Mr. Herrington asked Mr. Garrett to drive the coal truck back to the garage, and Mr. Garrett received permission from Clarksburg Mack to leave the flatbed truck at JRH's facility.

Mr. Garrett left the keys in the flatbed truck, but apparently did not give Mr. Herrington permission to use the vehicle. Based on past practice, however, Mr. Herrington said that he understood that he was only authorized to use the flatbed truck to drive to Clarksburg Mack to pick up his coal truck once it was repaired.

Thereafter, Tom Quinn, Clarksburg Mack's service manager, called Mr. Herrington to report that the coal truck was operative and ready to be picked up. He gave Mr. Herrington the option of waiting until Monday, when a Clarksburg Mack employee would be available to return the coal truck, or coming to Clarksburg Mack to pick up the coal truck that day.

Mr. Herrington, who needed the coal truck early Monday morning, chose to pick up the coal truck that day and Mr. Quinn gave him permission to drive the flatbed truck to Clarksburg Mack to retrieve the coal truck.

On his way from Morgantown to Clarksburg, Mr. Herrington collided with the rear of Denzil Carpenter's vehicle, which was stopped at a red light; Mr. Carpenter's vehicle then collided with that of Jillian Long. Mr. Carpenter, his wife Rhonda Carpenter, and their minor niece S.C. were injured.

The Carpenters and John and Marsha Cochran, on behalf of S.C., sued Mr. Herrington and JRH in a West Virginia state court, alleging negligence.

Canal Insurance Company, which had issued a commercial trucking policy to JRH, declined coverage, asserting that the flatbed truck Mr. Herrington operated at the time of the accident was neither a “covered auto” nor a “temporary substitute auto” because it was not used as a replacement for the coal truck that was being repaired.

Canal then went to court, seeking a declaration that its policy did not cover the flatbed truck and that it had no duty to defend or indemnify Mr. Herrington or JRH in the state court action

The parties moved for summary judgment,

The Canal Policy

The Canal policy stated:

A. COVERAGE

Any “temporary substitute auto” that is loaned to the named insured will be considered a covered “auto” only for those coverages where an “X” is entered in the check-box in the Schedule of Coverages.

(Emphasis added.)

The policy's Schedule of Coverages included an “X” in the check box for:

Liability Coverage

The policy also provided:

Section II—Liability Coverage

A. Coverage

We will pay all sums an “insured” legally must pay as damages because of “bodily injury” or “property damage” to which the insurance applies, caused by an “accident” and resulting from the ownership, maintenance, or use of a covered “auto.”

(Emphasis added.).

The policy defined:

temporary substitute auto

to include:

[A]ny “auto” you do not own while used with the permission of its owner, who is engaged in the business of selling, leasing, repairing, or servicing “autos” while such “auto” is used as a temporary replacement for a covered “auto” you own that is out of service because of its:

1. Breakdown,

2. Repair, or

3. Servicing

(Emphasis added.)

The Court's Decision

The court found that the flatbed truck owned by Clarksburg Mack and operated by Mr. Herrington qualified as a “temporary substitute auto” under the Canal policy.

In its decision, the court first explained that the Canal policy's temporary substitute auto provision had five requirements:

(1) the “temporary substitute auto” must be owned by someone other than the insured;

(2) the owner of the “temporary substitute auto” must be engaged in the business of selling, leasing, repairing, or servicing autos;

(3) the “temporary substitute auto” must be used with the permission of its owner;

(4) the “temporary substitute auto” must have been used as a “temporary replacement” for the insured's own vehicle; and

(5) the insured's own vehicle must be out of service due to a breakdown, repair, or servicing.

The court noted that the parties agreed that four out of the five requirements were satisfied:

(1) Clarksburg Mack owned the flatbed truck operated by Mr. Herrington;

(2) Clarksburg Mack was engaged in the business of “selling, leasing, repairing, or servicing” autos;

(3) Clarksburg Mack gave Mr. Herrington permission to drive the flatbed truck; and

(4) Mr. Herrington's coal truck was “out of service because of its breakdown, service, or repair.”

The court then examined whether Mr. Herrington had used Clarksburg Mack's flatbed truck as a “temporary replacement” for his coal truck, and ruled that he had.

It rejected Canal's argument that the flatbed truck was not being used as a “temporary replacement” for Mr. Herrington's own vehicle because “had the coal truck not been out of commission for repairs, [Mr. Herrington] would have had no reason to be driving to Clarksburg Mack.” In the court's view, a temporary substitute auto provision was “in fact designed for that very purpose: to provide an insured with continuity of liability coverage where an automobile described in the insured's policy [became] unavailable for use due to 'its breakdown, repair, or servicing,' and, therefore, another vehicle must be temporarily used in its place.”

The court said that, to adopt Canal's “circular reasoning” would defeat the purpose of the temporary substitute auto provision in providing continued protection to the insured while the insured's own auto was being repaired or serviced.

The court added that Canal's conclusion that Mr. Herrington must have used the flatbed truck to haul coal to be entitled to coverage was “unpersuasive” because it presumed that he only used his coal trucks to haul coal. The court said that the record reflected that Mr. Herrington sometimes drove his coal trucks to Clarksburg Mack himself to obtain service, “undercutting Canal's assumption that those trucks were used exclusively to haul coal.”

The court concluded that because Mr. Herrington used the flatbed truck to the same extent as he used his own vehicle (that is, driving to a repair shop to complete an auto repair cycle), the flatbed truck was used as a “temporary replacement” for Mr. Herrington's coal truck.

The case is Canal Ins. Co. v. Carpenter, No. 1:15CV127 (N.D. W.Va. May 10, 2016). Attorneys involved include: Robert A. Lockhart, Martin & Seibert, L.C., Charleston, WV, for Plaintiff; J. Ryan Stewart, Bucci Bailey & Javins LC, D. Blake Carter, Jr., Bailey, Javins & Carter, LC, Charleston, WV, Adam M. Barnes, Walsh, Collis & Blackmer, LLC, Pittsburgh, PA, Jeffery L. Robinette, Terry B. Tignor, Robinette Legal Group, PLLC, Morgantown, WV, for Defendants.