American Sentinel Insurance Company v. National Fire & Marine Insurance Company

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 12, 2024
• Docket: 23-55175
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 12 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

AMERICAN SENTINEL INSURANCE No. 23-55175 COMPANY, D.C. No. Plaintiff-Appellee, 2:22-cv-02602-PA-AS

v. MEMORANDUM* NATIONAL FIRE & MARINE INSURANCE COMPANY,

Defendant-Appellant.

Appeal from the United States District Court for the Central District of California Percy Anderson, District Judge, Presiding

Submitted February 8, 2024** Pasadena, California

Before: SCHROEDER, BUMATAY, and MENDOZA, Circuit Judges.

Defendant-Appellant National Fire & Marine Insurance Company

(“National”) appeals the district court’s order granting Plaintiff-Appellee American

Sentinel Insurance Company’s (“ASIC”) motion for summary judgment and

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). denying National’s cross-motion for judgment on the pleadings. We have

jurisdiction under 28 U.S.C. § 1291. We review the district court’s interpretation

of the insurance policies de novo, McHugh v. United Serv. Auto. Ass’n, 164 F.3d

451, 454 (9th Cir. 1999), and we affirm.

California law governs our interpretation of the insurance policies at issue.

Under California law, courts “look first to the language of the contract in order to

ascertain its plain meaning or the meaning a layperson would ordinarily attach to

it.” Waller v. Truck Ins. Exch., Inc., 11 Cal. 4th 1, 18 (1995); accord Emps. Mut.

Cas. Co. v. Phila. Indem. Ins. Co., 169 Cal. App. 4th 340, 348 (2008) (“An

insurance policy is interpreted according to the plain meaning a layperson would

ordinarily give it unless the parties used a word or phrase in a technical sense or it

has special meaning due to usage.”). An insurance policy must “be construed in a

manner which gives meaning to all its provisions in a natural, reasonable, and

practical manner, having reference to the risk and subject matter and to the

purposes of the entire contract.” Fireman’s Fund Ins. Co. v. Allstate Ins. Co., 234

Cal. App. 3d 1154, 1169 (1991).

As an initial matter, we conclude that Big Brother Transportation, Inc. (“Big

Brother”) falls within the definition of “insured” in National’s insurance policy

(“National Policy”) for Tengfei Trucking, Inc. (“Tengfei”). The National Policy

defines “insured” to include “[t]he owner or anyone else from whom you hire or

2 borrow a covered ‘auto’ that is a ‘trailer’ while the ‘trailer’ is connected to another

covered ‘auto’ that is a power unit.” A layperson would understand that definition

to mean that a trailer owner is an “insured” if it (1) leases or lends a, (2) covered,

(3) trailer, (4) to a National policyholder, (5) while that trailer is connected to a

covered, (6) tractor. Big Brother satisfies those six conditions. Big Brother leased

a trailer to Tengfei, a National policyholder. It is undisputed that Tengfei attached

Big Brother’s trailer to Tengfei’s 2015 Volvo tractor, a covered auto under the

National Policy. When Tengfei attached Big Brother’s trailer to Tengfei’s covered

tractor, the trailer became a covered auto because it was a trailer that Tengfei did

not own but attached to a covered tractor. Putting this all together, Big Brother

leased a covered trailer to Tengfei that Tengfei connected to a covered tractor. It

follows that, while Big Brother’s trailer was connected to Tengfei’s tractor, Big

Brother was an “insured” under the National Policy.

The question, therefore, is whether any exceptions to the National Policy’s

definition of “insured” apply to Big Brother. National contends that one

exception—the Truckers Exception—applies such that Big Brother is not an

“insured.” The Truckers Exception provides that a “trucker” is not an “insured”

“[i]f the ‘trucker’ is not insured for hired ‘autos’ under an ‘auto’ liability insurance

form that insures on a primary basis the owners of the ‘autos’ . . . while the ‘autos’

are being used exclusively in the ‘trucker’s’ business and pursuant to operating

3 rights granted to the ‘trucker’ by a public authority.” Contrary to National’s

suggestion, the Truckers Exception does not apply here.

First, the Truckers Exception’s plain language applies only where Tengfei

loans or leases an auto that it owns to a trucker. Indeed, the most natural and

logical reading of the Truckers Exception is that it serves to protect National when

Tengfei loans or leases autos or trailers that Tengfei owns. See Fireman’s Fund,

234 Cal. App. 3d at 1169. In those instances, the Truckers Exception establishes

that a trucker who borrows an auto from Tengfei is not an “insured” under the

National Policy if it does not have reciprocal primary coverage that protects

Tengfei and, by extension, National. But that is not what happened here. Here,

Tengfei leased a trailer from Big Brother. It follows that the Truckers Exception

does not apply.

Yet, even if we assume that the Truckers Exception can apply when Tengfei

hires or borrows an auto from a trucker, we conclude that the Truckers Exception

does not apply to Big Brother because Big Brother has the requisite reciprocal

hired auto insurance coverage. A layperson would understand the exception to

apply where (1) a trucker, (2) does not have hired auto coverage, (3) that is

primary, (4) for the hired auto’s owner, (5) while the trucker is exclusively using

the auto in its business, (6) pursuant to operating rights granted by a public

authority. See Waller, 11 Cal. 4th at 18. The exception does not apply to Big

4 Brother because Big Brother’s auto insurance policy—the ASIC Policy—insures

on a primary basis the owners of hired autos. Like the National Policy, the ASIC

Policy defines “insured” to include “[t]he owner or anyone else from whom [Big

Brother] hire[s] or borrow[s] a covered ‘auto’ that is a ‘trailer’ while the ‘trailer’ is

connected to another covered ‘auto’ that is a power unit . . . .” Further, the ASIC

Policy’s Other Insurance provision provides that the hired auto coverage is

“[p]rimary if a written agreement between the other ‘motor carrier’ as the lessor

and you as the lessee does not require the lessor to hold you harmless, and then

only while the covered ‘auto’ is used exclusively in your business as a ‘motor

carrier’ for hire.” Taken together, these provisions illustrate that Big Brother is

“insured for hired ‘autos’ under an ‘auto’ liability insurance form that insures on a

primary basis the owners of the ‘autos,’” such that the Truckers Exception does not

apply to it.

AFFIRMED.