Clarendon National Insurance Company v. State Farm Mutual Auto Insurance Company

* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CLARENDON NATIONAL
INSURANCE COMPANY,
Plaintiff - Appellant,
v.
STATE FARM MUTUAL AUTO
INSURANCE COMPANY;
TRANSPORTATION CONNECTION,
INC, DBA Los Angeles Sightseeing Tour
and Charters, DBA Los Angeles
Sightseeing Tours of Santa Monica DBA
Santa Monica LAX Bus,
Defendants - Appellees.
No. 08-55924
D.C. No. 2:07-cv-04526-MMM-
MAN
MEMORANDUM *
Appeal from the United States District Court
for the Central District of California
Margaret M. Morrow, District Judge, Presiding
Argued and Submitted October 8, 2009
Pasadena, California
FILED
NOV 16 2009
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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** The Honorable David M. Lawson, United States District Judge for the
Eastern District of Michigan, sitting by designation.
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Before: KLEINFELD and TALLMAN, Circuit Judges, and LAWSON,** District
Judge.
Clarendon appeals from the district court’s summary judgment for State
Farm. We have jurisdiction pursuant to 28 U.S.C. § 1291, and affirm.
The district court correctly concluded that the insurance policy term,
excluding coverage when an insured vehicle is “used to carry persons for a
charge,” does not violate California law. Although the exclusion is not one of the
enumerated exclusions found under California’s Insurance Code section
11580.1(c), other exclusions are allowed under California law so long as the
insurance policy provides an “explicit description” of “the purposes for which
coverage . . . is specifically excluded.” Cal. Ins. Code § 11580.1(b)(3); see also §
11580.1(c) (stating that coverage may be excluded for the eight enumerated
reasons “[i]n addition to any exclusion provided in paragraph (3) of subdivision
(b) . . .”).

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State Farm’s exclusion does not violate California’s Insurance Code section
11580.1(b)(4), which mandates coverage for permissive users. As the district court
correctly explained, unlike the exclusion in Metz v. Universal Underwriters
Insurance Co., 513 P.2d 922 (1973), the exclusion in the State Farm policy applies
both to the named insureds and to permissive users equally and relates to a
particular purpose—“carrying persons for a charge”—rather than to a particular
user. Nor is the policy provision ambiguous or illusory. See Farmers Ins. Exch. v.
Knopp, 58 Cal. Rptr. 2d 331, 333 (Cal. Ct. App. 1996) (finding an almost identical
policy term excluding “[b]odily injury or property damage arising out of the
ownership, maintenance or use of a vehicle while used to carry persons or property
for a charge” unambiguous and enforceable) (emphasis added).
The district court correctly ruled, based on the uncontradicted evidence, that
the van was being “used to carry persons for a charge” when the alleged injury
occurred. The owner of Transportation Connection “explained that the website’s
reference to ‘complimentary round-trip hotel transportation was designed simply to
avoid complaints by customers who wanted to be taken on a tour directly from
their hotel instead of being driven to Transportation Connection’s terminal in Santa
Monica.” ER 31. Though passengers paid nothing beyond the Transportation

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Connection tour fee for the “free” ride from their hotels to the tour bus terminal,
the vehicle was being used to transport only paying tour group passengers.
Transportation Connection admitted that round-trip hotel transportation was
included in the price of the tickets the Snyder party purchased. Therefore, the
exclusion was in effect, and there was no coverage under the State Farm
noncommercial policy at the time Snyder was allegedly injured.
AFFIRMED.

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