining the heightened risks faced by firefighters pressured to "do whatever it takes" to save homes from the flames.  Among others, the IJ story quotes John Maclean "a federally certified firefighter and the author of several books on wildfire disasters":

Maclean said the Forest Service could scale back structural protection without too much political fallout, but that would not be easy for the California Department of Forestry and Fire Protection, which answers to the governor.

More than 6 million homes in the Golden State stand in wildfire 'red zones' and that number is expected to grow by 20 percent in the next decade.

'There is an expectation on the part of a lot of people that somebody better get in there and do or die for their house,' Maclean said. 'If you stop doing that and you stop taking reasonable risk to protect structures, you'd have a new governor in about five minutes.'

Chaparral, like many another natural phenomenon, has its own group of supporters, notably the California Chaparral Institute.  It is commonly assumed that the array of plants that make up chaparral actually thrive on fire, or require fire as part of its natural life cycle.  The Institute argues against that perception, emphasizing that while many plants are well adapted to recovery after a fire, none really require it.  Discussing "How chaparral is misunderstood," the Institute looks back at the long history of brush fire in California, and gives simple advice on managing the risk attendant on living when surrounded by a fire-prone native environment:

Large chaparral fires have occurred prior to 2003 and will continue to occur.  Southern California has one of the worst fire-prone climates on earth.  For example, an estimated total of 800,000 acres burned late September, 1889 in two different fires.  One in Orange County, the other in San Diego County (the 2003 Cedar fire [in San Diego County] burned a little over 273,000 acres).  They weren't big deals then because no one really lived in the back country.  Now, with so many homes up against the wilderness, fires can become catastrophic.

'Santa Ana. Sept. 25. - The fire which has been burning for the past two days still continues in the canyons. The burned and burning district now extends over one hundred miles from north to south, and is 10 to 18 miles in width. Over $100,000 worth of pasturage and timber has been destroyed.'

Los Angeles Times, September 27, 1889.

The best ways to prevent loss of life and property are to retrofit existing structures to make them more fire safe, plan communities so they are not built in high fire risk areas, and maintain proper vegetation management directly around structures.

Those whose homes and businesses are damaged in these fires will inevitably present claims to their insurers.  The most fire-prone brush and slope areas are predominately covered by the California FAIR Plan*, but private insurers can expect their share.  California Insurance Commissioner Steve Poizner yesterday issued a press release on responses to the fires.  While there will likely be a string of stories suggesting that insurers have dealt unfairly with fire claims, the Commissioner's release ends with this remark directed to "public adjusters," whose role is to represent insureds and to pursue claims on their behalf:

Commissioner Poizner also reminds public adjusters of a law enacted after the 2003 wildfires that prohibits them from soliciting homeowners for adjusting business for seven calendar days after the disaster.  The purpose of the law is to permit victims, such as victims of this week's fires, to have some time to comprehend their losses before contracts relating to their losses are solicited.

More fire and insurance news as the situation develops...

~~~

* Matt Welch, then with Reason magazine and now of the Los Angeles Times, took a skeptical view of the FAIR plan in 2003, noting its tendency to encourage building in dangerous areas by making available unduly affordable insurance. 

A personal anecdote: When we bought our current home in Glendale, just north of Los Angeles, 16 years ago, a brushfire came within a quarter mile or less two days after we closed escrow.  We were insured with the FAIR plan for the first ten years or so, at which point several private market insurers began writing in the neighborhood.  Were those insurers unwise?  Personally, I hope never to have cause to find out.

~~~

UPDATE [2115 PDT]: From his current perch at the LAT, Matt Welch has a few more choice insights on FAIR plans.  A small taste:

The Malibu Schadenfreude identified by Steve Lopez and others today contains a legitimate public-policy issue within its (even more legitimate?) naked class envy/hatred. Namely, that many rich folk who build mansions in canyons -- and their less-rich compadres who build McMansions in foothills -- do so with subsidized, artificially inexpensive, actuarily unsound, government-secured insurance of last resort, called the California Fair Access to Insurance Requirements, or FAIR for short (and ironic). . . .

It is peculiar that a government-based insurance mechanism originally intended to deal with the urban wreckage of the riotous -- but metaphorical -- "long hot summers" of the 1960's is now the central tentpole for property owners' responses to the literal "long hot summers" that annually turn southern California into the prime exhibit in the Tinder Box Museum.

Discuss, if you will.

~~~

FURTHER UPDATE [102607, 1047 PDT]:  The Wall Street Journal, in an article free to non-subscribers, profiles California Chaparral Institute founder Richard Halsey, who is encountered with hose at the ready as that chaparral around his own home burns vigorously:

• "Fires Turn Up Heat On a Key Advocate Of California Shrubs"

A Picture is Worth a Thousand Words (subject to a 250-word deductible)

Back in January, I wrote about the high cost of insuring major art museum exhibitions.  The topic comes up again this week on the weblog of TIME Magazine's art writer, Richard Lacayo in the final installment of his interview with Neal Benezra, Director of the San Francisco Museum of Modern Art (SFMOMA). 

Here is the relevant passage:

LACAYO: What one thing would make your job easier?

BENEZRA: I wish the government would reassess this fractional gift thing.[*] This was something that was not broken and didn't need to be fixed.  There was not abuse.  Certainly not here there wasn't.

And something has to be done about insurance.  We're in earthquake territory.  We're in a 10-year-old building that's as rock solid as could be.  But because of our geography, we're having a terrible time with insurance.  This spring we had the Brice Marden show from MoMA and the Picasso and American Art show from the Whitney both here at the same time.  The insurance value of the art on loan to us at that time was close to a billion dollars.  We had such an insurance problem.  There's a federal indemnification program for international loans.  What we're lobbying very hard for now is that the indemnification program should work for domestic loans as well.

The nature of the current indemnification program, in which the U.S. government effectively acts as an insurer of traveling exhibition, was described in an informative 2005 article from Chubb Insurance, written from the point of view of collectors who might be considering lending works to an indemnified exhibition.  It makes the program sound like a reasonable and effective risk management tool:

Under the Arts and Artifacts Indemnity Act, claims against an indemnified exhibition are paid by the US Government, but since its inception there have been only two claims.  These were both over 10 years ago and totaled less than $105,000.  This is in spite of the fact that the program has indemnified 746 exhibitions for 211 museums in the United States, saving museums millions of dollars in commercial insurance premiums.

This is all sounding like a pretty good deal for museums but here’s why it’s also a good deal for collectors: it’s not that easy to get an exhibition approved for indemnity coverage.  The reason there have been so few claims is that standards of care must be extremely high for an exhibition to be accepted.  There is a very lengthy application which requires that the applicant provide very specific details about the nature of the proposed exhibition, places and dates, values and very specific information about packing, shipping and security arrangements, including for fragile objects which may not qualify for the indemnity.  Applicants must supply condition reports and climate control data at exhibition sites and storage facilities, and there are also questions about loan fees and contractual arrangements with lenders.  There are two other requirements that are of particular interest to appraisers and insurance carriers; all shipments must be accompanied by a courier, and lender values must be confirmed by a third party.  The end result is that if you are lending to an indemnified exhibition you can sleep pretty well; your treasured pieces will certainly be well cared for.

Administrative responsibility for the program lies with the National Endowment for the Arts.  The NEA Arts Indemnity Program Information Advisory details some of the program's terms and limits:

The Arts and Artifacts Indemnity Act allows coverage for a single exhibition up to $1,200,000,000. The total dollar amount of indemnity agreements which can be in effect at any one time is $10,000,000,000. The deductible amounts are as follows:

If the value of items covered by an indemnity agreement for a single exhibition is:

1.       $2,000,000 or less, then coverage under the Indemnity Act extends only to loss or damage in excess of the first $15,000 of loss or damage to items covered;

2.       more than $2,000,000 but less than $10,000,000, the first $25,000;

3.       not less than $10,000,000 but less than $125,000,000, the first $50,000;

4.       not less than $125,000,000, but less than $200,000,000, the first $100,000;

5.       not less than $200,000,000, but less than $300,000,000, the first $200,000;

6.       not less than $300,000,000, but less than $400,000,000, the first $300,000;

7.       not less than $400,000,000, but less than $500,000,000, the first $400,000;

8.       $500,000,000 or more, the first $500,000.

The GAO's Catalog of Federal Domestic Assistance** notes an interesting precondition to inclusion of an exhibition under the indemnification program:

Items must be of educational, cultural, historical or scientific value; and their exhibition must be certified by the U.S. Department of State to be in the national interest.

I have found nothing to indicate that any otherwise qualified exhibition has ever been determined not to be "in the national interest."

For an idea of the sort of exhibitions that have been benefiting from federal indemnification, consult the NEA's list of exhibitions covered by the program for 2007-2008.

Given what look to be sound and strict "underwriting" and loss prevention practices, and the very low incidence of covered losses historically, Neal Benezra's wish to see the Arts Indemnity Program expanded to purely domestic exhibitions doesn't seem particularly unreasonable.

~~~

Notes:

* Benezra's reference to "fractional gifts" relates to tax policy and to the deductibility of certain partial donations of art to museums.  Donn Zaretsky's Art Law Blog explained the issue at length last year, and recently noted moves afoot in Congress to revisit it.

** Prior to researching this post, I had never heard of the Catalog, which effectively provides "one-stop shopping" for those seeking Federal largesse:

The online Catalog of Federal Domestic Assistance gives you access to a database of all Federal programs available to State and local governments (including the District of Columbia); federally-recognized Indian tribal governments; Territories (and possessions) of the United States; domestic public, quasi-public, and private profit and nonprofit organizations and institutions; specialized groups; and individuals.  After you find the program you want, contact the office that administers the program  and find out how to apply.

The GAO proudly promises that you can "search for assistance programs in a variety of ways!" -- exclamation point in original --  including the "Top 10 (Percent of) Catalog Programs By Number Of Hits."  Top programs include the Christopher Columbus Fellowship Program ("To encourage and support research, study, and labor designed to produce new discoveries in all fields of endeavor for the benefit of mankind") and the oddly-named Unsolicited Grant Program of the U.S. Institute of Peace (which, although its grants are "unsolicited," nonetheless accepts applications which are to be "vetted through a rigorous, multi-stage process of review").  Anyone inclined to believe that their Government is Giving Money Away for No Good Reason will find ample reinforcement for that belief in these pages.

~~~

SFMOMA photo by alexg via stock.xchng .

Mothers Against Brie & Chardonnay*

Suppose, just suppose, that you are the Aspen Art Museum.

On occasion, you make your gallery spaces available for a price for social events. 

At some of these social events, alcohol is served. 

Following one such event, at which he consumed some of the alcohol that was served, a guest hires a cab to take him to another location.  En route, the guest attacks the cab driver, tosses him out of the vehicle and steals the cab.  The guest is arrested a few minutes later and charged with, among other things, assault and driving while intoxicated. 

The injured cab driver brings suit  for damages for his injuries.  The defendants in the case are the obstreperous guest and -- you know what's coming, don't you? -- the Aspen Art Museum.

As the Aspen Times reports, the Museum did not provide or serve whatever alcohol the guest consumed.  "The museum leased its space to the . . . group [holding the event], which was not affiliated with the facility and only renting it as a party venue."

That’s why Brad Ross-Shannon, a Denver-based attorney who is defending the museum on behalf of its insurance company, Travelers, will seek a court order to have it dismissed from the lawsuit.

'The claims against the museum absolutely have no merit,' Ross-Shannon said. 'It’s our hope and intent to be dismissed from the suit.'

But according to [cab driver] Nesvat’s attorney, Jeff Wertz, the museum is liable because it violated what is known as the 'Dram Shop Act,' by knowingly and willfully serving [alleged assailant] Talton alcohol when he was visibly intoxicated.

[Aspen Times story via Donn Zaretsky's Art Law Blog.]

I cannot comment on how this will pan out in Colorado, but California galleries and museums can rest easy.  "Dram Shop" liability -- liability for the damage caused by the direct wrongdoing of someone to whom you provided alcohol -- is recognized in a number of states, but is significantly restricted in California law. 

The controlling statute is California Business & Professions Code section 25602 [PDF link], which provides for criminal misdemeanor liability for those who sell, furnish or give away alcoholic beverages to "any habitual or common drunkard or to any obviously intoxicated person."  However, under that same statute, the Legislature has specified that there is no civil liability for damages "to any injured person or the estate of such person for injuries inflicted on that person as a result of intoxication by the consumer of such alcoholic beverage" running from the provider of alcohol, whether as a commercial seller (e.g., a liquor store, restaurant or bar) or in a purely social setting (e.g., hosting a party or Sunday afternoon football get-together in your home).

For several years in the mid-1970's California did impose broad liability on alcohol providers for injury caused by the recipients of the inebriating beverages.  That liability was recognized by the state Supreme Court in 1971 as to commercial sellers of alcohol, then expanded to non-commercial social hosts in 1978.  That last extension was a step too far for Californians: the Legislature (or those in a position to make their opinions known through the Legislature) promptly amended section 25602 to include the current prohibition on civil liability for the intoxication of others.  The amended version of the statute includes this somewhat unusual subsection --

(c)    The Legislature hereby declares that this section shall be interpreted so that the holdings in cases such as Vesely v. Sager (5 Cal.3d 153), Bernhard v. Harrah's Club (16 Cal.3d 313) and Coulter v. Superior Court ___ Cal.3d ___ [the "social host" case] be abrogated in favor of prior judicial interpretation finding the consumption of alcoholic beverages rather than the serving of alcoholic beverages as the proximate cause of injuries inflicted upon another by an intoxicated person.

-- which is the legislative equivalent of telling the Supreme Court and other creative jurists: "We mean it, man!"

~~~

For Reference: The website for Mothers Against Drunk Driving -- which consistently endorses imposition of the broadest possible liability on alcohol providers -- provides a state by state summary of Dram Shop laws.

~~~

The cover illustration on the Penguin edition of Zola's L'Assommoir, above, is "The Hangover" by Henri de Toulouse-Lautrec, various versions of which, by the original artist and others, can be examined here. 

~~~

* UPDATE [101907]:

Anyone care to wager how long it will take before I receive a cease and desist letter from MADD requiring me to change the title of this post?    [Via Radley Balko -- who previously noted the mysterious dearth of actual mothers in MADD's upper echelons.]