Interpreting A Commercial Policy

Business people in Dallas, Fort Worth, Arlington, Grand Prairie, Mansfield, Keller, Coppell, Irving, Mesquite, Garland, Richardson, or anywhere else in the State of Texas might want to read the case below. It illustrates why it is important to know what your commercial insurance policy covers and how to interpret it.
The United States Court of Appeals for the Fifth Circuit issued a decision on November 24, 2010, in a case styled, Atlantic Casualty Insurance Company v. Horatio Gonzalez. This is appeal from a district court where the district court had ruled in favor of the insurance company. This appeals court upheld the ruling of the district court.
In this case Atlantic Casualty Insurance Company (Atlantic) insured PV Roofing Corp. (PV). PV was sued by Gonzalez when Gonzalez was injured at a site where PV was performing roofing work.
In this case there was uncontroverted evidence in the record that shows PV engaged Bernardo Mejia as an independent contractor to complete a job for PV. Mejia was a personal friend of Gonzalez. On the day of the accident, Mejia went to do his final inspection at the job site and took Gonzalez with him. Mejia got on an aluminum ladder to make a repair. When he finished, he climbed down the ladder and moved around the house to make another repair. Gonzalez followed him with the ladder. Mejia asked Gonzalez to hand him the ladder; when Gonzalez did so, it came into contact with a high voltage power line and Gonzalez was electrocuted. Gonzalez was not paid by Mejia or PV for any services, and PV was not aware that Gonzales would be at the job site.
Atlantic argued that they had no duty to defend or indemnify. This arguement was based on the policy exclusion which states:
This insurance does not apply to:
(i) “bodily injury” to any “employee” of any insured arising out of or in the course of:
(a) Employment by any insured; or (b) Performing duties related to the conduct of any insured’s business (ii) “bodily injury” to any “contractor” arising out of or in the course of the rendering or performing services of any kind or nature whatsoever by such “contractor” for which any insured may become liable in any capacity …
The definitions part of the policy stated:
“Employee” shall include, but is not limited to, any person or persons hired, leased, loaned, contracted or volunteering for the purpose of providing services to or on behalf of any insured, whether or not paid for such services and whether or not an independent contractor.
As used in this endorsement, “contractor” shall include but is not limited to any independent contractor or subcontractor of any insured … and any and all persons working for or providing services and or materials of any kind for these persons or entities mentioned herein.
In making its ruling in this case the court stated as follows:
The question in this case is whether Atlantic’s policy excludes coverage to PV for Gonzalez’s claim based on the exclusion. Although Gonzalez alleges that he was not an employee or a contractor, there are no facts supporting the allegations.
The Gonzalez allegations “contain no facts describing what Gonzalez was actually doing when he was injured, or the nature of his relationship with PV or Mejia.”
Gonzalez testified that he does not remember what happened after arriving at the job site with Mejia. According to Mejia, Gonzalez moved the ladder at Mejia’s request so Mejia could make a roof repair as part of his subcontracting work for PV. This has not been contested.
The court then said that despite Gonzalez’s arguements that he was not an employee of PV because he received no payments from Mejia or PV, had no relationship with PV, and did not volunteer to help PV, we agree with the lower court that Gonzalez fell within the broad definition of “employee” in the policy’s exclusion. Under this policy, a person is an “employee” if he is “volunteering for the purpose of providing services to or on behalf of any insured.” Gonzalez “volunteered” to help Mejia. The policy does not require that Gonzalez have a direct, formal relationship with PV for his actions to qualify as a service “to or on behalf of” the insured. As a volunteer who was performing a service on behalf of PV, Gonzalez was an “employee”, and the “employee” exclusion effectively excluded coverage to PV for Gonzalez injury.
These policy interpretation cases can be confusing and are always fact specific and policy language specific. Only an experienced Insurance Law Attorney can provide guidance on how these case will turn out.