The facts of Furnishare, Inc. v. Travelers, No. 22-2245 (S.D.N.Y. April 28, 2023) are like something out of a cartoon.  Furnishare buys and sells furniture through the internet.  Furnishare sent a team to a building in lower Manhattan to pick up a sofa that a customer had sold.  While being carried down the stairs from the seller’s sixth floor condominium, the sofa struck an exposed water head and caused millions of dollars of damages to the building’s residences and the belongings of its occupants.  [In the interest of completeness, the court noted that the sofa was also irreparably damaged.]

Coverage litigation ensued.  It wasn’t a question of whether coverage was owed, but, rather, whose policy was to pay.  Travelers insured Furnishare under a commercial general liability policy and State Farm wrote the Auto policy.  The CGL, subject to an excess as well, had much higher limits than the Auto.  Which policy applied was the difference between $5 million and $1 million in coverage.

CGL versus Auto disputes are not unusual and nor was the issue here.  Although, usually the incident at issue takes place in much closer proximity to the auto.  But, in any event, it’s a “loading and unloading” case.

The Travelers CGL policy excludes coverage for “’[b]odily injury’ or ‘property damage’ arising out of the ownership, maintenance, use or entrustment to others of any . . . ‘auto’ . . . owned or operated by or rented or loaned to any insured. Use includes operation and ‘loading or unloading.’”  The policy defined “loading and unloading” to include ‘handling of property . . . [a]fter it is moved from the place where it is accepted for movement into or onto an . . . auto.’

So the Travelers policy excludes coverage for the “handling of property . . . [a]fter it is moved from the place where it is accepted for movement into or onto an . . . auto.”

Conversely, the State Farm Auto policy excludes coverage for “damages resulting from . . . the handling of property before it is moved from the place where it is accepted by the insured for movement into or onto a vehicle.”

The issue is clear.  Did the accident take place before or after the sofa was accepted by the insured for movement into or onto a vehicle?  In other words, is it excluded “use of on auto” under a CGL policy or covered “use of an auto” under an Auto policy?

The competing arguments were as follows: “Travelers argues that ‘the place’ can refer only to the inside of the condominium apartment from which the Furnishare movers first lifted the couch.  On this reading, the automobile exclusion to the Travelers CGL Policy kicked in—and the responsibility to provide coverage shifted to State Farm’s Auto Policy—the moment the couch exited the apartment. Furnishare argues that ‘the place’ could equally refer instead to the Textile Building.  On that reading, because the couch was well inside the building, on a sixth-floor stairwell, at the time it struck the sprinkler head, the Travelers CGL Policy was in effect and the State Farm Auto Policy was not.”

There is a boatload of case law nationally addressing the “loading and unloading” issue.  Not surprisingly, the court had no shortage of New York law to turn to for guidance.

Following a lengthy discussion, the court held that the accident at issue did not occur during “loading.”  Thus, the Travelers CGL policy’s automobile exclusion did not apply.

The court’s decision is expressed in terms of its comparison to, and examination of, New York’s highly fact-specific case law.  Thus, it is hard to express in brief and simple terms why the court reached its decision.  However, in general, the court simply viewed the sofa mishap as being too far removed from the truck waiting on the street to transport the furniture. 

The court observed that “[i]n each case [referring to one involving a person bring transferred to an ambulance], the object being transported and the persons carrying it were still well inside the building at the time of the accident. And in each case, at the moment of the accident, the vehicle waiting outdoors (there, the ambulette; here, the Furnishare truck parked outside the Textile Building and across a sidewalk) was not in any way involved in the accident. Indeed, the accident could equally have occurred had the vehicles not yet arrived outside at all. Here, had the truck been delayed in traffic, or in the process of seeking a parking spot, or misdirected to a different location, the collision between the couch and the sixth-floor sprinkler was just as possible. That the moving truck, in fact, was waiting outside had no causal consequence.”

The court also found support in distinguishing a 1952 decision from the New York Court of Appeals: “First, there [Wagman v. American Fidelity & Casualty], the ‘loading’ was indisputably underway at the time of the accident. The store employees had brought several loads of clothes from the store to the truck and the supervisory employee was actively ‘engaged in counting and checking the clothes.’  By contrast, the accident on the stairwell here occurred well in advance of any act of loading anything onto the vehicle, or even opening its rear door to receive the couch. This fact also distinguishes this case from others cited by Travelers.”