IL App. (5th Dist.)/Farm Auto

Mechanical device” exception too vague to apply to auger accident –  matter of first impression in IL

The Illinois Fifth District Appellate Court, on a matter of first impression in Illinois, in an opinion written by Justice Cates with Justice Chapman concurring, concluded that a “mechanical device” exclusion in an auto policy covering a grain truck was overly broad and ambiguous.  Such “mechanical device” exclusions have a mixed reception across the nation, with some states holding them unenforceable for vagueness, while others finding them acceptable.  With this ruling, Illinois declared these “mechanical device” exclusions unenforceable, at least under certain circumstances.

Kent Elmore suffered a traumatic leg amputation while operating a grain auger.  The auger was powered by a tractor and was transferring grain from a large grain truck, owned by his father and insured by State Farm Mutual Insurance Company (“State Farm), into a transport truck.  Elmore sued his father for negligence seeking to recover for his injuries under the State Farm auto policy.  State Farm filed a declaratory judgement action alleging there was no coverage under the auto policy because the injury was caused by an auger, and the auger was neither a car nor a trailer, and thus, it was not an insured vehicle within the meaning of the auto policy.  State Farm also argued that the auger was a mechanical device and thereby excluded from coverage under the “mechanical device” exclusion in the policy.  The parties filed cross motions for summary regarding the “mechanical device” exclusion.  The circuit court granted State Farm’s motion, and Elmore appealed.

Mechanical device exclusions typically state that there is no coverage under the relevant policy for damages resulting from “the movement of property by means of a mechanical device, other than a hand truck, that is not attached to the [covered] vehicle.”  State Farm urged the Appellate Court to consider precedent from other jurisdictions where the mechanical device exclusion had been held enforceable, including Georgia, West Virginia, and Louisiana.

The Appellate Court found a factual distinction between the cases cited by State Farm and the issue at hand — the “mechanical device” in the other cases operated under its own power, and the auger in this case, required an external power source.  The Appellate Court used this distinction to determine that an auger is not a “mechanical device” under the meaning of the exclusion.  The Appellate Court also found the mechanical device exclusion overbroad and ambiguous because the policy was written for a piece of farm equipment that regularly has grain unloaded from it.  According to the Appellate Court, if the exclusion were interpreted as broadly as State Farm argued, the only way to load and unload grain from the vehicle while still being covered by the policy would be by hand, which is “an absurd result.”

The Appellate Court concluded that some sort of mechanical unloading of the insured vehicle must have been contemplated by the parties, but since the exclusion, as written, does not make it clear which forms of mechanical unloading are covered and which are not, the exclusion is ambiguous.  Thus, applying well-established insurance law principles, the appellate court construed the exclusion in favor of coverage.

Justice Overstreet dissented, arguing that while the mechanical device exclusion is very broad, it is not ambiguous, and that the auger in question clearly fell under the plain meaning of the exclusion.  He argued that finding the exclusion unenforceable merely restricts parties’ ability to contract freely.  State Farm Mut. Automobile Ins. Co. v. Elmore, 2019 IL App (5th) 180038 (Sept. 30, 2019).