California Court of Appeal Holds That a CGL Policy’s Coverage for Products Liability Applies Because Food Truck Fell Under “Mobile Equipment” Exception to an “Auto” Exclusion

California Court of Appeal Holds That a CGL Policy’s Coverage for Products Liability Applies Because Food Truck Fell Under “Mobile Equipment” Exception to an “Auto” Exclusion

Am. States Ins. Co. v. Travelers Prop. Cas. Co. of Am., 223 Cal. App. 4th 495 (2014), [enhanced enhanced version available to lexis.com subscribers].

In American States, the California Court of Appeal held that the primary purpose of a food truck was to serve as a mobile kitchen and was not to transport people, that the “mobile equipment” exception to the automobile exclusion of the CGL policy therefore applied, and that the CGL policy provided coverage.

The insured catering company owned a fleet of food trucks, which it leased to operators who drove from site to site selling food. One such truck was run by a couple that was in an accident while the husband was driving the truck and his wife stood in the rear of the truck. Hot oil splashed on and burned the wife. The couple sued the insured and others for injuries sustained in connection with the accident. The suit included causes of action for products liability and loss of consortium. The insured tendered the action to its auto carrier, which agreed to provide a defense under a reservation of rights. The insured and the auto carrier also tendered the action to the CGL carrier, which denied coverage based on an automobile exclusion in its policy.

After settlement of the underlying action, the carriers brought suit against each other in an effort to establish the insured’s coverage under the other’s insurance policy. The auto carrier moved for summary judgment, and the CGL carrier moved for summary adjudication. The trial court granted the CGL carrier’s motion and denied the automobile carrier’s motion. In so doing, the court held that the claimants’ food truck was an “auto,” and therefore the CGL policy’s automobile exclusion applied. While the automobile carrier argued that the food truck qualified as “mobile equipment,” and therefore fell within an exception to the automobile exclusion within the CGL policy, the trial court disagreed. The trial court also found that the insuring agreement of the automobile policy was triggered by the underlying claim and that no exception applied.

On appeal, the court reversed the trial court’s ruling regarding the CGL policy because it found the food truck was “mobile equipment,” therefore triggering the exception to the automobile exclusion in the policy. In reaching this finding, the court concluded that the primary purpose of the food truck was to serve as a mobile kitchen and not to transport persons or cargo.

The court also determined that the automobile policy’s “completed operations” exclusion barred coverage for bodily injury arising out of equipment used in connection with the insured’s work—the leasing of the food truck. According to the court, the food truck and its contents were considered “completed” operations when the insured put them to their intended use by providing them to the couple in working order and ready to be utilized.

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