Lynnway Auto Auctions conducted
a wholesale auto auction at a facility owned by it and BLR. A Lynnway employee lost control of a vehicle, resulting in
serious injury and the death of five people. The claimants alleged that the driver had a suspended drivers license, that
Lynnway and BLR negligently established practices that permitted employees to
drive vehicles through crowds, and that they failed to properly implement
safety precautions including barriers and crosswalks.
Lynnway and BLR
were named insureds on a general liability policy issued by Indian Harbor Insurance Company. Indian Harbor filed a declaratory judgment
action seeking a declaration that it had no duty to defend or indemnify, because the policy contains an auto
The auto exclusion
excludes bodily injury arising out of the ownership, maintenance, use or entrustment to others of any auto owned or operated by or rented or loaned to
any insured. The exclusion applies even if the claims against any insured
allege negligence or other wrongdoing in the supervision, hiring, employment,
training or monitoring of others by that insured, if the accident that
caused bodily injury involved the ownership,
maintenance, use or entrustment to others of any auto that is owned, operated by or rented or loaned to any insured.
In Indian Harbor Ins. Co. v. Lynnway Auto Auctions, Inc., 2021 WL 4295776 (D. Mass. 2021), the United States District Court for the District of Massachusetts looked at a1986 SJC decision, Worcester Mut. Ins. Co. v. Marnell. In that case the SJC held that a homeowner’s policy with an
auto exclusion provided coverage in a social host case that alleged a drunk
driving accident. Although the policy in
that case had superficial similarities to the general liability policy at issue
in Lynnway, they were far from identical.
The auto exclusion in Lynnway applied by its own terms even if the
claims alleged negligence with respect to the employment of others, as long as
the accident involved a vehicle. The
court noted that the broader language was in fact a response to Marnell.
The situation was also different. As the court pointed out, homeowners are not expected to have auto coverage for accidents involving cars they don’t own such as the car involved in the drunk driving accident. But the defendants in Lynnway would clearly have, and did have, an auto policy covering vehicles at the wholesale auto auction facility it owned, including the vehicle involved in the accident.
As I noted to Massachusetts Lawyers Weekly, although technically courts should not consider the availability of other coverage in determining whether a policy applies, of course they do. Judges are fully aware that in a case like this it is often one insurer suing another over reimbursement for payments already made to the claimants. That is significantly less compelling than a situation where a finding of no coverage may leave a claimant with no realistic chance of a fair recovery.
The decision is under appeal.