Jurisdiction: Wisconsin
Court: Wisconsin Supreme Court
Decision Date: 4/18/2014
Case Title: Casey vs. Smith, Acceptance Casualty and Great West Casualty; 2012AP667
This is a published decision. Therefore it is mandatory authority and may be cited as legal precedent.
Insurance Issues:
- Truckers Liability Policies.
- Bobtail Liability Policies, exclusions 14(a) and 14(b).
- Lease agreements between individual truckers and truck companies.
Legal Issue: In this particular traffic accident, did Acceptance Casualty’s Bobtail Liability policy apply, or did Great West Casualty’s Truckers Policy apply?
Resolution:
The Wisconsin Supreme Court used this case to adopt the Hartford Rule to resolve these disputes in Wisconsin. The Hartford Rule asks whether the semi was being used to further the commercial interests of the lessee. The Hartford Rule is used in several jurisdictions and was first defined in the 7th Federal Circuit.
Facts of the Case:
John Z. owned a semi. He agreed to lease the semi and a driver exclusively to Taylor Truck line.
The terms of the lease specified that John Z. would:
- “Bear all expenses to the operation of the equipment, including…repairs and maintenance” and “maintain the equipment in a state of repair required by all applicable regulations.”
- Taylor Truck Line would obtain insurance required by federal law.
- John Z. would obtain bobtail liability insurance to cover the semi “when not used in performance under this agreement.”
John Z. obtained a bobtail liability policy through Acceptance Casualty, and Taylor Trucking obtained a truckers policy through Great West Casualty.
The semi sustained minor damage to the grille. Thirty days later, John Z. was driving the semi to the repair facility to replace the grill and pick up an oil filler tube which he intended to replace himself. Neither of these repairs would have put the semi out-of-service.
On the way to the repair facility, John Z. was involved in a multi-vehicle traffic accident which ultimately resulted in two bodily injury lawsuits. After the accident, a Wisconsin State Trooper inspected the semi and noted that there were no violations.
He was not on-duty for Taylor Truck on the day of the accident. In addition, Taylor Truck had not ordered, nor was even aware, that he was getting repairs done. Essentially, the repairs were being completed when it was convenient for John Z.
The dispute arose between Acceptance and Great West.
Acceptance denied coverage citing Exclusions 14(a) and 14(b). They argued that because John Z. was on his way to a repair facility, the semi was being used for a “business purpose” of Taylor Truck.
Great West also denied coverage arguing that their policy only afforded coverage when the semi was “being used exclusively in Taylor’s business.”
The insurance carriers disagree about whether John Z. was using the semi “in the business of” Taylor Truck at the time of the accident.
The Wisconsin Supreme Court used this case to adopt the Hartford Rule to resolve these disputes in Wisconsin. The Hartford Rule asks whether the semi was being used to further the commercial interests of the lessee.
Acceptance made several arguments and pointed to facts that the semi was being used to further the commercial interests of Taylor Truck.
The Court rejected all these arguments and concluded that because the repairs were not required by the lease agreement, were not done pursuant to orders by Taylor Truck, and were not necessary for the semi to continue its service, the trip that day was not in furtherance of Taylor Truck’s commercial interest at the time of the accident. Therefore, Acceptance Casualty’s Bobtail Liability Policy applied, and Great West Casualty’s policy did not.
The Court also stated that Acceptance’s interpretation of a business purpose was overly expansive and could render their insurance coverage illusory.
This material is for informational purposes only and not for the purpose of providing legal advice. R&R Insurance Services, Inc. is not a law firm. You should contact your attorney to obtain advice with respect to any issue or problem specific to your business. The information contained in this document is intentionally condensed and is a summary of court findings.
