Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_18-cv-01319/USCOURTS-caed-1_18-cv-01319-2/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

PENN-STAR INSURANCE COMPANY,

Plaintiff,

v.

ZENITH INSURANCE COMPANY, DM 

CAMP & SONS, a general partnership, 

GOLDEN LABOR SERVICES, LLC, and 

VALENTIN ROMER COLOTL,

Defendants.

No. 1:18-cv-01319-DAD-EPG

ORDER DENYING PLAINTIFF’S MOTION 

FOR SUMMARY JUDGMENT

(Doc. No. 32)

This matter is before the court on plaintiff Penn-Star Insurance Company’s (“Penn-Star”)

motion for summary judgment. (Doc. No. 32.

1

) A hearing on the motion was held on April 16, 

2019. Attorney James Nielsen appeared on behalf of Penn-Star, attorney James Wilkins appeared 

on behalf of defendant Golden Labor Services, LLC (“Golden Labor”), and attorney Karen Uno

appeared telephonically on behalf of defendants Zenith Insurance Company (“Zenith”) and DM 

 

1

 On March 5, 2019, Penn-Star filed a motion for summary judgment. (Doc. No. 30.) On March 

18, 2019, Penn-Star filed an amended motion for summary judgment. (Doc. No. 32.) 

Accordingly, the court will deny Penn-Star’s earlier filed motion for summary judgment as 

having been rendered moot by the later filed motion. However, the court will consider the 

attachments to the original motion (see Doc. Nos. 30-2, 30-3) to the extent that they have not 

been amended by the later motion or otherwise opposed by defendants, since the amended motion 

for summary judgment relies on those attachments. 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 1 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

Camp & Sons (“DM Camp”). Having considered the parties’ briefs and oral arguments, and for 

the reasons set forth below, the court will deny Penn-Star’s motion for summary judgment.

BACKGROUND

Penn-Star seeks a declaration from this court that, as a matter of law, the damages sought 

against defendants Golden Labor, DM Camp, and Valentin Romer Colotl2(“Colotl”) in an 

underlying state court action are not covered under the insurance policy that it issued Golden 

Labor (the “Penn-Star policy”), and that it therefore has no duty to defend or indemnify these 

defendants in the underlying state court action.

3

 (Doc. No. 32 at 5.) The material facts of this 

case are undisputed4and, as relevant to the pending motion, are set forth below. 

 

2

 Defendant Colotl has not appeared in this action. On March 1, 2019, the Clerk of the Court 

entered default against him. Penn-Star’s pending motion for default judgment against defendant 

Colotl (Doc. No. 26) will be addressed separately by the undersigned in considering the findings 

and recommendations issued by the assigned magistrate judge. See Local Rule 302(c)(19).

3

 Penn-Star also seeks a declaration stating that defendant Zenith, who issued a separate 

insurance policy to DM Camp (the “Zenith policy”), has a duty to defend and indemnify Golden 

Labor, DM Camp, and Colotl in the underlying action pursuant to that policy. (See Doc. No. 13.) 

If the court finds that both Penn-Star and Zenith are obligated to defend and indemnify in the 

underlying action, then Penn-Star seeks a declaration stating that Zenith’s coverage is primary. 

(Id.) Making either of these determinations would require the court to interpret both insurance 

policies. However, the pending motion only addresses whether the Penn-Star policy’s auto 

exclusion precludes coverage. While a section of the pending motion is entitled “Zenith owes a 

duty to defend Golden Labor and Colotl in the [underlying] action” (Doc. No. 32 at 2), Penn-Star 

only provides a conclusory analysis of this issue. Moreover, at the April 16, 2019 hearing on the 

pending motion, counsel for Golden Labor noted that “whatever interplay [that] may . . . exist 

between [the policies] is something that . . . is probably not appropriate for summary 

adjudication,” and counsel for Penn-Star noted that “the court can decide the issue of the scope of 

Penn-Star’s coverage without addressing the scope of Zenith’s coverage.” Accordingly, the court 

confines this order to the question of whether the Penn-Star policy covers the underlying action. 

4

 The parties have submitted a joint statement of undisputed facts. (See Doc. No. 34 (joint 

statement of undisputed facts, hereinafter “JSUF”).) Most of the facts recited in this order are 

gleaned from that filing. Defendant Golden Labor has also filed a separate statement of 

undisputed facts. (Doc. No. 36-1.) Moreover, each of the parties has filed declarations (see Doc. 

Nos. 30-2, 34-1, 36-2, 37-1, 38-1), and some have attached to those declarations various 

documents, including the insurance policies at issue, the complaint filed in the underlying action, 

various correspondences between the parties, and other documents (see, e.g., Doc. Nos. 30-1, 34-

1, 37-1, 38-1). To the extent there are no objections, the court construes the facts contained 

within these filings to be undisputed for the purpose of resolving the pending motion. Where an 

objection has been raised, the court will only address the objection by way of footnote if it relies 

on that evidence in resolving the pending motion. 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 2 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

A. The Parties

Penn-Star is an insurance company that issued a commercial general liability (“CGL”) 

insurance policy to Golden Labor. (JSUF at ¶ 8.) Golden Labor is a labor-services firm that 

provides farms with laborers. (Id. at ¶ 5.) DM Camp is a farm based in Kern County. (Id. at 

¶ 3.) Colotl is a farm contractor. (Id. at ¶ 5.) DM Camp hired Colotl through Golden Labor. 

(Id.) Zenith is an insurance company that issued an “agribusiness insurance package policy” to 

DM Camp (the “Zenith policy”). (Id. at ¶ 16.)

B. The Underlying State Court Action

On June 27, 2018, the plaintiffs in the state court action filed a complaint in Kern County 

Superior Court, naming Golden Labor, DM Camp, and Colotl as the defendants (the “underlying 

action” or “state court action”). (Id. at ¶ 1.) The underlying action stems from a collision

between an automobile and a tractor pulling a tillage disc in unincorporated Kern County. (Id. at 

¶¶ 2–3.) The automobile in the collision was owned by one plaintiff in the state court action and 

was driven by another. (Id. at ¶ 2.) The driver of the automobile was killed in the collision and 

the three surviving passengers suffered injuries. (Id. at ¶ 2.) 

The state court complaint alleges that, at the time of the collision, Colotl was operating the 

tractor that collided with the automobile and that the tractor was owned and entrusted to him by 

DM Camp and Golden Labor. (Id. at ¶¶ 3, 4.) Based thereon, the underlying complaint alleges 

that Colotl, DM Camp, and Golden Labor were negligent and careless in their ownership, 

operation, maintenance, and/or control of the tractor, and that their negligence and carelessness 

caused the tractor to collide with the automobile, thereby causing the decedent’s death and the 

other injuries about which they complain. (Id. at ¶ 3.) The underlying complaint further alleges 

that the negligence of these defendants’ is not limited to the ownership, operation, maintenance, 

and/or control of the tractor but also includes the negligent hiring, retaining, training, and/or 

supervision of persons responsible for the collision. (Id.) 

Golden Labor and Colotl tendered the underlying action to Penn-Star for a defense and 

indemnification under the Penn-Star policy. (Id. at ¶ 22.) Penn-Star accepted the tender subject 

to a reservation of its rights, advising Golden Labor and Colotl that it agreed to provide them with 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 3 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

a defense in the underlying action subject to the terms, conditions, limitations, and exclusions of 

the Penn-Star policy.5 (Id. at ¶¶ 22–23.)

C. The Penn-Star Insurance Policy

Penn-Star issued the CGL Penn-Star policy (insurance policy number CPV0014424) to 

Golden Labor for the period of February 19, 2017 to February 19, 2018. (JSUF at ¶ 8.) As 

relevant to the pending motion, “SECTION 1 – COVERAGES,” “COVERAGE A” of the 

Penn-Star policy states:

We will pay those sums that the insured becomes legally obligated 

to pay as damages because of “bodily injury” or “property damage” 

to which this insurance applies. We will have the right and duty to 

defend the insured against any “suit” seeking those damages. 

However, we will have no duty to defend the insured against any 

“suit” seeking damages for “bodily injury” or “property damage” to 

which this insurance does not apply.

(Doc. No. 34-1 at 19.) 

Like most insurance policies, the Penn-Star policy at issue here contains a set of 

exclusions to which “th[e] insurance does not apply to.” (Id. at 20.) Appearing under paragraph 

“2. Exclusions” to Coverage A, the “g. Aircraft, Auto, Or Watercraft” exclusion states that the

policy does not apply to:

“Bodily injury” or “property damage” arising out of the ownership, 

maintenance, use, or entrustment to others of any aircraft, “auto,” or 

watercraft owned or operated by or rented or loaned to any 

insured . . .. This exclusion applies even if the claims against any 

insured allege negligence or other wrongdoing in the supervision, 

hiring, employment, training or monitoring of others by that insured, 

if the “occurrence” which caused the “bodily injury” or “property 

damage” involved the ownership, maintenance, use or entrustment to 

others of any aircraft, “auto,” or watercraft that is owned or operated 

by or rented or loaned to any insured.

 

5

 Even though the Penn-Star policy was issued only to defendant Golden Labor, plaintiff PennStar seeks a declaration that it owes no duty to defend or indemnify any of the defendants in this 

action, including defendants DM Camp and Colotl. This is because it is undisputed that if the 

Penn-Star policy covers defendant Golden Labor with respect to the underlying action, then 

defendant DM Camp qualifies as an “additional insured” under the policy. (JSUF at ¶ 10.)

Moreover, it appears that defendant Colotl would also be covered under the Penn-Star policy, 

since Penn-Star accepted his tender of the underlying action, despite him not being a named 

insured, and the Penn-Star policy contains a “Section II – Who Is An Insured,” which provides 

that the insured’s “employees” are also covered, with the policy defining “employee” to includes 

leased or temporary workers. (Id. at ¶¶ 22, 33, 34.)

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 4 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

(Id. at 22; JSUF at ¶ 11.) This standard auto exclusion, however, is amended and replaced by an 

endorsement titled “AUTO EXCLUSION.” (JSUF at ¶ 12.) That endorsement states:

THIS ENDORSEMENT CHANGES THE POLICY

The endorsement modifies insurance provided under the []:

COMMERCIAL GENERAL LIABILITY COVERAGE PART

Exclusion 2. of SECTION 1 – COVERAGES – COVERAGE A 

BODILY INJURY AND PROPERTY DAMAGE LIABILITY –

Aircraft, Auto, Or Watercraft is deleted in its entirety and replaced 

with the following:

This insurance does not apply to: 

“Bodily injury” or “property damage” arising out of the ownership, 

maintenance, or use by any person or entrustment to others, of any 

aircraft, “auto,” or watercraft. 

This exclusion applies even if the claims against any insured allege 

negligence or other wrongdoing in the supervision, hiring, 

employment, training, or monitoring of others by that insured, if the 

“occurrence” which caused the “bodily injury” or “property damage” 

involved an aircraft, “auto,” or watercraft. . . . 

(Doc. No. 34-1 at 37; JSUF at ¶ 13.) 

Thus, while exclusion “g. Aircraft, Auto, Or Watercraft” excludes coverage 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 auto exclusion 

endorsement replaced that language. The endorsement excludes coverage for bodily injury or 

property damage arising out of the ownership, maintenance, or use by any person or entrustment 

to others of any “auto.”

In a separate section, entitled “SECTION V – DEFINITIONS,” the Penn-Star policy

provides definitions for terms used in it. (Doc. No. 34-1 at 31.) There, “auto” is defined as:

a. A land motor vehicle, trailer, or semitrailer designed for travel on 

public roads, including any attached machinery or equipment; or 

b. Any other land vehicle that is subject to a compulsory or financial 

responsibility law or other motor vehicle law where it is licensed 

or principally garaged. 

However, “auto” does not include “mobile equipment.”

(Doc. No. 34-1 at 31; JSUF at ¶ 14.) 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 5 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

Finally, the policy defines “mobile equipment” to include:

a. Bulldozers, farm machinery, forklifts and other vehicles 

designed for use principally off public roads. . . . 

However, “mobile equipment” does not include any land vehicles 

that are subject to a compulsory or financial responsibility law or 

other motor vehicle insurance law where it is licensed or principally 

garaged. Land vehicles subject to a compulsory or financial 

responsibility law or other motor vehicle insurance law are 

considered “autos.” 

(Doc. No. 34-1 at 32; JSUF at ¶ 15.)

D. This Action and the Pending Motion for Summary Judgment 

On September 25, 2018, Penn-Star commenced this declaratory judgment action (Doc. 

No. 1) and on March 7, 2019, filed the pending motion for summary judgment, contending that 

the policy’s auto exclusion, as amended by endorsement, excludes coverage. (Doc. No. 32.) On 

April 2, 2019, Golden Labor, Zenith, and DM Camp filed their oppositions to Penn-Star’s motion 

for summary judgment.

6

 (Doc. Nos. 36, 37.) On April 9, 2019, Penn-Star filed its reply. (Doc. 

No. 38.)

LEGAL STANDARD

Summary judgment is appropriate when the moving party “shows that there is no genuine 

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. 

Civ. P. 56(a). 

 

6

 Included in defendants Zenith and DM Camp’s opposition to the pending motion is a purported 

“cross-motion for summary judgment.” (See Doc. No. 37 at 1, 25–26.) Therein, these defendants 

seek an order from the court declaring that: (1) Penn-Star owes a duty to defend Golden Labor, 

DM Camp, and Colotol in the underlying state court action; and (2) Zenith does not owe a duty to 

defend Golden Labor in that action. (Id. at 25.) Although the first of these requests overlaps to 

some extent with the issues raised in the pending motion for summary judgment, the court will 

not consider this purported cross-motion, since defendants Zenith and DM Camp did not notice it 

for hearing before the undersigned as required, nor did they file a proper motion supported by 

evidence, accompanying briefs and a statement of undisputed facts. See Local Rules 230(b), 

260(a). To bury a cross-motion for summary judgment in an opposition to another party’s motion 

for summary judgment is inherently unfair and inappropriate. That is particularly true here where 

there are defendants with interests adverse to one another. Indeed, at the April 16, 2019 hearing 

on the pending motion, counsel for defendant Golden Labor expressed that it was unable to file an 

opposition to defendants Zenith and DM Camp’s cross-motion because it was not properly 

noticed. Accordingly, the court will not consider Zenith and DM Camp’s “cross-motion for 

summary judgment.”

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 6 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

In summary judgment practice, the moving party “initially bears the burden of proving the 

absence of a genuine issue of material fact.” In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 

(9th Cir. 2010) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The moving party 

may accomplish this by “citing to particular parts of materials in the record, including 

depositions, documents, electronically stored information, affidavits or declarations, stipulations 

(including those made for purposes of the motion only), admissions, interrogatory answers, or 

other materials” or by showing that such materials “do not establish the absence or presence of a 

genuine dispute, or that the adverse party cannot produce admissible evidence to support the 

fact.” Fed. R. Civ. P. 56(c)(1)(A), (B). If the moving party meets its initial responsibility, the 

burden then shifts to the opposing party to establish that a genuine issue as to any material fact 

actually does exist. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 

(1986). In attempting to establish the existence of this factual dispute, the opposing party may 

not rely upon the allegations or denials of its pleadings but is required to tender evidence of 

specific facts in the form of affidavits, and/or admissible discovery material, in support of its 

contention that the dispute exists. See Fed. R. Civ. P. 56(c)(1); Matsushita, 475 U.S. at 586 n.11;

Orr v. Bank of Am., NT & SA, 285 F.3d 764, 773 (9th Cir. 2002) (“A trial court can only consider 

admissible evidence in ruling on a motion for summary judgment.”). The opposing party must 

demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the 

suit under the governing law, see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); T.W. 

Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987), and that the 

dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the 

nonmoving party. See Wool v. Tandem Computs., Inc., 818 F.2d 1433, 1436 (9th Cir. 1987).

In the endeavor to establish the existence of a factual dispute, the opposing party need not 

establish a material issue of fact conclusively in its favor. It is sufficient that “the claimed factual 

dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at 

trial.” T.W. Elec. Serv., 809 F.2d at 631. Thus, the “purpose of summary judgment is to ‘pierce 

the pleadings and to assess the proof in order to see whether there is a genuine need for trial.’” 

Matsushita, 475 U.S. at 587 (citations omitted).

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 7 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

“In evaluating the evidence to determine whether there is a genuine issue of fact,” the 

court draws “all reasonable inferences supported by the evidence in favor of the non-moving 

party.” Walls v. Cent. Contra Costa Cty. Transit Auth., 653 F.3d 963, 966 (9th Cir. 2011). It is 

the opposing party’s obligation to produce a factual predicate from which the inference may be 

drawn. See Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244–45 (E.D. Cal. 1985), 

aff’d, 810 F.2d 898, 902 (9th Cir. 1987). Undisputed facts are taken as true for purposes of a 

motion for summary judgment. Anthoine v. N. Cent. Counties Consortium, 605 F.3d 740, 745 

(9th Cir. 2010). Finally, to demonstrate a genuine issue, the opposing party “must do more than 

simply show that there is some metaphysical doubt as to the material facts . . .. Where the record 

taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 

‘genuine issue for trial.’” Matsushita, 475 U.S. at 587 (citation omitted).

ANALYSIS

It is undisputed that, but for the application of the Penn-Star policy’s auto exclusion, as 

amended by the endorsement, Penn Star has a duty to defend and indemnify Golden Labor in the 

underlying action pursuant to that policy. (See Doc. Nos. 32, 36, 37, 38.) Penn-Star advances 

two theories in support of its position that, as a matter of law, it owes no duty to defend Golden 

Labor, DM Camp, or Colotl in the underlying state court action. First, Penn-Start contends that 

the auto exclusion, as amended by endorsement, excludes coverage because the tractor involved 

in the collision is subject to financial responsibility laws and is therefore an excludable “auto” 

under the Penn-Star policy. (Doc. No. 32 at 19 –22.) Second, it contends that coverage is 

additionally excluded under the auto exclusion of the Penn-Star policy, as amended by 

endorsement, because the automobile involved in the collision is an “auto” used by “any person.” 

(Id. at 15–19.) 

“It is . . . a familiar principle that a liability insurer owes a broad duty to defend its 

insured against claims that create a potential for indemnity.” Horace Mann Ins. Co. v. Barbara 

B., 4 Cal. 4th 1076, 1081 (1993), as modified on denial of reh’g (May 13, 1993). “[T]he [insurer]

must defend a suit which potentially seeks damages within the coverage of the policy.” Gray v. 

Zurich Ins. Co., 65 Cal. 2d 263, 275 (1966). “The determination [of] whether the insurer owes a 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 8 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

duty to defend usually is made in the first instance by comparing the allegations of the complaint 

with the terms of the policy.” Horace Mann, 4 Cal. 4th at 1081. In analyzing the policy, “courts 

must consider both the [] language in the policy, and the endorsements or exclusions affecting 

coverage, if any, included in the policy terms.” Modern Dev. Co. v. Navigators Ins. Co., 111 Cal. 

App. 4th 932, 939 (2003), as modified (Aug. 29, 2003), as further modified (Sept. 18, 2003). 

“Facts known to the insurer and extrinsic to the third party complaint can generate a duty to 

defend, even though the face of the complaint does not reflect a potential for liability under the 

policy.” Montrose Chem. Corp. v. Superior Court, 6 Cal. 4th 287, 296 (1993).

To prevail in an action for declaratory relief regarding the duty to defend, “the insured 

must prove the existence of a potential for coverage, while the insurer must establish the absence 

of any such potential.” Id. at 300; see also Reg’l Steel Corp. v. Liberty Surplus Ins. Corp., 226 

Cal. App. 4th 1377, 1389 (2014) (“The insurer’s defense duty is obviated where the facts are 

undisputed and conclusively eliminate the potential the policy provides coverage for the third 

party’s claim.”) “Facts merely tending to show that the claim is not covered or may not be 

covered, but are insufficient to eliminate the possibility that resultant damages (or the nature of 

the action) will fall within the scope of coverage . . . add no weight to the scales.” Montrose 

Chem., 6 Cal. 4th at 300. Accordingly, for Golden Labor, DM Camp, and Colotl to survive PennStar’s motion for summary judgment here, they must show that the underlying claims may fall 

within the Penn-Star policy; Penn-Star, on the other hand, must prove that they cannot. See 

Montrose Chem., 6 Cal. 4th at 300. Penn-Star “is entitled to summary judgment that no potential 

for indemnity exists if the evidence establishes no coverage under the policy as a matter of law.” 

Reg’l Steel, 226 Cal. App. 4th at 1389; see also Am. Star Ins. Co. v. Ins. Co. of the W., 232 Cal. 

App. 3d 1320, 1325 (1991) (“If the claim does not fall within the insuring clauses, there is no 

need to analyze further. There is no coverage.”) (citations omitted).

Defendants have met their initial burden of establishing that the claims in the underlying 

action are within the scope of the Penn-Star policy’s insuring clause because it is undisputed that 

the plaintiffs in the state court action seek damages for bodily injury caused by an occurrence. 

(See Doc. Nos. 32, 36, 37, 38); see also Montrose Chem., 6 Cal. 4th at 300. Accordingly, below 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 9 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10

the court addresses whether the Penn-Star policy’s auto exclusion removes the underlying action 

from the scope of that policy’s insuring clause. 

A. Whether the Penn-Star Policy’s Auto Exclusion as Amended by Endorsement 

Excludes Coverage Because the Accident Involved a Tractor

Penn-Star contends that its auto exclusion, as amended by endorsement, excludes the 

damages for bodily injury sought by the plaintiffs in the underlying state court action because the 

tractor at issue qualifies as an “auto.” (Doc. No. 32 at 19.) Its argument is as follows. The auto 

exclusion, as amended by endorsement, states that the Penn-Star policy does not apply to bodily 

injury “arising out of the ownership, maintenance, or use by any person or entrustment to others, 

of any . . . ‘auto.’” (Doc. No. 30-1 at 62.) Despite the policy defining an “auto” to not include 

“mobile equipment” (id. at 56), and despite the policy defining “mobile equipment” to include 

“farm equipment” (id. at 58), Penn-Star argues that “mobile equipment” does not include “any 

land vehicles that are subject to a compulsory or financial responsibility law or other motor 

vehicle insurance law where it is licensed or principally garaged” (id.). Penn-Star contends that, 

because the tractor at issue is subject to California’s financial responsibility laws, it qualifies as 

an “auto” when applying the definitions of “mobile equipment” and “auto” provided in the PennStar policy and is therefore excluded pursuant to the auto exclusion. (Doc. No. 32 at 19.) Golden 

Labor counters that this interpretation of the Penn-Star policy’s provisions is unreasonable and 

that the limitation resulting from the definition of “mobile equipment” with respect to whether a 

land vehicle is subject to “compulsory or financial responsibility laws” is not plain or clear. 

(Doc. No. 36 at 16–22.) Zenith and DM Camp also contend that this limitation is not plain or 

clear, arguing further that the limitation is also not conspicuous and that the exclusion itself is 

ambiguous. (Doc. No. 37 at 11–16.)

“In the insurance context, we begin with the fundamental principle that an insurer cannot 

escape its basic duty to insure by means of an exclusionary clause that is unclear. . . . [A]ny 

exception to the performance of the basic underlying obligation must be so stated as clearly to 

apprise the insured of its effect.” Haynes v. Farmers Ins. Exch., 32 Cal. 4th 1198, 1204 (2004)

(citation and internal quotation marks omitted). “Coverage may be limited by a valid 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 10 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11

endorsement and, if a conflict exists between the main body of the policy and an endorsement, the 

endorsement prevails.” Id. However, in order to be enforceable, “any provision that takes away 

or limits coverage reasonably expected by an insured must be ‘conspicuous, plain and clear.’” Id. 

Therefore, “any such limitation must be placed and printed so that it will attract the reader's 

attention. Such a provision also must be stated precisely and understandably, in words that are 

part of the working vocabulary of the average layperson.” Id. “The burden of making coverage 

exceptions and limitations conspicuous, plain and clear rests with the insurer.” Id. Applying

these well-recognized principles here, the court concludes that Penn-Star cannot, as a matter of 

law, rely on the provisions limiting coverage for “mobile equipment” in the Penn-Star policy to 

escape its coverage obligations in this case.

First, the provisions are not conspicuous. In order to reach the conclusion that the tractor 

at issue is not covered by the Penn-Star policy because it is a “mobile equipment” subject to 

financial responsibility laws, the reader of the insurance policy must locate several provisions in a 

policy that is almost fifty pages long. Initially, the reader must find the auto exclusion, as 

amended by endorsement, which states that the insurance policy does not apply to bodily injury 

arising out of the use of any “auto.” Next, the reader must find the definition of “auto,” which 

explicitly excludes “mobile equipment.” Thereafter, one would have to locate the definition of 

“mobile equipment,” which explicitly notes that “farm machinery” and “other vehicles designed 

principally for use off public roads” qualify as “mobile equipment.” At this point, the average 

insured might reasonably assume that a tractor constitutes farm machinery or an “other vehicle 

designed principally for use off public roads” and is therefore not within the scope of the auto 

exclusion. See Jauregui v. Mid-Century Ins. Co., 1 Cal. App. 4th 1544, 1552 (1991) (“Protection 

of the insured’s reasonable expectation of coverage underlies the rules of construction dictating 

that we construe exclusionary language against the insurer . . . and demands . . . conspicuous 

placement to avoid or limit coverage.”) “Without further notice, [the] average insured could 

scarcely anticipate a subparagraph . . . [that] would contain an exclusion.” Id. at 1549 (citation 

and internal quotation marks omitted). Yet, this is exactly what the definition of “mobile 

equipment” contains, as it goes on to exclude from its scope “any land vehicles that are subject to 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 11 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12

a compulsory or financial responsibility law or other motor vehicle insurance law where it is 

licensed or principally garaged.” Here, this exclusion is not conspicuous since it is buried in the 

definitions section of the policy. See Thompson v. Mercury Cas. Co., 84 Cal. App. 4th 90, 95

(2000) (“A limitation is conspicuous when it is positioned and printed in a form which adequately 

attracts the reader’s attention to the limitation.”) (internal quotation marks and citation omitted); 

see also Haynes v. Farmers Ins. Exch., 32 Cal. 4th 1198, 1209 (2004) (“We agree with the Court 

of Appeal that burying the . . . limitation among [other] provisions renders it inconspicuous and 

potentially confusing to the average lay reader.”) Moreover, the auto exclusion, as amended by 

the endorsement, does not even alert the policyholder that its scope will or could be expanded by 

a definition that appears in a different section of the policy and not in the endorsement itself. See

Haynes, 32 Cal. 4th at 1205 (finding limiting language to be inconspicuous where it appeared on 

the policy’s tenth page as the second of four paragraphs and “[t]here [wa]s nothing in the 

[definition] to alert a reader that it limits . . . coverage, nor anything in the section to attract a 

reader’s attention to the limiting language”). In short, “the average lay reader . . . would have a 

difficult time locating the limiting language and is not required to conduct such an arduous search 

for camouflaged exclusions.” Jauregui, 1 Cal. App. 4th at 1550. Accordingly, the court 

concludes that Penn-Star has not “[met] its stringent obligation to alert a policyholder to 

limitations on anticipated coverage by hiding the disfavored language in an inconspicuous portion 

of the policy.” Id.

Second, even if the reader successfully found all of the relevant provisions, the 

undersigned concludes that the provisions limiting coverage for “mobile equipment” in the PennStar policy are not plain or clear. See id. (“Conspicuous placement of exclusionary language is 

only one of two rigid drafting rules required of insurers to exclude or limit coverage. The 

language itself must be plain and clear.”). In order to establish that a provision is plain and clear, 

“[u]nderstandability is [] required” and “the exclusion must be couched in words which are part 

of the working vocabulary of average lay persons.” Id. (internal quotation marks and citation 

omitted). Here, the provision limiting coverage is the language that appears in the definition of 

“mobile equipment,” which states that “any land vehicles that are subject to a compulsory or 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 12 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13

financial responsibility law or other motor vehicle insurance law where it is licensed or 

principally garaged” are not considered “mobile equipment.” Zenith, Golden Labor, and DM 

Camp contend that an average lay person would not understand the scope of this exclusion as it is 

now interpreted by Penn-Star. (Doc. Nos. 36 at 20; 37 at 11.) The court agrees. 

“Although ‘Financial Responsibility Law’ may be an obvious reference to the Vehicle 

Code to lawyers and judges, . . . it is too vague to meet the stringent obligation of the insurer to 

limit coverage in plain and clear language.” Jauregui, 1 Cal. App. 4th at 1551. Here, in order for 

Golden Labor to understand the coverage provided to it, it “was expected to either know the 

financial responsibility law . . . or know the discrete body of statutory law [] set forth within . . . 

the [California] Vehicle Code.” Id. at 1552. The Penn-Star policy, however, does not reference 

the statutes embodying California’s financial responsibility laws, leaving the reader to determine 

what is meant by that language. Moreover, as demonstrated by Penn-Star’s own motion, even if a 

reader understood what was meant by that language, in order to reach the conclusion that the 

tractor at issue is subject to financial responsibility laws, one would need to: (1) locate the 

definition of “motor vehicle” within California Vehicle Code § 412; (2) conclude that the tractor 

qualifies as a motor vehicle; and (3) determine whether the tractor, as a motor vehicle, was 

required to “establish financial responsibility” pursuant to California Vehicle Code §§ 16020 and 

16021. (See Doc. No. 32 at 20–21.) Assuming that a reader concluded that a tractor did not 

qualify as a “motor vehicle” under § 412, one would apparently still need to determine whether 

the tractor qualifies as an “implement of husbandry” as defined in §§ 36000 and 36015 or a 

“commercial vehicle” as defined in § 260, both of which purportedly require the vehicle at issue 

to be registered or comply with financial responsibility law. (See id. at 21.)

The court need not determine whether the tractor at issue qualifies as a “motor vehicle” or 

an “implement of husbandry” under the California Vehicle Code because Penn-Star “presumed a 

level of sophistication and knowledge beyond that of an ordinary layperson and, therefore, the 

policy provision purporting to limit coverage d[o] not satisfy the requisite plain and clear 

criteria.” Jauregui, 1 Cal. App. 4th at 1552. That the ordinary lay insured would not reach the 

same conclusion as the one proffered by Penn-Star here is bolstered by the analysis of a claims 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 13 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

14

consultant that Penn-Star retained to analyze whether the tractor at issue is subject to a 

compulsory or financial responsibility law or other motor vehicle insurance law. That claims 

consultant, after reviewing the relevant sections of the California Vehicle Code, noted in an email 

to Penn-Star’s counsel that a tractor “is not a ‘commercial vehicle’ which would be required to 

maintain proof of financial responsibility” and that, “[w]hen read in its entirety, [section] 16500.5 

does not appear to support the assertion that the D.M. Camp tractor would be subject to 

compulsory financial responsibilities law.” (Doc. No. 37-1 at 12; see also JSUF at ¶ 31.) The 

claims consultant further noted that, “[w]hile we agree with Penn-Star’s position that the D.M. 

Camp tractor is an implement of husbandry, we disagree that it is subject to compulsory financial 

responsibilities laws thus making the tractor an ‘auto’ under the insured’s policy for purposes of 

applying the automobile exclusion.” (Doc. No. 37-1 at 12.) Moreover, the claims consultant 

noted that “implements of husbandry, like the D.M. Camp tractor, are exempt for vehicle 

registration and therefore are also exempt from maintaining proof of financial responsibility.” 

(Id. at 13.) Finally, the claims consultant noted that “it appears the other sections of the 

California motor vehicle code support the position that the D.M. Camp tractor is not subject to the 

state’s compulsory financial responsibilities laws.” (Id.)

Because the court finds, based upon the evidence before it on summary judgment, that the 

provisions limiting coverage for “mobile equipment” in the Penn-Star policy are not conspicuous, 

plain, or clear as a matter of law, the court concludes that these provisions are unenforceable. See

Hall v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, No. 08 CV 1195 JLS (WVG), 2010 WL 

2650271, at *9 (S.D. Cal. July 1, 2010) (finding that “the limitation provision . . . [wa]s not clear, 

plain and conspicuous and [wa]s therefore unenforceable”); Thompson v. Mercury Cas. Co., 84 

Cal. App. 4th 90, 97 (2000) (finding that a limitation appearing in a policy addendum, instead of 

“in the ‘Liability’ section of the policy, where an average layperson would expect to find it,” was 

unenforceable). Consequently, Penn-Star cannot rely on these provisions to establish that it is not 

obligated to defend or indemnify Golden Labor, DM Camp, or Colotl in the underlying state court 

action.

/////

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 14 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

15

B. Whether the Penn-Star Policy’s Auto Exclusion as Amended by Endorsement 

Excludes Coverage Because the Collision Involved a Private Automobile

Penn-Star next contends that, because the collision giving rise to the plaintiffs’ injuries in 

the underlying state court action involved a vehicle, the auto exclusion, as amended by 

endorsement, excludes coverage. (Doc. No. 32 at 15.) In so arguing, Penn-Star relies on the

following language in the auto exclusion: “This insurance does not apply to: ‘Bodily injury’ or 

‘property damage’ arising out of the ownership, maintenance, or use by any person . . . of any . . . 

‘auto.’” (Doc. No. 30-1 at 62) (emphasis added). Penn-Star’s argument is that, because the 

collision involved an automobile that was used by a person, the exclusion applies, and it therefore

has no obligation to defend or indemnify Golden Labor, DM Camp, or Colotl in the underlying 

action. Golden Labor argues that Penn-Star’s interpretation of this exclusion is unreasonable and 

does not comport with how exclusions in insurance contracts are generally interpreted. (Doc. No. 

36 at 23–30.) Zenith and DM Camp contend that Penn-Star’s interpretation is “illogical and 

overbroad.” (Doc. No. 37 at 17–23.) Each defendant contends that the exclusion should not be 

read so broadly as to exclude liability for accidents involving the use of an “auto” by any person 

and, instead, should reasonably be interpreted to exclude liability for accidents involving the use 

of an “auto” by a person for whom Golden Labor could be held legally liable. 

As discussed, “the California Supreme Court [has] held that insurance contract provisions 

limiting coverage that are not . . . plain and clear cannot defeat an insured’s reasonable 

expectation of coverage as provided by the insuring clause.” Essex Ins. Co. v. City of Bakersfield, 

154 Cal. App. 4th 696, 707 (2007), as modified (Aug. 27, 2007). Here, the undisputed evidence 

before the court on summary judgment establishes that (1) the auto exclusion is not plain or clear 

and (2) Golden Labor reasonably expected that the Penn-Star CGL policy would provide it 

coverage for a lawsuit alleging that it was negligent and careless in its ownership, operation, 

maintenance, and/or control of the tractor, or negligent with respect to its hiring, retaining, 

training, and/or supervision of persons responsible for the collision. 

First, in the insurance context, “basic coverage provisions are construed broadly in favor 

of affording protection, but clauses setting forth specific exclusions from coverage are interpreted 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 15 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

16

narrowly against the insurer.” Minkler v. Safeco Ins. Co. of Am., 49 Cal. 4th 315, 322, opinion 

after certified question answered sub nom. Minkler v. Safeco Ins. Co., 399 F. App’x 230 (9th Cir. 

2010). In addition, “some commentators have argued that an exclusion limits or takes back some 

of the insurance coverage granted by the insuring clause” because “exclusions serve to limit 

coverage granted by an insuring clause and [] apply only to hazards covered by the insuring 

clause.” Essex, 154 Cal. App. 4th at 709 (internal quotation marks and citation omitted). Here, 

the Penn-Star policy’s insuring clause states that: “We will pay those sums that the insured 

becomes legally obligated to pay . . ..” (Doc. No. 34-1 at 19) (emphasis added). In other words,

the Penn-Star policy does not cover situations where Golden Labor is not liable. However, PennStar’s proffered interpretation of the auto exclusion seeks to exclude the underlying action from 

coverage because the state court plaintiffs—who are not associated with, employed by, or 

otherwise connected to Golden Labor—were travelling in an “auto.” This interpretation of the 

auto exclusion runs afoul of the contract interpretation principles outlined by the California Court 

of Appeal in Essex, since Golden Labor does not face exposure to liability in the underlying state 

court action due to its operation or use of the vehicle involved in the collision. Indeed, the state 

court complaint does not even seek damages based on the use or operation of the vehicle involved 

in the collision. 

Second, in the court’s view Penn-Star’s “interpretation of the auto exclusion[] converts 

th[at] exclusion[] into unusual and unfair limitations of coverage that defeat the insured’s 

reasonable expectations of coverage.” Essex, 154 Cal. App. 4th at 706. Penn-Star interprets the 

auto exclusion to limit coverage in any case where an automobile was used by any person that 

resulted in bodily injury, but “no average lay person would have understood the auto exclusion[] 

in that manner.” Id. at 707. Here, the defendants in the underlying action are being sued for 

negligence in the use, maintenance, and operation of the tractor and the negligent training for the 

use, maintenance, and operation of the tractor. Penn-Star contends that it would provide coverage 

but can’t because the collision involved a vehicle that has no connection to its insured, Golden 

Labor. Indeed, at the April 16, 2019 hearing on the pending motion, counsel for Penn-Star noted 

that, had the state court plaintiffs been riding a horse at the time of the collision, Golden Labor 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 16 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

17

would be covered pursuant to the Penn-Star policy. Penn-Star’s position in this regard strains 

credulity. How could Golden Labor have reasonably expected that the Penn-Star policy would 

protect it from liability for negligently using, operating, or training another to use a tractor in all 

instances “except where the [negligence] leads to an automobile accident involving [a] vehicle[] 

that had no connection to the [insured]”? Id. at 708. Moreover, in this regard Penn-Star’s

interpretation of the auto exclusion[] do[es] not comport with the 

common understanding of auto exclusions in CGL policies. A CGL 

policy is intended to cover every risk that is not excluded. A CGL 

policy has a very broad insuring clause but also has numerous 

exclusions. Exclusions can be divided into two categories: Certain 

exclusions are designed to avoid coverage for risks the insurer does 

not wish to insure at all; e.g., war, flood, intentional injury, 

environmental pollution, etc. Other exclusions are designed to limit 

coverage for risks normally covered by other insurance. The auto 

exclusion . . . is an exclusion designed to limit coverage for risks 

normally covered by other insurance. To cover these risks, the 

insured must purchase separate insurance. 

Id. at 709–10. However, “[g]iven that [the insured] could not get separate automobile insurance 

for the accident in the [underlying] lawsuit, the auto exclusion[] should not be interpreted to deny 

[it] coverage[.].” Id. at 710.

Third, Ramiro Marin Perez, who holds Golden Labor’s contractor license, avers7that, 

after learning of the facts and circumstances giving rise to the collision, Golden Labor 

“understood and expected that liability coverage would be available for its potential exposure 

under [the Penn-Star policy]” and that, at no time prior to the collision, did Penn-Star advise or 

alert Golden Labor “to any provision or language in the Penn Star policy [which would] . . . 

 

7

 Penn-Star objects to this declaration, contending that Golden Labor’s intent is irrelevant, and 

that Mr. Perez’s averments constitute hearsay and are argumentative because “[t]he Penn-Star 

policy has been entered into the record and it speaks to notice of its terms.” (Doc. No. 38-2 at 2.) 

The court overrules Penn-Star’s boilerplate objections. First, the objected-to portion of the 

declaration is not hearsay. Second, the court is not sure what Penn-Star hopes to accomplish by 

asserting that the objected-to portion of the declaration is “argumentative.” Finally, where, as 

here, an argument is made that language in an insurance contract is not plain or clear, courts are 

to “interpret [insurance contracts] to protect the objectively reasonable expectations of the 

insured.” Minkler, 49 Cal. 4th at 321. This necessarily requires ascertaining what the insured’s 

reasonable expectations were. See Essex, 154 Cal. App. 4th at 708 (“Of course, the auto 

exclusions can be interpreted as Essex has done so, but that is an interpretation of the exclusions 

in the abstract, and not in the context of the policy or in the circumstances of this case.”).

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 17 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

18

limit[] . . . coverage simply because the claimed injuries involved a vehicle in some way, even if 

Golden Labor . . . had no connection with or relationship with the driver of the involved vehicle, 

and/or it was not alleged that Golden Labor . . . was even liable for the use or operation of such 

vehicle.” (Doc. No. 36-2 at 2.) The court in Essex, which considered broad auto exclusions 

similar to the one before this court, found that the “auto exclusions do not plainly and clearly 

preclude coverage of the [underlying] lawsuit in context of the policy as a whole and in the 

circumstances of the case,” particularly because “the record provide[d] no evidence that [the 

insurer’s] broad interpretation of the auto exclusions was brought to the attention of the 

insureds[.]” 154 Cal. App. 4th at 706–07. Based on the undisputed evidence presented on 

summary judgment before this court, that analysis holds true here as well. 

Finally, the court notes that although Penn-Star has moved for summary judgment in its 

favor, it has provided no authority in support of its strained interpretation of the phrase “by any 

person” which appears in its policy’s auto exclusion. Penn-Star relies heavily on the decision in

Maxum Indemnity Company v. Kaur, 356 F. Supp. 3d 987 (E.D. Cal. 2018) in advancing its 

interpretation of that language, but Maxum is both distinguishable and not binding authority. In 

Maxum, the district court granted summary judgment in favor of an insurance company seeking a 

declaration that it had no duty to defend or indemnify in a state court action asserting causes of 

action for negligence and negligent training. Id. at 1005, 991. At issue there was an automobile 

exclusion which stated that the “insurance does not apply to . . . ‘[b]odily injury’. . . arising out of 

the ownership . . . [or] use . . . of any . . . ‘auto’ . . . including the supervision, hiring, 

employment, training or monitoring of . . . anyone in connection with the ownership . . . [or] use 

. . . of any . . . ‘auto.’” Id. at 991 (emphasis added). In that case, the insured operated a truck 

driving school and a driver that the insured had trained was later involved in a single-vehicle, 

tractor-trailer accident. Id. at 990–91. The insurance company argued that it had no obligation to 

defend or indemnify the insured in an underlying action because the auto exclusion in its policy 

specifically excluded liability for bodily injury arising out of the training of anyone in connection 

with the use of any auto. Id. at 997. The insured argued that the auto exclusion was ambiguous 

“and that no average lay person would have understood an auto exclusion to exclude coverage for 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 18 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

19

an allegation of negligent training of the trucking school’s specialty students.” Id. The district 

court in Maxum disagreed, concluding that “the language [before it] plainly and explicitly 

excluded coverage” for bodily injury arising out of the use of any auto, including the training of 

anyone in connection with the use of any auto. Id. at 1005. 

The circumstances in Maxum are distinguishable from those presented here. First, the 

underlying state court action in Maxum sought damages relating to the driving school instructor’s 

training of the driver and the exclusion at issue there “explicitly excludes[d] coverage for the 

injury that occurred in the Underlying Action as it was related to Kaur’s training of Sangam in the 

use of ‘autos.’” Id. The court in Maxum noted that it “w[ould] not strain to create ambiguity 

where none exists.” Id. In contrast, here, this court has already concluded that the Penn-Star 

policy’s auto exclusion does not plainly and clearly inform the insured that the auto exclusion 

would be applied in the manner Penn-Star seeks to apply it. 

Second, the language of the auto exclusion in the Penn-Star policy is different than the 

language of the auto exclusion that was before the district court in Maxum. Penn-Star has 

directed this court to no binding authority that analyzes the effect of the phrase “by any person” 

on the auto exclusion. Penn-Star points the court only to two out-of-circuit decisions (one by a 

federal trial court and one by a state appellate court) analyzing language similar to “by any 

person,” but its reliance on those decisions in unavailing, since the language analyzed by those 

courts is not the same as the language at issue here See Fed. Ins. Co. v. New Coal Co., 415 F. 

Supp. 2d 647, 653 (W.D. Va. 2006); Massachusetts Prop. Ins. Underwriting Ass’n v. Berry, 80 

Mass. App. Ct. 598, 603 (2011). Moreover, Penn-Star simply cites to these two cases, but does 

not explain why the policies at issue in the contexts of those cases supports its contention that this 

court should adopt its proffered interpretation of the auto exclusion in its policy. See Maxum 

Indem. Co., 356 F. Supp. 3d at 1002 (“Exclusions must be viewed in the context of each specific 

case.”).

Third, even if this court were to adopt Penn-Star’s strained interpretation of its policy’s

auto exclusion, the decision in Maxum is still distinguishable because the plaintiffs in the 

underlying state court action here are not alleging that their use or ownership—or anyone’s use or 

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 19 of 20
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

20

ownership for that matter—of a vehicle resulted in bodily injury. Allstate Ins. Co. v. Naai, 684 F. 

Supp. 2d 1220, 1230 (D. Haw. 2010) (“The plain language of the automobile exclusion focuses 

on the connection between a vehicle and the injury, not between a vehicle and the 

insured.”), aff'd, 490 F. App’x 49 (9th Cir. 2012). Instead, the state court complaint alleges that 

the defendants were negligent in their use, maintenance, and control of the tractor, or the training 

for the use, maintenance, and control of the tractor. Thus, as alleged in the underlying state court 

complaint, there is no connection between the use or ownership of the vehicle the plaintiffs in the 

state court action were travelling in and the injuries they incurred as a result of the collision. 

The court finds that the Penn-Star policy’s auto exclusion is not plain and clear enough to 

defeat Golden Labor’s reasonable expectation that it was covered for claims arising out of its 

alleged negligence with respect to using, operating, and/or training others to use the tractor 

involved in the collision at issue here. Accordingly, the court rejects Penn-Star’s interpretation of 

its auto exclusion and finds that Penn-Star may not rely on that interpretation to preclude 

coverage. 

CONCLUSION 

Having concluded that the Penn-Star policy’s auto exclusion does not defeat coverage, the

court denies Penn-Star’s motion for summary judgment (Doc. No. 32) and also denies PennStar’s earlier filed motion for summary judgment (Doc. No. 30) as having been rendered moot by 

the filing of the amended motion for summary judgment. This matter is referred back to the 

assigned magistrate judge for a further scheduling conference and possible amendment of the 

scheduling order (Doc. No. 25), if appropriate and in light of this order. 

IT IS SO ORDERED. 

Dated: January 31, 2020 

UNITED STATES DISTRICT JUDGE

Case 1:18-cv-01319-LHR-EPG Document 50 Filed 01/31/20 Page 20 of 20