Pioneer State Mutual, acting as the insurer for Mercedes-Benz’s landlord, Airport Boulevard Associates LLC, sought over $1 million in reimbursement for coverage it provided following the fire. The lower court had ruled in favor of both Mercedes-Benz and Allianz Risks, granting them summary judgment, but the Sixth Circuit reversed the decision regarding Mercedes-Benz.
The judges noted that the insurance policies and the lease agreement played a critical role in their ruling. While Allianz Risks was correctly granted summary judgment due to its commercial liability coverage, Mercedes-Benz may still be liable for the damage, as its lease prohibited the handling of hazardous materials like gasoline at the facility.
Mercedes-Benz argued on appeal that having gasoline in test vehicles did not equate to storing or handling hazardous materials on the property. However, the panel found that the act of transferring gasoline from one vehicle to another could indeed breach the lease terms. The court stated that whether parking a vehicle with gasoline qualifies as a violation of the lease’s hazardous material clause was a separate issue from whether siphoning gasoline from the vehicle constitutes a breach.
