Insured Covered for Damage from Use of Tractor While Loading and Unloading Though Injury Occurred after Unloading
In Canal Ins. Co. v. Cook, 2008 WL 2718355, (M.D.Ala.), a mobile home collapsed onto co-defendant Frank LaDon Cook, pinning him underneath. At the time, he was setting up the home as a part of his duties as an employee at Bear Creek, a company that sells, moves, and sets up mobile homes. The tractor Cook used to transport the mobile home and Bear Creek were both owned by co-defendant Colbert Brian McGriff.
Cook filed a lawsuit in state court against Bear Creek, McGriff, and others, charging them with negligence and violation of the Alabama Extended Manufacturer's Liability Doctrine.
Bear Creek and McGriff asked Canal Insurance to defend and indemnify them. Their policy provided duty-to-defend and indemnification coverage for “bodily injury or property damage … caused by an occurrence and arising out of the ownership, maintenance or use, including loading and unloading, … of an owned automobile.” Under the policy, the term “owned automobile” included the tractor and any mobile home while attached to a scheduled trailer. The term “owned automobile” included “a trailer not described in this policy, if designed for use with a four wheel private passenger automobile and if not being used for business purposes with another type automobile.”
At the time the mobile home collapsed on top of Cook, it was not attached to the tractor and the tractor was not at the site of the mobile home. While the tractor had been used to transport the mobile home a day or so earlier, another Bear Creek employee later drove the tractor away from the site where the mobile home was being set up. Cook alleged in state court that, during the time that the mobile home was attached to the tractor, Bear Creek and McGriff failed to inspect the site adequately, failed to provide appropriate supervision, and that they detached the mobile home from the tractor prematurely.
Canal Insurance sought a declaration as to whether it had a duty to defend or indemnify Bear Creek and McGriff.
The court first examined the issue of whether Cook had standing to argue that Canal Insurance owed Bear Creek and McGriff a duty to defend them in state court. The court explained that under an insurance policy to which a person is not a party—and thus under which he is not insured— a person has no standing to assert that the insurer has a duty to defend the insured. Here, Cook was not a party to the Canal policy and he did not demonstrate any benefit he would gain if Canal was required to defend Bear Creek and McGriff in the underlying suit. Also, he would suffer no injury if Canal was not required to defend those parties and he did not show that there was any bar to Bear Creek's and McGriff's assertion of their own contractual rights. Thus, the court held that Cook did not have standing to argue that Canal owed Bear Creek and McGriff a duty to defend.
Next, the court looked at whether Canal was entitled to summary judgment on its claim that it had no duty to defend Bear Creek and McGriff in the underlying state court lawsuit.
The court first explained that the law required an insurer to defend regardless of the ultimate liability of the insured if the allegations of the injured party's complaint showed an accident or occurrence which came within the coverage of the policy
The court determined that the policy in question covered only injuries caused by the use of the mobile home during loading and unloading process while the tractor was attached to the mobile home , and this included the alleged negligence occurring during the delivery of the mobile home, when the insured allegedly failed to compact the site on which the home was deposited. Although the injury did not occur until after the tractor had left the job site, the alleged negligence occurred while the mobile home was still attached to the covered tractor.
In addition, the process of unloading a vehicle, for purposes of liability coverage for damage caused by the use of the vehicle while loading and unloading, included at least the entire operation during which the article was lifted and removed from the vehicle up to the moment when the article had actually come to a place of rest outside the vehicle and the connection of the vehicle with the process of unloading had ceased.
Accordingly, the court denied Canal's and Cook's motions for summary judgment, and dismissed Canal's request for a declaration that it is under no duty to indemnify Bear Creek and McGriff.