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Dealership’s insurer doesn’t have to cover auction crash litigation

Posted On: Nov. 28, 2022 2:29 PM CST


The insurer of a car dealership that owned a car that suddenly accelerated into a group of attendees at an auction, killing five people, does not have to provide coverage in the subsequent litigation, a federal appeals court ruled in affirming a lower court decision.

Merrimack, New Hampshire-based Nashua Automotive LLC received a 2006 Jeep Grand Cherokee in a 2017 trade-in and arranged for Billerica, Massachusetts-based Lynnway Auto Auction Inc. to auction the vehicle, according to Wednesday’s ruling by the 1st U.S. Circuit Court of Appeals in Boston in Motorists Commercial Mutual Insurance Co. v. Roger Hartwell; Lynnway Auto Auction Inc.

In May 2017, while the Jeep was being put up for auction inside Lynnway’s Billerica facility, it accelerated into a crowd, killing five people and causing multiple serious injuries, the ruling said.

The victims and their estates filed a series of lawsuits in Massachusetts state court alleging several 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.

Dealership insurer Motorist Commercial, based in Columbus, Ohio, filed suit in U.S. District Court in Boston, seeking a declaration its policies did not cover the auctioneer or Mr. Hartwell. The district court ruled in the insurer’s favor and was affirmed by a unanimous three-judge appeals court panel.

A policy exclusion excepted from the definition of insureds a third party that is in the business of selling the dealership’s autos, the ruling said.

“No reasonable insured that procured the policy would ordinarily have any interest in paying for a policy that provided coverage for another person who works for another unrelated seller of autos,” the ruling said.

“And that is the precise situation here: Lynnway retained its own insurance policies, the providers of which have conceded the availability of coverage,” the decision said in affirming the lower court.

A Motorists attorney had no comment, while Lynnway’s attorneys did not respond to a request for comment.