Title: James River Insurance Co. v. Doswell Truck Stop, LLC

State: virginia

Issuer: Virginia Supreme Court

Document:

VIRGINIA:  
 
 
In the Supreme Court of Virginia held at the Supreme Court Building in the 
City of Richmond on Thursday the 16th day of May, 2019. 
 
Present:  Chief Justice Lemons, Justice Mims, Justice McClanahan, Justice Powell, Justice 
Kelsey, Justice McCullough, and Senior Justice Lacy 
 
 
James River Insurance Company,  
 
 
 
    Appellant, 
 
 against 
 
Record No. 180624 
 
 
 
Circuit Court No. CL17001049-00 
 
Doswell Truck Stop, LLC, et al.,  
 
 
 
    Appellees. 
 
 
 
 
 
 
 
 
  Upon an appeal from a judgment 
rendered by the Circuit Court of Hanover 
County. 
 
 
Upon consideration of the record, briefs, and argument of counsel, the Court is of the 
opinion that there is reversible error in the judgment of the circuit court. 
 
Doswell Truck Stop, LLC (“DTS”) operates a truck stop in Doswell, Virginia.  The truck 
stop premises include a gas station/convenience store, a hotel, a repair garage/truck wash, and 
approximately 24 acres of vacant land.  At all times relevant to the present case, DTS was 
insured under a Commercial General Liability Policy (the “Policy”), issued by James River 
Insurance Company (“James River”).  The Policy contained an Absolute Auto, Aircraft and 
Watercraft Exclusion endorsement (the “Auto Exclusion”) which precludes coverage for bodily 
injury and property damage arising out of the maintenance of any “auto.”1  The Auto Exclusion 
specifically stated: 
                                                          
 
 
1 The policy defines the term “auto” as: 
a. A land motor vehicle, trailer or semitrailer designed for travel 
on public roads, including any attached machinery or 
equipment; or 
b. Any other land vehicle that is subject to a compulsory or 
financial responsibility law or other motor vehicle insurance 
law in the state where it is licensed or principally garaged. 
 
2 
“Bodily injury” or “property damage” arising out of the ownership, 
maintenance, use or entrustment to others of any aircraft, “auto” or 
watercraft.  Use includes operation and “loading or unloading”.  
Use also includes the handling and placing of persons by an 
insured into, onto or from an aircraft, “auto” or watercraft. 
This exclusion applies even if the claims against any insured allege 
negligence or other wrongdoing in the supervision, hiring, 
employment, training or monitoring of others by that insured, if the 
“occurrence” which caused the “bodily injury” or “property 
damage” involved the ownership, maintenance, use or entrustment 
to others of any aircraft, “auto” or watercraft. 
In June 2016, James T. Smith (“Smith”) filed a personal injury lawsuit against DTS for 
injuries he allegedly suffered as a result of a tire explosion.  According to Smith’s complaint, he 
sought to have DTS repair or replace a tire on his tractor-trailer.  During the course of the repair, 
a DTS employee invited Smith into the garage area.  The tire was secured within an OSHA-
compliant steel cage designed for inflating damaged truck tires.  However, while Smith was 
present, the DTS employee over-inflated the tire, causing it to explode and injure Smith. 
DTS filed an insurance claim with James River, but James River denied coverage on the 
basis that DTS’s claim was precluded by the Auto Exclusion.  DTS filed a declaratory judgment 
action against James River, seeking a determination of whether the Policy covered Smith’s 
injury.  DTS and James River both filed motions for summary judgment.  In its motion, DTS 
argued that the term “maintenance” in the Auto Exclusion was ambiguous because it is subject to 
two meanings:  (1) regular repair operations and (2) a possessory interest other than ownership or 
use.  DTS asserted that both definitions of maintenance are equally possible in the context of the 
Auto Exclusion and, therefore, the circuit court should adopt the construction that is most likely 
to effectuate coverage.  Alternatively, DTS contended that an independent basis existed for 
coverage under the Policy.  Specifically, DTS claimed that Smith’s complaint contained a 
premises liability claim that would not be precluded by the Auto Exclusion. 
The circuit court ruled in favor of DTS.  In a letter opinion, the circuit court determined 
that the Auto Exclusion was ambiguous with respect to the meaning of “maintenance” of an auto.  
It also adopted DTS’s argument on premises liability as an alternative basis for granting 
                                                          
 
However, “auto” does not include “mobile equipment”. 
 
3 
summary judgment.  The circuit court further awarded DTS $7,000 in attorneys’ fees as 
compensation for the fees DTS had already incurred in defending Smith’s claim. 
1. Ambiguity of the word “Maintenance” 
James River first assigns error to the circuit court’s determination that the term 
“maintenance,” as used in the Policy, is ambiguous.  In determining whether a term is 
ambiguous, a court cannot look at the term in isolation; it must look at the term in the context of 
the entire contract.  See Babcock & Wilcox Co. v. Areva NP, Inc., 292 Va. 165, 180 (2016) 
(recognizing that the proper interpretation of a contract requires a court to avoid placing 
emphasis on individual terms “wrenched from the larger contractual context”).  In other words, a 
contractual term is not ambiguous merely because it is subject to multiple interpretations when 
viewed in isolation.  Rather, a contractual term is ambiguous when it is subject to multiple 
interpretations in view of the entire contractual context. 
Under Virginia law, conflicting interpretations reveal an ambiguity 
only where they are reasonable.  A “reasonable” or “fairly 
claimed” interpretation is one of two competing interpretations that 
are “equally possible” given the text and context of the disputed 
provision. 
Erie Ins. Exch. v. EPC MD 15, LLC, 297 Va. 21, 29 (2019) (citations omitted). 
Notwithstanding the fact that “maintenance” is the term at issue in the present case, DTS 
focuses its argument on the meaning of its root word: maintain.  As DTS correctly notes, the 
term “maintain” is used throughout the Policy in a manner indicating that it should be interpreted 
as meaning “to keep.”  According to DTS, this interpretation of “maintain” informs the 
interpretation of “maintenance.” 
 
Although the word “maintenance” is derived from the word “maintain,” the terms are 
used differently throughout the Policy and, therefore, can have distinct meanings.  Notably, the 
Policy’s definition of “mobile equipment” uses both terms in a manner that clearly indicates they 
have different meanings.  For example, “mobile equipment,” as used in the Policy, may refer to 
“[v]ehicles maintained for use solely on or next to premises you own or rent” or 
“[v]ehicles . . . maintained primarily to provide mobility” to certain permanently mounted 
equipment.  (Emphasis added.)  This language supports DTS’s argument, as the term 
“maintained” is used in a manner indicating that the term means “kept,” e.g., vehicles maintained 
 
4 
for a specific purpose or use.  At the same time, however, the Policy also states that “mobile 
equipment” does not refer to “self-propelled vehicles with . . . types of permanently attached 
equipment . . . designed primarily for . . . [r]oad maintenance.”  (Emphasis added.)  The 
interpretation of “maintenance” asserted by DTS would mean that this language refers to 
equipment primarily designed for a possessory interest in roads other than ownership or use.  
Such an interpretation makes little sense and, therefore, cannot be an “equally possible” 
interpretation of the term “maintenance.”  Rather, the more reasonable interpretation would be 
that this language referred to equipment primarily designed for the regular repair of roads. 
 
A review of the Policy demonstrates that, of the two competing interpretations of 
“maintenance,” only one can reasonably be applied to every instance of the term in the Policy.  
Specifically, “regular repair operations” is the only interpretation of “maintenance” that can be 
reasonably applied to every instance of the term in the Policy, whereas the alternative 
interpretation offered by DTS can only reasonably be applied to approximately half of the 
instances in which the term is used.  Accordingly, the term is not ambiguous. 
2. Premises Liability 
 
James River next argues that the circuit court erred in ruling that Smith’s claim asserted a 
premises liability claim which provided an independent basis for potential liability that is not 
precluded by the Auto Exclusion.  James River points out that the Auto Exclusion precludes 
coverage for bodily injury “arising out of the ownership, maintenance, use or entrustment” of a 
vehicle.  (Emphasis added.)  According to James River, regardless of the nature of the claim 
brought by Smith, the fact remains that his injury arose out of maintenance of a vehicle and, 
therefore, coverage is precluded by the Auto Exclusion. 
In the context of an insurance policy, the phrase “arising out of the ownership, 
maintenance or use” of a vehicle is broad in its scope.  The Court has recognized that the 
“ownership, maintenance, or use of the vehicle need not be the direct, proximate cause of the 
injury in the strict legal sense” to fall within the scope of the “arising out of” language.  State 
Farm Mut. Auto. Ins. Co. v. Powell, 227 Va. 492, 500 (1984).  Rather, such language only 
requires that a reasonable causal connection exist between the ownership, maintenance or use of 
the automobile and the injury.  Id. 
In the present case, DTS relies heavily on language in Smith’s complaint indicating that 
his injuries were the result of a DTS employee negligently permitting him to enter a dangerous 
 
5 
location.  Smith’s complaint, however, specifically alleges that his injury occurred when a DTS 
employee “over inflated the tire so as to cause the tire to explode.”  Thus, regardless of whether 
allowing Smith into a dangerous location was a proximate cause of his injuries, the fact remains 
that a significant causal connection exists between the maintenance on the tire and Smith’s 
injuries.  As such, Smith’s injury arose out of the maintenance of a vehicle and the Auto 
Exclusion applies.  Accordingly, the trial court erred in ruling that an independent basis existed 
for coverage under the Policy. 
3. Award of Costs 
 
James River argues that the circuit court erred in awarding DTS compensation for the 
fees it had incurred in defending Smith’s claim.  Such compensation was premised on the circuit 
court’s determination that James River had a duty to defend DTS under the Policy.  As noted 
above, however, the Auto Exclusion precludes coverage for Smith’s injury under the Policy.  
Accordingly, there was no basis for such an award and, therefore, the award must be reversed. 
 
For the foregoing reasons, the decision of the circuit court is reversed and final judgment 
is entered declaring that the Auto Exclusion precludes coverage of Smith’s injuries under the 
Policy. 
 
This order shall be published in the Virginia Reports and shall be certified to the Circuit 
Court of Hanover County. 
 
 
 
 
 
                A Copy, 
 
 
 
 
          
                    Teste: 
 
 
 
 
                        
 
 
 
 
 
 
 Douglas B. Robelen, Clerk