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14-P-449 Appeals Court
RITA BORDEN vs. PROGRESSIVE DIRECT INSURANCE COMPANY.
No. 14-P-449.
Bristol. November 10, 2014. - May 21, 2015.
Present: Rubin, Brown, & Maldonado, JJ.
Insurance, Business exclusion. Contract, Insurance. Motor
Vehicle, Insurance. Practice, Civil, Summary judgment.
Civil action commenced in the Superior Court Department on
October 9, 2012.
The case was heard by Robert J. Kane, J., on motions for
summary judgment.
Joseph A. Keough, Jr., for the plaintiff.
Hillary J. Giles for the defendant.
BROWN, J. The single issue presented for review is whether
the "automobile business" exclusion contained in a standard
Rhode Island automobile policy applies in the circumstances of
this case as to preclude coverage. Ruling on cross motions for
summary judgment, a judge of the Superior Court concluded that
it did, and ordered judgment to enter for the defendant,
2
Progressive Direct Insurance Company (Progressive). We agree
and, accordingly, affirm the judgment.1
To prevail on appeal, the plaintiff must convince us that
there is a dispute of material fact which precludes summary
judgment or that the undisputed material facts entitle her to a
judgment as matter of law. See Augat, Inc. v. Liberty Mut. Ins.
Co., 410 Mass. 117, 120 (1991). Our review is de novo. See
Miller v. Cotter, 448 Mass. 671, 676 (2007).
1. Facts. The material facts necessary to decide the
legal issue before us are undisputed. In 2008, Geraldina Melo
purchased a Dodge tow truck solely for the use of her boy
friend, Davidson Lues Bucco. On behalf of automobile
dealerships, Bucco transported used automobiles by means of the
tow truck either (1) from dealer lots to sales auctions or (2)
from the auctions to dealer lots. Bucco called his business
"David's Towing." He hired Eduardo A. Silva to assist him with
the work.2 Whenever Silva's help was needed, someone from
David's Towing would notify Silva that he was needed on a
1
As confirmed at oral argument, for purposes of summary
judgment, the parties agree that Rhode Island law applies. We
cite to cases from other jurisdictions, as did the parties, for
their persuasive value.
2
At the time, Silva, the holder of a commercial driver's
license, also worked full-time as a driver for CMI of Canton
delivering doughnuts.
3
designated day. Silva performed services for David's Towing
once or twice per week, earning $100 per day.
On the date of the accident, Silva arrived at the garage
used by David's Towing at 9 A.M. and parked his 2007 Nissan
Altima (the vehicle insured by Progressive). After retrieving
the keys to the tow truck, the only one used in the business, he
inspected it to make sure everything was in order. At 9:55
A.M., while Silva was en route to pick up a car for delivery to
a dealer, he struck a vehicle in which the plaintiff, Rita
Borden, was a passenger. As a result of the accident, the
plaintiff sustained personal injuries. Her medical bills
exceeded the amount of primary insurance available through
Melo's insurer. Progressive denied the plaintiff's claim for
excess coverage under Silva's personal automobile policy on the
basis of its automobile business exclusion.3 This declaratory
judgment action followed.
3
The policy issued to Silva contained a broad insuring
agreement requiring Progressive to "pay damages for bodily
injury and property damage for which an insured person becomes
legally responsible because of an accident." The automobile
business exclusion provided, in relevant part, that coverage,
including the duty to defend, did not apply to "bodily injury
. . . arising out of an accident involving any vehicle while
being maintained or used by a person while employed or engaged
in any auto business." The policy defined "auto business" as
"the business of selling, leasing, repairing, parking, storing,
servicing, delivering, or testing vehicles" (emphasis supplied).
4
2. Discussion. As the plaintiff points out, the
automobile business exclusion has a long history.4 The majority
of published cases that have considered the exclusion involve
the surrender of the insured vehicle for use by some unknown
individual in the automobile business. See, e.g., Transamerica
Ins. Group v. State Farm Mut. Auto. Ins. Co., 492 F. Supp. 283,
287 (D. Nev. 1980) (parking lot attendant); Universal
Underwriters Ins. Co. v. Travelers Ins. Co., 669 A.2d 45, 46
(Del. 1995) (car dealership employee). The exclusion is based
on the assumption that the lack of control over the insured
vehicle increases the risk to the owner's insurer. See Halley
v. State Farm Mut. Auto. Ins. Co., 130 Ga. App. 258, 260 (1973).
Courts have reasoned that once the automobile business assumed
control over the insured vehicle, that business should bear the
cost of insuring for such risks under its own liability policy.
See Grisham v. Allstate Ins. Co., 128 N.M. 340, 342 (1999). We
agree with the plaintiff that the facts of this case do not fit
into this entrustment line of cases. However, the exclusion
also has been applied in cases such as the one before us
involving the insured's use of a nonowned vehicle in the course
of employment. See, e.g., St. Paul Fire & Marine Ins. Co. v.
4
This common exclusionary clause has taken on many forms
and has generated a considerable amount of litigation. See
Transamerica Ins. Group v. State Farm Mut. Auto. Ins. Co., 492
F. Supp. 283, 285 (D. Nev. 1980).
5
West Am. Ins. Co., 437 A.2d 165, 169-170 (Del. Super. Ct. 1981)
(no coverage under bank employee's personal automobile policy
where he was returning repossessed car offered for sale by bank
after showing it to potential buyer); Western Cas. & Sur. Co. v.
Verhulst, 471 S.W.2d 187, 188-190 (Mo. 1971) (no coverage under
personal automobile policy where insured was delivering vehicle
for car salesman between sales auction and used-car lot); Carney
v. Erie Ins. Co., 189 W. Va. 702, 707 (1993) (no coverage under
personal automobile policy of employee of automobile dealership
where she was returning vehicle after showing it to potential
buyer).
The plaintiff recognizes that insurance coverage follows
the insured individual. To the extent that she argues
Progressive had the ability to evaluate the risk presented by
Silva operating a vehicle not listed on the policy, we note
that, as a general rule, an insurer of a personal automobile is
only expected to provide coverage for an insured's occasional or
infrequent use of other vehicles. See Western Cas. & Sur. Co.
v. Verhulst, supra at 190. Here, the risk posed by Silva's use
of the tow truck in the course of his employment for David's
Towing, we think, falls outside the range of ordinary risks
contemplated by insurers of personal automobiles. See Henderson
v. Nationwide Ins. Co., 35 A.3d 902, 908 (R.I. 2012) (insurance
company could not reasonably anticipate that personal automobile
6
policy would cover losses incurred by professional limousine
driver using nonowned vehicle in course of employment).
Noting that the definition of "auto business" in the
Progressive policy is unambiguous and does not list the business
of towing, the plaintiff contends that the exclusion is clearly
inapplicable. Although we agree with the plaintiff that the
policy language is unambiguous, we disagree with her analysis.5
The words "business of . . . delivering . . . vehicles" are
readily understood by any ordinary purchaser of personal
automobile insurance. Delivering vehicles means bringing them
from one location to another location. As the Superior Court
judge noted, the delivery of a vehicle by a business may be
accomplished in several ways, including through the use of a
driver, a flatbed truck, a car carrier, or a tow truck. The
method of transportation required for any delivery is
necessarily encompassed within the expressly excluded business
activity. The plaintiff provides no record evidence or
authority to support her argument that for purposes of the
5
The Rhode Island Supreme Court has enforced previous
versions of the automobile business exclusion clause as "clear
and unambiguous and requir[ing] no construction." Murray v.
Remuck, 108 R.I. 179, 184 (1971) ("[The clause] excludes all
insurance coverage to an insured under the policy while employed
or engaged in an automobile business. . . . There is nothing in
such exclusion contrary to public policy"). See Mullins v.
Federal Dairy Co., 568 A.2d 759, 763 (R.I. 1990) (policy
language is "clear on its face").
7
exclusion, a delivery is limited to an individual driving a
vehicle.
The plaintiff further argues that the cases relied upon by
Progressive and the motion judge as authority for summary
judgment actually support her position in this litigation. See
Maryland Cas. Co. v. Integrity Ins. Co., 693 F.2d 506 (5th Cir.
1982); Westfield Ins. Co. v. Aetna Life & Cas. Co., 153 Ariz.
564 (Ct. App. 1987); Mullins v. Federal Dairy Co., 568 A.2d 759
(R.I. 1990). We disagree. These cases, in which the courts
found the particular automobile business exclusions
inapplicable, are distinguishable on the facts or by policy
language.6 Moreover, the principles discussed in each case
support the conclusion reached by the judge.
In the Mullins case, the policy definition of automobile
business did not include towing or delivering. The Rhode Island
Supreme Court held that the "automobile-business exclusion
should only preclude coverage when the insured, at the time of
the accident, is engaged in an activity in connection with one
of the listed activities." Id. at 763. Where the owner of the
disabled vehicle had retained the towing company solely to haul
6
These cases arose in the traditional towing context in
which insured, disabled vehicles were involved in accidents
while under tow. The courts concluded that the towing companies
were not automobile businesses within the definitions of the
policies. As the plaintiff herself points out, none involved
the insured individual driving a nonowned tow truck.
8
the vehicle and not to perform any of the activities listed in
the definition of automobile business (such as repairing,
servicing, or storing), the court concluded that the exclusion
did not apply. Ibid.
Similarly, in a case called "particularly instructive" by
the Rhode Island Supreme Court, ibid., the United States Court
of Appeals for the Fifth Circuit, construing the same definition
of automobile business as that at issue in Mullins, concluded
that since there was no evidence that the wrecking service
retained by the insured had engaged in any of the listed
activities, the exclusion did not apply. See Maryland Cas. Co.
v. Integrity Ins. Co., supra at 509-510. The Fifth Circuit
reasoned that while the pickup and delivery of a vehicle in
connection with a listed activity would fall within the
exclusion, in the case before it, the service provided was
limited solely to towing. See id. at 509.
The third case, Westfield Ins. Co. v. Aetna Life & Cas.
Co., supra, also does not assist the plaintiff. Although the
policy in Westfield Ins. Co. contained an automobile business
exclusion referencing "delivery," the language of the clause
differed, in material respect, from the Progressive policy.7
7
The exclusion at issue in Westfield Ins. Co. v. Aetna Life
& Cas. Co., supra at 569, stated that liability coverage would
not be provided "[f]or any person while employed or otherwise
engaged in the business or occupation of selling, repairing,
9
Applying similar reasoning as the courts in Mullins and Maryland
Cas. Co., the Court of Appeals of Arizona concluded that where
towing was neither a specifically listed business or occupation,
nor incidental to the towing company's intention to engage in
one of the listed businesses or occupations with respect to the
insured vehicle, the exclusion did not apply. See Westfield
Ins. Co. v. Aetna Life & Cas. Co., 153 Ariz. at 569.
Here, the specific language of the exclusion at issue, as
applied to the facts, barred coverage as matter of law. The
plaintiff correctly points out that the parties disputed whether
Silva was engaged in a towing or an automobile delivery business
at the time of the accident. If David's Towing were to be
deemed a delivery business, a specifically excluded activity,
see note 3, supra, coverage was precluded. Even assuming
David's Towing was merely a towing company, as the plaintiff
contended, under Rhode Island law, Silva was engaged in an
activity (towing) in connection with the listed activity of
delivering a vehicle.8 See Mullins v. Federal Dairy Co., 568
servicing, storing or parking of vehicles designed for use
mainly on public highways, including road testing and delivery"
(emphasis supplied). In contrast, the Progressive policy more
broadly excludes vehicle delivery businesses, see note 3, supra.
8
The plaintiff's argument that Silva was not engaged in any
of the excluded activities (i.e., towing or delivering) at the
time of the accident is based on a distorted view of the facts.
At the time of the accident, Silva was in the tow truck on his
way to pick up a vehicle for delivery to a dealer; that no
10
A.2d at 763. Coverage was thus precluded whether David's Towing
was a delivery or towing business.9
The reasonable expectations doctrine followed by Rhode
Island courts supports the result we reach. In Henderson v.
Nationwide Ins. Co., 35 A.3d at 903-904, a limousine driver, who
had been seriously injured while dropping off passengers at the
airport for his employer, sought underinsurance benefits under
his personal automobile insurance policy. The Rhode Island
Supreme Court upheld the denial of coverage, ruling that the
"for a fee" exclusion in that policy was clear and unambiguous,
applied to the facts of the case, and did not violate State law
or public policy. See id. at 906-907. The court reasoned that
"the purchaser of a personal automobile insurance policy cannot
reasonably anticipate coverage for losses that occur in the
course of his employment as a professional limousine driver;
vehicle was under tow is immaterial as matter of law. Contrast
Universal Underwriters Ins. Co. v. Farmers Ins. Co. of Idaho,
108 Idaho 249, 252 (1985) (holding, as matter of law, exclusion
inapplicable where at time of accident, salesperson was driving
borrowed demonstrator vehicle to grocery store).
9
The exclusion applies to the use of any vehicle "by a
person while employed or engaged in any auto business." See
note 3, supra. Although the issue was not raised by the
parties, Silva was arguably employed or engaged in a second
automobile business, i.e., the business of the car dealerships
that retained David's Towing to transport vehicles between the
auctions and their sales lots. In any event, we think it could
be fairly determined as matter of law that Silva was engaged in
the excluded business of selling vehicles. See Western Cas. &
Sur. Co. v. Verhulst, 471 S.W.2d at 190.
11
neither could an insurance company reasonably anticipate
insuring that risk in a personal automobile insurance policy."
Id. at 908.
This reasoning applies with equal force here. No
individual employed as a tow truck driver could reasonably
expect coverage under his personal automobile insurance policy
for a loss occurring in the course of his employment.
The judgment declaring that coverage was precluded under
the Progressive policy is affirmed.
So ordered.