Interpreting An Insurance Policy – What Dallas Lawyers Need To Know

Dallas insurance lawyers need to know how the Courts look at policy language when deciding how to rule on cases involving insurance. A 1997, Amarillo Court of Appeals case is a good one to read to help understand how the Courts interpret certain policies. The style of the Amarillo case is, Home State County Mutual Insurance Company v. Acceptance Insurance Company. Here is some of the relevant information.
Esquival was engaged to deliver rock and sand, called “base,” for a road construction project. Esquival had a commercial auto liability policy issued by Home State and a CGL policy issued by Acceptance. Pritchard, an employee of Jordan Paving, another subcontractor responsible for leveling and spreading the base, collided with a load of base which had previously been unloaded at the site by Esquival. Pritchard sued Esquival and Esquival brought a declaratory judgment action against Acceptance. Acceptance likewise sought a declaratory judgment that Home State’s auto policy provided coverage for Pritchard’s injuries. The trial court held that the auto policy provided coverage and granted Acceptance a summary judgment.
When this Amarillo Court of Appeals made its’ ruling it held that the judgment of the trial court be reversed and judgment be rendered in favor of Home State. The CGL policy, not the auto policy, provides coverage for Pritchard’s injuries. Texas courts have rejected the “coming to rest” rule to interpret the “loading and unloading” clause contained in the “used” provision of a standard auto liability policy. Instead, Texas courts have adopted the “completed operation” rule which holds that loading and unloading not only includes the immediate transport of goods to and from the vehicle, but the complete operation of transporting the cargo between the vehicle and the place to or from which the cargo is being delivered.
Under the “completed operation” rule, unloading is completed when the goods being transported reach their final destination. The fact that Esquival had delivered only one load of base the morning of Pritchard’s collision is irrelevant. The load reached its final destination when it was completely unloaded on the road at the construction site. At that stage of the project, Jordan Paving was responsible for leveling and smoothing out the base. Therefore, the Home State policy did not provide coverage for Pritchard’s injuries because the base had been completely unloaded and delivered to its final destination.
Furthermore, the auto policy contained an exclusion that precluded coverage “for damages resulting from the handling of property after it is moved from the covered auto to a place where it is finally delivered.” This exclusion also precludes coverage because the load of base in question had been finally delivered.
Having determined that the load in question had been fully delivered, the “loading or unloading” exclusion contained in Acceptance’s CGL policy is inapplicable. If applicable, Esquival would be required to complete the entire construction contract by delivering and unloading all of the base necessary for the entire road project before the “unloading” could be completed. The pertinent question is not whether the contract had been completed, but whether the unloading operation under the terms of the policy had been completed. Because it had with respect to the load in question, the CGL policy issued by Acceptance provides coverage for the loss.