Unpublished Disposition, 900 F.2d 263 (9th Cir. 1990)

MEMORANDUM^* 

Sharek appeals the district court's decision to grant summary judgment in favor of Hartford Accident and Indemnity Co. (Hartford).

It is a well-established rule of construction in California insurance cases that all ambiguities are to be read in favor of the insured. Castro v. Fireman's Fund Am. Life Ins. Co., 206 Cal. App. 3d 1114, 1118, 253 Cal. Rptr. 833, 835 (1988) (quoting Producers Dairy Delivery v. Sentry Ins. Co., 41 Cal. 3d 903, 912, 718 P.2d 920, 924, 226 Cal. Rptr. 558, 562 (1986)). This court, interpreting California law, held that the term "medical treatment" is ambiguous. Franceschi v. American Motorists Ins. Co., 852 F.2d 1217, 1220 (9th Cir. 1988). In Franceschi, a group insurance policy contained a "Waiting Period" provision entitling an insured to benefits for pre-existing conditions only after having been treatment free for twelve months from the effective policy date. A pre-existing condition was defined as any illness for which medical treatment was rendered. Id. at 1218. Franceschi underwent a diagnostic colonoscopy within twelve months of the effective date of the policy. We held:

The term "medical treatment" is ambiguous and is nowhere defined in the policy. We must, therefore, imply from the range of permissible meanings that definition which most favors coverage....

... We hold that, as used in the policy, the term "medical treatment" excludes diagnostic procedures such as the colonoscopy and biopsies performed here.

Id. at 1220. It follows, therefore, that the ambiguity created by the use of the same term in Sharek's policy must be resolved in Sharek's favor.

The district court apparently concluded that Hartford intended the term to include diagnostic procedures. A conclusion as to Hartford's intent, however, is not controlling. In fact, "an undisclosed unilateral intent of the insurer of an insurance contract [is] 'immaterial.' " City of Mill Valley v. Transamerica Ins. Co., 98 Cal. App. 3d 595, 603, 159 Cal. Rptr. 635, 639 (1979). Instead, "the substance of [an] exclusion must be stated in words that convey the proper meaning to persons expected to read the contract." Ponder v. Blue Cross, 145 Cal. App. 3d 709, 719, 193 Cal. Rptr. 632, 637 (1983) (emphasis added).

Moreover, Sharek's policy excluded coverage in cases of " [l]oss resulting from ... medical or surgical treatment." The express exclusion of both medical and surgical treatment indicates that Hartford took pains to draft its exclusion explicitly. Had Hartford intended to exclude loss resulting from diagnostic procedures as well, we can only assume that it would have been equally explicit in doing so.

In any event, because controlling Ninth Circuit precedent considers the term in question ambiguous, and because California courts decide all such ambiguities in favor of the insured, the district court's grant of Hartford's motion for summary judgment is

REVERSED.