                                                                           FILED
                           NOT FOR PUBLICATION                              MAR 16 2010

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS




                            FOR THE NINTH CIRCUIT



LINCOLN GENERAL INSURANCE                        No. 08-17619
COMPANY,
                                                 D.C. No. 1:06-cv-01143-OWW-
             Plaintiff - Appellee,               SMS

  v.
                                                 MEMORANDUM *
GATEWAY SECURITY SERVICES,
INC., DBA Hughes Towing and Auto
Wrecking; et al.,

             Defendants - Appellants.



LINCOLN GENERAL INSURANCE                        No. 09-16201
COMPANY,
                                                 D.C. No. 1:06-cv-01143-OWW-
             Plaintiff - Appellee,               SMS

  v.

GATEWAY SECURITY SERVICES,
INC., DBA Hughes Towing and Auto
Wrecking,; et al.,

             Defendants,

 and

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
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


        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).

                                          2
“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 Gateway.

      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


                                          3
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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