Lancer Insurance Co. v. Garcia Holiday Tours, 345 S.W.3d 50

Garcia Holiday Tours operated a commercial bus company; it contracted with Alice Independent School District for a band trip to Six Flags, carrying Alice High School students.
During the trip, several passengers observed the driver coughing; upon return, the driver was hospitalized with active tuberculosis.
TB can be latent (not contagious) or active (contagious); passengers were later tested, some with latent TB.
Passengers sued the driver and bus company for negligent exposure; Lancer Insurance refused defense/indemnity, claiming no coverage under the business auto policy.
A trial jury awarded over $5 million to passengers; after judgment, insureds and judgment creditors sought declarations of rights under the policy.
Court of Appeals remanded for factual resolution on where infections occurred; Texas Supreme Court granted review to address coverage.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the transmission of a communicable disease arise from use of the vehicle under the policy?	Passengers: coverage extends so long as the bus is used to transport them and they were injured during the trip.	Lancer: exposure to disease is a general liability risk, not produced by vehicle use; injuries did not arise out of the bus's use.	No coverage; injuries did not arise from the vehicle's use.
What causal standard governs whether an injury 'arises out of' vehicle use?	Passengers contend Lindsey three-part test supports coverage.	Lancer argues Lindsey must be read with policy language; vehicle use must produce the injury.	The same Lindsey framework applies; vehicle use must be a producing cause, not merely a situs.
Is the insurer obligated to defend the insureds against the passengers' claims?	Passengers contend insurer must defend and indemnify as per policy.	Insurer disputes both defense and indemnity given no coverage.	Duty to defend not resolved on appeal; remains an issue in the trial court; indemnity claim is decided here.

Lindsey v. Mid-Century Insurance Co. of Texas, 997 S.W.2d 153 (Tex. 1999) (establishes 'arising out of' / 'resulting from' three-part test for auto-use coverage)
LeLeaux v. Hamshire-Fannette Indep. School Dist., 835 S.W.2d 49 (Tex. 1992) (assault in vehicle generally not covered; vehicle not producing cause)
Utica Nat'l Ins. Co. of Tex. v. Am. Indem. Co., 141 S.W.3d 198 (Tex. 2004) (distinguishes 'arising out of' vs 'due to' in parallel policy language)
State Farm Mut. Auto. Ins. Co. v. Peck, 900 S.W.2d 910 (Tex. App.-Amarillo 1995) (injury by dog while in vehicle not auto accident; nexus too remote)
Lincoln General Ins. Co. v. Aisha's Learning Center, 468 F.3d 857 (5th Cir. 2006) (vehicle as producing cause in a hot-vehicle scenario; 'producing' standard applied)
American States Ins. Co. v. Bailey, 133 F.3d 363 (5th Cir. 1998) (discussion of 'arising out of' vs related causation concepts in insurance)