United States District Court, M.D. Alabama, Eastern Division
KEITH WATKINS CHIEF UNITED STATES DISTRICT JUDGE
an insurance coverage dispute. On March 11, 2016, Defendant
Bobby Sullivan was driving a propane tanker truck when he
lost control and crashed. The propane tank was punctured,
caught fire, and exploded, causing Mr. Sullivan catastrophic
burn injuries. Mr. Sullivan and his wife, Allison, sued
Defendant H&W Tank Testing, Inc., in an Alabama state
court, alleging that H&W was negligent in its testing and
inspection of the propane tanker. H&W had insurance
coverage through a commercial general liability
(“CGL”) policy with Plaintiff AIX Specialty
Insurance Company. AIX denied coverage to H&W, invoking
an exclusion in the policy for any bodily injury or property
damage arising out of “[a]n error, omission, defect or
deficiency in [a]ny test performed; or [a]n evaluation, a
consultation[, ] or advice given by or on behalf of”
H&W. AIX then brought this action seeking a declaratory
judgment that its policy does not cover the Sullivans'
claims against H&W in the underlying suit and that AIX
has no obligation to defend or indemnify H&W in that
suit. (Doc. # 1, at 5.)
the court is the Recommendation and Order of the Magistrate
Judge. (Doc. # 57.) After briefing and oral argument on the
parties' cross motions for summary judgment, the
Magistrate Judge determined that (1) the Sullivans'
claims fall within the insurance policy's testing
exclusion, and (2) this exclusion does not violate Alabama
law or public policy and is therefore enforceable.
Accordingly, the Magistrate Judge recommends that judgment be
entered in favor of AIX. The Sullivans object to the
Magistrate Judge's second conclusion, but not the first.
(Doc. # 58.) Upon an independent review of the record and a
de novo determination of those issues to which the
Sullivans object, the court finds that the Magistrate
Judge's Recommendation is due to be adopted. See
28 U.S.C. § 636(b).
Sullivans invoke the Alabama statutory scheme governing
liquefied petroleum gas as establishing a public policy of
“protect[ing] the public from the unique dangers of
propane tanker explosions, ” and warn that “[i]f
AIX is free to exclude the very coverage required by [Alabama
law], then the Alabama citizens would lose the very
protection mandated by the legislature.” (Doc. # 58, at
Magistrate Judge pointed out, however, the problem with this
argument is that the statutory provision at issue (1)
regulates the individuals seeking permits to work with
liquefied petroleum gas, not their insurance carriers, and
(2) is silent on the requirement of the kind of coverage (or
exclusion from coverage) here at issue. The relevant Code
applicant for any of the 10 permits shall provide
the board with evidence of minimum insurance coverage by an
insurance company or companies licensed to do business in the
state. . . . The minimum insurance requirements are as
(1) Commercial general liability insurance for all 10
a. One million dollars ($1, 000, 000)-each occurrence.
b. One million dollars ($1, 000, 000)-personal and
c. One million dollars ($1, 000, 000)-general aggregate.
d. One million dollars ($1, 000, 000)-products and completed
Ala. Code § 9-17-105(d) (emphasis added). Thus, even if
the CGL policy issued by AIX did not conform to the statutory
requirements, it was H&W's responsibility to acquire
correct coverage. The provision does not impose an
affirmative obligation on AIX to provide it.
in contrast to the automobile coverage cases that the
St. Paul Fire & Marine Insurance Co. v. Elliott,
545 So.2d 760 (Ala. 1989), for instance, the Alabama Supreme
Court found that a city ordinance requiring an insurer to
notify the city 30 days before cancelling coverage of a
taxicab operator meant that the insurer would be liable for
continued coverage if it failed to do so, even if the insured
himself was on notice that his coverage had lapsed.
Id. at 762. The court found that the “purpose
and intent of the ordinance . . . is to insure the citizens
of Eutaw against tortious conduct of taxicab operators,
” and concluded that the ordinance meant what it said:
that the insurer, not the taxicab operator, was
responsible for notifying the city of the cancellation ...