The insurer of a car dealer who owned a car that suddenly accelerated into a crowd of auction attendees, killing five people, need not provide coverage in the ensuing lawsuit, a federal appeals court ruled in affirming a lower court decision.
Merrimack, New Hampshire-based Nashua Automotive LLC obtained a 2006 Jeep Grand Cherokee in a 2017 trade-in and arranged for Billerica, Mass.-based Lynnway Auto Auction Inc. to auction off the vehicle, according to Wednesday’s ruling by the 1st U.S. Circuit Court of Appeals . Appeals in Boston i Motorists Commercial Mutual Insurance Co. v. Roger Hartwell; Lynnway Auto Auction Inc.
In May 2017, while the Jeep was being auctioned inside Lynnway̵7;s Billerica facility, it accelerated into a crowd, killing five people and causing several serious injuries, the ruling said.
The victims and their estates filed a series of lawsuits in Massachusetts state court asserting multiple theories of liability against Lynnway, associated entities and Mr. Hartwell, a Lynnway employee who was in the driver’s seat at the time of the accident.
The dealer’s insurance company, Motorist Commercial, based in Columbus, Ohio, filed suit in US District Court in Boston, seeking a declaration that its policies did not cover the auctioneer or Mr. Hartwell. The district court ruled in favor of the insurer and was upheld by a unanimous three-judge panel of the Court of Appeal.
An exception to the policy exception to the definition of insured insures a third party who is in the process of selling the dealer’s cars, the ruling said.
“No reasonable insured who obtained the policy would ordinarily have any interest in paying for a policy that provided coverage for another person working for another unrelated seller of automobiles,” the ruling said.
“And that is precisely the situation here: Lynnway retained its own insurance policies, whose providers have admitted the availability of coverage,” the decision said in an affirmance of the lower court.
Attorneys in the case did not respond to requests for comment.