Unpublished Disposition, 890 F.2d 420 (9th Cir. 1989)

MEMORANDUM^* 

This diversity action for declaratory judgment was brought by Commercial Union Insurance Company ("the Carrier") to determine whether it owed a duty to defend and indemnify the Bauers in a lawsuit brought against them by persons who were injured in an explosion on a boat that was previously owned by them. The Carrier had provided a policy of insurance on the boat during the time it was owned by the Bauers. The claim against the Bauers was for negligence during the time that they owned the boat. The Carrier contends that the policy only covers liability for damages occurring during the time the policy was in force. The Bauers contend that coverage extends to damages resulting from any negligence of theirs with respect to the boat during the duration of the policy.

The Bauers first contend that the express language of the policy is ambiguous and under California law must be interpreted favorably to the insured. So interpreted, they contend the language of the policy provides coverage. The Bauers also contend that, even if the language of the policy does not cover the claim, the Carrier's agents "misrepresented the terms of the policy and/or their effect," thus imposing an obligation on the Carrier to extend the coverage to these claims.

The Carrier moved for summary judgment, which was granted by the district court. The judgment provided that the Carrier had no duty to defend nor to indemnify the Bauers on the claims filed against it. In its motion for summary judgment, the Carrier maintained that there were essentially only two facts that were pertinent--the date the insurance policy was canceled when the boat was sold, and the date of the injuries when the boat exploded after it was sold. There was no dispute as to these facts. It is clear that the injuries occurred after the date of the cancellation of the policy. The Carrier's motion for summary judgment, however, made no mention of the allegation of the Bauers in their Fifth Affirmative Defense that the Carrier's agents had "misrepresented the terms and/or effects of the policy." This allegation does present a factual question.

Fed. R. Civ. P. 56(c) for summary judgment states:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact that the moving party is entitled to a judgment as a matter of law.

An issue of material fact for summary judgment purposes is one that is "relevant to an element of a claim or defense, and whose existence might affect the outcome of a case." United States v. Grayson, 879 F.2d 620, 622 (9th Cir. 1989); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n., 809 F.2d 626, 630 (9th Cir. 1987).

It is clear that the existence of the fact of agents' misrepresentations, if established, might affect the outcome of a case. The issue before us, therefore, is whether the Bauers were required at that point to produce evidence of such agent misrepresentation in order to survive summary judgment.

The Supreme Court recently held that

[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The non-moving party bears the burden of producing evidence to support its claim only after the moving party has met its burden. Id. at 324. In this case, the Carrier did not inform the court of the basis for its motion with regard to the Bauers' allegation of misrepresentation by the Carrier's agents, nor did it identify any portions of the "pleadings, depositions, answers to interrogatories, and admissions on file," or provide any affidavits that support its contention that there was no genuine issue of material fact concerning agent misrepresentation. The Carrier did not meet its initial burden under Rule 56 and thus the Bauers were not required to produce evidence of agent misrepresentation in order to defeat the summary judgment. The summary judgment was erroneously granted. Accordingly, we need not reach the question whether the language of the policy affords coverage for the claim.

REVERSED.