T.G.S. Transportation, Inc. v. Canal Insurance
Docket: No. 02-16494; D.C. No. CV-00-06797-REC(SMM)
Court: Court of Appeals for the Ninth Circuit; October 21, 2003; Federal Appellate Court
The case involves T.G.S. Transportation, Inc. (TGS) claiming coverage under its Motor Truck Cargo Policy issued by Canal Insurance Company for stolen cargo. The district court granted summary judgment in favor of Canal, concluding that the policy did not cover the stolen cargo, which resulted in the rejection of TGS's claims for bad faith and punitive damages. On appeal, the court reversed the district court’s decision, clarifying that the policy's language requires only that the trailer be physically attached to a scheduled tractor for coverage to apply. The loss occurred when a thief attached the tractor to the trailer and removed the cargo, satisfying the policy’s attachment requirement. The court found that the policy language created ambiguity regarding the attachment process, which must be interpreted against Canal as the insurer under California law. It emphasized that ambiguities in insurance contracts are resolved in favor of the insured and that any reasonable interpretation supporting coverage should be upheld. The court concluded that TGS had a reasonable expectation that the cargo would be covered when the trailer was attached to a scheduled vehicle, regardless of how it was attached. It criticized the district court for narrowly interpreting the coverage clause and not considering the insured's expectations. Consequently, the court reversed the ruling on TGS's breach of contract claim and remanded the case for the district court to address the merits of TGS's claims for bad faith and punitive damages. The disposition of the case is not for publication and cannot be cited in other cases except as permitted by Ninth Circuit Rule 36-3.