A federal district court in Connecticut has ruled that an insurance company was not obligated to defend or indemnify a restaurant for a judgment obtained by a couple injured in an accident with the restaurant's driver, because of the policy's "auto exception."
Case
Jonathan Prue, a delivery driver for M&A Pizza Restaurant, LLC, in Storrs, Connecticut, was delivering a pizza when he was involved in an automobile accident with John and Heidi Organek. At the time of the accident, Mr. Prue was operating a vehicle owned by Jarrett C. Toth, who was not associated with M&A Pizza.
The Organeks sued and obtained a judgment against M&A Pizza for personal injuries they sustained in the accident.
State Farm Insurance Company, which insured M&A Pizza, asked the U.S. District Court for the District of Connecticut to declare that it had no duty to defend or indemnify M&A Pizza, Mr. Prue, or Mr. Toth against the Organeks' suit. Among other things, State Farm relied on the policy's "auto exception."
The Organeks counterclaimed, seeking a declaration that State Farm had a duty to indemnify, and the court held a trial.
The State Farm Policy
The State Farm policy excluded:
"[b]odily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any insured.The Court's Decision
The court ruled that State Farm had no duty to defend or indemnify M&A Pizza Restaurant, Mr. Prue, or Mr. Toth.
In its decision, the court explained that the State Farm policy's auto exception excluded from coverage any bodily injury and property damage arising out of an insured's operation of an auto. It found that Mr. Prue was an "employee" of M&A Pizza at the time of the accident, that the delivery he was making at the time of the accident was within the scope of his employment, and, accordingly, that Mr. Prue was an insured. Because he was driving an auto at the time of the accident, the court ruled, liability arising out of the accident was "excluded from coverage."
The court concluded that the claims made in the Organeks' complaint did not give rise to a duty on the part of State Farm to defend or indemnify M&A Pizza, Mr. Prue, or Mr. Toth, and State Farm did not have a duty to pay the Organeks the judgment amount that had been entered against M&A Pizza.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].