Home / Fulltext Opinions / Supreme Court of Virginia / ALFONSO C. RECALDE, t/a A & R SWEEPING & CLEANING v. ITT HARTFORD





October 31, 1997

Record No. 970437






Present: Carrico, C.J., Compton, Lacy, Hassell, Keenan,
and Kinser, JJ., and Gordon, Retired Justice

On April 18, 1997, we accepted for consideration a question of
Virginia law that the District of Columbia Court of Appeals
certified to us.[1] That court stated in its
certification order that the certified question is determinative
of the appeal pending before it. The certified question is:

[W]hether under Virginia law, for the purpose of
deciding the scope of coverage of a commercial insurance
policy for injury or property damage arising from the use
of a motor vehicle, a sole proprietorship named as the
insured is a legal entity separate and distinct from the
individual owner doing business in that name.


The underlying lawsuits arose out of an automobile accident
that occurred in Virginia on September 22, 1989. An employee of A
& R Sweeping and Cleaning (A & R), while in the course of
his employment, left a Ford pickup truck, owned by Alfonso C.
Recalde and his wife, Anita G. Mora, unattended without removing
the keys. Another individual stole the truck, drove it away at a
high rate of speed, and collided with an automobile driven by
Donald E. Reynard. Alleging that he sustained injuries in the
accident, Reynard filed a personal injury action in the Superior
Court of the District of Columbia against Alfonso C. Recalde and
A & R Sweeping and Cleaning. Judith A. Reynard, Donald E.
Reynard’s wife, sought recovery in a separate count of the same
action for loss of consortium.

During the pendency of the Reynard action, a dispute ensued
concerning available insurance coverage. Consequently, Recalde
filed a complaint for declaratory judgment styled on behalf of
"Alfonso C. Recalde, t/a A & R Sweeping and
Cleaning"[2] in the Superior Court of the
District of Columbia against ITT Hartford (Hartford), A & R’s
insurance carrier. Recalde sought a declaration that, pursuant to
the ABusiness Auto Coverage Part" of an insurance policy
issued by Hartford to A & R, Hartford has a duty to defend A
& R and to provide insurance coverage in the Reynard action.[3] After staying the Reynard
action pending resolution of the declaratory judgment proceeding,
the superior court granted summary judgment for Hartford. Recalde
appealed that ruling to the District of Columbia Court of
Appeals, which in turn certified the question of law to us.

The disputed insurance policy is a ASpecial Multi-Flex
Policy" consisting of two ACoverage Parts," the
ABusiness Auto Coverage Part" and the ACommercial General
Liability Coverage Part." The crucial provisions are the
designation of the Anamed insured" in both ACoverage
Parts" and the two classes of motor vehicles identified as
Acovered autos" in the ABusiness Auto Coverage Part."

The named insured under the policy is AA & R Industrial
Sweeping & Cleaning," and its mailing address is A5108
Ninian Ave., Alexandria, VA 22310." The parties agree that
this address is Recalde’s home and business address. The
definition of Acovered autos" in this policy includes only
the following two categories of vehicles:

HIRED AUTOS ONLY. Only those autos you lease, hire,
rent or borrow. This does not include any auto you lease,
hire, rent or borrow from any of your employees or
members of their households.


NONOWNED AUTOS ONLY. Only those autos you do not own,
lease, hire or borrow which are used in connection with
your business. This includes autos owned by your
employees or members of their households but only while
used in your business or your personal affairs.


The superior court interpreted the designation of the
"named insured" and the categories of "covered
autos" to deny coverage in the Reynard action. In reaching
this conclusion, the court rejected the argument that A & R
Sweeping and Cleaning is a legal entity separate and distinct
from Alfonso C. Recalde. Instead, the court found that Recalde
and A & R are one and the same and that "to name one as
the ‘named insured’ is to name the other." Thus, the court
found no coverage under the "Business Auto Coverage
Part" on the basis of the definitions of "Hired Autos
Only" and "Nonowned Autos Only." The court also
held that the Reynard claims fall within the coverage exclusion
in the "Commercial General Liability Coverage Part" for
"’Bodily injury’ or ‘property damage’ arising out of the
ownership, maintenance, use or entrustment to others of any
. . . ‘auto’ . . . owned or operated by or
rented or loaned to any insured."

The effect of the superior court’s decision is that the
Hartford policy, which covered only nonowned autos, provided no
coverage for the Reynard claims because the named insured and the
owner of the pickup truck were the same entity.


We are of opinion that the certified question should be
answered in the negative because of the definition and nature of
a sole proprietorship. Furthermore, the weight of authority from
other jurisdictions that have dealt directly with the issue is in

A sole proprietorship is A[a] form of business in which one
person owns all the assets of the business in contrast to a
partnership, trust or corporation. The sole proprietor is solely
liable for all the debts of the business." Black’s Law
Dictionary 1392 (6th ed. 1990).[4] Even when an individual does
business as a sole proprietorship under a different name, the
individual remains personally liable for all obligations of the
business. Carlson v. Doekson Gross, Inc., 372 N.W.2d 902,
905 (N.D. 1985). "`Doing business under another name does
not create an entity distinct from the person operating the
business. The individual who does business as a sole proprietor
under one or several names remains one person, personally liable
for all his obligations.’" Id. (quoting Duval v.
Midwest Auto City, Inc.
, 425 F. Supp. 1381, 1387 (D. Neb.
1977)); see also Toulousaine de Distribution et de
Serv. v. Tri-State Seed and Grain
, 520 N.W.2d 210, 215 (Neb.
App. Ct. 1994); Patterson v. V & M Auto Body, 589
N.E.2d 1306, 1308 (Ohio 1992).

The weight of authority in other jurisdictions has applied the
concept that the individual owner and the proprietorship are a
single entity in insurance contexts. In Allstate Ins. Co. v.
, 885 P.2d 342 (Colo. Ct. App. 1994), the owner of a
sole proprietorship titled a vehicle in the name of the business,
Bill’s Service and RV Center. In addition to a business insurance
policy which was not the subject of the litigation, the owner,
Willison, had a personal automobile policy issued by Allstate.
Willison had an accident while driving the business vehicle, and
Allstate denied coverage on the basis that its policy covered
only nonowned autos used in the business. Finding in favor of
Allstate, the court held that, even though the vehicle was titled
in the proprietorship name, Willison was nevertheless the owner.
Thus, the vehicle was an Aowned" vehicle under the Allstate
policy. Id. at 344. Accord Providence Washington
Ins. Co. v. Valley Forge Ins. Co.
, 50 Cal. Rptr. 2d 192, 194
(Cal. Ct. App. 1996) (a van registered to sole proprietorship was
owned by the individual proprietor since the sole proprietorship
"has no existence apart from [the individual owner]"); Samples
v. Georgia Mutual Ins. Co.
, 138 S.E.2d 463, 465 (Ga. Ct. App.
1964) ("The fact that the plaintiff’s husband purchased this
automobile in the name that he used in doing business does not
contradict the fact that he owned the automobile as an

Recalde contends that the decision in Consolidated American
Ins. Co. v. Landry
, 525 So. 2d 567 (La. Ct. App. l988), is
There, however, the sole proprietor operated two different
businesses: an apartment rental business and a carpentry
business. The insurance policy in question insured the individual
doing business as Landry’s Apartments. Thus, the court found no
coverage for a claim arising out of his separate carpentry
business. That outcome does not address the issue presently
before this Court and, in a more recent case, Trombley v.
Allstate Ins. Co.
, 640 So. 2d 8l5 (La. Ct. App. l994), the
Louisiana court specifically held that a sole proprietor doing
business under a trade name was not Aa juridical person separate
and apart from the natural person . . . ." Id.
at 817.

Nor is Hertz Corp. v. Ashbaugh, 607 P.2d ll73 (N.M.
l980), also relied upon by Recalde, persuasive. There the court
found no coverage for a temporary substitute vehicle owned by the
proprietor under an insurance policy issued to him Ad/b/a Corky’s
Wrecker Service." That court relied upon an inapposite case
involving insurance issued to a partnership. See id. at
1176 (citing Farley v. American Auto Ins. Co., 72 S.E.2d
520 (W. Va. 1952)). Therefore, we do not find the Hertz
decision persuasive, especially in light of the authorities
discussed above.


We conclude, therefore, that a sole proprietorship is not a
legal entity separate and distinct from the individual owner
doing business in that name, and hence the certified question
will be answered in the negative.

Certified question answered in the negative.



[1] This Court’s jurisdiction to
accept the certified question is pursuant to Va. Const. art. VI,
? 1. See also Rule 5:42.

[2] No party to this appeal
disputes that A & R Sweeping and Cleaning, sometimes rendered
as A & R Industrial Sweeping and Cleaning, is a sole
proprietorship owned by Recalde.

[3] A & R’s claim
against Hartford in effect sought a declaration respecting excess
coverage because Allstate Insurance Company insured the Recalde
pickup truck under a separate policy.

In contrast to a sole proprietorship, Aa corporation is a legal
entity that is completely separate and distinct from its
shareholders . . . ." Bogese, Inc. v.
State Highway Comm’r
, 250 Va. 226, 230, 462 S.E.2d 345, 348

[5] Recalde also argued extensively
on brief and orally that the Hartford insurance policy
unambiguously identified only A & R as the named insured.
However, questions concerning ambiguity, contract interpretation,
or coverage are not before this Court on the certified question
of law.