NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PENN-STAR INSURANCE COMPANY, 

Plaintiff-counterdefendant-Appellant, 

 v. 

ZENITH INSURANCE COMPANY

Defendant-counterclaimant-Appellee.

No. 21-16930 

D.C. No. 

1:18-cv-01319-DAD-EPG 

MEMORANDUM*

Appeal from the United States District Court

for the Eastern District of California

Dale A. Drozd, District Judge, Presiding

Argued and Submitted December 9, 2022

San Francisco, California

Before: BRESS and VANDYKE, Circuit Judges, and RESTANI,**Judge.

Concurrence by Judge VANDYKE.

Penn-Star Insurance Company appeals the district court’s grant of summary 

judgment to Zenith Insurance Company in this dispute between two insurers 

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

except as provided by Ninth Circuit Rule 36-3.

** The Honorable Jane A. Restani, Judge for the United States Court of 

International Trade, sitting by designation.

FILED

DEC 28 2022

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2 

concerning the costs of defending and settling a state court lawsuit regarding a 

serious traffic accident. We assume the parties’ familiarity with the relevant facts. 

We have jurisdiction under 28 U.S.C. § 1291, and we review the grant of summary 

judgment de novo. Westport Ins. Corp. v. Cal. Cas. Mgmt. Co., 916 F.3d 769, 773 

(9th Cir. 2019). We reverse.

The Penn-Star policy contains a specific endorsement excluding coverage for 

“‘[b]odily 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.” 

(Emphasis added). The auto exclusion endorsement “deleted in its entirety” and 

“replaced” a narrower provision from earlier in the policy, which had excluded from 

coverage 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.” (Emphasis added). The auto 

exclusion endorsement noted the change in bolded capital letters at the top of the 

page, instructing the reader: “THIS ENDORSEMENT CHANGES THE 

POLICY. PLEASE READ IT CAREFULLY.” 

Under California law, if an insured reasonably expects coverage, then the 

court will find that an exclusion from coverage is unenforceable unless the exclusion 

is “conspicuous, plain and clear.” Haynes v. Farmers Ins. Exch., 89 P.3d 381, 385 

(Cal. 2004) (citation omitted). An exclusion is conspicuous if it is “placed and 
3 

printed so that it will attract the reader’s attention.” Id. It is plain and clear if it is 

“stated precisely and understandably, in words that are part of the working 

vocabulary of the average layperson.” Id.

The underlying accident involved a Toyota Camry operated by a third party 

and a tractor owned by Zenith’s insured and driven by a contracted farm worker. 

We need not decide whether a tractor is an “auto” within the meaning of the 

exclusion because the Toyota Camry clearly qualifies as “any . . . auto” “use[d] by 

any person.” The district court concluded otherwise on the ground that the Toyota 

Camry was not owned or operated by any insured party. But Penn-Star’s auto 

exclusion, which is conspicuous, plain, and clear, is drafted broadly and is not 

limited to autos used by insureds.

Zenith points us to Essex Ins. Co. v. City of Bakersfield, 65 Cal. Rptr. 3d 1 

(Cal. Ct. App. 2007), but that case is distinguishable. The relevant provision in Essex 

did not specify whether the exclusion pertained broadly to any person or merely to 

any insured. See id. at 8. Here, by contrast, Penn-Star’s auto exclusion specifically 

applied to the use of “any” auto “by any person.” In addition, unlike in Essex, PennStar’s auto exclusion endorsement specifically replaced an earlier provision that only 

excluded autos “operated by . . . any insured.” And unlike Essex, 65 Cal. Rptr. 3d 

at 9–10, this is not a case in which the collision took place between vehicles that 

were wholly unconnected to the insured parties; here, the tractor was driven by 
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Golden Labor’s employee and owned by Camp, which was an “additional insured” 

under the Penn-Star policy. 

We thus conclude that the Toyota Camry was an “auto” “use[d] by any 

person.” And the parties do not dispute that the collision between the Camry and 

the tractor “ar[ose] out of” the use of the Camry. Thus, the collision fell within PennStar’s auto exclusion and was conspicuously, plainly, and clearly outside PennStar’s coverage. In light of our conclusion, we need not reach Penn-Star’s other 

assignments of error.

REVERSED.
VANDYKE, J., concurring,

I concur in the panel’s decision. It is not clear to me that, if the appellee had 

properly raised the issue, the injury here sufficiently “ar[ose] out of the ... use ... [of 

an] ‘auto’” such that the exclusion in Penn-Star’s policy would apply. See, e.g.,

Southgate Recreation & Park Dist. v. California Ass’n. for Park & Recreation Ins., 

130 Cal. Rptr. 2d 728, 733 (Cal. Ct. App. 2003) (reasoning that a harm arises out of 

an event when it “originat[es], grow[s,] or flow[s] from the event” (citation 

omitted)). That is particularly unclear on this record, which is silent as to whether

the Camry’s involvement was anything other than as the mere “situs” of the injury

inflicted by the tractor. See Kramer v. State Farm Fire & Cas. Co., 90 Cal. Rptr. 2d 

301, 306 (Cal. Ct. App.), as modified on denial of reh’g (Dec. 8, 1999) (reasoning 

that a harm does not arise from an auto when the auto “merely serv[ed] as the situs 

for the activity”); Am. Nat. Prop. & Cas. Co. v. Julie R., 90 Cal. Rptr. 2d 119, 122–

23 (Cal. Ct. App. 1999) (concluding that “[m]ere use of a vehicle in some way 

connected to the events giving rise to the injury is insufficient”; use of the vehicle 

must be a “predominating cause” or “substantial factor” in causing the injury

(citations omitted)).

The district court arguably concluded that the plaintiffs’ injury did not “arise 

out of” the use of the Camry, stating that “as alleged in the underlying state court 

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

FILED

DEC 28 2022

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
plaintiffs in the state court action were traveling in and the injuries they incurred as 

a result of the collision.” But appellant disputed that conclusion in its opening brief

on appeal, and appellee in its response brief failed to address the “arise out of” 

language at all. Appellee therefore forfeited any argument that the injury did not 

“arise out of” the use of an auto. See United States v. Dreyer, 804 F.3d 1266, 1277 

(9th Cir. 2015) (“Generally, an appellee waives any argument it fails to raise in its 

answering brief.”). I accordingly concur with the panel’s conclusion.