USFIC was the carrier for a Garage Policy that covered Neff Towing. Neff was hired by CRST, Inc. to tow a tractor-trailer rig that had broken down on a highway. Two large towing vehicles were sent to the site and, while the tractor was towed without incident, there were problems with handling the trailer.

When Neff’s employee attempted to hook the trailer (which had a full cargo) to the tow truck, the trailer fell over. The driver left the trailer at the site and returned the next day to find that the trailer’s cargo was being unloaded by CRST employees. Neff, after setting the emptied trailer back on its wheels, towed it in for repairs. Acknowledging Neff’s damaging the trailer, USFIC paid CRST over $9,000. However, CRST sued Neff, claiming that they suffered more than $50,000 in damage to the trailer’s cargo. Neff disputed the amount of damage and asked to be defended against the suit, but USFIC denied the request on the grounds that the damaged cargo was not eligible for coverage.

Both Neff and USFIC filed for summary judgment for, naturally, opposite motions regarding coverage obligations. USFIC and Neff argued over whether the cargo loss (and the defense obligation) was excluded based on the Garage Policy’s care, custody and control exclusion. The trial court ruled that the exclusion did not apply to the loss circumstances, so the insurer was obligated to provide Neff with a defense against the suit. USFIC appealed the decision.

The higher court reviewed the matter and, as did the lower court, focused upon the care, custody and control question. Neither party disputed that the question of custody would be determinant. The court rejected Neff’s contention that its failure in its attempt to attach the trailer to its tow truck indicated that it never had custody of the trailer at the time the loss occurred. The court saw the towing company’s position as too narrow. In the court’s view, the fact that Neff was not able to immediately physically possess the trailer was not the only consideration. Since CRST had hired Neff to tow the tractor-trailer rig, Neff had permission to take possession. This demonstrated that the trailer was both in the company’s care and control. That being the case, the Garage Policy’s care, custody and control exclusion was found to apply. The lower court’s ruling in favor of Neff was reversed.

Neff Towing Service, Incorporated, Appellee v. United States Fire Insurance Company, doing business through Crum & Forster Insurance, Appellant. Nebraska Supreme Court No. S-61-960 Filed November 1, 2002 Neb. LEXIS 219, CCH Paragraph 7452 Reversed and Remanded.