The Alabama Supreme Court upheld a district court’s finding that an insurer had a duty to defend under a CGL policy against claims arising from the loss of a medical-imaging device damaged during transport by the insured. Mid-Continent Cas. Co. v. Advantage Med. Elecs., LLC, 2015 WL 6828722 (Ala. Nov. 6, 2015).
The insured was hired to inspect and transport a used CT scanner. A portion of the device was damaged while being lowered into a truck by a winch attached to a tow truck. The insured was sued for the failure to use reasonable care in moving the device. Its insurer denied coverage citing the contractual liability exclusion, the auto exclusion, the exclusion for personal property in the insured’s “care, custody, or control” and the “your work” exclusion. The parties filed cross-motions for summary judgment on the duty to defend. The court found a duty to defend.
The Alabama Supreme Court affirmed. The Court found that the “auto” exclusion did not apply because the accident did not arise out of the “use” of the truck. The Court reasoned that the device became damaged while being lowered by a mechanical device, and therefore the incident fell within an exception to the definition of “loading and unloading” which otherwise would constitute “use.” The Court also found that the district court did not err in failing to apply the “care, custody, or control” exclusion because the complaint did not allege that the insured exercised the type of exclusive possessory control over the device required, noting the tow truck company’s involvement. As for the “your work” exclusion, the Court considered that while the complaint alleged physical damage to the entire device, only one portion of it was being moved at the time of the incident. Thus, the Supreme Court found, even if the mere movement of property constituted work on the device, to the extent the parts of the device other than the portion being moved were damaged, the ”your work” exclusion would not apply as to them.