Stalker & Parson Cos., Inc. v. Scottsdale Ins. Co., No. CV-21-0256-CQ (July 10, 2024) (J. Beene) https://www.azcourts.gov/Portals/0/OpinionFiles/Supreme/2024/CV210256CQ.pdf

LOADING & UNLOADING (TO INCLUDE TRANSPORTATION OF LOAD BETWEEN LOADING AND UNLOADING) OF VEHICLE CONSTITUTES “USE” OF INSURED VEHICLE FOR COVERAGE OF ADDITIONAL NAMED INSURED UNDER COMMERCIAL AUTO LIABILITY POLICY/MAINTAINING ROADS AND FAILURE TO TRAIN AND SUPERVISE DO NOT CONSTITUTE “USE” OF INSURED VEHICLE

The United States District Court of Utah certified four questions to the Arizona Supreme Court concerning the scope of coverage for an additional insured under a commercial automobile liability policy. 

Stalker & Parson Companies [Stalker] operate a mine in Pima, Arizona. They contract with BDR Transport [BDR] to transport rock between processing areas at the mine. They require BDR to have commercial automobile liability insurance on its vehicles and require BDR name Stalker as an additional insured. Stalker built and maintained the roads used for this transport.

On the date of the accident William Baugh, an employee of BDR, had Stalker load a BDR truck insured by Scottsdale Insurance Company [SIC] under a commercial automobile liability policy. Once loaded, Baugh drove the truck towards another processing area when a rock became lodged in the double tires on the truck. He got out of the truck, took a hammer to the rock, tires exploded and he was seriously injured.

Baugh sued Stalker in Utah alleging negligence in the loading of the truck, in the maintenance of the roads and in failing to have in place a training and safety program.  SIC denied coverage for this suit on the basis Stalker was not operating or controlling the covered vehicle at the time of the accident.

Stalker lost the trial but won on liability at the appellate level in Utah. Stalker then brought suit against SCI in Utah for its fees and costs in defending the Baugh lawsuit. The Utah Federal District Court certified 4 questions to the Arizona Supreme Court:

1. Does the SCI policy cover additional insured Striker for the loading and transporting of its rocks,i.e., does loading and transporting Striker's material constitute a “use” of the insured vehicle where Striker had no active or actual control of the vehicle at the time of the accident?

Answer: Yes, A.R.S.sec. 28-4009(A)(2) requires all motor vehicle liability policies in Arizona cover “maintenance or use”of the insured vehicle and Arizona courts have interpreted “use” to include the loading, transporting and unloading of the vehicle. The loading, transporting of a load and unloading of a vehicle is a common and expected use of the vehicle and involves the very operation of the vehicle.

2. Does the SCI policy provide coverage for Striker for alleged failure to maintain its private road?

Answer: No, use, though broadly defined must relate to the operation of the covered vehicle. Road maintenance has nothing to do with the operation of vehicles upon it. Further, “use” of the vehicle cannot be reconciled with a claim of failure to maintain premises. A failure to maintain claim relates to a failure to do something, while the term “use” means “actually doing something.”

3. Does the SCI policy cover alleged failures to properly manage, train or employ a driver safety program?

Answer: No, again, an allegation of failing to do something is not a use— negligence in actually doing something, and the purpose of Arizona's omnibus automobile insurance coverage statute is to assure parties injured in auto accidents do not go uncompensated. Here Baugh would not be uncompensated had he proven his case as coverage did exist for the loading and transporting of rock and nothing precluded him from claiming managerial misconduct against Striker, coverage or not. Further, if contractors could shift the responsibility to compensate injured victims for managerial negligence to an subcontractor's insurer, the contractor would be disincentivized to institute safety and training programs. Lastly, on this point, “insurers should not be responsible for liability coverage that is far beyond what the parties to the policy intended.”

4. If the answer to any of the above questions is “yes” is there a sufficient casual link between the additional insured's “use” of the covered vehicle and the alleged negligence to require SCI to provide Striker with a defense?

Answer: Go fish.  In Arizona, the causal link between an injury and the use of a vehicle need not arise to the level of proximate cause, instead the accident need only be “connected to” the negligent ownership, maintenance or use of the covered vehicle. That is a question of fact for the Utah court to determine.