Occidental Fire & Casualty Company prevailed in a motion filed by Christine Anto, a partner in the firm’s Transportation and Insurance Services Practice Groups, requesting the chancery court to reconsider a previous ruling where it originally awarded a default judgment against the insurer. This motion caused the court to state that its earlier ruling against our client was a clear error.
At issue in this matter was whether a default judgment in the amount of $201,104.67 against Occidental’s insured for cargo that was stolen while hauling the cargo on behalf of American President Lines (APL) was covered under a business auto liability policy that includes a Truckers Uniform Intermodal Interchange Endorsement (UIIE-1 Endorsement) pursuant to the Uniform Intermodal Interchange Agreement (UIIA). APL owned the container being hauled by the insured at the time of the theft. Occidental denied any obligation to pay the default judgment in a garnishment proceeding and initiated a declaratory judgment action.
Initially, the chancery court ruled in favor of the shipper, finding that the UIIE-1 Endorsement incorporates all indemnification obligations assumed by Occidental’s insured in the UIIA, which was found to include any liability arising from the insured’s use of APL’s equipment. Finding that the cargo loss arose from the insured’s use of the equipment, the court entered judgment in favor of APL. The court stated that because the UIIE-1 Endorsement broadened coverage, it need not decide under Illinois law whether the term “property damage,” as defined in the Occidental policy, included theft. The court also held that APL was entitled to fees and costs in seeking to enforce the indemnification provision pursuant to the UIIE-1 Endorsement.
On Christine's motion to reconsider, the court reversed itself, stating that the earlier ruling incorrectly focused on the terms of the UIIA, instead of the wording of the Occidental Policy and UIIE-1 Endorsement. Finding the expansion of coverage under the UIIE-1 Endorsement in the Occidental policy to have been in err, the court limited coverage to those indemnification obligations assumed by the insured that fell within coverage otherwise provided under the policy – bodily injury and property damage – and agreed with the position advanced by Christine on behalf of Occidental that, under Illinois law, theft is not “property damage” as that term is defined in liability policies. No appeal was taken.
This decision is significant within the trucking industry as it helps to define the scope of the UIIA and the UIIE-1 Endorsement to liability policies required by the UIIA. It gives some guidance to parameters for trucking liability coverage, as opposed to separate cargo coverage. In this case, cargo coverage was not available, so APL was trying to use the UIIA to get coverage for the loss under a liability policy not intended to cover this type of loss. This is an issue of first impression that most intermodal companies will face at some point.