|
Commercial General
Liability |
Auto Exclusion |
|
Duty To Defend Or
Indemnify |
Negligent Entrustment |
Builders Mutual Insurance
Company (Builders) issued a commercial insurance policy to North Main
Construction, Ltd. (North Main). The policy excluded "'Bodily injury' or
'property damage' arising out of the ownership, maintenance, use or entrustment
to others of any aircraft, 'auto' or watercraft owned or operated by or rented
or loaned to any insured." Under the policy, "use" included
"operation and 'loading or unloading."
North Main employee Ronald
F. Exware, Jr., was driving a company vehicle when he crossed a median, struck
and injured Gajendra and Poonam Sirohi. Exware was intoxicated at the time.
Builders filed an action for declaratory relief, asking the court to find that
it had no duty to defend or indemnify North Main and Exware in the resulting
lawsuit. The Sirohi's participated in the Builders declaratory judgment action,
arguing that it should provide coverage under its policy.
To support its case,
Builders asserted that North Main knew Ronald Exware had an unusually bad
driving record but still allowed him to drive a company vehicle. This resulted
in negligent entrustment of a company vehicle with a North Main employee as
well as negligent driving. In addition, Builders claimed that North Main
created an atmosphere of tolerance and acceptance of alcohol and drug use among
its employees. Builders maintained that North Main officers knew that alcohol
and marijuana consumption took place in the North Main offices but did nothing
to prevent or stop it. As a result and accordingly, North Main was negligent in
its employee hiring, supervision, and retention practices.
The lower court found in
favor of Builders as to all claims for negligent entrustment and negligent
driving. However, as to the claims for negligent hiring, negligent supervision,
and negligent retention, the court found in favor of the Sirohi's. Builders
appealed.
On appeal, the issue was
whether the policy excluded claims for negligent hiring, supervision, and
retention. The Court of Appeals of North Carolina found that the automobile
exclusion applied. In reaching its decision, the court looked to the actual
cause of the injuries to determine whether a cause separate from the use of the
vehicle resulted in the injuries. It found that Gajendra and Poonam Sirohi's
injuries resulted from Exware's use of the automobile, not from a separate
cause. Accordingly, the automobile exclusion applied. The court held that the
lower court erred in finding in favor of the Sirohis.
The case was remanded to the
lower court for entry of a judgment in favor of Builders Mutual.
Builders Mutual Insurance
Company vs. North Main Construction, Ltd-No COA04-1717-Court of Appeals of
North Carolina-February 21, 2006-625 South Eastern Reporter 2d 622