Cravens v. Montano
Arizona Supreme Court
April 29, 2025
JSH Attorney: Elizabeth Garcia & Justin Ackerman
In Cravens v. Montano., No. CV-24-0143-PR (Apr. 2., 2025), the Arizona Supreme Court addresses two separate issues—the first, regarding the scope of coverage available under an automobile policy which provided coverage for a non-owned covered auto that is being operated “in connection with” the employer’s business; and the second, regarding the enforceability of a contingent Morris agreement.
Montano was involved in a fatal car accident, while driving his mother’s truck. At the time of the accident, Montano had just completed his work, and was driving to his employer’s main yard to correct his timesheet. The Plaintiff brought direct liability claims against Montano, and sought to hold his employer vicariously liable for the accident. Montano’s employer was insured under an automobile policy which extended insurance coverage to employees “while using a covered ‘auto’ in [the employer’s] business.” The policy further defined a non-owned covered auto as one that was not owned, leased, rented, hired, or borrowed, that was “used in connection with [the employer’s] business.”
After the insurer defended Montano under a reservation of rights, he entered into a Morris agreement with the Plaintiff, for a stipulated $3.85 million judgment. The insurer intervened, arguing Montano was not entitled to coverage at the time of the accident, because his use of his mother’s truck when the accident occurred, was not “in connection with” his employer’s business.
The Arizona Supreme Court reasoned that to determine the scope of coverage under the Policy, it had to recognize two related, but distinct phrases—namely, the extended coverage provision’s phrase “in your business,” and the non-covered auto definition’s phrase “in connection with your business.” Reconciling these terms, the Court ruled, that an employee had to use the vehicle “in connection with [the employer’s] business and in [the employer’s] business” to trigger coverage.
Rejecting both parties (albeit reasonable) interpretations of the phrase “in connection with your business,” the court ruled that the phrase, as used in the Policy, requires a correlation between the employee’s vehicle use and a business purpose that falls short of scope of employment, but exceeds a mere association, link or relationship. Said differently, the employee’s use of the vehicle must constitute or facilitate work to advance a business purpose. Thus, coverage was contingent upon Montano using his mother’s truck while directly involved with, or in furtherance of his employer’s business purpose—a use that did not including a routine commute to or from work. The court thus vacated remanded the coverage ruling to the trial court for further proceedings, consistent with this ruling.
The second issue the Arizona Supreme Court considered, was the enforceability of Montano’s Morris Agreement with Plaintiff, which was subject to rescission if Plaintiff was unable to pursue his claim of respondeat superior liability against Montano’s employer for specified reasons. Declining to hold contingent Morris agreements per se unenforceable, the Arizona Supreme Court affirmed that such agreements are reviewed on a case-by-case basis, and are only unenforceable in the existence of fraud, collusion, unfairness, or unreasonableness.
Here, the Morris agreement would only be rescinded if a court determined that the Agreement itself released Montano’s employer from Plaintiff’s respondeat superior claim, but it remained enforceable if the claim failed for any other reason. The contingency provision was intended to protect against a court construing the promise not to execute against the employer’s assets as a release of liability. The court concluded that this contingency did not prejudice the insurer’s rights or leave Montano devoid of protection because the contingency provision’s triggering event was narrow in scope, and has not occurred. If it did, the Morris agreement would be invalidated. The court further affirmed that if the insurer establishes, on remand, that Montano was not engaged in his employer’s business while using his mother’s truck, the insurer will not be liable for any part of the damages set forth in the Morris agreement.
Elizabeth B. N. Garcia focuses her practice in federal and state appellate matters. Liz joined JSH after gaining experience at a multi-state firm where she handled class action defense and other complex litigation. In addition to her class action experience, Liz handled breach of contract and other sophisticated commercial litigation for clients across industries. After law school, she worked for the Arizona Attorney General’s Office as an Assistant Attorney General for Criminal Appeals and was named the 2017 Emerging Star for the Solicitor General’s Office.
egarcia@jshfirm.com | 602.263.4486 | jshfirm.com/egarcia
Justin Ackerman represents clients in federal and state appellate matters in cases involving excessive force, wrongful death, personal injury, bad faith, and premises liability. After graduating as the valedictorian of his class from Phoenix School of Law, Justin worked as a law clerk for the Hon. Michael J. Brown in Division One of the Arizona Court of Appeals. Following his clerkship, Justin has handled over 75 appeals, successfully arguing before the Arizona Court of Appeals, Arizona Supreme Court, and U.S. Court of Appeals for the Ninth Circuit. Justin has spoken at many seminars on appellate preservation topics and is recognized as a Southwest Super Lawyers and Best Lawyers in the area of Appellate Practice.
jackerman@jshfirm.com | 602.263.4552 | jshfirm.com/jackerman