Covington Specialty Ins. Co. v. Indian Lookout Country Club, Inc., 62 F.4th 748

Covington issued a commercial general liability policy (7/11/2018–7/11/2019) to Indian Lookout Country Club, Harley Rendezvous Classic, Inc., and the Potters; an endorsement (the Absolute Auto Exclusion) replaced the standard auto exclusion.
The Absolute Auto Exclusion disclaims coverage for bodily injury "arising out of or resulting from the use of any auto" and states it applies even if claims allege negligence in supervision or monitoring by an insured.
On June 21, 2019 two motorcyclists were struck by a Kia driven by an attendee entering the Rendezvous; the motorcyclists sued the driver and the Insureds for negligent traffic supervision (Underlying Action).
The Insureds tendered defense; Covington denied coverage under the Absolute Auto Exclusion, provided a limited defense to oppose default while reserving rights, and later filed a declaratory judgment action seeking no duty to indemnify and recovery of defense costs.
The Insureds counterclaimed for a duty to defend/indemnify; the district court granted summary judgment for Covington, finding the exclusion unambiguous; the Insureds appealed arguing ambiguity based on Essex Ins. Co. v. Grande Stone Quarry.
The Second Circuit affirmed, holding the Absolute Auto Exclusion, read on its own terms, unambiguously excludes coverage for injuries arising out of the use of any auto, including third-party vehicles.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Absolute Auto Exclusion unambiguously bars coverage for bodily injury arising from the use of any auto (including third-party vehicles)	Exclusion's plain language ('any auto') bars coverage for auto-related injuries regardless of ownership or operator	Exclusion is ambiguous because it omits the standard limiting phrase 'owned or operated by any insured' and Grande Stone Quarry found similar wording ambiguous	Exclusion is unambiguous on its face, must be read alone as replacing the standard exclusion, and precludes coverage for injuries arising from use of any auto; judgment affirmed

Essex Ins. Co. v. Grande Stone Quarry, LLC, 918 N.Y.S.2d 238 (3d Dep't 2011) (found ambiguity in similar exclusion phrasing on related issue)
DMP Contracting Corp. v. Essex Ins. Co., 907 N.Y.S.2d 487 (1st Dep't 2010) (held similar auto exclusion unambiguously applies whether or not an insured used the vehicle)
Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304 (N.Y. 1984) (insurer must use clear and unmistakable language to exclude coverage)
Ace Wire & Cable Co. v. Aetna Cas. & Sur. Co., 60 N.Y.2d 390 (N.Y. 1983) (ambiguities in exclusions construed against insurer)
Sanabria v. Am. Home Assur. Co., 68 N.Y.2d 866 (N.Y. 1986) (unambiguous policy language is given its plain, ordinary meaning)
Ruge v. Utica First Ins. Co., 819 N.Y.S.2d 564 (2d Dep't 2006) (similar auto exclusion held unambiguous)