A food truck owned by the insured qualified as “mobile equipment,” and therefore was not subject to a standard “auto” exclusion contained within the insured’s commercial general liability policy. ( American States Ins. Co. v. Travelers Property Casualty Ins. Co. of America (2014) 223 Cal.App.4th 495)
Facts
Royal Catering Company leased a food truck to Esmeragdo Gomez and his wife Irais Gomez. The food truck had two seats and two seatbelts. It was equipped with a specially-designed deep fryer, grill, steam table, oven, refrigerator and coffee maker. The Gomezes would drive the leased food truck from site to site, where the Gomezes would prepare and sell food to customers.
One day Mr. Gomez was driving the food truck while Mrs. Gomez was standing in the back of the truck. At an intersection, Mr. Gomez swerved to avoid an approaching vehicle, and in the process of swerving, hot oil from the food truck’s deep fryer splashed on Mrs. Gomez and burned her.
The Gomezes sued Royal and others for injuries sustained in the accident. Mrs. Gomez asserted a cause of action against Royal for products liability, based on allegations that Royal had supplied the food truck with a deep fryer that did not have a properly working lid. Mr. Gomez asserted a cause of action against Royal for loss of consortium based on the injury to Mrs. Gomez.
At the time of the accident, Royal was the named insured on a commercial automobile policy issued by American States Insurance Company as well as a commercial general liability policy issued by Travelers Property Casualty Company of America. Pursuant to the American States auto policy, American States agreed to defend Royal against the Gomezes’ lawsuit. Travelers, on the other hand, declined to defend Royal based on the “auto” exclusion in the Travelers general liability policy.
American States eventually paid $500,000 in settlement of any claims the Gomezes might have against Royal that would be covered by the American States auto policy. Under the terms of the settlement, the Gomezes were allowed to continue pursuing their products liability-based claims against Royal, but only to the extent such claims were covered by the Travelers general liability policy.
The Gomezes and Royal then submitted Mrs. Gomez’ product liability claim and Mr. Gomez’s loss of consortium claim to binding arbitration. The arbitrator ruled in favor of the Gomezes and against Royal, and awarded the Gomezes damages of over $2.4 million against Royal.
American States filed a complaint for declaratory relief against Travelers, and Travelers filed a cross-complaint for declaratory relief back against American States, Royal and the Gomezes. The trial court later ruled that the Gomezes’ claims against Royal in the underlying action were barred from coverage by the “auto” exclusion in Travelers’ general liability policy. American States, Royal and the Gomezes appealed.
Holding
The Court of Appeal reversed. The appellate court acknowledged that the Travelers general liability policy excluded coverage for bodily injury arising out of the ownership, maintenance or use of any “auto” owned by Royal. However, the policy’s “auto” exclusion contained an exception for “mobile equipment,” and the policy defined “mobile equipment” so as to include vehicles “maintained primarily for purposes other than the transportation of persons or cargo.”
Here, according to the appellate court, “the primary purpose” of the food truck was to “serve as a mobile kitchen and not to transport persons or cargo.” Under such circumstances, the food truck qualified as “mobile equipment,” and thus it was not subject to the “auto” exclusion in the Travelers general liability policy. Therefore, Travelers had been obligated under its general liability policy to defend and indemnify Royal against Mrs. Gomez’ product liability claim and Mr. Gomez’s loss of consortium claim.
Comment
If a vehicle is maintained primarily for purposes other than the transportation of persons or cargo, that vehicle will be considered “mobile equipment” and thus will not be subject to the “auto” exclusion contained in the current version of a commercial general liability policy. The state appellate court’s decision that the food truck was “mobile equipment” is consistent with an earlier case decided by a federal appellate court. (See Employers Mutual Casualty Company v. Bonilla (5th Cir. 2010) 613 F.3d 512, 518 [“The ‘inherent purpose’ of a mobile catering truck certainly could be seen as including the use and maintenance of its kitchen facilities . . .”].)