In American States Insurance Company v. Travelers Property Casualty Company of America, 2014 Cal. App. LEXIS 74 (January 27, 2014), California’s Second Appellate District had occasion to consider whether a food truck constituted mobile equipment under a general liability policy.
The underlying injury in American States involved a food truck that collided with another truck. At the time, one of the food truck workers was standing in the back of the truck, nearby the on-board deep fryer. The worker was burned by oil that splashed out of the deep fryer as a result of the collision. The worker was standing at the rear of the truck while it was moving because a non-employee guest was occupying the truck’s passenger seat at the time. All three persons brought suit against the company (“Royal”) that leased the truck to the food truck operator (“Gomez”).
At the time of the accident, Royal was insured under a primary and excess auto liability policy issued by American States Insurance Company (“American States”). Royal also had primary and excess general liability coverage through Travelers. American States agreed to defend Royal, but Travelers declined. The underlying matter proceeded to binding arbitration, and Royal was found 40% liability based on a theory of products liability; namely, its defective deep fryer. A stipulated judgment against Royal for $2,428.577.34 was entered into based on the arbitration award.
American States subsequently brought an action against Travelers, and Travelers cross-complained back against American States, each seeking to establish coverage for Royal under the other’s policy. Each filed motions for summary judgment, with the trial court granting Traveler’s motion, finding that the truck was an “auto” and not “mobile equipment,” and not within the exception to the Traveler’s policy’s auto exclusion.
The appellate court looked at that part of the Traveler’s policy’s definition of “mobile equipment” that included vehicles “maintained primarily for purposes other than transportation of persons or cargo.” The appellate court concluded that under a plain reading of the Traveler’s policy, the food truck was “mobile equipment” as its primary purpose was to serve as a mobile kitchen and not to transport persons or cargo. The court also noted that the omission of a food truck from the list of special use vehicles with permanently attached equipment considered “autos” under the definition of “mobile equipment,” supported this finding. The court further concluded that coverage was unavailable under the American States’ policy as a result of a “completed operations” exclusion.