March 27, 2015 – A state appeals court has ruled that a “business auto policy” covers a paving company’s liability for a motorcycle accident involving a stationary trailer, but the company is not covered for the accident under a “commercial general liability policy.”

An employee of Rick’s Blacktop & Paving Co. used a company dump truck to tow a trailer near a worksite, then parked the trailer in an allegedly hazardous and illegal lane off the road. Motorcyclist Cole Cooper collided with the trailer after cresting a hill.

Cooper sued Rick’s Blacktop, which had two business insurance policies with Grinnell Mutual Reinsurance Company. One was a “business auto policy” that covered liability for company “autos.” The other was a “commercial general liability policy.”

In Cooper’s lawsuit against Blacktop, its employee, and Grinnell, the court bifurcated the insurance coverage issue and granted summary judgment to Grinnell, concluding Rick’s Blacktop was not covered for its liability under either of its Grinnell insurance policies.

In Cooper v. Rick’s Blacktop & Paving Co., 2014AP966 (March 19, 2015), a three-judge panel for the District IV Court of Appeals ruled that Rick’s Blacktop was covered under the business auto policy, but an exclusion barred coverage under the other policy.

Business Auto Policy

The circuit court had ruled that there was no initial grant of coverage under the business auto policy because the trailer that Cooper struck was not listed as a “covered auto.”

But the panel said that summary judgment was not appropriate because the dump truck was covered, and the dump truck was used to tow and station the trailer.

“[W]e conclude that there is an initial grant of coverage based on the uncontested facts that Cherry used a dump truck that was listed on the schedule of covered autos to tow the trailer to, and leave it in, the allegedly hazardous location where Cooper’s motorcycle collided with it,” wrote Presiding Appeals Court Judge Brian Blanchard.

The panel noted that Grinnell’s policy did not include an exclusion for autos not listed on the “schedule of autos.” Grinnell had argued that allowing coverage for the trailer would always allow businesses to be covered for an auto it didn’t pay premiums to cover.

“Grinnell seems to ignore the fact that, unless the accident does involve use of a scheduled auto, there is no initial grant of coverage,” Judge Blanchard wrote.

“We can think of many circumstances in which accidents involving a trailer could occur that might be covered only if the trailer were listed on the schedule, regardless whether vehicles that might tow the trailer are listed on the schedule of covered autos.”

The panel also rejected Grinnell’s argument that losses caused by both covered (dump truck) and excluded (trailer) risks are precluded unless the covered risk is independent from the excluded risk, the so-called “independent, concurrent cause” rule.

The principle doesn’t apply, the panel noted, because the policy was susceptible to more than one meaning and a reasonable insured could believe the trailer was covered.

Blanchard also noted that the rule didn’t apply because “no one suggests that there were multiple instances of negligence by Rick’s that jointly resulted in injury.” The panel directed the circuit court to grant summary judgment to Cooper on this issue.

Commercial General Liability Policy

Although the panel found coverage under the business auto policy, it said that coverage was precluded under the commercial liability policy, based on an auto exclusion.

The policy specifically excluded liability for damage or injury caused by an “auto,” including “trailers.” Thus, the trailer was not covered, the panel concluded.

The panel also rejected Cooper’s argument that an exception applied for “mobile equipment” covering construction and paving equipment, based on the trailer’s ramp: “Any such ramp could not be considered road construction or resurfacing equipment.”