Federal Court in Texas Holds Auto Exclusion Precludes Antecedent Negligence Claims

A federal court in Texas has held that an auto exclusion excludes coverage for the death of a child left on a school bus in the summer heat notwithstanding the existence of antecedent claims of negligent supervision and care. Scottsdale Ins. Co. v. Discovering Me Academy LLC et al., 4:20-cv-02449 (S.D. Tex. Mar. 23, 2021).

The underlying petition alleged not only that the child was left on the bus, but also that a teacher’s negligent supervision and care and the school’s not having in place a policy to confirm all children were off the bus contributed to the child’s death. In the declaratory judgment action that the school’s insurer filed, the insureds and the underlying plaintiffs asserted that these antecedent negligence claims fell outside of the auto exclusion.

The court found no duty to defend based on the auto exclusion, looking to the test set out under Texas law for use of an auto: (1) that the accident must have arisen out of the inherent nature of the automobile, as such, (2) that the accident must have arisen within the natural territorial limits of an automobile, and the actual use must not have terminated, and (3) that the automobile must not merely contribute to cause the condition which produces the injury, but must itself produce the injury. The court found that the child’s death arose out of the use of the bus’s inherent function or purpose, which was to transport students and which had not been fulfilled as to the child left on the bus; that the accident occurred within the bus’s natural territorial limits; and that the bus caused, rather than contributed to, the conditions that produced the injury.

The court rejected the argument that the antecedent negligent claims fell outside of the auto exclusion under the test, which requires courts to examine whether the injuries, not whether a particular cause of action, arose out of the use of an auto. The court also rejected an argument of new and independent cause because under “arising out of” wording, the claim need only bear an incidental relationship to the described conduct for the exclusion to apply. Relying on Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81 (Tex. 1997), the court also found that there is no duty to indemnify because the facts as developed in the underlying action would not alter the fact that the injury arose out of the use of the bus.

Phelps attorneys Jay Sever and Chris Gabriel represented the insurer.