5 Fla. L. Weekly Supp. 746a
Insurance — Commercial liability — Garage operations — Exclusions — Accident in which automobile struck stationary tractor-trailer rig, the tractor of which was owned by insured and leased to third party — Policy expressly excluded coverage for autos leased to third parties unless the auto was leased to one of insured’s customers while the customer’s auto was left with insured for service or repair, a circumstance not present in instant case — Policy also excluded from definition of covered auto any auto used to carry property or persons for hire and any auto furnished to someone for regular use who was not specifically described in garage coverage form as required by terms of policy — Notice to insurer — Insured failed to comply with conditions precedent to coverage where insured failed to provide prompt notice of accident, claim, suit or loss — Insured did not present competent proof which would rebut presumption of prejudice arising from fact that insurer did not receive notice until more than two years after accident
GENERAL AGENTS INSURANCE COMPANY OF AMERICA, INC., a Foreign Corporation, Plaintiff, vs. BRADFORD TRUCK & EQUIPMENT, INC., a Florida Corporation, and CLAUDIA FALLIN and WALTER FALLIN, Defendant. 4th Judicial Circuit, in and for Duval County. Case No. 96-03703-CA. October 2, 1997. Michael R. Weatherby, Judge.
FINAL DECLARATORY JUDGMENT
This cause came on for hearing on Wednesday, July 30, 1997 on the Plaintiff’s General Agents Insurance Company’s [“GAINSCO’s”], Motion for Summary Judgment and Supplemental Motion for Summary Judgment. The Court has had the benefit of the argument of counsel and their respective memoranda. The Court has considered the record in the present cause, including the pleadings, depositions from the present case, depositions from the underlying liability case, Answers to Interrogatories from the present case, Answers to Interrogatories from the underlying liability case, and all other materials properly of record at this time.
Upon such consideration the Court determines that the record shows that there is no genuine issue as to any material fact and that GAINSCO is entitled to the entry of a Summary Final Declaratory Judgment in its favor as a matter of law.
BACKGROUND
This is a Declaratory Judgment Action concerning insurance coverage arising out of an automobile accident. Claudia and Walter Fallin, defendants in this Declaratory Judgment Action, are the plaintiffs suing Defendant Bradford Truck & Equipment, Inc. and other parties in the underlying liability case found at Claudia and Walter Fallin v. American President Lines, Ltd., Inc., etc., et al., Fourth Circuit, Duval County, Case No.: 94-05058 CA [5 Fla. L. Weekly Supp. 665a]. It is undisputed that Claudia Fallin’s automobile struck a stationary tractor-trailer. It is also undisputed that Bradford Truck owned the tractor. The trailer was owned by American President Lines, a party to the underlying liability case but not the present case.
Bradford Truck was primarily in the business of selling truck-tractors. It also leased tractors. There was a garage on the premises of Bradford Truck. (Deposition in this case of Patricia Weeks, president of Bradford Truck, taken May 27, 1997, at 24.) Bradford Truck’s president further testified in this case, without dispute, that the garage on the premises of Bradford Truck is where minor or light repair or maintenance was done that was needed to sell the vehicles. These items included matters “like paint or fixing tires or having a windshield put in or something like that.” (Id. at 24.) Motors and major repairs or maintenance of that nature were “done out.”
Bradford Truck & Equipment, Inc. obtained a commercial policy from GAINSCO which provided coverage for “garage operations” described in the GAINSCO policy. The GAINSCO policy definition of “garage operations” reads in full as follows:
E.“Garage operations” means the ownership, maintenance or use of locations for garage business and that portion of the roads or other accesses that adjoin these locations. “Garage operations” includes the ownership, maintenance or use of the “autos” indicated in SECTION I of this Coverage Form as covered “autos”. “Garage operations” also include all operations necessary or incidental to a garage business.
(Form CA 00 05 06 92, page 13 of 14, in GAINSCO’s policy.)
EXCLUSION 7 BARS COVERAGE
The GAINSCO policy at issue in this case is limited to “garage operations” as defined in the policy. The GAINSCO policy further provides that with respect to all liability coverage, leased autos are excluded. This provision is found in Exclusion 7, which reads in full as follows:
B. EXCLUSIONS
This insurance does not apply to any of the following:
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7. LEASED AUTOS
Any covered “auto” while leased or rented to others. But this exclusion does not apply to a covered “auto” you rent to one of your customers while their “auto” is left with you for service or repair.
(Form CA 00 05 06 92, page 4 of 14, in GAINSCO’s policy.)
It is undisputed that Bradford Truck leased or rented the tractor in question to others. It is further undisputed in this case that the tractor in question was not rented to one of Bradford Truck’s customers while their “auto” was left with Bradford Truck for service or repair. Bradford Truck’s admissions are clear and concise in its Answers to Interrogatories propounded and filed in this Declaratory Judgment Action:
11. State the owner of the tractor and the tractor-trailer rig involved in the underlying case.
Bradford Truck & Equipment owned the truck tractor, but leased it to T & M Container; T & M Container through an Interchange Agreement leased the trailer rig to a company at Blount Island.
12. What were the lease arrangements in the underlying case?
Defendant Bradford leased their truck tractor to T & M but cannot locate the lease after several efforts of attempting to do so; however, T & M Container or their counsel, has a copy of Bradford’s lease to them.
13. Was the tractor or the tractor-trailer rig vehicle leased while an automobile was left for repair or service?
No.
[Emphasis in original.]
The president of Bradford Truck confirmed in her deposition in the present case that Bradford Truck leased some tractors. (Ms. Pat Weeks May 27, 1997 deposition, at 13.) She further confirmed that neither Bradford Truck, nor its officers or employees, had any interest in the lessee, T & M Container Corporation. (Id. at 32.)
Discovery from the underlying liability case has also been filed in the record of the present case. It was noted above that American President Lines [“APL”] was the owner of the trailer part of the tractor-trailer involved in the subject accident. APL’s Answers to Interrogatories in the underlying liability case are before the Court in the present case. APL admitted in answer to Interrogatory 8 thereof, that
“[o]ur trailer was interchanged to T & M Container & Distribution under an equipment lease, either de facto with T&M or with a principal of T&M. The interchange agreement grants possession and use in accordance with its terms.”
The Fallins specifically asked in the underlying liability case in their Interrogatory 13, whether there had been a lease. APL answered affirmatively that there had been a lease both of the trailer, and of the tractor.
13. Did you lease the vehicle involved in the incident described in the Complaint to any company, person, entity or corporation? If so, state the name and address of the person or entity to whom the vehicle was leased, the duration of the lease and whether any contract or document reflects the terms and conditions of the lease.
Yes. We have an interchange agreement with Market Distribution Services, Inc., which through its brokers Shipper’s Dispatch and their agents, Vast, Inc. and T&M had possession of this vehicle under lease. The equipment was interchanged out of the Norfolk Southern Railway yard on August 11, 1993, and interchanged back on August 13, 1993. The interchange receipt and interchange agreement reflect the terms and conditions of the lease.
[Emphasis added.]
The Answer of Bradford Truck to Mr. and Mrs. Fallin’s “Automobile Negligence Interrogatory” 13 was even more concise:
Yes. To T&M Container Corp., present address unknown to me.
The Court holds that, on the record of this particular case in which the facts material to a Declaratory Judgment are not in dispute, the clear language of GAINSCO’s Exclusion 7 in its policy covering “garage operations”, excludes all liability coverage for the accident involving Claudia and Walter Fallin described above. In a case involving analogous insurance policy language, applying a similarly worded exclusion, it has been held that there was no coverage, Southeastern Fidelity Ins. Co. v. Sintros, 409 So. 2d 521 (Fla. 5th DCA 1982). In that case the appellate court stated that the question before it was “whether appellant is required under its `Automobile Service Center Policy’ to pay for the automobile accident described in this opinion.” Id. at 521. The court applied an exclusion of all liability coverage regarding any automobile “[w]hile rented to others by the named insured”. The policy in that case was issued to a service station which occasionally rented cars. The accident described in the opinion involved a car which the insured had rented to others. The appellate court looked to the nature of the policy issued to the insured and held that there was no duty to pay for the automobile accident in question,
“It is our determination that the operation of a car rental agency is not a necessary and/or incidental part of a service station operation thus the policy was not broad enough to cover the accident even if Mike’s Texaco had serviced the car before placing it on the lot for rent. That servicing of the car, if it had occurred, was incidental to the rental agency, not vice versa.” Id. at 522.
THE TRUCK LEASED BY GAINSCO’s INSURED, BRADFORD TRUCK & EQUIPMENT, INC., WAS NOT A “COVERED `AUTO’ ”.
It is undisputed in this case that the tractor leased by Bradford Truck & Equipment, Inc. was an “auto” as defined in the GAINSCO policy at bar. However, the Court concludes that the tractor was not a covered auto under the terms of the GAINSCO policy.
Reinforcing the limitation on coverage to identified “garage operations”, the Plaintiff’s policy further contains Covered Auto Symbol 32 Form GP103 (06/92). That endorsement limits Liability Coverage concerning “autos”. It adds to the list of “Covered Auto” Symbol in Section I of the policy’s Form CA 00 05 06 92. That endorsement, Form GP103, provides that a covered auto, in pertinent part, “does NOT include any `auto’ ” which is:
2. Used as a public livery conveyance or to carry property or persons for a charge.
3.Over 20,000 lbs. gross vehicle weight (G.V.W.) or gross combined weight (G.C.W.) ….
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5.Furnished for the regular use of any person or organization unless the person or organization and the driver of the “auto” is specifically described in ITEM NINE of the Garage Coverage Form — Auto Dealers’ Supplementary Schedule. Coverage shall extend to the occasional use by a non-scheduled driver for emergency purposes if (a) the non-scheduled driver has permission of a scheduled driver and the actual use is within the scope of such permission and (b) the non-scheduled driver is 21 years of age or older.
(Form GP103 (06/92).)
It is undisputed in this record that the truck in question was leased for the purpose of carrying “property or persons for a charge” and thus was clearly not a “covered auto”, on two grounds. First, it was not a covered auto because it was used to carry “property or persons for a charge” as excluded by paragraph 2, quoted above. As argued by counsel, at all material times the Code of Federal Regulations defined “lease” in full as follows:
(e) Lease. A contract or arrangement in which the owner grants the use of equipment, with or without driver, for a specified period to an authorized carrier for use in the regulated transportation of property, in exchange for compensation. 49 C.F.R. §1057.2(e).
The definition of “lease” clearly includes the lease of the truck tractor in the accident in question since it was a contract or agreement for use in transporting property for a charge.
Second, as the tractor in question was leased by Bradford Truck & Equipment, it was furnished to someone for regular use who was not specifically described as required by the clear terms of the GAINSCO policy in paragraph 5, quoted above.
PRESUMPTION OF PREJUDICE FROM BREACH OF CONDITIONS.
Finally, the GAINSCO policy contains standard conditions precedent to the accrual of coverage under a liability insurance policy in Florida. Such conditions include a requirement for the insured to provide prompt notice in the event of an accident, claim, suit or loss. The conditions at issue also include a requirement that the insured
“[i]mmediately send us copies of any request, demand, order, notice, summons or legal paper received concerning the claim or `suit’.”
These conditions further include a requirement that the insured cooperate with GAINSCO “in the investigation, settlement or defense of the claim or `suit’.” Form CA 00 05 06 92, page 11 of 14, in the GAINSCO policy.
GAINSCO’s Reservation of Rights letters to Bradford Truck are before the Court as Composite Exhibit “C” to the Complaint for Declaratory Relief. The letter, dated April 12, 1996, recites that a letter from an attorney representing Mrs. Fallin was GAINSCO’s first knowledge of the suit. Furthermore, in her Deposition taken in this action, the president of Bradford Truck, Ms. Patricia Weeks, testified that GAINSCO was never notified until after she had been noticed for her deposition in the underlying liability case. Ms. Weeks’ deposition in the underlying liability case is Exhibit Number 1 to her deposition in the present case and was taken on November 2, 1995. The accident upon which the underlying liability case is based occurred in August, 1993. The underlying liability case was filed in October, 1994.
Late notice under such circumstances raises a presumption of prejudice as a matter of settled Florida law. Bankers Ins. Co. v. Macias, 475 So. 2d 1216, 1218 (Fla. 1985). The presumption of prejudice may be rebutted by a showing by the insured, that the insurer has not been prejudiced by the lack of notice. Id. It seems fundamental that the notice requirement in a liability insurance policy enables the insurer to conduct a timely and adequate investigation of all the circumstances surrounding an accident. Id. at 1217.
In the action at bar, no competent proof has been submitted by any party which would rebut the presumption of prejudice arising from the notice to GAINSCO which it received more than two years after the accident happened.
The rule appears to be that the presumption prevails over the insured’s denial of prejudice. It is necessary for the insured to present competent proof that the insurance company has not been prejudiced. Otherwise, entry of judgment in favor of the insurer will be affirmed. See Klein v. Allstate Ins. Co., 367 So. 2d 1085, 1086 (Fla. 1st DCA 1979), in which the First District Court of Appeal affirmed judgment entered on a directed verdict in favor of the appellee insurance carrier, where the appellants/insureds had not met their burden to demonstrate through evidence that the insurance company had not been prejudiced by a failure to report and give notice. See also, City Mgmt. Grp. Corp. v. American Reliance Ins. Co., 528 So. 2d 1299, 1300 (Fla. 3d DCA 1988), where it was undisputed that the insured had been over two years late in notifying its insurer of the subject accident. Summary judgment for the insurer was affirmed where there was nothing in the record to overcome the presumed prejudice to the insurer or to raise genuine factual issues in relation thereto.
Upon all of the foregoing, it is
ORDERED AND ADJUDGED:
The Court enters its Final Declaratory Judgment in favor of the Plaintiff, GAINSCO, and hereby declares the rights and obligations under the GAINSCO policy as follows:
1.GAINSCO’s policy covers only operations necessary and incidental to covered “garage operations”. There are no covered “garage operations” at issue here. There is, thus, no coverage under Plaintiff’s policy.
2.There is no genuine issue of material fact but that the subject tractor was leased and is therefore excluded by Exclusion 7 of the policy. The policy does not cover the accident in question nor the damages arising therefrom.
3.The language of Covered Auto Symbol Endorsement 32 excludes the truck and trailer involved in the accident. The truck was used to carry “property or persons for a charge” and thus was not a “covered auto”. The tractor in question was leased by Bradford Truck & Equipment and was therefore provided for the regular use of a person or organization which is not specifically described in item 9 of the Garage Coverage Form — Auto Dealer’s Supplementary Schedule, i.e., the lessee. The subject tractor again, therefore, is not a “covered `auto’ ” under the clear terms of GAINSCO’s policy.
4.The Conditions of the subject GAINSCO policy were breached in this cause, resulting in a presumption of prejudice to GAINSCO which has not been rebutted on this record.
Each of the parties shall be governed accordingly. The parties shall each bear their own attorney’s fees and costs in this action.
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