A federal judge recently refused an insured's attempt to escape a policy exclusion by contending that a large "storage bin" on wheels was a "vehicle" under an exception to the exclusion, which prohibited coverage for costs associated with gas system tests. In 1070 Park Ave. Corp. v. Fireman's Fund Ins. Co., No. 17 CIV. 2474 (CM) (S.D.N.Y. June 19, 2018), appeal docketed No. 18-1961 (2d Cir. June 29, 2018), the judge ruled that the storage bin was not a "vehicle" as that term was used in the insurance policy at issue even though the wheeled bin technically fit several dictionary definitions of that term.

The insured, a high-end apartment building on New York City's Upper East Side, had to shut down its gas lines after a contractor moving a large, wheeled "storage bin" for discarded electronics accidentally bumped into one of the building's gas meters. The bump resulted in a gas leak that caused the utility company to turn off the gas to the entire building. The leaky meter was fixed quickly, but that's when the real headaches started.

A New York City ordinance required the insured to pass a high pressure test to ensure that its gas lines were safe before the gas could be turned back on. Due to the age of the building and its gas distribution system, however, certain valves and connections had to be upgraded before that test could be safely performed. Workers had to enter every apartment in the building and cut open walls to access the valves and connections in question. When all that work was completed and the gas could finally be turned back on following the test, the insured had incurred costs of over $550,000.

The insured sought reimbursement under a commercial "all risks" policy issued to it by Fireman's Fund Insurance Company. However, Fireman's Fund pointed to an exclusion that precluded coverage for "costs associated directly or indirectly with the enforcement of any law or ordinance that requires the testing of a gas system for integrity or conditions" or "any loss to a gas system caused by testing for integrity or condition" and denied the building's claim on the basis of that exclusion (and on several other grounds).

Thinking creatively, the insured pointed to an exception to the exclusion. The exception provided that coverage existed if the testing had to be performed "due to a direct loss causing physical damages to Covered Property from Fire; Lightning; Explosion; Aircraft or Vehicles," or several other categories of disastrous events such as volcanic activity. The insured looked to Merriam-Webster's Collegiate Dictionary and Black's Law Dictionary and realized something surprising: The "storage bin" filled with old VHS players and boxy televisions technically fit some of the definitions of the word "vehicle" in those resources. After all, it had wheels and could be pushed around a little to move the to-be-recycled products. The insured sued citing the exception.

Unfortunately for the apartment building, the judge was not swayed by its technical and somewhat unorthodox application of the dictionary definitions in question. The court concluded that the term "vehicle" in the exception was not ambiguous and did not include trash bins on wheels. Even though the word "vehicle" was not defined in the policy and was not described in any more detail in the exception, and even though the bin in question was technically a "vehicle" under some (but not all) dictionary definitions of that term, the notion that the bin into which the woman in apartment 7C threw her old flip phone was a vehicle stretched the definition beyond the point of common sense. The court found a number of problems with the apartment building's novel theory.

First, the judge explained that the principal purpose of any storage bin — even one fancy enough to have wheels — was, unsurprisingly, to store things. An item with the principle purpose of storing rather than moving things would not ordinarily be "reasonably understood to be a vehicle" even if moved around on occasion, the court noted. Although a single thing could be used both to store and transport things (and therefore be a vehicle as well), New York law holds that contracts have to interpreted according to common sense and reasonable expectations. The insured's proposed reading, the court concluded, was simply strained and unnatural. That was true despite the fact that some dictionaries allowed the storage bin to be "shoehorned" into their definitions of vehicles. (The court also noted that other dictionary definitions gave examples of vehicles as things like cars and trucks, "not what is really nothing more than a movable trash can.")

Second, the apartment building's manager had conceded at his deposition that a luggage cart is not a vehicle. Just like the storage bin in question, luggage carts have wheels and move things like suitcases and packages around. And even though there was no suggestion that the building manager had anything to do with drafting Fireman's policy, his testimony highlighted the obvious: Normal people do not think of Rubbermaids as vehicles even if they have wheels.

Third, the court cited case law from the Eleventh Circuit that stood for the proposition that "one cannot determine the meaning of words in an insurance policy just by looking them up in a dictionary; instead, on must read the policy as a whole for clues about meaning." In other words, dictionary definitions have their limits. In this case, the judge explained that the term "vehicles" in the relevant exception could not include the "storage bin" that struck the gas meter. The exception, the court explained, referred to "aircraft" and "vehicles." The decision to list both of these terms compelled the conclusion that "not everything that qualifies etymologically as a 'vehicle' is comprehended by that word for purposes of this particular insurance policy." That was so because under a literal dictionary definition, aircraft are vehicles. The court further found that "aircraft" must be related to "vehicles" given how they were used in the exception, and deduced that they must be "the same general type of thing." Trash containers on wheels, however, were certainly not the same type of thing as a Boeing 757. Finally, the court also noted that the list of events in the exception, which included fires, sinkholes, and volcanic activity, were all "catastrophic." A recycling bin bumping into a gas meter, the court noted, was simply not catastrophic in the same way as Mount Saint Helens' eruption.

For all these reasons, the court discarded the insured apartment building's theory and granted Fireman's motion for summary judgment. (The court nevertheless went on to disagree with Fireman's other grounds for disclaiming coverage.) But the trash hasn't been taken all the way out to the curb quite yet; both the apartment building and Fireman's Fund have appealed the court's decision to the United States Court of Appeals for the Second Circuit. The building will presumably reassert its trash-can-vehicle-run-amok argument while Fireman's Fund will most likely take issue with the district court's ruling on its other disclaimers.

The major takeaways from this case revolve around the limits of dictionary definitions. Such definitions are commonly employed by counsel arguing over the meaning of particular policy terms, and many courts rely on them in analyzing terms in insurance policies. But dictionary definitions have their limits. When the facts of the case might technically fit into a dictionary definition, but no reasonable person would have ever defined the policy term at issue in that way, common sense and reasonable expectations should prevail.

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