Wednesday, January 29, 2014
Food Truck Held Covered by Commercial, Not Auto, Liability Insurance Policy by Court of Appeal
By a MetNews Staff Writer
A food truck’s primary purpose was to serve as a mobile kitchen and not as transportation for people, so claims arising from the operation of the truck should have been covered by the lessor’s commercial general liability policy, and not its automobile insurer, this district’s Court of Appeal has ruled.
Div. Five, in an opinion by Justice Richard M. Mosk, Monday reversed a summary judgment in favor of CGL carrier Travelers Property Company. The appellate panel agreed with American States Insurance that a food truck is not an “auto.”
The dispute between the two insurers arose from an incident involving Royal Catering Company, an insured of both companies that leases food trucks. Esmeragdo Gomez, and his wife, Irais, operated one of Royal’s trucks.
According to the stipulated facts, the truck was equipped to transport a driver and a cook, and each day it was to be returned to the catering company. Royal provided the Gomezes with all of the food and requisite supplies to operate the food truck.
One day, while Emeragdo Gomez was driving the truck, he was forced to swerve to avoid a collision, and his wife, who was in the back of the truck next to the deep fryer, had hot oil splashed on her.
The Gomezes brought an action against Royal Catering, asserting various causes of action in tort.
American States Insurance agreed to defend Royal in the matter. Travelers Property Company, which issued Royal general liability coverage, declined to provide a defense.
American paid $500,000 to the Gomezes to settle their claims against Royal, which permitted them to still pursue their products liability claims.
The Gomez action was then submitted to binding arbitration on the products liability theory. The arbitrator entered a judgment against Royal for roughly $2.4 million, for the Gomezes’ loss of consortium claim and products liability claims.
American States Insurance then brought an action against Travelers seeking a declaration that the general liability coverage gave rise to a duty to defend and indemnify Royal in the products liability suit.
Both parties stipulated to the facts and motioned for summary judgment, so the only issue before the court was determining which policy covered Royal’s food truck in the Gomezes’ suit.
Los Angeles Superior Court Judge Barbara Scheper ruled that the food truck was an “auto” and not “mobile equipment,” since the food truck was used to “move food and other items to places where people are waiting to buy them.”
Mosk said, however, that the food truck was “mobile equipment.” under Travelers policy. He explained that the food truck only had two seats, and was immobile while it was selling food for most of the day, which was its primary purpose.
He also said:
“Travelers did not include food trucks among the vehicles identified as ‘autos’ and thus not subject to the ‘mobile equipment’ exception to the auto exclusion. If Travelers had intended to exclude food trucks from coverage as ‘autos’—a significant consideration [in] light of the fact that Royal maintained a fleet of food trucks and was in the business of leasing such vehicles—it would have identified them along with other special use vehicles it identified as ‘autos.’”
The court also held that the liability in issue arose from equipment in the truck that was excluded from American States Auto Policy, under an operations exclusion which excluded coverage for bodily injury occurring during the course of work.
This meant, Mosk concluded, that only Travelers’ general liability coverage gave rise to defend and indemnify Royal in the Gomez action.
The case is American States Insurance Company v. Travelers Property Casualty Company; 14 S.O.S. 478.
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