Farmowner Insurer Ordered to Pay $1 Million Judgment Against Its Insured for Farm Truck Accident Occuring Off Premises

FARMOWNERS – "INSURED PREMISES" – USE OF FARM VEHICLE ON PUBLIC ROADWAY – MOTOR VEHICLE SUBJECT TO REGISTRATION
McLaughlin v. Midrox Ins. Co.
(4th Dept., decided 2/11/2010)

Midrox's insured, Ronald Blodgett, was driving a pickup truck between Blodgett's main farm and leased farm property, which were approximately nine miles apart, when he collided with a motorcyclist, Charles McLaughlin.  The incidental liability provisions of Blodgett's policy with Midrox covered liability for bodily injury and property damage that "occurs on the insured premises and results from the ownership, maintenance, use, loading or unloading of . . . motorized vehicles not subject to motor vehicle registration because of their type or use . . . ." Pursuant to the policy, the "[i]nsured premises" included Blodgett's main farm as identified in the "Described Location" section as well as "any premises used . . . in connection with the described location," the "approaches and access ways immediately adjoining the insured premises," and "other land [the insured] use[s] for farming purposes[.]" 

Midrox disclaimed coverage for the accident under Blodgett's farmowner's policy on the ground that the accident had occurred off the "insured premises" while Blodgett was operating a vehicle subject to motor vehicle registration. McLaughlin's underlying personal injury action ultimately settled, and judgment was entered against the Blodgett defendants in the amount of $1 million.  When Midrox did not respond to McLaughlin's demand for payment of the judgment pursuant to New York Insurance Law § 3420(a)(2), McLaughlin commenced this action to require Midrox to pay the judgment.

McLaughlin moved and Midrox cross-moved for summary judgment.  Ontario County Supreme Court granted plaintiff's motion in part and denied Midrox's cross motion, finding there to be a question of fact whether the accident occurred on insured premises.  Following an evidentiary hearing, the trial court determined that the policy provided coverage for the accident and that Midrox was obligated to pay McLaughlin $1 million.  Midrox appealed.

In AFFIRMING the judgment against Midrox, the Fourth Department agreed with the lower court that: (1) the various definitions of "insured premises" were "broad enough to include public roadways used by the insured to transport workers and materials between the insured's farms"; and (2)because the pickup truck was used exclusively for farm purposes and the accident occurred along the most direct route between the two farm parcels, the pickup truck was not subject to regular motor vehicle registration because of its exclusive use as a farm vehicle:

Midrox contends that its policy does not provide coverage because the accident occurred on a public roadway while Ronald Blodgett was driving a pickup truck. We reject that contention. In Nationwide Mut. Ins. Co. v Erie & Niagara Ins. Assn. (249 AD2d 898), we interpreted a farmowner's insurance policy that was substantially similar, if not identical, to the Midrox policy. There, the insured's employee was involved in an accident on a public roadway while driving a pickup truck between two farms operated by the insured (id. at 898). We further concluded that the various definitions of "insured premises" were "broad enough to include public roadways used by the insured to transport workers and materials between the insured's farms" (id.). Here, the record establishes that, at the time of the accident, Ronald Blodgett was driving the pickup truck between the Blodgett defendants' main farm and leased farm property, which were approximately nine miles from each other.

We further reject the contention of Midrox that our decision in Nationwide Mut. Ins. Co. does not apply because the pickup truck was registered as an agricultural truck (Vehicle and Traffic Law § 401 [7] [E]) rather than as a farm vehicle (§ 401 [13]). The Blodgett defendants had the option of registering the truck as either a farm vehicle or an agricultural truck, and the fact that they elected to register the truck as an agricultural vehicle does not, in our view, deprive them of coverage under the policy inasmuch as the pickup truck was used exclusively for farm purposes and the accident occurred along the most direct route between the two farm parcels. Thus, the pickup truck was not subject to regular motor vehicle registration because of its exclusive use as a farm vehicle (see Nationwide Mut. Ins. Co., 249 AD2d at 898).

There is likewise no merit to the contention of Midrox that the term "premises" within the meaning of the policy is not intended to encompass public roadways. That restrictive interpretation is not supported by the language of the policy, which neither defines "premises" nor excludes public roadways from its purview (cf. Estate of Belmar v County of Onondaga, 147 AD2d 900, lv denied 74 NY2d 612). Construing the policy in favor of the insureds and resolving all ambiguities in the insureds' favor, as we must (see United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232), we conclude that the accident occurred on the "insured premises" within the meaning of one or more of the policy's alternative definitions of that phrase (see Nationwide Mut. Ins. Co., 249 AD2d at 898). 

With no information about McLaughlin's injuries or the lower court's rulings other than what is reflected in this decision, it is difficult to say whether Midrox should have considered providing a gratuitous defense to its named insureds in the underlying action while commencing a declaratory judgment action to confirm its disclaimer.  Disclaiming and walking away leaves insureds free to defend or not defend underlying personal injury or property damage actions and potentially enter into million dollar settlements as they see fit.