Clarifying Transport-Related Exclusions: Application of Auto and Care, Custody & Control Exclusions in CGL & BAC Policies

Introduction

In Clear Blue Specialty Insurance Company v. Landrieu Concrete & Cement Industries, L.L.C., 22-30375 (5th Cir. May 1, 2025), the Fifth Circuit reviewed a district court’s grant of summary judgment in a declaratory-relief action. Landrieu Concrete & Cement Industries (Landrieu) had used sand inadvertently mixed with sugar—delivered by a third party, Double R&J Trucking Services (R&J)—to manufacture concrete that failed to cure. When Landrieu’s repair costs claim under R&J’s insurance policy was denied, Clear Blue Specialty Insurance (Clear Blue) sought a declaration that no coverage existed. Landrieu appealed, arguing coverage existed under both the Commercial General Liability (CGL) Form and the Business Auto Coverage (BAC) Form, and that Clear Blue’s refusal to pay constituted bad faith.

Summary of the Judgment

The Fifth Circuit affirmed. It held:

Under the CGL Form’s Auto Exclusion, “property damage” arising out of the “use” or “maintenance” of an “auto” is excluded. The Court agreed the sand’s contamination in the back of the truck amounted to property damage during “use” of the vehicle, and a failure to wash and cleanse the truck bed was a failure of “maintenance.”
The BAC Form’s Care, Custody or Control (CCC) Exclusion—which bars coverage for damage to property “transported by the insured” or in its “care, custody or control”—also applied because the insured truck was carrying the sand when it became contaminated.
Because both forms independently barred coverage, Clear Blue owed no defense or indemnity and its denial was not in bad faith.

Analysis

1. Precedents Cited

Skotak v. Tenneco Resins, Inc. (5th Cir. 1992) – Standard for de novo review of summary judgment.
Barry Concrete, Inc. v. Martin Marietta Materials, Inc. (M.D. La. 2008) – Federal district court applied an Auto Exclusion to bar coverage for truck-contaminated aggregate, construing “occurrence” as “continuous or repeated exposure.”
Rando v. Top Notch Properties & Korossy v. Sunrise Homes – Louisiana appellate decisions establishing the “manifestation theory” for construction-defect coverage triggers.
Orleans Parish School Board v. Scheyd – Louisiana Fourth Circuit refused to adopt manifestation theory as mandatory in all contexts.
Bolin v. Safeco Insurance Companies (La. Ct. App. 1983) – Defined “maintenance” broadly to include cleaning or washing a vehicle.
Carter v. City Parish Gov’t of E. Baton Rouge – Louisiana recognition that “use” plus legal causation triggers Auto Exclusion.

2. Legal Reasoning

The Fifth Circuit’s reasoning can be broken down by form:

a. CGL Form – Auto Exclusion

Definitions
– “Property damage” covers (a) physical injury to tangible property or (b) loss of use of tangible property.
– “Occurrence” means an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
– “Use” includes operation, loading, unloading; “maintenance” is undefined.
Occurrence Trigger
Landrieu urged the “manifestation theory”—damage occurs only when visible defects (cracks, failure to cure) appear in concrete. Citing Barry Concrete and Scheyd, the Court held Louisiana law does not uniformly require the manifestation theory; instead, courts select the theory that best fits the facts. Here the undisputed fact is the sand was contaminated in the truck bed—an “occurrence” within the policy’s definition—and that contamination itself was property damage.
“Use” and “Maintenance”
The sugar contamination occurred while the truck was in use transporting sand. The failure to wash the bed between loads constituted a lack of maintenance. Under Bolin, “maintenance” encompasses non-mechanical acts like periodic washing that extend a vehicle’s useful life.
Loss of Use
Even if the sand grains themselves were not “physically injured,” their contamination rendered them unfit for intended use. Courts have held that loss of an item’s ability to perform its function qualifies as “property damage.”

b. BAC Form – Care, Custody or Control Exclusion (CCC)

The CCC Exclusion bars coverage for property “owned or transported by the insured or in the insured’s care, custody or control.” Because the contamination occurred during transport by R&J, the exclusion applies as plainly as in Barry Concrete. The truck was carrying (i.e., “transporting”) the sand at the time of damage.

3. Impact of the Decision

This decision underscores that when a single policy contains multiple forms (CGL and BAC), each form—and its exclusions—must be tested independently for coverage.
It reaffirms that Louisiana courts will not mechanically apply the manifestation theory; insurers and insureds must examine the facts to determine when an “occurrence” happened under the policy definition.
Insureds transporting raw materials should be aware that contamination or mixing errors on the vehicle constitute “property damage” during transport and likely fall within Auto and CCC Exclusions unless the policy expressly carves out such risks.
It provides clarity for future disputes over whether routine cleaning or vehicle washing counts as “maintenance” under liability policies—courts may broadly construe maintenance to include any act that preserves the vehicle’s condition.

Complex Concepts Simplified

Occurrence vs. Manifestation: Occurrence: The event or exposure causing damage, as defined by the policy (here, the mixing of sand and sugar).
Manifestation Theory: Views damage as occurring only when defects or injury become visible or known (e.g., cracked concrete). Louisiana courts apply this theory selectively, not automatically.
Use and Maintenance: Use: Operating, loading, unloading, or any manner in which a vehicle performs its transportation function.
Maintenance: Any act preserving a vehicle’s condition—includes mechanical repairs and non-mechanical acts like washing to remove corrosive substances.
Loss of Use: When tangible property, though not physically broken, can no longer serve its intended purpose (e.g., contaminated sand that cannot cure into concrete).
Care, Custody or Control Exclusion: Bars coverage for damage to property the insured owns, transports, or has in its care—designed to prevent double recovery and manage risk around cargo.

Conclusion

Clear Blue Specialty Insurance v. Landrieu Concrete clarifies two key insurance-law principles: first, that contamination of cargo during transport constitutes an “occurrence” and “property damage” under Auto Exclusions; second, that Care, Custody or Control Exclusions in a BAC Form independently bar coverage for damage to property being transported. Louisiana courts will not uniformly apply the “manifestation theory” but instead examine the policy language and factual record to determine when damage occurs. For contractors, transporters, and insurers, this case reinforces the importance of precise policy drafting, routine vehicle maintenance, and careful risk allocation when raw materials are carried on trucks.