Georgia High Court Leaves Truck Insurer on the Hook for Accident

November 24, 2021 by

If the owner of a trucking company drives one of his company’s trucks to a friend’s house for free repairs, is that considered a business use of the truck, or personal use?

The Georgia Supreme Court effectively decided this week that such a trip was not trucking-related, which leaves American Southern Insurance Co. on the hook for coverage after the truck was involved in an accident on the day it was repaired.

The high court on Tuesday declined to hear an appeal from American Southern, known as ASIC, on a state appeals court ruling in June. That left intact the appeals court decision that trucking company owner Petrov Tchotrov was not engaged in business at the time of the accident, and that American Southern’s non-trucking policy must cover the damages.

“We conclude that the trial court was authorized to find that Tchotrov was not driving the truck for business reasons on behalf of FBM at the time of the accident, and therefore, ASIC was liable to provide coverage under the terms of the policy,” the Georgia Court of Appeals, 1st Division, wrote in its June decision.

Tchotrov owned SPN Trans LLC, a freight-hauling company in Sugar Hill, Georgia, near Atlanta. In 2016, SPN entered into a lease agreement with FBM Express Inc., to allow the truck to haul cargo loads for FBM. The lease agreement required FBM to maintain insurance on the truck while it was used for business purposes and required SPN to purchase coverage for non-trucking liability for when the truck was not in business use.

FBM purchased a policy through Spirit Commercial Auto. SPN had its policy with American Southern, with a $1 million limit for an accident. The policy excluded claims that arose during personal use of the truck.

On Dec. 23, 2016, the SPN truck was involved in an accident with a motorcycle. Tchotrov denied any knowledge of the incident, but records showed he had driven the truck at some time that day.

At trial and appeal, ASIC argued that its personal-use policy did not apply because the truck repair constituted a business use needed to keep the truck in good working order; that the truck was still under lease to FBM; and that federal regulations have decreed that transporting a truck for maintenance is not a personal use.

The trial court disagreed, noting that there was a dispute over the date of the lease termination. ASIC had said that a judgment against it would “upend trucking law.” The appeals court opinion, written by Judge Elizabeth Gobeil, gave this response: “Our holding in this case is not intended to create a bright-line rule that driving a truck for repair purposes can never constitute a business use.”

At some point in the proceedings, things got complicated – and a little nasty.

An FBM principal testified that although the lease with SPN was through the end of 2016, Tchotrov had finished by Dec. 22, the day before the accident, and did not haul another load. A month later, Tchotrov sent a notice of termination of the lease, and back-dated the termination to Dec. 22.

In an appeal brief, the attorney for Tchotrov and SPN Trans claimed that ASIC’s counsel was party to a criminal conspiracy regarding the date that the lease was terminated. The appeals court declined to strike that portion from SPN’s brief.

ASIC also objected to post-trial revelations that the motorcycle driver’s counsel had told the judge that FBM’s business-policy insurer, Spirit, had been placed into receivership and was unlikely to pay on any policy. The trial court said that fact had no bearing on the final judgment.