NMSC: Gas Stations Liable for Selling Gas to Intoxicated Persons

In a controversial 3-1 opinion, the New Mexico Supreme Court has held that a gas station can be liable for selling gas to a person who is intoxicated. In Morris v. Giant Four Corners, Inc., the Court answered a question that was certified to it from the Tenth Circuit, holding that a commercial gasoline vendor owes a duty of care to a third party to refrain from selling gas to a driver it knows or should know to be intoxicated.

Background

This case arises out of a drunk driving accident fatality. After a long night of drinking, Andy Denny drove his car until it ran out of gas. He and his passenger then walked to a gas station to purchase gas so that he could keep driving.

While at the gas station, Denny learned that there were no empty gas cans for sale. Denny and his passenger decided to purchase a gallon of water and empty it to use as a container for gasoline. Initially, because they were intoxicated, the clerk working at the gas station would not sell anything to Denny or his passenger, but the clerk ultimately sold the gallon of water and a gallon of gasoline to Denny. After filling the gallon container with gas, Denny and his passenger left on foot and walked back to Denny’s vehicle. Denny and his passenger then drove back to the gas station and purchased an additional nine gallons of gasoline for Denny’s car.

After driving away from the gas station, Denny dropped off his passenger. He then returned to the highway. As he drove, his vehicle crossed the centerline and then collided with the oncoming vehicle of Marcellino Morris. Morris was killed in the collision. Nearly four hours later, a blood sample revealed Denny’s blood alcohol concentration at 0.176.

Mr. Morris’s estate brought a wrongful death action in federal court. The lawsuit included claims against the gas station for vicarious liability for, among other things, negligent entrustment of chattel (the gas). The gas station filed a motion for judgment on the pleadings arguing that New Mexico law did not create a duty to refrain from selling gas to an intoxicated driver. Finding no cases to support this theory, the district court granted the motion. The estate then appealed to the Tenth Circuit, which certified the question to the New Mexico Supreme Court.

The Majority Opinion

To anyone familiar with New Mexico tort law, the majority opinion will not come as a surprise: the Court found that there was a duty. Whether a duty exists in New Mexico is a question of law. In general, a duty of ordinary care always exists unless the Court can articulate a policy reason why it should not. Most questions therefore end up being questions of fact (i.e., did the vendor know or have reason to know the customer was intoxicated?). The net result is that it can be very difficult and expensive to dispose of a negligence case even if it is weak because the fact issues must be decided by a jury.

New Mexico has long recognized a cause of action for negligent entrustment. Its initial recognition of the cause of action was based on sections from the Restatement (Second) of Torts, a popular treatise. Under the Restatement, a seller has a duty to refrain from supplying products to a person the supplier knows or has reason to know is likely to use it in a manner that creates an unreasonable risk of harm to himself or others.

New Mexico had previously relied on the relevant sections of the Restatement to apply negligent entrustment of chattel in the context of letting an intoxicated person use a car. Here, the Court expanded it to also include the sale of gasoline. More generally, however, the Court treated the Restatement as a general principle of negligence, arguably adopting it in its more general form. As such, litigants should expect this theory to be invoked outside the context of cars, gasoline, and DWI as lawyers find creative ways to use this case.

The Dissent

Retired Justice Barabara Vigil, sitting by designation, wrote alone in dissent. Fearing the unintended consequences of this opinion, Justice Vigil observed that the decision is contrary to New Mexico law (which developed in the context of lending cars to intoxicated persons) and that most states to have considered this issue have gone the other way. As she explains, there are good reasons to do believe that the rule adopted by the majority creates more problems than it solves.

First, Justice Vigil notes that judicial rules that require fact-specific analysis lead to overcautiousness, potential error, and claims of discrimination. Second, the legislature has not extended DWI liability to non-alcohol transactions, and Justice Vigil believes it is a mistake for the Court to do so. Third, Justice Vigil believes that the majority did not adequately take into account the “practical reality of sales to the general public,” which makes it difficult to know why random customers behave strangely, and provided inadequate guidance to businesses as to how to avoid being held liable for future acts of customers.

The dissent makes a persuasive case. Regardless, however, the law of New Mexico is now that gas stations can be liable for sales of gasoline to intoxicated persons. That law probably extends more generally to other commercial sales. We will no doubt see many future cases on this topic. In the meantime, businesses should review their insurance policies and employee training to try to reduce their exposure to this type of liability.

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