Cravens v. Montano, No. CV-24-0143-PR (April 29, 2025) (VCJ Lopez) https://scholar.google.com/scholar_case?case=2227252367529046442&hl=en&as_sdt=6&as_vis=1&oi=scholarr

LIABILITY COVERAGE FOR A BUSINESS BASED UPON THE NEGLIGENT OPERATION OF A NONOWNED AUTO DEPENDS UPON THE NONOWNED AUTO BE OPERATED BOTH “IN” THE INSURED'S BUSINESS AND “IN CONNECTION WITH [THE INSURED'S] BUSINESS A BROADER STANDARD THAN “WITHIN THE COURSE AND SCOPE” OF THE INSURED'S BUSINESS/MORRIS AGREEMENTS INCLUDING CONTINGENCIES ARE VALID  PROVIDED THE CONTINGENCIES DO NOT RENDER THE AGREEMENT FRAUDULENT, COLLUSIVE, UNFAIR OR UNREASONABLE

Defendant in Intervention Martin Montano Jr. calls in sick to his employer Casa Custom Floor Care [Casa] and says rather than driving to the main yard and getting a company vehicle and then driving to the job site he will be late but will drive directly to the job site. On his way to the job site, he gets a nail in his tire, drives to his mom's house, borrows her car and drives to the job site. After work, he starts driving his mother's car to the yard to correct his time sheet to reflect his actual hours for the day, when he runs a red-light killing plaintiff Michael Craven's wife. Cravens sues Montano and Casa for wrongful death. Cincinnati Indemnity Company [Cincinnati] provided Casa automobile liability coverage that would include coverage for Montana, even in a non-owned vehicle, if at the time of the accident he was driving “in connection with [Casa's] business.”

Cincinnati reserved its rights claiming Montano was not driving “in connection [Casa's] business”  because at the time of the accident he was not acting “within the course and scope” of his employment.  Cravens argued it only needed prove Montano was acting in “association, link, or relationship" with the business.  Montano and Cravens entered into a Morris agreement including a $3.85 million stipulated judgment against Montano, only to be collected against Cincinnati, and assigning Cravens Montano's rights against Cincinnati. The agreement was contingent on the court finding Casa vicariously liable for Montano's negligence.  Before the judgment could be filed Cincinnati intervened in the wrongful death lawsuit, suing Cravens and Montano claiming the Morris agreement invalid. Cravens then counter-claimed against Cincinnati alleging breach of its contractual obligation to indemnify.

Montano and Cincinnati each moved for summary judgment. The Pima County Superior Court granted Montano's motion finding Montano was driving “in connection with Casa's business.” It further ruled the Morris Agreement was valid, held a reasonableness hearing and then entered judgment for $3.85 million. The Arizona Court of Appeals affirmed the superior court, and the Arizona Supreme Court reversed and remanded the superior court and affirmed in part and vacated in part the court of appeals.

The supreme court found that focusing totally upon the “in connection with Casa's business” language here was too narrow an analysis and that the Expanded Coverage Plus Endorsement added the requirement that Montano be using the vehicle “in [Casa's] business” and not just “in connection,” the former being more restrictive than the latter.  Because the Cincinnati policy uses the language “within the course and scope of employment” elsewhere but choose not to use this language in defining coverage for non-owned autos Cincinnati's argument fails. Further, because Cincinnati's argument for interpretation of the policy and Craven's interpretation that the policy only requires an “association, link, or relationship" are both reasonable, the policy is ambiguous. The supreme court finds this language is a lesser standard than “course of employment” yet a narrower standard than “”association, link or relationship.”

 We hold that the Policy's coverage for an employee's use of a covered auto

"in connection with your business" is contingent upon the employee's

            engagement in an employer's business at the time of the coverage event.

An employee's use of a vehicle must be directly involved with or in furtherance

            of an employer's business purpose but does not include a routine commute to

or from an employer's office.

Here, the Morris agreement is also enforceable despite the fact it was subject to recission if Cravens was unable to pursue a vicarious liability claim against Casa. The supreme court held that providing a contingency in a Morris agreement does not render the agreement unenforceable unless it renders the agreement fraudulent, collusive, unfair or unreasonable. Such is not the case with this contingency. Thus, the Morris agreement here will be enforceable pending a determination in superior court that Casa is vicariously liable for Montano's driving.