American States Insurance v. Travelers Property Casualty Co.
167 Cal. Rptr. 3d 288
Cal. Ct. App.2014Background
- Royal Catering Company owned and leased a fleet of food trucks; the Gomezes leased one and operated it as a mobile kitchen with permanently installed cooking equipment (deep fryer, grill, etc.).
- The truck had only two seats/seatbelts and was not designed to carry passengers beyond driver and cook; it parked at stops to prepare and sell food along a daily route.
- While driving, hot oil from the truck's deep fryer splashed and burned Irais Gomez; arbitration found Royal liable on a products-liability theory because an improper fryer basket caused the spill and apportioned fault among defendants.
- American States (auto insurer) defended Royal under reservation and settled the Gomezes’ claims for $500,000; Travelers (CGL insurer) denied defense, arguing the auto exclusion applied.
- Trial court granted Travelers’ summary adjudication, holding the food truck was an "auto" (transporting cargo/food) not "mobile equipment," and therefore Travelers had no duty to defend; American States and Royal appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the food truck is "mobile equipment" under the Travelers CGL (thus outside the auto exclusion) | American States: the truck’s primary purpose was as a mobile kitchen, i.e., maintained primarily for purposes other than transporting persons or cargo | Travelers: the truck transports food/customers; its primary purpose is moving food (cargo) so it is an "auto" excluded from CGL coverage | Court: truck is "mobile equipment" — its primary purpose was serving as a mobile kitchen, not transporting persons or cargo; Travelers’ auto exclusion did not apply |
| Whether American States’ auto policy excludes products/completed-operations liability (i.e., whether Travelers must indemnify) | American States: the loss arose from Royal’s products/completed operations (fryer basket), which the auto policy’s Completed Operations exclusion removes from auto coverage, leaving Travelers’ CGL responsible | Travelers: argued no duty under CGL given auto exclusion and that American States had primary auto coverage | Court: American States’ auto policy excluded completed-operations/products liability (so CGL must cover); Travelers had a duty to defend/indemnify under its primary CGL policy |
Key Cases Cited
- Powerine Oil Co., Inc. v. Superior Court, 37 Cal.4th 377 (interpretation of insurance contracts; de novo review of duty-to-defend issues)
- Alpine Ins. Co. v. Planchon, 72 Cal.App.4th 1316 (vehicle maintained primarily for non-transport purposes can be "mobile equipment")
- Employers Mut. Cas. Co. v. Bonilla, 613 F.3d 512 (5th Cir.) (recognizing mobile catering trucks’ inherent purpose includes kitchen use)
- Horace Mann Ins. Co. v. Barbara B., 4 Cal.4th 1076 (broad duty to defend where complaint creates potential for indemnity)