INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Non-owned truck used for business
On April 26, 2018, Martin Montano Jr., an employee of Casas Custom Floor Care, LLC, was running late to an assignment due to feeling ill. Instead of driving to his employer and switching his car for a company vehicle, he decided to meet at the worksite. Because of a tire problem, Montano had borrowed his mother’s truck and arrived at the jobsite location at 11 a.m.
When the job was completed by the end of the day, Montano had to return to Casas’ office to correct a time sheet that he had previously filled out as working a full day when he had started at 11:00. On his way, he caused a serious intersection collision, killing the driver of the other car, Samantha Cravens. Her spouse, Michael, sued both Montano and Casas.
At the time of the loss, Casas was insured by Cincinnati Insurance Company under a commercial auto policy. Cincinnati responded to the suit by agreeing to defend Casas.
However, it issued a reservation of rights regarding Montano. Cincinnati did not offer to defend or indemnify Montano without firmly establishing whether an obligation to do so existed. Cincinnati asked the court to determine if Montano’s use of his borrowed car was within the scope of his employment with Casas.
Meanwhile, Cravens and Montano entered an agreement. They placed the liability for the accident on Montano, assigned his policy rights to Cravens and agreed on a payment of nearly four million dollars to be paid by the Casas policy.
Once aware of the agreement, Cincinnati and Cravens filed several actions that ultimately resulted in the latter requesting summary judgment on whether coverage was owed. The lower court ruled that a coverage obligation existed and that the amount stipulated in the agreement was to be paid along with Cravens’ defense costs.
Cincinnati appealed. An appellate court affirmed the action and Cincinnati appealed again.
The high court expended its efforts on reconciling two business-use phrasings found in the policy and an amendment that expanded what was meant by “covered persons.” The court rejected the interpretations presented by both parties.
Instead, after viewing the phrases through the lens of relevant cases, in the end it ruled that the policy language’s intent was to permit coverage if the use of a non-owned car had a direct connection with furtherance (advancement, promotion) of, in this situation, Casas’ business. However, no liability would exist for mere commuting to or from work. Which situation applied would have to be determined.
Next, the court examined the settlement/assignment of rights agreement made between Montano and Cravens as Cincinnati argued that it was not enforceable. The court found the opposite. Due to the agreement being contingent—relying on a determination of coverage—it was valid.
It did not present evidence of fraud on Montano’s part, nor did it prejudice Cincinnati’s position. Whether the agreement was executed depended entirely on what was decided regarding the vehicle’s use qualifying it as eligible for insurance protection.
The high court vacated the lower court’s decision granting coverage, affirmed its ruling on the validity of the settlement/assignment of rights agreement, reversed the appellate court ruling and remanded the matter to a hearing in light of its findings.
Michael Cravens v. Martin Montano Jr., and Casas Custom Floor Care, LLC—Supreme Court of Arizona—No. CV-24-0143-PR—April 29, 2025.
