Opinion ID: 1650514
Heading Depth: 2
Heading Rank: 2

Heading: Coverage under the Commercial General Liability Policy

Text: ¶ 11. Having determined that Cherokee did not waive its right to appeal, we must examine whether the GCL policy covers the direct claims against Three Rivers despite the so-called automobile exclusion. Under the controlling provision, This insurance does not apply to: Aircraft, Auto or Watercraft Bodily injury or property damage arising out of the ownership, maintenance, use or entrustment to others of any aircraft, auto or watercraft: (1) Owned or operated by or rented or loaned to any insured; or (2) Operated by any employee in the course of his or her employment by the insured or while performing duties related to the conduct of the insured's business. That language was contained in an endorsement that was appended to the policy at the time the policy was issued. This endorsement replaced the original automobile exclusion. The only significant difference between the endorsement and the original policy is the omission of the following language from the endorsement: This exclusion applies even if the claims arising 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 that is owned or operated by or rented or loaned to any insured. ¶ 12. The trial court concluded that, because the language concerning negligence or other wrongdoing in the supervision, hiring, employing, training and monitoring of others was omitted from the endorsement, the plaintiffs' claims against Three Rivers fell outside the exclusion contained in the endorsement. ¶ 13. Cherokee argues that, despite the amendment to the exclusion, the policy nevertheless excludes the plaintiffs' claims regarding negligent supervision, hiring, employing, training and monitoring. Cherokee asserts that the language of the exclusion contained in the endorsement remains unambiguous and that the claims against Three Rivers are excluded because they aris[e] out of the use or entrustment to Morris of an auto. ¶ 14. The parties agree that Tennessee law controls the interpretation of the GCL policy. The Tennessee Supreme Court has recognized what it has termed the concurrent causation doctrine. Under this doctrine, coverage exists where a nonexcluded cause is a substantial factor in producing the damage or injury, even though an excluded cause may have contributed in some form to the ultimate result and, standing alone, would have properly invoked the exclusion contained in the policy. Allstate Ins. Co. v. Watts, 811 S.W.2d 883, 887 (Tenn.1991). ¶ 15. In Watts, the Tennessee Supreme Court examined a homeowner's policy which contained an exclusion for bodily injury or property damage arising out of the ownership, maintenance, use, occupancy... loading or unloading of any motorized land vehicle or trailer. Id. at 884. Under the facts of that case, the insured and the plaintiff were attempting to repair a truck parked on the insured's property. Id. When the plaintiff tried to use a cutting torch to remove a lug nut, a spark from the torch ignited a pan of flammable liquid, and the plaintiff suffered serious burns. Id. at 884-85. The plaintiff sued the homeowner, alleging that the homeowner was negligent in failing to warn him of the presence of the flammable substance and in picking up the flaming pan and then dropping it so as to burn the plaintiff. Id. at 885. Allstate denied coverage on the ground that the injuries arose out of the maintenance of an automobile. Id. Applying the concurrent causation doctrine, the Tennessee Supreme Court concluded that the plaintiff's injuries were covered because, even though they were caused in part by an excluded risk, maintenance of a vehicle, they were also caused in part by nonexcluded risks: negligence in failing to warn, and spilling flaming liquid. Id. at 888. ¶ 16. Here, the trial court relied on Watts, as well as the language Cherokee chose to remove from its original policy, to find that the claims against Three Rivers were covered. Specifically, the trial court found that: In light of the sworn testimony taken in this case and the documentary evidence available to the Court, there are facts upon which a jury may conclude that Three Rivers failed to properly train, monitor, and supervise Bobby Morris in Tennessee; that Three Rivers failed to have proper safety management controls in place; and failed to monitor and implement a proper safety training program for the safety of its employees and the public; failed to hire qualified employees. ¶ 17. We agree with the trial court's interpretation of the Watts decision, in that there could have been two alleged concurrent causes of the accident such that coverage would apply: (1) Morris's negligence in his operation of the vehicle; and (2) Three Rivers' negligence in their supervision, hiring, employing, training, and monitoring of Morris. However, under Watts, the nonexcluded cause must be a substantial factor in producing the damage or injury. Id. at 887. We find no language in the judgment indicating that the trial judge found the nonexcluded cause to be a substantial factor in causing the accident. Therefore, we reverse the judgment and remand the case for further proceedings. Should the trial court find that Three Rivers was not negligent in its supervision, hiring, employing, training, or monitoring of Morris, or that Three Rivers was negligent, but that such negligence was not a substantial factor in causing the accident, a judgment should be entered in favor of Cherokee in the declaratory judgment action. On the other hand, should the trial court find that Three Rivers was negligent in its supervision, hiring, employing, training, or monitoring of Morris, and that such negligence was a substantial factor in causing the accident, a judgment should be entered in favor of the plaintiffs in an amount the trial court finds to be consistent with the settlement agreement. ¶ 18. AFFIRMED IN PART; REVERSED IN PART AND REMANDED. WALLER, C.J., CARLSON AND GRAVES, P.JJ., DICKINSON, RANDOLPH, LAMAR, CHANDLER, AND PIERCE JJ., CONCUR.