Pennsylvania Supreme Court to Address Potential Ambiguity of “Arising out of”

By David A. Gauntlett*

Introduction

If you examine any insurance policy, odds are good you’ll see the phrase “arising out of” used liberally throughout. Courts have widely agreed that this phrase is to be interpreted broadly when used in a provision granting coverage. But what happens when it is used in an exclusion, which courts are required to construe narrowly? After a Pennsylvania appellate court recently confronted this paradox and determined there was ambiguity in the exclusion as issue, the Supreme Court of Pennsylvania has now announced it will hear the case and address this issue.

Background Facts

The case in question is titled Chris Eldredge Containers, LLC v. Crum.[1] The insurance claim arose from an incident in which an Eldredge Containers employee, driving an Ottawa Terminal Tractor, backed into a stationary service truck owned by Safety-Kleen Systems, Inc., and occupied by its employee. The employee, who alleged that he sustained injuries from the collision, filed an underlying suit that is currently pending in the Court of Common Pleas of Philadelphia County. Edredge Containers sought defense and indemnity from its insurers, all of which disclaimed any potential coverage.

At issue in this case was a policy from Crum & Foster Specialty Insurance Company (“C&F”). In denying coverage, the carrier cited the policy’s “Absolute Auto” exclusion that precluded potential coverage for “[b]odily injury or property damage arising out of or resulting from the ownership, maintenance, use[,] or entrustment to others of any aircraft, ‘auto’[,] or watercraft.”[2] In particular, it argued that the Safety-Kleen service truck was an “auto” and the injuries therefore arose out of the “ownership [or] use [of an] auto.”[3]

Appellate Court Concludes Exclusion Is Ambiguous

The court began its analysis by citing Pennsylvania Supreme Court authority concluding that the phrase “arising out of” was “vague or ambiguous” in the context of an automobile insurance policy and should therefore be “construed strictly against the insurer and liberally in favor of the insured.”[4] The court also noted a subsequent case that concluded the phrase, when used in a similar exclusion, should be interpreted as “exclude[ing] only those injuries which are proximately caused by the automobile.”[5]

Applying this proximate causation test, the court highlighted that the injuries were caused by the Ottawa Terminal Tractor (a non-auto). The fact that the injured person was located inside the Safety-Kleen service truck (an auto) at the time did not make that vehicle the cause of his injuries. Accordingly, the court concluded that the claim did not “arise out of . . . use [of an] auto.”[6] Similarly, because Eldredge Containers owned the tractor (non-auto) and not the service truck (auto), the claim did not “arise out of . . . ownership [of an] auto.”[7]

Pennsylvania Supreme Court Will Address Two Issues

In a per curiam order, the Pennsylvania Supreme Court announced it would accept C&F’s appeal to address two issues:

(1) Whether the Superior Court erred by declaring the term “arising out of” is ambiguous in the context of the Absolute Auto Exclusion Endorsement such that it applies only to injuries proximately caused by an “auto” as opposed to but for causation and by not addressing the two prongs of the Endorsement that extends the exclusion to “arising out of or resulting from the ownership, maintenance, use or entrustment of others of any aircraft, ‘auto’ or watercraft[?]”

(2) Whether the Superior Court erred by declaring the Absolute Auto Exclusion endorsement provision excluding “bodily injury” “arising out of or resulting from the ownership, maintenance, use or entrustment to others of any aircraft, ‘auto’ or watercraft” is vague and ambiguous such that the exclusion applies only to “the insured's ownership, maintenance, use[,] or entrustment to others of' an auto[?]”[8]

Similar Decisions in Other Jurisdictions Support Appellate Court’s Decision

The most prominent case to directly address the inherent conflict created by the use of “arising out of” in an exclusion is My Choice Software, LLC v. Travelers Casualty Insurance Co. of America.[9] The My Choice court overturned a district court decision that broadly interpreted “arising out of” language connected to an IP Exclusion.

The My Choice decision only directly cites MacKinnon[10] and Capurro, [11] but Partridge[12] was the ultimate source for the Ninth Circuit’s conclusion that “arising out of” in an exclusion must be construed narrowly like all other language in exclusions. There, the California Supreme Court stated:

The insurer, pointing to the exclusionary clause of the homeowner's policy which denies coverage for injuries “arising out of the ... use ... of a motor vehicle,” contends that since, as we have just determined, the instant accident “arose out of the use” of the vehicle for purposes of the automobile policy, the homeowner's policy necessarily excludes the accident. Emphasizing that the language of the homeowner's exclusionary clause is nearly identical to the language of the automobile policy's coverage clause, and that the same insurer drafted and issued both policies, State Farm argues that the policies were intended to be mutually exclusive and that no overlapping coverage can be permitted. For the reasons discussed below, we cannot agree.

Initially we point out that the insurer overlooks the fact that although the language in the two policies is substantially similar, past authorities have made it abundantly clear that an entirely different rule of construction applies to exclusionary clauses as distinguished from coverage clauses. [footnote] Whereas coverage clauses are interpreted broadly so as to afford the greatest possible protection to the insured [citations], exclusionary clauses are interpreted narrowly against the insurer. . . .

In view of the above approach the fact that an accident has been found to “arise out of the use” of a vehicle for purposes of an automobile policy is not necessarily determinative of the question of whether that same accident falls within a similarly worded exclusionary clause of a homeowner's policy.[13]

Analogous decisions have been reached in most other major jurisdictions, including New York.[14]

Conclusion

The motivation for the Pennsylvania Supreme Court accepting C&F’s appeal remains unclear. On one hand, it could potentially reverse the Superior Court’s decision and impose a broad interpretation for “arising out of” regardless of where it appears in an insurance policy. Assuming logic and settled principles of coverage law prevail, however, the court could simply be using this as an opportunity to reaffirm its decision in Mfrs. Cas. Ins. Co. v. Goodville Mut. Cas. Co. since the case is over 60 years old. It could also confirm that the strict construction it mandated in that case has been accurately interpreted by subsequent Superior Court decisions to require proximate causation.

*David A. Gauntlett is a principal of Gauntlett & Associates and represents policyholders in insurance coverage disputes regarding intellectual property, antitrust, and business tort claims, as well as in the underlying actions. Mr. Gauntlett can be reached at (949) 514-5662 or dag@gauntlettlaw.com. For more information, visit Gauntlett & Associates at www.gauntlettlaw.com.

[1] Chris Eldredge Containers, LLC v. Crum, 335 A.3d 1216, 1218 (Pa. Super. 2025).

[2] Id. at 1219.

[3] The parties agreed that the Safety-Kleen service truck qualified as an “auto” and the Ottawa Terminal Tractor did not. Id. at 1219, n.3.

[4] Id. at 1221 (quoting Mfrs. Cas. Ins. Co. v. Goodville Mut. Cas. Co., 403 Pa. 603, 607 (1961)).

[5] Id. (quoting Eichelberger v. Warner, 434 A.2d 747, 752 (Pa. Super. 1981).

[6] Id.

[7] Id.

[8] Chris Eldredge Containers, LLC v. Crum & Foster Specialty Ins. Co., Nos. 267 MAL 2025, 268 MAL 2025, 2025 Pa. LEXIS 1674, at *1 (Oct. 20, 2025).

[9] My Choice Software, LLC v. Travelers Casualty Insurance Co. of America, 823 F. App’x 510, 512 (9th Cir. (Cal.) 2020).

[10] MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635, 648 (2003).

[11] Tower Ins. Co. of N.Y. v. Capurro Enters. Inc., No. C 11-03806, 2012 WL 1109998, *9–10 (N.D. Cal. Apr. 2, 2012).

[12] State Farm Mut. Auto. Ins. Co. v. Partridge, 10 Cal. 3d 94 (1973).

[13] Id. at 101–02.

[14] See Xerox Corp. v. Travelers Cas. & Sur. Co. of Am., 205 N.Y.S.3d 387, 388 (App. Div. 2024) (narrow construction of “arising out of” for “Prior Acts” exclusion); Schlather, Stumbar, Parks & Salk, LLP v. OneBeacon Insurance Co., No. 5:10-CV-0167 NPM/DEP, 2011 WL 6756971, *7 (N.D.N.Y. Dec. 22, 2011) (“[T]his term [‘arising out of’] should be interpreted as narrowly as possible in an insurance exclusion[.]”)