Cargo Master, Inc. entered a carrier agreement with S. A. Trucking for freight transportation, wherein S. A. Trucking agreed to indemnify Cargo Master for any loss or damage. S. A. Trucking secured a motor truck cargo liability insurance policy with ACE USA Insurance Company to cover property lost during transit. While transporting a shipment of tires from Continental Tire, Inc., the driver parked the trailer behind a shopping center overnight, during which the cargo was stolen. S. A. Trucking's claim for insurance coverage was denied on the grounds that the cargo was not "in transit" at the time of the theft. Cargo Master then sued both S. A. Trucking and ACE USA for breach of contract, seeking recovery for the stolen tires. The trial court granted summary judgment to ACE USA, ruling that the theft occurred when the cargo was not covered under the policy. Cargo Master appealed, and the appellate court reversed part of the trial court's decision, affirming in part and remanding for further proceedings.
On November 27, 2001, S. A Trucking discovered that a trailer containing a shipment of tires had been stolen overnight. S. A Trucking filed an insurance claim with ACE, which was denied due to the expiration of the cargo insurance policy for nonpayment of premiums, effective October 24, 2001. ACE claimed the premium finance agreement with Transamerica was in default, leading to the policy's cancellation. Cargo Master, having paid $35,700.61 to Continental Tire, Inc. for the stolen tires, sued ACE and S. A Trucking for breach of contract, arguing that ACE's cancellation was ineffective and seeking bad faith penalties under Tennessee law.
ACE responded, denying the allegations and asserting several defenses, including that the cargo insurance policy was not in effect during the theft and that the trailer was not "in transit" as per the policy’s terms. After discovery, both parties filed motions for summary judgment regarding the policy's status and whether the shipment was "in transit."
During a hearing on October 26, 2005, the trial court ruled that the trailer was left in a public parking lot, and thus the shipment was not considered "in transit," leading to the conclusion that there was no coverage under the policy. The court did not address the policy's validity at the time of the theft. On November 3, 2005, the court granted ACE's cross-motion for summary judgment and denied Cargo Master’s motion, directing final judgment in favor of ACE. Cargo Master appealed, focusing solely on whether the trial court erred in its determination regarding the "in transit" status of the cargo. The appeal will be reviewed de novo, without a presumption of correctness for the lower court's conclusions.
Evidence must be viewed in favor of the nonmoving party when considering a motion for summary judgment, which is granted only when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Summary judgment is appropriate when the facts and legal conclusions allow for only one reasonable conclusion. If there is any doubt regarding the existence of a genuine issue of material fact, the motion must be overruled.
The appeal involves interpreting a cargo insurance policy, where the intention of the parties is paramount. Terms are given their ordinary meaning, and ambiguities are construed against the insurer. Legal issues regarding the policy’s coverage can be resolved by summary judgment if relevant facts are undisputed.
The policy states coverage for loss of property during transit, defined as lawful goods accepted for transportation. The term "in due course of transit" remains undefined in the policy. In a related case, Williams v. Berube Associates, the court found that cargo was not "in transit" when it was parked for over a week in a lot unrelated to its delivery. The plaintiff argued for a broader definition based on a Texas case, but the Williams court rejected this, determining that "in transit" applies only while cargo is actively being transported from one location to another, as defined in Black’s Law Dictionary.
The court upheld the trial court's ruling in Williams, determining that the plaintiff’s cargo was not 'in transit' at the time of loss. Cargo Master distinguishes this case from Williams, asserting that an overnight stop does not sufficiently deviate from the delivery route to disqualify the cargo from coverage. In contrast, ACE emphasizes that the key issue from Williams is whether the cargo was 'in the process of shipment' during the loss. ACE argues that the cargo was not in transit because the driver abandoned it when he left the trailer behind a shopping center. The Williams scenario involved cargo left unattended for over a week, indicating it was not 'in the process of being shipped' due to its prolonged idleness for unrelated reasons. The current case, however, features an overnight stop with the cargo discovered missing the next day, necessitating further research into the definition of 'in transit.' Other jurisdictions have addressed this term in relation to insurance coverage. For instance, in Dealers Dairy Products Co. v. Royal Ins. Co., the Supreme Court of Ohio ruled that 'in transit' implies the movement of goods from the starting point to the delivery point, including incidental stops. Minor deviations or temporary stops, such as overnight rests, do not typically remove goods from transportation. Similarly, in Franklin v. Washington General Ins., a New York court held that goods remain 'in transit' during ordinary delays related to transportation. The determination of whether an interruption affects coverage depends on the interruption's extent and purpose, with temporary interruptions for carriage-related reasons generally not removing goods from coverage.
In Ben Pulitzer Creations, Inc. v. Phoenix Ins. Co., the court addressed whether a shipment of neckties was still considered "in transit" after being temporarily parked overnight. The plaintiff’s driver parked the delivery wagon in a rented garage on Friday after hours, intending to deliver the ties the following week. Upon returning Monday, the driver found the shipment stolen. The court ruled that the goods remained "in transit" despite the overnight stop, emphasizing that the key factor is whether the stoppage is incidental to the main purpose of delivery. This ruling aligns with prior cases and confirms that temporary halts related to transport do not negate transit status. In a related case involving a shipment of tires left overnight in a parking lot, the court found unresolved factual issues regarding whether the trailer’s stop was incidental to transportation. Consequently, the court reversed the trial court’s summary judgment in favor of ACE, affirmed the denial of Cargo Master’s summary judgment, and remanded the case for further proceedings, with costs of the appeal awarded to ACE.
