Driver Who Leaves Terminal to Visit Brother at Shopping Mall Still "Under Dispatch"; No Coverage Under Bobtail Policy

The United States District Court for the Eastern District of Pennsylvania has recently held that a Commercial Auto Policy with a Trucker’s Endorsement provides liability coverage for a trucker who is involved in a motor vehicle accident while returning from a visit to a shopping mall for lunch with his brother. The Court further held that there was no coverage under the Non-Trucking Use or Bobtail Policy.

Senior U.S. District Judge Raymond J. Broderick ruled in Guaranty National Insurance Co. v. Vanliner Insurance Co. and Stephen Ray Hubbard that the driver was still “under dispatch” to the carrier, A&P Transportation Co. because he was required to return to the terminal to pick up a loaded trailer. Therefore, the tractor was being used in the business of A&P, and coverage was provided under the Trucker’s Endorsement and excluded by the Non-Trucking Use Endorsement. Judge Broderick granted our Motion for Summary Judgment in favor of the Non-Trucking Use carrier, Guaranty National and issued a declaratory judgment that Guaranty was not required to defend or indemnify the driver, Stephen Hubbard in the underlying action.

Hubbard was an owner-operator under lease to A&P Transportation pursuant to a “Lease & Contractor Operating Agreement.” Hubbard agreed to operate his tractor “exclusively in the service” of A&P, “a Common Carrier by Motor Vehicle, holding authority from the Interstate Commerce Commission.” The day before the accident, Hubbard dropped a trailer at the carrier’s Philadelphia terminal and picked up an empty trailer. The following day he reported to A&P that he had completed the prior delivery. He was given instructions to proceed to another Philadelphia location to pick up a new load. However, when he arrived at the loading facility, the trailer was not yet loaded. He was informed that loading would be completed in three to four hours.

Hubbard dropped the empty trailer and proceeded to a local shopping mall where he hoped to meet his brother for lunch. The shopping mall was approximately ten miles from the loading location. He was unable to meet his brother but had lunch and purchased a magazine. He then left the shopping mall and headed for a local coffee shop to fill his thermos prior to returning to the loading location. He was involved in a motor vehicle accident on the way to the coffee shop.

Guaranty National provided coverage to Hubbard pursuant to a Non-Truckmen Auto Insurance Policy. The policy contained a Trucker’s Endorsement for Non-Trucking Use which excluded liability for “a covered ‘auto’ while used in the business of anyone to whom the ‘auto’ is rented.” A&P was insured by Vanliner Insurance through a Commercial Automobile Policy containing a Trucker’s Endorsement. The Trucker’s Endorsement expanded the policy definition of “Insured” to include the owner of any vehicle hired or borrowed by A&P, which was used exclusively in A&P’s business and pursuant to A&P’s operating rights.

Judge Broderick found that Hubbard was “in the business of” A&P at the time of the accident for two reasons. First, the Lease Contractor & Operating Agreement provided that Hubbard had agreed to furnish A&P with the “exclusive possession, control and use” of his tractor. Second, Hubbard had accepted a transport job from A&P at the time of the accident and was therefore “under dispatch” to A&P, because he was obligated to return to the loading location to pick up the trailer. Judge Broderick held that Hubbard’s trip to the shopping mall for lunch did not change the fact that he was still under dispatch to A&P. Hubbard was not free to do as to wished but was required to remain in the vicinity to pick up the load within three to four hours. Therefore, he was operating his tractor “in the business of” A&P at the time of the accident.

Judge Broderick found that the relevant portions of both Guaranty National’s Non-Trucking Use Policy and Vanliner’s Commercial Automobile Policy with Trucker’s Endorsement were clear and unambiguous. In so finding, Judge Broderick refused to follow Connecticut Indemnity v. Stringfellow, 956 F. Supp. 553 (M.D.Pa. 1997) which had previously ruled that the phrase “in the business of” as used in the standard Non-Trucking Use Exclusion was ambiguous and should be construed against the bobtail insurer.

Guaranty National Insurance Co. v. Vanliner Insurance Co., USDC, EDPA, Philadelphia Summary Judgment Granted July, 1998

Plaintiff’s Counsel: David P. Thompson, Jon Dumont
Rawle & Henderson LLP (Philadelphia)

Defendant’s Counsel: Stephen N. Huntington
Cohen & Huntington (Philadelphia)