Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-01248/USCOURTS-casd-3_11-cv-01248-3/pdf.json

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

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

EL CAJON LUXURY CARS DBA

BOB BAKER LEXUS,

Plaintiff,

CASE NO. 11CV1248 JLS (DHB)

ORDER (1) GRANTING MOTION

FOR RECONSIDERATION; (2)

DISMISSING PLAINTIFF’S

SECOND AMENDED COMPLAINT

WITHOUT PREJUDICE; AND (3)

STAYING CASE

(ECF No. 36)

vs.

TOKIO MARINE & NICHIDO FIRE

INSURANCE COMPANY,

Defendant.

Presently before the Court is Tokio Marine & Nichido Fire Insurance Co., Ltd.’s

(“Defendant,” or “Tokio Marine”) Motion for Reconsideration, Request for

Clarification, and Request for Certification for Interlocutory Appeal. (ECF No. 36). 

Also before the Court is Plaintiff El Cajon Luxury Cars d/b/a Bob Baker Lexus’s

(“Plaintiff,” or “Bob Baker Lexus”) response in opposition, (Resp. in Opp’n, ECF No.

41), and Tokio Marine’s reply in support, (Reply in Supp., ECF No. 42). 

Tokio Marine moves for this Court to reconsider its September 10, 2012 Order

denying Tokio Marine’s motion to dismiss Bob Baker Lexus’s Second Amended

Complaint (“SAC”). Having considered the parties’ arguments and the law, the Court

GRANTS Tokio Marine’s motion for reconsideration, DISMISSES Plaintiff’s SAC

WITHOUT PREJUDICE, and STAYS this case pending the resolution of the

underlying state court suit against Bob Baker Lexus. 

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BACKGROUND

This Order incorporates by reference the factual and procedural history

articulated in the Court’s prior orders. (See Order, Sept. 10, 2012, ECF No. 31; Order,

Mar. 6, 2012, ECF No. 22; Order, Nov. 8, 2011, ECF No. 13). Tokio Marine filed an

answer to the SAC on September 21, 2012, (ECF No. 32), and then proceeded to file

the current motion for reconsideration on October 11, 2012, (ECF No. 36). Plaintiff

filed its response in opposition on November 8, 2012, (Resp. in Opp’n, ECF No. 41),

and Tokio Marine filed a reply in support on November 15, 2012, (Reply in Supp., ECF

No. 42). The motion hearing, originally set for November 29, 2012, was reset for

January 3, 2013. (Order, Nov. 15, 2012, ECF No. 43). 

On December 17, 2012, the parties filed a joint motion requesting that this action

be temporarily stayed until April 1, 2013 to facilitate ongoing settlement discussions. 

(Jt. Mot. to Stay, ECF No. 46). The Court granted the motion to stay and continued the

hearing on the motion for reconsideration. (Order, Dec. 20, 2012, ECF No. 47). As the

parties did not file a notice of settlement, the Court held a hearing on the motion for

reconsideration on June 6, 2013.

STANDARD OF REVIEW

In the Southern District of California, motions for reconsideration are governed

by Local Rule 7.1(i). See Gallagher v. San Diego Unified Port Dist., 2011 U.S. Dist.

LEXIS 100861, at *2 (S.D. Cal. Sept. 8, 2011). Local Rule 7.1(i)(1) allows a party to

apply for reconsideration “[w]henever any motion or any application or petition for any

order or other relief has been made to any judge and has been refused in whole or in

part.” Civ LR 7.1(i)(1). 

Whether to grant or deny a motion for reconsideration is in the sound discretion

of the district court. Navajo Nation v. Norris, 331 F.3d 1041, 1046 (9th Cir. 2003)

(citing Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000)). 

Generally, a reconsideration of a prior order is “appropriate if the district court (1) is

presented with newly discovered evidence, (2) committed clear error or the initial

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decision was manifestly unjust, or (3) if there is an intervening change in controlling

law.” Sch. Dist. No. 1J v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993) (citation

omitted). “Newly discovered evidence” is evidence that was in existence at the time of

trial but (1) “was discovered after trial”; (2) could not have been discovered at an earlier

stage by the “exercise of due diligence”; and (3) “is of such magnitude that production

of it earlier would likely have changed the outcome of the case.” Far Out Prods., Inc.

v. Oskar, 247 F.3d 986, 992–93 (9th Cir. 2001) (quoting Defenders of Wildlife v.

Bernal, 204 F.3d 920, 929 (9th Cir. 1999)). 

DISCUSSION

In its September 10, 2012 Order, this Court determined that Bob Baker

Lexus’s cause of action for breach of an insurer’s duty to defend should survive

because Tokio Marine’s insurance policy might cover Bob Baker Lexus’s liability in

an underlying wrongful death lawsuit arising from a fatal accident involving one of

the dealership’s loaner vehicles. (Order, Sept. 10, 2012, ECF No. 31). Plaintiff’s

SAC alleges that extrinsic facts support a negligence claim against Bob Baker Lexus

based on a receptionist’s failure to document a customer complaint regarding an

unintended acceleration event in the vehicle that was involved in the accident. 

(SAC, ECF No. 23). 

The Court agreed with Plaintiff that such a negligence claim, if alleged, would

not fall within the policy’s “Completed Operations” exclusion. (Order, Sept. 10,

2012, ECF No. 31). The Court concluded that this provision, which excludes

coverage for liability arising out of “work or operations” performed by, or on behalf

of, the dealership, refers to “the work performed in the service or maintenance of

[loaner] vehicles, and not [to] a receptionist’s work in tracking customer complaints

on loaner vehicles.” (Id.) The Court’s reasoning relied, in part, on Bob Baker

Lexus’s practice of providing loaner vehicles to its customers free of charge:

“Nothing in the SAC suggests that customers are required to pay for Bob Baker

Lexus’s loaner car services; indeed, a more reasonable inference is that this service

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is provided as a ‘courtesy’ to customers who leave their personal vehicles with Bob

Baker Lexus for maintenance services.” (Id.) 

Tokio Marine now contends that the Court’s prior ruling should be modified

because (1) documents not previously presented to the Court indicate that customers

receiving a loaner vehicle from Bob Baker Lexus must pay for mileage, fuel, and

other incidental expenses associated with use of the vehicle; and, (2) the Court’s

interpretation of the “Completed Operations” exclusion is flawed because it departs

from the plain meaning of the term “work.” The Court addresses each argument in

turn. 

1. New Evidence Regarding Charges Associated with Bob Baker Lexus’s

Loaner Car Services

Tokio Marine submits as purportedly new evidence selected portions of Bob

Baker Lexus’s standard Rental Agreement, (Salem Decl., Ex. B, ECF No. 36-3), 

and the Lexus Customer Convenience System (“LCCS”) Manual, (Salem Decl, Ex.

C, ECF No. 36-4).1

 Tokio Marine argues that these documents show that customers

must pay for various expenses associated with Bob Baker Lexus’s loaner vehicle

service. For example, the Rental Agreement indicates that customers using loaner

vehicles must pay, among other fees, (1) time and mileage charges; (2) basic or

minimum rate, service, and other charges; (3) refueling charges, if the vehicle is

returned with less fuel than when rented; (4) applicable taxes; and, (5) toll, parking,

and traffic fines or citations. (Salem Decl., Ex. B, at 3, ECF No. 36-3).2

 The Rental

Agreement also requires customers using loaner vehicles to authorize Bob Baker

Lexus to “process a credit card voucher in [their] name for payments due under [the]

Agreement.” (Id.) 

In addition, the LCCS Manual sets forth basic features and advantages of the

1

 The first page of the Rental Agreement was previously submitted to the Court, (Mot. to Dismiss SAC, Ex. C, Part 2, ECF No. 26-4), along with other portions of the LCCS Manual, (SAC, Ex. 3, ECF No. 23-1). 

2

 Pincites to exhibits utilize the page numbers assigned by CM/ECF. 

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loaner vehicle program and provides guidelines as to how the dealership should

manage its loaner vehicle fleet. Tokio Marine cites the LCCS Manual as evidence

that Bob Baker Lexus’s loaner vehicle program is an integral part of the dealership’s

for-profit business, rather than a charitable side venture. For example, the LCCS

Manual indicates that dealerships should provide loaner vehicles exclusively to

customers and that dealerships can expect to enjoy several benefits from offering

this service, such as “increased customer loyalty and owner retention” and

opportunities to re-sell loaner vehicles at attractive prices. (Salem Decl., Ex. C, at 6,

ECF No. 36-4). 

Tokio Marine argues that the Rental Agreement and the LCCS Manual

undermine the Court’s premise that Bob Baker Lexus provides loaner vehicles

exclusively as a courtesy, with no apparent view to its own benefit. Tokio Marine

contends that if “the Court feels payment for the loaners affects interpretation of

‘work or operations’ within the [‘Completed Operations’] exclusion[,] [then] the

tasks performed by the receptionist in tracking customer complaints [are] clearly

within the ‘work or operations’ of Bob Baker Lexus.” (Mot. for Reconsideration 6,

ECF No. 36).

The Court remains skeptical, however, that Tokio Marine’s allegedly new

evidence could not have been presented at an earlier point in this litigation. Baker v.

National Interstate Insurance Co. indicates that whether a service is performed in

exchange for payment is, at the very least, relevant in determining whether that

activity constitutes “work” for purposes of the “Completed Operations” exclusion. 

103 Cal. Rptr. 3d 565, 581 (Cal. Ct. App. 2010) (“We are confident that the common

understanding of ‘work’ includes a person’s services performed in return for

payment of money.”). Thus, it makes little sense for Tokio Marine to suggest that

the Court raised this issue on its own, without notice or warning to the parties. 

Moreover, the documents presented by Tokio Marine do not, by themselves,

suggest that the Court’s analysis is flawed. At most, the documents indicate that

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Bob Baker Lexus requires its customers to pay for certain incidental expenses

incurred in using a loaner vehicle, such as the cost of fuel or parking citations.3

(Salem Decl., Ex. B, at 3, ECF No. 36-3). Accordingly, the Court declines to

modify its prior ruling on this basis. 

2. The Court’s Prior Interpretation of the “Completed Operations” Exclusion

Tokio Marine further contends that the Court’s prior order erred in departing

from Baker’s interpretation of the term “work.” According to Tokio Marine, the

Court assigned excessive importance to whether a specific fee is charged in

exchange for a service in determining what constitutes “work” for purposes of the

“Completed Operations” exclusion. Tokio Marine maintains that the task of a Bob

Baker Lexus receptionist in tracking customer complaints on loaner vehicles

constitutes “work” under any ordinary, or common, construction of that term,

regardless of whether the dealership charges a specific fee for loaner vehicles. 

Upon reconsideration, the Court agrees with Tokio Marine. Baker indicates

that the term “work” should be construed in accord with its ordinary, or

commonsense, meaning, and should not take on a more limited signification based

on the insured’s business model. See Baker, 103 Cal. Rptr. at 581 (applying the

“common understanding” and “ordinary and popular meaning” of the term “work.”).

This interpretation honors the reasonable expectations of policyholders because

“[t]he best indicator of an insured’s reasonable expectation of coverage is . . . the

language of the insurance policy.” Spangle v. Farmers Ins. Exch., 82 Cal. Rptr. 3d

763, 770 (Cal. Ct. App. 2008); see also Baker, 103 Cal. Rptr. at 581 (“Although

exclusions are generally viewed through a more critical prism, the principle that

words are considered in their ‘ordinary and popular sense’ is not discarded . . . .”). 

One common definition of work—applied by the court in Baker—is “the

3

 Indeed, the portions of the LCCS Manual submitted by Tokio Marine confirm that the “goal” of Lexus’s loaner vehicle program is to “[s]upport Lexus’[s] commitment to customer satisfaction by providing no-charge service loaner vehicles

. . . .” (Salem Decl., Ex. C, at 6, ECF No. 36-4) (emphasis added).

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labor, task, or duty that is one’s accustomed means of livelihood.” 

Merriam–Webster’s Collegiate Dictionary 1442 (11th ed. 2007). In its briefing,

Tokio Marine suggests another common definition, drawn from the same dictionary:

“[T]o carry on an operation or perform a job . . . .” Id. at 1443. Black’s Law

Dictionary provides a third, more generic, definition: “Physical and mental exertion

to attain an end, esp. as controlled by and for the benefit of an employer; labor.” 

Black’s Law Dictionary 494 (9th ed. 2009). The insurance policy does not indicate

that the term “work” is intended to bear a more technical or specialized sense than

these definitions provide. 

Here, applying any of these definitions, a Bob Baker Lexus receptionist

tracking customer complaints on loaner vehicles is engaged in “work,” regardless of

whether customers pay a specific fee to use the vehicles. The receptionist is

performing her job and is engaged in activity that is controlled by, and benefits, the

dealership. As Tokio Marine argues, it is simply inconsistent with ordinary usage to

find that a receptionist is performing her job and carrying on the business of her

employer, but is not engaging in “work.” 

Moreover, this approach is more consistent with the Court’s earlier holding

that allegations of “negligent maintenance” fall within the “Completed Operations”

exclusion and are not covered by the policy. (See Order, Nov. 8, 2011, ECF No.

13). Under the Court’s previous interpretation, a Bob Baker Lexus mechanic

performing repairs on a courtesy, no-charge loaner vehicle might not be engaged in

“work,” such that a claim for negligent maintenance against the dealership would

trigger coverage under the policy. Under a plain meaning approach, however, a

mechanic servicing a loaner vehicle and a receptionist documenting a customer

complaint regarding that vehicle are both engaged in “work” because they are both

performing “the labor . . . that is [their] . . . means of livelihood.”

Merriam–Webster’s Collegiate Dictionary 1442 (11th ed. 2007). 

Bob Baker Lexus contends that Tokio Marine’s proposed interpretation is

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misguided because it would preclude coverage not only for liability arising from

vehicle maintenance, but also for liability arising from vehicle “ownership,” thereby

undermining the policy’s guarantee of coverage for accidents resulting from the

ownership, maintenance, or use of a covered vehicle. (Resp. in Opp’n 5–6, ECF No.

41). Bob Baker Lexus maintains that interpreting the “Completed Operations”

exclusion to preclude coverage for liability arising from any completed act or

omission by the dealership conflicts with the rule that coverage exclusions must be

narrowly construed. (Id.) 

Yet this interpretation is consistent with a reasonable policyholder’s

expectations and does not eliminate coverage under the policy. Tokio Marine’s

policy would continue to cover Bob Baker Lexus for liability arising from

customers’ and employees’ use of loaner vehicles.4

 

Accordingly, the Court GRANTS Tokio Marine’s motion for reconsideration. 

Nonetheless, the Court DISMISSES Plaintiff’s SAC WITHOUT PREJUDICE in

case an unanticipated theory of liability that might be covered by the policy arises in

the course of the underlying proceedings. The Court STAYS this matter until the

record in the underlying wrongful death suit is complete. 

CONCLUSION 

For the reasons stated above, the Court GRANTS Tokio Marine’s motion for

reconsideration, DISMISSES Plaintiff’s SAC WITHOUT PREJUDICE, and 

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4

 A dealership employee driving a loaner vehicle would typically be engaged in an ongoing operation. Accordingly, liability arising from an employee’s use of a loaner

vehicle probably would not fall within the “Completed Operations” exclusion. (June 6, 2013 Hearing Tr. 8–9, ECF No. 53). 

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STAYS this case pending resolution of the underlying state court action. The parties

shall move to lift the stay in this matter once the record in the underlying suit is

complete. 

IT IS SO ORDERED. 

DATED: July 1, 2013

Honorable Janis L. Sammartino

United States District Judge

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