QUESTION. Is it permissible to serve alcohol at association-sponsored events?
ANSWER. Yes. As long as the association is serving the alcohol rather than selling it, potential liability should be minimal.
No social host who furnishes alcoholic beverages to any person may be held legally accountable for damages suffered by that person, or for injury to the person or property of, or death of, any third person, resulting from the consumption of those beverages. (Civ. Code §1714(c).)
Most often we see wine and cheese served at annual meetings or beer at association picnics and rarely does it create a problem. However, if an association serves hard liquor, the likelihood of an incident increases and the risk of litigation goes up, especially if the function is off-site and participants must drive to get home.
Lawsuits. If the association is sued, it may ultimately avoid liability but it will have to endure the litigation. It is better to avoid the problem altogether by limiting the alcohol to beer and wine and not allowing guests to consume too much. Serving alcohol to an obviously intoxicated participant could result in a misdemeanor:
Every person who sells, furnishes, gives, or causes to be sold, furnished, or given away, any alcoholic beverage to any habitual or common drunkard or to any obviously intoxicated person is guilty of a misdemeanor. (Bus. & Prof. Code §25602(a).)
Common Sense Precautions. Whenever the association is serving alcohol at an event, the board should take some sensible precautions to minimize potential liability. Some of those precautions include:
- make the premises safe,
- serve only beer or wine,
- establish a two drink limit,
- do not serve minors,
- do not serve to a visibly intoxicated person,
- stop serving alcohol well in advance of the event's ending time, and
- provide transportation home for those who may need it.
Insurance. In addition to avoiding hard liquors and limiting consumption, associations should make sure they are covered for "host liquor liability" on the association's commercial general liability policy. This is a special liability form that covers individuals or organizations (not engaged in the business of distilling, selling or distributing alcoholic beverages) that sponsor or host events where liquor is served. Coverage is provided for injury or damage caused by an intoxicated person to whom the insured served liquor. Most policies include the coverage at no extra cost. If your policy does not include it, you should add it. Host liquor liability covers claims for bodily injury or property damage that result when the association serves alcoholic drinks without charging for them. This coverage will not protect the association if the beverages are sold. If you plan to sell alcohol, you may be able to purchase additional coverage specific to the event. Usually, the cost is reasonable and can often be secured with a phone call.
Catering. If the association hires a bartender or caterer to serve food and alcohol, the board should make sure the party has insurance and that the association is named as additional insured for the event. The board should also contact the association's insurance agent to find out if the amount of insurance is sufficient and if the association should purchase its own coverage for the event.
Charging Admission. If an association charges admission to an event where it is serving alcohol, it can be liable for injuries or deaths that may occur as a result of alcohol consumption. (Ennabe v. Manosa.)
Recommendation: When associations plan events involving alcohol, boards should talk to the association's insurance broker and attorney and follow their advice. For more information on the subject see "Liquor Liability."
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.