Insurance Policy Language

People everywhere, including Dallas, Fort Worth, Grand Prairie, Arlington, Mansfield, Irving, Burleson, Granbury, Lake Worth, or anywhere else in Texas, have dreams of someday having their own business. When that happens they will find themselves having to purchase commercial insurance policies to protect themselves and their business from accidents and mistakes that are simply going to happen at one time or another.
The United States Court of Appeals for the Fifth Circuit decided a case on July 9, 2010, that involved a small business person and their commercial insurance policies. The style of the case is, Employers Mutual Casualty Company; Emcasco Insurance Company v. Juan Miguel Bonilla, et al. This case is an insurance coverage dispute and though there are other issues in the case, the primary issue was the meaning or definition of the word “use” within the insurance policy.
Here are some background facts: Bonilla leased a truck from Jolly Chef Express, Inc. On a daily basis he hired a driver and cook for each of his trucks. At the end of each day the driver and cook would return to their parking place to clean the truck and prepare for the next day’s route.
On February 13, 2002, Bonilla hired Fernandez to drive and Molina to serve as a cook on one of the trucks. At the end of the day they returned to their parking place. While parked, Fernandez poured a flammable substance on the floor of the truck to loosen the grease. He then left the truck to turn in the days money. Molina began washing dishes, then an explosion occurred. A pilot light from the stove had ignited the flammable substance and Molina was severely injured.
A lawsuit resulted. Jolly Chef’s trucks were insured by Employers Mutual Casualty Company under a Commercial General Liability Policy and a Commercial Unbrella Policy and a Commercial Auto Policy from Emcasco Insurance Company.
Again, the primary issue in this case was whether the fire arose out of the “use” of the vehicle or the maintenance of it.
This Federal Court looked to Texas insurance law to reach a determination in this case. The insurance companies argued that “use” meant driving and operating the truck. There are many cases supporting their arguement. The court looked at the policy. The first page of the Auto Policy is captioned “Commercial Auto Declarations – Business Auto Coverage.” That same page states that Jolly Chef is the named insured, that the “form of the business” is a corporation, and that the “description” of the business is “mobile catering.” The policy, clearly, was not intended to apply to a motor vehicle used by individuals simply in their daily activities of traveling to and from work or school or otherwise. The policy was specifically for vehicles involved in a mobile catering business.
For coverage to exist, the accident must have been one “resulting from the ownership, maintenance or use of a covered auto.”
Here, the truck was a vehicle designed for a special use. It had kitchen facilities built into it. Cleaning necessary from the use of that equipment set in motion the events resulting in the accident, and a pilot light that was a part of the equipment was among the causes of the accident.
The term “use” was not defined in the policy. Under Texas law, liability for “use” requires that “a casual connection or relation … exist between the accident or injury and the use of the motor vehicle. This is language from the Texas Supreme Court case, Mid-Century Insurance Co. of Texas v. Lindsey, which is applicable case law for guidance here. In the Lindsey case, the court stated, “The term ‘use’ is the general catchall of the insuring clause, designed and construed to include all proper uses of the vehicle not falling within other terms of definition such as ownership and maintenance.” “If a vehicle is only the locational setting for an injury, the injury does not arise out of any use of the vehicle.”
Citing legal treatises the court stated:
For an injury to fall within the “use” coverage of an automobile policy (1) the accident must have arisen out of the inherent nature of the automobile, as such, (2) the accident must have arisen within the natural territorial limits of an automobile, and the actual use must not have terminated, (3) the automobile must not merely contribute to cause the condition which produces the injury, but must itself produce the injury.
This is quoting, Couch on Insurance, and John A. Appleman, Insurance Law and Practice.
The court went on to say that the “inherent purpose” of a mobile catering truck certainly could be seen as including the use and maintenance of its kitchen facities, though the inherent purpose of a usual vehicle would not include cooking but it is not an unexpected use.
Here the truck was equipped with a kitchen. According to Dallas City Code provisions, all licensed mobile units were required daily to return to the commissary to be cleaned and stocked for the next day’s route. The full scope of the truck’s purpose was to transport food and personnel and also to prepare and sell food. Molina could not safely be transported with a greasy floor. Moreover, the food could not be prepared and sold if the truck were not clean and sanitary. Cleaning a mobile kitchen was not simply a speculative event that might conceivably occur, not was the cleaning foreign to the vehicle’s inherent purpose.
Further, this vehicle is not some mystical, generic vehicle, but one specifically insured by the parties to the policy. The special nature of this vehicle was not hidden or otherwise unknown. It literally was in black and white in the policy.
The Federal Court ruled in favor of coverage and is good reading for how courts analyse coverage issues in insurance policies.