Insurance Policy Interpretation Issues

Grand Prairie insurance lawyers need to be aware of this recent Federal District Court case. It is styled Colony Insurance Company v. Progressive County Mutual Insurance Company. It is an appeal from a summary judgement.
This is an action for breach of contract and associated damages against Defendant arising out of Defendant’s refusal to defend its insured, Bell Tech Enterprises, Inc., d/b/a Bell Tech Training School, and Bell Tech Home Health Care.
Defendant issued a policy of liability insurance to Bell Tech, which is a licensed provider of home and community based services. The policy required that Defendant defend Bell Tech against covered claims arising out of the use of covered automobiles. The policy provides coverage as follows:
We will pay all sums an “Insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident and resulting from the ownership, maintenance or use of a covered “auto.”
Bell Tech was providing services to Carlos Jackson (“Jackson”), who was afflicted with cerebral palsy, mental retardation, seizure disorders, and arterial sclerosis, and as a result profoundly impaired mentally and physically. Jackson was confined to a wheelchair, fed and provided water through a feeding tube, and unable to speak.
In July 2008, Jackson was transported, along with a number of other patients of Bell Tech, from one medical facility to another in a van owned by Bell Tech and insured by Defendant. The patients boarded the van around 3:00 p.m. Shortly after leaving the first facility, Bell Tech employees stopped to get gas. Afterwards, the van in which Jackson was a passenger would not start. As a result, other vehicles were sent to transport the passengers. Jackson was the last person to be removed from the disabled van. The time he spent in the broken down van is disputed. Plaintiff alleges that Jackson spent little to no time in the broken down van, having been removed between 3:00 and 3:20 p.m. Defendant alleges that Jackson may have stayed in the broken down van as late as 4:45 p.m. It is undisputed that Jackson arrived at his residence around 6:45 p.m., approximately three hours and forty-five minutes after he first boarded the van. Jackson lived 2.5 miles from where the van broke down. Once at his residence, the staff at the facility observed that Jackson “did not look well, his eyes were half shut, he was non-responsive to stimuli, and his pulse was allegedly very faint.” Staff workers called the paramedics, who noted that Jackson was not breathing and had no pulse. Jackson was pronounced dead on arrival at the hospital, with a core temperature of 107 degrees Fahrenheit. It is undisputed that the cause of death was hyperthermia and dehydration due to “environmental exposure”. Cerebral palsy was also listed as a contributing cause.
Jackson’s estate filed suit against Bell Tech in state court.
Plaintiff filed this suit, seeking damages for Defendant’s failure to defend.
Plaintiff alleges two claims against Defendant. They are the duty to defend and the duty to indemnify. The Fifth Circuit has stated that these issues are clear and distinct from one another. The duty to defend means the insurer must defend the insured in any lawsuit that alleges and seeks damages for an event potentially covered by the policy.
The duty to defend is determined solely by the facts alleged in the petition and the terms of the policy. This is known as the eight-corners rule. “Resort to evidence outside the four corners of these two documents is generally prohibited.” Moreover, the duty to defend does not rely on the truth or falsity of the underlying allegations; an insurer is obligated to defend the insured if the facts alleged in the petition, taken as true, potentially assert a claim for coverage under the insurance policy. The duty to defend is broad, with the Fifth Circuit explaining that “[i]f any allegation in the complaint is even potentially covered by the policy then the insurer has a duty to defend its insured.” Because the two documents relevant to the duty-to-defend inquiry are only the insurance policy and the petition, an insurer’s duty to defend can be determined at the moment the petition is filed.
The parties hinge the argument of Defendant’s duty to defend on the definition of “use of an auto”. The insurance policy covers damages caused by “accident and resulting from the . . .use of a covered “auto. Plaintiff argues that Jackson’s death arose out of the use of an auto. Defendant argues that the auto was not the but for cause of Jackson’s death. Rather, the allegations are of medical negligence related to Bell Tech’s custodial care of Jackson. Therefore, Defendant argues that the van was only the location of the injury and not the instrumentality of the injury.
Texas courts define “use” broadly: “the phrase ‘arising from use’ is treated as being a ‘general catchall … designed and construed to include all proper uses of the vehicle not falling within other terms of definition ….’ ” The phrase ‘arise out of” means there is “simply a ‘causal connection or relation,’ which is interpreted to mean that there is but for causation, though not necessarily direct or proximate causation.” “Use” means “to put or bring into action or service; to employ for or apply to a given purpose.”
In Texas, for liability to arise out of the use of a motor vehicle, there must be a causal connection between the accident or injury and the use of the motor. Further, “the use required is of the vehicle qua vehicle, rather than simply as an article of property.” If the vehicle at issue “is only the locational setting for an injury, the injury does not arise out of any use of the vehicle.” Lindsey sets forth a three part test for determining whether an injury relates to a “use” of an automobile under an insurance policy:
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.
Case law demonstrates how broad “use of a vehicle” is in Texas. In Lindsey, the case involved a child who attempted to enter his parents’ parked and locked truck through its rear to retrieve an article of clothing. While doing so, he inadvertently caused a loaded shotgun in the truck’s gun rack to fire, injuring a passenger in another vehicle. The court concluded that the injury arose from the use of the truck as a matter of law. The child’s sole purpose was to gain entry, and even his unorthodox method of entry was not an unexpected or unnatural use of the vehicle for a child. Even though the vehicle was not in motion, the court concluded that the truck “produced” the injury. Likewise, the Fifth Circuit has applied the test for “use” broadly. In Aisha’s Learning Center, the Fifth Circuit found “use of a vehicle” when a child was left in a car for seven hours in the heat. In applying the Lindsey factors, the Fifth Circuit found that the van was being used for one of its inherent purposes: transportation of children. Although the van was no longer in motion, its purpose, as to the trapped child, had not yet been fulfilled and was thus ongoing. Second, the accident occurred within the van’s natural territorial limits. Third, the vehicle caused the conditions that produced the injury. The Court recognized “the danger of leaving children in locked vehicles during extreme weather conditions is well known; it is a danger inherent in the manner in which automobiles trap heat.” The Court further explained that the same dangers are not found in classrooms or parks. Therefore, “but for” the use of the van to transport the child, she would not have been injured.
The allegations in the present suit bear strong similarity to the facts in Aisha’s Learning Center. Jackson was an incapacitated individual being transported to a medical facility when the van broke down and he was left in the vehicle. In applying the Lindsey factors, the Court finds and holds that Jackson’s injury is caused by the use of a vehicle. First, Jackson’s injuries occurred while the vehicle was being used for one of its inherent purposes, transporting patients. As in Aisha’s Learning Center, the purpose of the vehicle had not yet been fulfilled though the vehicle was not in motion. Bell Tech had not finished transporting Jackson, hence the need to send another van. Second, the hyperthermia allegedly occurred while Jackson was in the van, which is within the natural territorial limits of the vehicle. Neither party disputes that Jackson was in a vehicle in the time he was being transported between the two facilities. Third, a hot July day in a vehicle caused the “environment exposure” that caused the hyperthermia. Defendant tries to distinguish Aisha’s Learning Center, arguing that the child was trapped in the vehicle for seven hours while Jackson was in a broken down car for much less time than that, about thirty minutes, and then in transit for approximately three and a half hours. Nevertheless, the Harris County Deputy Chief Medical Examiner determined that Jackson’s death was caused by hyperthermia and dehydration due to environmental exposure. Before Jackson was in the van, he was in an air conditioned facility. After he left the van, he was inside his air conditioned residence. The only time he was subjected to the environment was while he was in the van. Therefore, the vehicle was a substantial factor in creating the environment that led to Jackson’s hyperthermia and dehydration.
Defendant argues that a physically vulnerable person could have become overheated anywhere. Defendant further argues that this is not an auto liability claim, but a health care or custodial negligence claim. However, the vehicle was a “substantial factor” in bringing about the injury, which satisfies the eight corners rule. The Fifth Circuit noted in Aisha’s Learning Center that the type of rapid onset hyperthermia that kills children, or incapacitated adults in this case, occurs almost exclusively in motor vehicles, making the car an instrumentality, rather than mere situs, of the injury. Even if health care or custodial negligence attributed to Jackson’s ultimate death, this allegation goes beyond the eight corners of the policy and petition. The car was a substantial factor in creating the environment that led to hyperthermia and dehydration, which is enough to satisfy the eight-corners rule. The Fifth Circuit has stated that the test is not sole cause or even “proximate cause. Rather, it is “but for” cause. (“The phrase “arise out of” means there is “simply a ‘causal connection or relation,’ which is interpreted to mean that there is but for causation, though not necessarily direct or proximate causation.”
Therefore, the circumstances of Jackson’s hyperthermia and dehydration fall within the definition of “use of an auto.”
This case is a long example of how courts will interpret policy language.