11 F.4th 860
8th Cir.2021Background
- Worldwide purchased a Mack power unit that McNeilus upfitted into a garbage truck for Rumpke; McNeilus arranged final inspection at a different facility.
- McNeilus contracted Advanced Auto under a Master Drive-Away Service Agreement to transport the truck between McNeilus facilities; Advanced Auto provided driver Gregory Hansen.
- While driving a Worldwide-owned truck on February 18, 2016, Hansen collided with Brady Gartner; Gartner’s conservators sued Worldwide, Advanced Auto, and Hansen.
- Advanced Auto tendered defense/indemnity to Worldwide’s insurer, Westfield; Westfield denied coverage and sought a declaratory judgment that the policy did not cover Advanced Auto or Hansen.
- Worldwide’s Westfield policy insured permissive users of covered autos but excluded anyone “using a covered ‘auto’ while he or she is working in a business of selling, servicing or repairing ‘autos’ unless that business is [Worldwide’s] ‘garage operations.’”
- The district court granted summary judgment for Westfield, finding Advanced Auto/Hansen fell within the exclusion because they were working in McNeilus’s auto-servicing business; the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Advanced Auto/Hansen were “insureds” under Worldwide’s policy while driving the truck | Advanced Auto (via Carolina Casualty) contended they were permissive users of Worldwide’s covered auto and thus insured | Westfield argued the business-use exclusion applied because they were working in a business of servicing autos | Held: Not insured — exclusion applied |
| Whether the business-use exclusion requires employment or control by the auto-servicer | Carolina Casualty argued exclusion should not apply to independent contractors whose business is transporting autos | Westfield argued exclusion covers those acting in furtherance of an auto-servicer’s business even if independent | Held: Exclusion applies to non-employees acting to further the auto-servicer’s commercial interests |
| Proper test for “working in a business of … servicing” — formal control or functional/commercial-interest test | Carolina Casualty urged a narrow test tied to control/employment | Westfield and court adopted a functional test: activity integral to and furthering the auto-servicer’s business | Held: Adopted functional test; driver need not be employee if acting on behalf of auto-servicer |
| Whether the exception to the exclusion (if working in such a business) applies because the business was Worldwide’s “garage operations” | Carolina Casualty argued transport was integral to Worldwide’s garage operations and thus excluded from exclusion | Westfield argued the servicing business was McNeilus’s, not Worldwide’s, so the carve-out did not apply | Held: Transport furthered McNeilus’s servicing business, not Worldwide’s garage operations; carve-out does not apply |
Key Cases Cited
- Wolfley v. Solectron USA, Inc., 541 F.3d 819 (8th Cir. 2008) (standard of de novo review on summary judgment)
- Travelers Indem. Co. v. Bloomington Steel & Supply Co., 718 N.W.2d 888 (Minn. 2006) (insurer bears burden to prove applicability of exclusions)
- Lobeck v. State Farm Mut. Auto. Ins. Co., 582 N.W.2d 246 (Minn. 1998) (exclusions are part of the contract and must be considered)
- Wendt v. Wallace, 240 N.W. 470 (Minn. 1932) (distinguishing permissive drivers from unknown drivers of independent auto businesses)
- Grisham v. Allstate Ins. Co., 992 P.2d 891 (N.M. Ct. App. 1999) (functional test: exclusion covers drivers acting on behalf of automobile business)
- Mahaffey v. Gen. Sec. Ins. Co., 543 F.3d 738 (5th Cir. 2008) (exclusion applies where driver furthers lessee’s commercial interests)
- Empire Fire & Marine Ins. Co. v. Brantley Trucking, Inc., 220 F.3d 679 (5th Cir. 2000) (vehicle use that furthers commercial interests falls within business-use exclusion)
- Hartford Ins. Co. v. Occidental Fire & Cas. Co., 908 F.2d 235 (7th Cir. 1990) (exclusion refers to uses that further the lessee’s commercial interests)
- Forkwar v. Empire Fire & Marine Ins. Co., [citation="487 F. App'x 775"] (4th Cir. 2012) (independent contractor’s acts that further commercial interest bring exclusion into play)
- Md. Cas. Co. v. Integrity Ins. Co., 693 F.2d 506 (5th Cir. 1982) (distinguishing ordinary couriers from drivers using owner’s autos in servicing operations)