Last Wednesday, Houston federal district judge Nancy Atlas denied summary judgment relief in a coverage case involving a serious ATV accident at Middleton Ranch in Fort Bend County.  In Mid-Continent Cas. Co. v. BFH Min., Ltd., No. CIV.A. H-14-0849, 2015 WL 2124767 (S.D. Tex. May 6, 2015), a potential client of BFH visited its cattle ranch property and was involved in an ATV rollover accident while on the ranch.  BFH settled the injury claim for $1 million, the limits of its insurance policy with Mid-Continent.

Mid-Continent filed a declaratory judgment suit arguing its policy did not cover the claim for two reasons:

1. The policy excluded coverage for use of the farm premises that are used for non-agricultural purposes; and
2. The accident was excluded because it was expected or intended from the insured’s point of view.

Mid-Continent sought summary judgment on both of these coverage defenses, but Judge Atlas rejected them both, finding genuine issues of material fact.  First, there was evidence that the property was represented to the insurance broker as a ranch, not a farm, at the time the property was purchased.  Second, although there was some evidence the property was used to grow hay for cattle feed as well as raising cattle, it was not clear whether the property qualified as “farm premises” under the policy’s definition.

As to the Expected or Intended Injury exclusion, Mid-Continent argued that BFH knew the employee driving the ATV did not have a driver’s license, knew the ATV had experienced previous rollovers, and knew the ATV’s safety net had been removed, and that all this created a high probability that the injury would be the natural and expected result of putting the claimant and driver on the ATV. Notably, to prevail on such a defense, the facts would have to establish a state of mind beyond gross negligence, which is generally defined as a subjective awareness of an objectively unreasonable risk of harm.  Judge Atlas noted Texas law clearly holds the Expected or Intended Injury exclusion is not so broad as to exclude grossly negligent acts.

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