Ms. Holding sued MGB, Matthew Brooks, and Chad Brooks in a state court in New York.

Matthew Brooks testified at his deposition in the state court action that the truck had been on loan to MGB for approximately one year prior to the Christmas Eve accident; that it was used exclusively by MGB; and that MGB paid all the expenses related to the truck including loan payments. Additionally, the Dodge Ram truck was marked with the MGB logo.

The Brookses contended that Chad Brooks was employed by MGB and the truck had been assigned to him to use in his employment. At the time of the incident, he had just left an MGB Christmas party luncheon.

Harleysville Worchester Insurance Company, which provided commercial auto liability insurance to MGB, disclaimed coverage for the Christmas Eve accident. It asserted that the truck was owned by Matthew Brooks, not MGB, and was being driven by Chad Brooks for personal use, not in furtherance of MGB business. Harleysville contended that because the truck was not owned by, hired by, or borrowed by MGB, it was not covered.

Harleysville filed a declaratory judgment action, asking the district court to rule that it had no obligation under its policy for the Christmas Eve incident. In response to an interrogatory, Harleysville's counsel stated the following:

It is Harleysville's position that in order for a vehicle to be “borrowed” within the meaning of the [p]olicy, it must be established that the vehicle was being used in furtherance of MGB business at the time of the accident. That is, it must be shown that MGB exercised control over the vehicle at the time of the accident. MGB employees engaging in personal travel are not acting within the scope of their employment or operating the vehicle within MGB's control….

It is also Harleysville's position that at the time of the accident the 2012 Dodge Ram was not borrowed by MGB because it was not being used in furtherance of MGB business or controlled by MGB at the time of the accident. Chad Brooks stated that at the time of the accident he was done with work for the day and he was going home to eat dinner with his family and go to church. He was completely done with work for the day.

The parties moved for summary judgment.

The Harleysville Policy

The Harleysville policy provided coverage for bodily injury pertaining to:

Covered Autos 01 

, meaning any:

land motor vehicle…designed for travel on public roads. 

The policy defined

Insured 

as:

any person or organization qualifying as an insured in the Who Is An Insured provision of the applicable coverage. 

An endorsement provided that covered autos included:

a. [MGB] for any covered “auto.”

b. Anyone else while using with [MGB's] permission a covered “auto” [MGB] own[s], hire[s] or borrow[s]…. 

The endorsement also stated that it included:

Any “employee” of yours while using a covered “auto” you don't own, hire or borrow in your business or your personal affairs. 

The district court denied the insurer's motion and granted summary judgment in favor of the Brookses and MGB.

In its decision, the district court said that it appeared that Harleysville was basing its argument for summary judgment on its contention, as detailed in the interrogatory response quoted above, that the truck could be considered “borrowed” within the meaning of the policy only if and only when it was being used within the course of MGB's business.

The district court ruled, however, that the policy covered “any vehicle borrowed by MGB” and “anyone driving a borrowed MGB vehicle with MGB's permission.”

Therefore, the district court decided that Harleysville's basis for disclaiming coverage – that the truck was not being driven in the course of MGB's business – was “not an element in the coverage equation.”

The district court reasoned that, under the policy, for an employee using his or her own vehicle to be an “insured” under the policy, the use of that vehicle had to be in furtherance of MGB's business. However, the district court said, there was “no such qualification for covered vehicles which MGB borrow[ed].” If Harleysville had wanted to include a limitation on “borrowed” vehicles “to the effect that coverage pertained only when such vehicles were being used in the course of MGB's business, it could have done so.”

Finally, the district court rejected the insurer's argument that the truck had not been “borrowed,” reasoning that the truck titled to Matthew Brooks, president of closely held MGB, was, according to him, on loan to MGB, which had loaned it to Chad Brooks, an employee of MGB, and concluding that Harleysville's insurance policy “did not require MGB to give notice of any borrowed vehicles” and Harleysville had not presented any evidentiary proof in admissible form showing that MGB had not borrowed the truck from its president.

The case is Harleysville Worcester Ins. Co. v. MGB Building, Inc., No. 16-CV-6135-CJS-JWF (W.D.N.Y. Nov. 16, 2017). Attorneys involved include: For Harleysville Worcester Insurance Company, Plaintiff/Counter-Defendant: Dan D. Kohane, Esq., Jennifer Jeanne Phillips, Esq., Hurwitz & Fine, P.C., Buffalo, NY; James J. Duggan, Esq., Jesse John Cooke, Esq., Duggan Pawlowski & Cooke LLP, Buffalo, NY. For MGB Building, Inc., Defendant/Counter-Claimant: Sean Michael Spencer, Esq., Hagelin Spencer LLP, Buffalo, NY. For Matthew G. Brooks and Chad Brooks, Defendants/Counter-Claimants: Elsa Johanna Schmidt, Esq., Jessica L. Foscolo, Esq., Kenney, Shelton, Liptak & Nowak LLP, Buffalo, NY. For Kathleen M. Holding and Brian Holding, Defendants/Counter-Claimants: Kevin A. Szanyi, Esq., Webster Szanyi LLP, Buffalo, NY.