Last week, the Fifth Circuit addressed another common exclusion – the “auto” exclusion – in Salcedo v. Evanston Ins. Co., No. 11-50686 (5th Cir. Feb. 22, 2012).  Salcedo sued Evanston after he obtained a final judgment against Evanston’s insured, Villegas, which was entered by the 448th District Court of El Paso  County,  Texas  for  $1.1  million  plus  interest.  Evanston  denied  coverage  based  on  the  “auto” exclusion in its CGL policy.  The district court granted Evanston’s motion for summary judgment and the Fifth Circuit affirmed.

The injury took place at Villegas’s asphalt plant. On the day of the accident, Salcedo was assisting with the upload of a shipment of oil when a hose attached from the plant’s asphalt reservoir to an oil truck ruptured, causing him to be burned by the hot oil.  The policy excluded bodily injury “arising out of, caused by, or contributed to by the ownership, non-ownership, maintenance, use, or entrustment to others of any aircraft, ‘auto,’ or watercraft.  Use includes operations and ‘loading and unloading.’” The parties stipulated  that  the  oil  truck  in  question  was  an  “auto,”  and  the  court  noted  that  it  was  essentially undisputed that Salcedo was “unloading” the truck at the time of the accident.

Salcedo argued the injuries did not “arise out of the use” of an auto.  Applying the framework set forth by the Texas Supreme Court in Mid-Century Ins. Co. v. Lindsey, 997 S.W.2d 153 (Tex. 1999), the Fifth Circuit found the exclusion applied. Salcedo’s injury occurred while the oil truck was being used as it was inherently intended – uploading oil.  The accident occurred within the truck’s natural territorial limits, before the actual use terminated; the use – uploading oil – was still in progress.  The oil truck produced the injury in question, rather than merely contributing to it.  That is, but for the use of the oil truck in its expected and intended state of uploading oil, Salcedo would not have been injured.

 Salcedo also argued that for the “auto” exclusion to apply, the insured, Villegas, must have been the one doing the unloading or, at least, causing it to be done.  In this case, Villegas had loaned its plant to another entity prior to the time of the accident.  The court found the unambiguous language in the policy did not require the insured do anything with the auto for the exclusion to apply.

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