457 F.Supp.3d 715
D. Minnesota2020Background
- Worldwide ordered Mack cab-and-chassis units for Rumpke; Mack sent chassis to McNeilus where a packer unit was mounted to make finished garbage trucks.
- McNeilus separately contracted with AAT (Advance Auto Transport) under a Master Drive-Away Service Agreement to transport finished trucks from McNeilus (MN) to a McNeilus facility in Ohio; Worldwide did not hire or supervise AAT.
- On February 18, 2016, AAT driver Gregory Hansen was driving a finished truck after leaving McNeilus when he collided with a third party, giving rise to personal-injury litigation.
- AAT tendered defense/indemnity to Westfield (Worldwide’s insurer), claiming permissive use of a Worldwide-owned vehicle; Westfield denied coverage and sought a declaratory judgment that the garage-operations (automobile business) exclusion precluded coverage.
- Westfield’s policy defines "garage operations" and excludes coverage for someone "using a covered ‘auto’ while he or she is working in a business of selling, servicing or repairing ‘autos’ unless that business is your ‘garage operations.’"
- The Court held that AAT was transporting the truck on behalf of McNeilus and therefore was "working in" McNeilus’s garage business; the automobile-business exclusion applied and Westfield was entitled to summary judgment.
Issues
| Issue | Plaintiff's Argument (Westfield) | Defendant's Argument (AAT) | Held |
|---|---|---|---|
| Whether the garage-operations/automobile-business exclusion bars coverage for AAT/Hansen | Transporting the finished truck was an integral, essential part of McNeilus’s garage business, so AAT was "working in" that business and is excluded | Term is ambiguous; driver not employed in auto business and was not "working in" McNeilus’s business for purposes of exclusion | Exclusion applies; AAT was working in McNeilus’s business; Westfield wins |
| Whether "working in" requires employment or direct control by the garage business | Exclusion covers agents/nonemployees when the garage business assumes control or directs the transport | Argues wording implies narrower meaning (must be employed or in auto business) | Court follows authority that control/agency, not formal employment, determines application |
| Whether McNeilus’s activities qualify as "selling, servicing or repairing autos" | McNeilus installed packer units and delivered trucks for customer service; delivery/transport is integral to servicing | AAT/Worldwide emphasize separate contracts and lack of control by McNeilus/Worldwide over transport | McNeilus held to be in business of selling/servicing autos; delivering to facilitate servicing falls within exclusion |
| Whether Westfield must indemnify AAT/its insurer for settlement and defense fees | Westfield says no obligation under policy due to exclusion | AAT/insurer sought defense/indemnity under policy | Court: Westfield has no coverage obligation; summary judgment for Westfield |
Key Cases Cited
- Grisham v. Allstate Ins. Co., 992 P.2d 891 (N.M. Ct. App. 1999) (delivery to an automobile business for servicing falls within automobile-business exclusion; independent driver can be agent of auto business)
- Columbia Ins. Co. v. Baker, 108 F.3d 148 (8th Cir. 1997) (identical automobile-business exclusion construed as clear and unambiguous)
- Universal Underwriters Ins. Co. v. American Motorists Ins. Co., 541 F. Supp. 755 (N.D. Miss. 1982) (agency/principal relationship brings driver within automobile-business exclusion)
- Allstate Ins. Co. v. Universal Underwriters Ins. Co., 439 S.W.2d 385 (Tex. Ct. Civ. App. 1969) (control/agency is dispositive for exclusion application)
- Wesco Ins. Co. v. Valasquez, 540 P.2d 203 (N.M. 1975) (driver acting as agent of auto repair business brought within exclusion)