NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PRAETORIAN INSURANCE CO., 

Plaintiff-Appellee, 

 v. 

MARSHAUN TATE; et al., 

Defendants-Appellants, 

and 

A R BUSINESS GROUP, INC., DBA U.S. 

Tire & Wheel; et al., 

Defendants.

No. 17-15303 

D.C. No. 

2:13-cv-02639-MCE-EFB 

MEMORANDUM*

Appeal from the United States District Court

for the Eastern District of California

Morrison C. England, Jr., District Judge, Presiding

Argued and Submitted June 15, 2018

San Francisco, California

Before: MURPHY,** PAEZ, and IKUTA, Circuit Judges.

 

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

** The Honorable Michael R. Murphy, United States Circuit Judge for 

the U.S. Court of Appeals for the Tenth Circuit, sitting by designation.

FILED

JUL 10 2018

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2

Praetorian Insurance Co. (“Praetorian”) brought a declaratory judgment 

action against Marshaun Tate; S.T., through his guardian ad litem, Kenneth Tate; 

Eliseo Quintero; and Aida Quintero (collectively “Tate”). Tate purchased used 

tires from U.S. Tire & Wheel (“USTW”); USTW installed those tires on Tate’s 

vehicle. One of the tires failed and Tate’s vehicle overturned, resulting in the 

deaths of two passengers and serious injuries to Marshaun Tate and S.T. When 

Tate sued USTW in California state court, USTW tendered its defense and 

indemnity to Praetorian, its insurer. In response, Praetorian brought this action in 

federal court, claiming the Used Tire Exclusion (the “Exclusion”) in its garage 

operations policy with USTW precluded coverage. The district court granted 

summary judgment in favor of Praetorian. Tate appeals. Exercising jurisdiction 

under 28 U.S.C. § 1291, we reverse and remand.

To validly exclude coverage, insurers must satisfy two “rigid drafting rules”: 

they must conspicuously place the exclusionary language and “the language itself 

must be plain and clear.” Haynes v. Farmers Ins. Exch., 89 P.3d 381, 390 

(Cal. 2004). Whether an exclusion meets these requirements “is a question 

of law” for the court. Alterra Excess & Surplus Ins. Co. v. Snyder, 184 Cal. 

Rptr. 3d 831, 840 (Cal. Ct. App. 2015) (quoting Hartford Cas. Ins. Co. v.

Swift Distribution, Inc., 326 P.3d 253, 259 (Cal. 2014)). The district court 

correctly determined the Exclusion is plain and conspicuous.
3

Relying on Haynes, Tate argues the Exclusion is not conspicuous. 

The endorsement containing the Exclusion bears no meaningful resemblance 

to the endorsement at issue in Haynes. The first page of the policy

specifically notes that all endorsements are part of one complete policy. 

The next page contains both an alphanumeric and textual description of the 

relevant endorsement. The textual description is: “USED TIRES AND 

RECAPPED TIRES EXCLUSION ENDORSEMENT.” The Exclusion is 

set out as a single-page document. At the top of that page, the policy states:

“THIS ENDORSEMENT CHANGES THE POLICY, PLEASE READ IT 

CAREFULLY.” The next line repeats, in all capital and bold letters, the 

nature of the Exclusion. The nature of the exclusion is again repeated, in all 

capital and bold letters just above the body of the Exclusion. Finally, the 

Exclusion specifically states it “shall apply to any continuation, 

reinstatement, renewal or replacement of the above mentioned policy.” 

Thus, the identification and placement of the Exclusion does not suffer from 

any of the flaws identified in Haynes. To the extent Tate asserts Praetorian 

was under a special burden to personally apprise USTW’s principals about 

the Exclusion because it knew USTW sold used tires, the argument fails for 

the reason pointed out by the district court: it is not supported by citation of 
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meaningfully relevant precedent. Haynes makes clear that enforceability is 

resolved under an objective legal standard.

The Exclusion is also sufficiently plain and clear. It excludes 

coverage for bodily injury arising out of the failure of any tire that was not 

new when sold or installed. The term “arising out of” has a well-defined 

meaning in California law. Jon Davler, Inc. v. Arch Ins. Co., 178 Cal. Rptr. 

3d 502, 509-11 (Cal. Ct. App. 2014). The exclusion withdraws coverage 

whenever a used tire sold or installed by USTW fails and the failure is 

causally related to bodily injury. See id. Any lay reader would understand 

the import of this description. See Haynes, 89 P.3d at 390.

Although the district court correctly ruled that the Exclusion is 

enforceable, it erred in concluding Praetorian is entitled to a declaratory 

judgment in its favor on the duty to defend. Controlling precedent in 

California makes it difficult for an insurer to obtain a declaration that it 

does not have a duty to defend an insured. See generally Montrose Chem. 

Corp. v. Superior Court, 861 P.2d 1153, 1157–64 (Cal. 1993). Under this 

onerous standard, summary judgment in favor of Praetorian is only proper if

the record before the district court conclusively establishes that Tate’s state -

court claims against USTW cannot fall within the terms of the garage

operations policy. Id. at 1161. If there is any doubt as to whether the facts 
5

so establish, Tate is entitled to summary judgment on the question of 

Praetorian’s duty to defend USTW. Id. at 1160 (holding that a “bare 

‘potential’ or ‘possibility’ of coverage” will trigger the duty to defend).

Dennis Carlson, a mechanical engineer with a particular expertise in 

tires, offered an expert opinion as to the cause of the “[tire] failure and/or 

rollover” accident. Carlson opined that USTW committed several errors in 

selling and installing the tires at issue here: (1) placing the newest tires on 

the front axle of Tate’s Explorer; (2) selling tires, without regard to whether 

used or unused, that were older than six years from manufacture; (3) 

installing the wrong size tires on the Explorer; and (4) installing the wrong 

type (all-season instead of all-terrain) of tires on the Explorer. Carlson 

concluded as follows:

The actions by USTW . . . were improper and did not follow 

industry recommendations independent of whether the tires 

installed on Mr. Tate’s vehicle were used or unused at the time 

of sale. Additionally, the installation of the wrong type and size 

tires on Mr. Tate’s Explorer was improper and could have 

equally contributed to the failure and/or rollover event 

regardless of whether the tires were used or unused at the time 

of sale.

When he was cross-examined by Praetorian’s attorney during his deposition, 

Carlson reiterated that two of the alleged negligent acts on the part of 

USTW particularly contributed to the failure of the tire and two particularly 

contributed to the rollover of the Explorer. Thus, reading the summary 
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judgment record in the manner most favorable to Tate, the nonmoving party, 

Carlson’s testimony supports the notion that the Explorer overturned not 

necessarily because of the tire failure, but because improper all-season tires 

(i.e., tires of an improper type and size) were installed on the Explorer and 

the older tires were placed on the rear axle. These two allegedly negligent 

acts do not relate to the used nature of the tires supplied to Tate by USTW, 

or indeed, to tire failure at all.

1

 Instead, based on Carlson’s testimony, a 

reasonable jury could conclude, among a spectrum of possible findings, that 

the Explorer would have overturned at highway speeds even absent a tire 

failure or would not have overturned, even upon the failure of a rear tire, if 

that tire had been the proper type, proper size, or had been properly placed. 

Under the standard set forth in Montrose Chemical Corp., Tate has carried 

his burden of demonstrating at least a bare possibility that some aspects of 

the state-court negligence claims against USTW will fall within the garage 

operations coverage of the policy and will not be excluded by the Exclusion. 

This is especially true given California law regarding concurrent causation 

in the context of insurance coverage and exclusions. See, e.g., State Farm 

 

1To be clear, Praetorian does not claim the negligent acts alleged in 

Tate’s state-court actions against USTW would not fall within the 

parameters of the garage operations policy it issued to USTW if the tires at 

issue were new.
7

Mut. Auto. Ins. Co. v. Partridge, 514 P.2d 123, 130–31 & 130 n.11 (Cal. 

1973).

Because Praetorian failed to conclusively demonstrate that Tate’s 

claims cannot fall within the terms of its garage operations policy with 

USTW, the district court erred in granting declaratory judgment in 

Praetorian’s favor. Instead, the district court should have granted summary 

judgment in favor of Tate on the question of Praetorian’s duty to defend 

USTW.

REVERSED and REMANDED.