American Oil Co. v. Hardware Mutual Casualty Co., 7191.

• Citation: 408 F.2d 1365
• Decision Date: 21 March 1969
• Docket Number: No. 7191.,7191.
• Parties: The AMERICAN OIL COMPANY, Plaintiff, Appellant, v. HARDWARE MUTUAL CASUALTY COMPANY, Defendant, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

408 F.2d 1365 (1969)

The AMERICAN OIL COMPANY, Plaintiff, Appellant, v. HARDWARE MUTUAL CASUALTY COMPANY, Defendant, Appellee.

No. 7191.

United States Court of Appeals First Circuit.

Heard January 8, 1969.

Decided March 21, 1969.

Rehearing Denied April 24, 1969.

Raymond A. LaFazia, Providence, R. I., for appellant.

Leonard A. Kiernan, Jr., Providence, R. I., for appellee.

Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Judges.

McENTEE, Circuit Judge.

In this declaratory judgment suit, The American Oil Company (American) seeks, inter alia, to compel Hardware Mutual Casualty Company (Hardware) to take over the defense of a pending negligence action brought against American. The district court, sitting without a jury, found that Hardware had no obligation to assume the defense of the suit and denied the relief sought. The issue raised by American's appeal is whether the trial court erred in finding that the injuries alleged by the plaintiff in the negligence action did not come within the complete operation doctrine. If not, Hardware has no duty to defend the suit.

The facts are not complicated. Hardware issued a policy of insurance to Superior Coal Company, Inc., a Rhode Island corporation, which policy included liability on the latter's motor vehicles. The policy also provided coverage for any person using the named insured's motor vehicles with its permission.¹ Unlike some such policies, there is no stipulation in this one that "use of an automobile" includes the loading and unloading thereof. Nor is the term "use of an automobile" defined or restricted as to Coverage A.

On April 6, 1964, Albert Correia, the driver of a Superior Coal tank truck, was injured when he fell from an oil loading rack at American's terminal in East Providence where his truck was parked, waiting to take on a load of fuel oil. Correia sued American alleging in substance that his injuries were caused by its negligence in failing to maintain its premises in a reasonably safe condition for the use of its business invitees.² It is this suit that American asks the court to order Hardware to defend under the terms of the aforesaid policy.³ Although the accident happened before the actual loading of the truck had begun, American alleges that the loading process had begun and that the accident occurred "in the course of the loading operation." From this it argues that under the complete operation doctrine, it was using Superior Coal's truck within the fair intendment of the policy at the time and place of the accident and therefore Hardware owes it a defense to the Correia suit as an additional insured under the policy.

As so well stated in Allstate Insurance Co. v. Valdez, 190 F.Supp. 893, 894-895 (E.D.Mich.1961):

"It is generally acknowledged that the `loading and unloading\' provision extends liability coverage under a policy beyond the limits circumscribed by the words `maintenance or use.\' Appleman Insurance Law & Practice, Vol. 7, § 4322 (1942). The courts have adopted two views of the scope of insurance coverage under the `loading and unloading\' clause, the so-called `coming to rest\' and `complete operation\' doctrines. Under the former category, `loading\' would cover only the period during which the article has left its place of rest and is in the process of being carried to or placed in the vehicle. * * *

"Broader in scope than the `coming to rest\' theory, the `complete operation\' interpretation covers the entire process involved in the movement of the article, thereby omitting any distinction between `loading\' and preparatory activities * * *."

In most jurisdictions the "complete operation" view prevails. Rhode Island has adopted this view in the case of Cinq-Mars v. Travelers Insurance Co., 100 R.I. 603, 218 A.2d 467 (1966) and this being a diversity action, the substantive law of Rhode Island as enunciated in Cinq-Mars governs the instant case. After observing that the scope of the complete operation doctrine can only be determined in the factual context of each case, the district court found, among other things, that under the facts of this case the loading operation had indeed begun at the time Correia was injured.⁴ Citing the case of Travelers Insurance Co. v. American Fidelity and Casualty Co., 164 F.Supp. 393, 400 (D.Minn. 1958), the court also found that when, as here, "a vehicle is normally used to transport oil and is insured as such, it is a reasonable construction of the policy that the parties intended the term `use' to include loading and unloading, since these activities are essential to the use of the vehicle for the transport of oil."⁵ We think that in a liability policy of this kind words such as "use" or "using" have a comprehensive scope. There is adequate precedent for the view that when the policy is silent on the point, loading and unloading is "using" an insured motor vehicle. Liberty Mutual Insurance Co. v. Truck Insurance Exchange, 245 Or. 30, 33, 420 P.2d 66, 68 (1966). Under the facts of this case and construing the policy against the insurer, we cannot say that this construction of the policy was unreasonable.

We come now to the principal issue raised by the appeal, namely, whether the trial court erred in finding that the loading operation was not the efficient and predominant cause of the accident, and therefore not within the policy. In making this finding the court said:

"It is the opinion of this court, in light of the allegations of Mr. Correia\'s complaint, which mentions nothing about loading, the facts as established in this hearing, and in accord with the decision cited above that the fall and subsequent injuries were caused by an independent factor wholly disassociated with the loading operation and therefore, there is a sufficient absence of causal relations or connection between the accident and the loading operation to allow the injury to come within the coverage provided in the policy in question."

American strongly contends that for it to come within the provisions of the Hardware policy it need only show that its alleged negligence occurred during the loading operation of Superior Coal's vehicle. In other words, it asserts that under the complete operation doctrine all that is required to establish coverage is that the act or omission which resulted in the injury was necessary to carry out the loading or unloading. We do not agree. The pertinent coverage provisions in the policy in the instant case⁶ are substantially the same as those in Cinq-Mars except that in the latter case there was a stipulation that "use of an automobile includes the loading and unloading thereof." In view of the trial court's construction of the term "use" in the instant case, we do not think that for present purposes this distinction in the two policies is a critical one.

In Cinq-Mars the court, applying the complete operation doctrine, held that policies containing loading and unloading clauses extend...