When is a Car not a Car?

The case of Meadowview Heights Ltd. v. Revivo raises some issues reminiscent of our undergraduate philosophy course in “Personal Identity”. But on a more prosaic level, the case is a useful interpreation of the exclusion, found in both homeowner’s and CGL policies, for “ownership, use or operation of an automobile” (or, in this case, a “motorized land vehicle”). Because of this “crossover”, the decision is being sent to subscribers to our “BI” list and our “CGL” list. Our apologies to those who, by virtue of being on both lists, receive two copies of the mailing.

The case arose out of a fire that occurred while the defendant Revivo was in the process of converting a Pontiac Fiero to (if you can believe it), a Lamborghini. To accomplish this transformation, Mr. Revivo had purchased two different Fieros (referred to in the decision of Madam Justice Sanderson as the “parts car” and the “kit car”), both of which had been functioning automobiles at one time. However, neither was capable of being driven when the fire occurred.

Actually, at the time of the fire, both Fieros were up on hoists. It appears that the gas tanks of both had been removed and Mr. Revivo was in the process of removing the radiator from the “parts car” when sparks from a cutting torch ignited some gasoline.

Neither car was licensed or had insurance on it. But Mr. Revivo’s intention was that, at the end of his labours, a fully functional Lamborghini would emerge from the ashes of the two Fieros.

Mr. Revivo was sued in two separate actions. One was brought by the owner of the garage in which he was working (who happened to be his father) and the other by a company called “Meadowview” whose status is not clear from the decision. Mr. Revivo turned to his homeowner’s insurer, State Farm, for a defence. State Farm refused to undertake the defence and took the position that coverage was excluded by the “ownership, use or operation of a motorized land vehicle” exclusion in its policy.

Justice Sanderson did a useful review of the caselaw that has considered this exclusion. The court observed that the jurisprudence relied upon by counsel for State Farm had “been held to cover a wide range of circumstances involving the use or operation of a motor vehicle, including the drilling of holes to rewire the vehicle, the cleaning of engine parts after their removal from the vehicle, the negligent use of a blow torch while doing body work of a vehicle, the negligent use of a grinder in grinding an exhaust system after removal from an automobile, the movement of a vehicle after removal of its fuel system during its conversion from a propane to a gasoline powered engine and the negligent pumping of fuel during fuel delivery”.

However, Justice Sanderson distinguished those decisions. In her view, the “automobile” exclusion did not apply:

Although Jessie hoped to eventually convert the replica into an operable motor vehicle, at the time of the fire it was far from operable. At that time it was no more than a collection of parts that would eventually become an operating motor vehicle. It was not yet of that nature.

Hence, it was found that State Farm did owe a duty to defend.

While these facts are not likely to arise again, the discussion of the applicable principles will be useful in interpreting the “automobile” exclusion.

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