Lincoln General Insurance Company v. GATEWAY SECURITY SERVICES, INC., DBA Hughes Towing and Auto Wrecking;

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LINCOLN GENERAL INSURANCE
COMPANY,
Plaintiff - Appellee,
v.
GATEWAY SECURITY SERVICES,
INC., DBA Hughes Towing and Auto
Wrecking; et al.,
Defendants - Appellants.
No. 08-17619
D.C. No. 1:06-cv-01143-OWW-
SMS
AMENDED
MEMORANDUM *
LINCOLN GENERAL INSURANCE
COMPANY,
Plaintiff - Appellee,
v.
GATEWAY SECURITY SERVICES,
INC., DBA Hughes Towing and Auto
Wrecking,; et al.,
Defendants,
and
No. 09-16201
D.C. No. 1:06-cv-01143-OWW-
SMS
FILED
APR 30 2010
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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The panel unanimously concludes this case is suitable for decision**
without oral argument. See Fed. R. App. P. 34(a)(2).
2
LUCINDA DEVINE; et al.,
Defendants - Appellants.
Appeal from the United States District Court
for the Eastern District of California
Oliver W. Wanger, District Judge, Presiding
Submitted March 12, 2010**
San Francisco, California
Before: HALL, NOONAN and CALLAHAN, Circuit Judges.
Gateway Security is a closely held California corporation owned by Donald
and Debrah Hughes that provides towing services. Debrah Hughes serves as
President of Gateway. On July 18, 2005, Mrs. Hughes was on her way to work
when she was involved in a car accident in which Ramon Devine was injured. She
was driving her personal Cadillac. To resolve a suit arising out of the accident, the
Hughes and Gateway agreed to pay Devine $1.1 million.
At the time of the accident, Gateway was insured by Lincoln General. The
policy insured Gateway for accidents including those occurring in autos not
owned, rented, or borrowed by Gateway “while used in your business or your
personal affairs.” By a separate endorsement, the policy was extended so that

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“Any ‘employee’ of yours is an ‘insured’ while using a covered ‘auto’ you don’t
own, hire or borrow in your business or your personal affairs.” Lincoln General
defended Gateway in Devine’s suit, under a reservation of rights.
Lincoln General brought the present action against the Hughes, the Devines,
and Gateway. Lincoln General sought inter alia a declaration that the policy did
not cover Devine’s claims against Gateway and the Hughes. After a bench trial,
the district court granted judgment to Lincoln General.
The policy language at issue – and the only policy language relevant to this
dispute – is the provision contained in both the endorsement and in the main policy
document that coverage is provided an insured using a covered auto in Gateway’s
“business or personal affairs.” The policy provides no further definition of the
phrase “business or personal affairs.”
At the time that the policy was issued, the record shows that Lincoln
General had no reason to believe that Gateway had an expectation of coverage for
Mrs. Hughes during her commute in her personal car. See E.M.M.I., Inc. v. Zurich
Am. Ins. Co., 32 Cal. 4th 465, 470 (2004) (stating that under California law a court
should first attempt to resolve ambiguity in an insurance contract by interpreting
the ambiguous provisions in the sense the insurer believed the insured understood
them at the time of formation). Gateway failed to add Mrs. Hughes’ car to the

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policy’s schedule of covered autos. And when asked specifically by Lincoln
General whether employees regularly used their vehicles in Gateway’s business,
Gateway answered “no.”
The district court’s judgment is AFFIRMED.

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