In its January 27, 2014, decision in American States Insurance Company v. Travelers Property Casualty Company of America, the California Court of Appeal (Second Appellate District) held that a food truck was mobile equipment which was not excluded from coverage provided by a commercial general liability (CGL) insurance policy.
Royal Catering Company owned a fleet of food trucks. Royal leased its trucks to operators who drove from site to site selling food. Royal obtained automobile insurance coverage from American States and CGL insurance coverage from Travelers.
Esmeragdo Gomez and his wife Irais operated a food truck leased from Royal. The Gomezes’ food truck was equipped with a deep fryer. While Mr. Gomez was driving the truck, Mrs. Gomez was standing in the rear of the truck. Mr. Gomez swerved to avoid an approaching vehicle. Hot oil splashed and burned Mrs. Gomez.
The Gomezes sued Royal for negligence and on a products liability theory, alleging that that Royal provided a defective deep fryer basket which caused hot oil to spill on Mrs. Gomez. American States and Travelers disputed what company’s insurance policy covered the Gomezes’ claim.
The Travelers’ CGL policy excluded claims involving the use of an auto. The policy’s definition of “auto” stated that auto did not include "mobile equipment.” The policy’s definition of “mobile equipment” provided that mobile equipment included vehicles “maintained primarily for purposes other than the transportation of persons or cargo.”
The trial court ruled that the Gomezes’ food truck was excluded from coverage under Travelers’ CGL policy. The court concluded the food truck was an “auto” and not “mobile equipment.” The trial court observed that “the whole point … of this endeavor is to move food and other items to places where people are waiting to buy them.”
The Court of Appeal reversed the trial court’s ruling.
The appellate court noted that if the Gomezes’ food truck was maintained primarily for purposes other than the transportation of persons or cargo, the truck was mobile equipment and not subject to the auto exclusion in the CGL policy. The court concluded that under a plain reading of Travelers’ CGL policy, the Gomezes’ food truck was “mobile equipment” and not an “auto.” The court explained, “The primary purpose of the Gomezes’ food truck was to serve as a mobile kitchen and not to transport persons or cargo.”
A copy of the Court of Appeal’s opinion is available at www.courts.ca.gov