On December 14, 2015, a federal court in California denied Evanston Insurance Company’s motion to dismiss Uber’s breach of contract and breach of the implied covenant of good faith and fair dealing claims. Evanston Insurance Company v. Uber Technologies, No. 15-cv-03988-WHA (Dec. 14, 2015). The case concerns Evanston’s duty to indemnify Uber for claims arising from two car accidents during which drivers were allegedly logged on to the Uber App.
Evanston, the excess insurer over Uber’s General Commercial Liability and Business Auto policies, denied coverage based on, inter alia, two policy limitations: (1) the policies’ designated premises limitation; and (2) the auto liability limitation.
The designated premises limitation stated that the policy only applied to losses arising out of operations in twelve of Uber’s office building locations. The auto liability limitation excluded coverage for any loss resulting from automobile use away from Uber’s office buildings. Evanston argued that because the auto accidents did not occur in one of Uber’s office locations designated under the Policy, then there is no coverage as a matter of law.
The court rejected Evanston’s interpretation, holding that Evanston’s view would render its Business Auto policy illusory because that interpretation would mean that coverage could only apply to car accidents occurring in the hallways of Uber office buildings. Such a reading would be inconsistent with the California Supreme Court’s directive that “contracts are to be interpreted in a manner that makes them reasonable and capable of being carried into effect, and that is consistent with the parties’ intent.” Safeco Ins. Co. of Am. v. Robert S., 26 Cal. 4th 758, 765 (2001). Accordingly, the court denied Evanston’s motion to dismiss Uber’s breach of contract and bad faith claims and permitted discovery into the availability of coverage under Evanston’s policies.