Unpublished Disposition, 937 F.2d 614 (9th Cir. 1991)

MEMORANDUM^* 

In this diversity action, Texas Employers sued Western Waste over the amounts due and owing on policies of workers' compensation insurance issued by Texas Employers. At issue on appeal is whether a particular contractual term, the "experience modification factor" [EMF], is a binding, fixed figure or a tentative figure subject to change.¹  If tentative, as Texas Employers claims, a rise in the EMF from the estimated figure listed in the policy would require Western Waste to pay more than $400,000 in increased premiums.

Western Waste contends that the EMF was fixed and binding on Texas Employers, or at least that a triable issue of fact is raised by the claims of two Western Waste officers that they did not understand the EMF was subject to change. The express language of the insurance contract, however, makes clear that the EMF and other factors used to estimate premiums were subject to change. Part Five, Paragraph E of the insurance policy, denominated "Final Premium," provides that

The premium shown on the Information Page, schedules, and endorsements is an estimate. The final premium will be determined after this policy ends by using the actual, not the estimated, premium basis and the proper classification and rates that lawfully apply to the business and work covered by this policy. If the final premium is more than the premium you paid to us, you must pay us the balance. If it is less, we will refund the balance to you....

Appellant's Supplemental Excerpts of Record at 117. Paragraph D of the policy's information page also clearly describes the EMF as subject to change. Specifically, it provides, in relevant part, that " [a]ll information required below is subject to verification and change by audit." Among the list of items "below" p D is the EMF. Moreover, the EMF is listed in a column with the heading "Estimated Annual Premium." Id. at 119.

Even were we to admit extrinsic evidence on the theory that the contract is ambiguous, our conclusion would be the same because such evidence would include a letter sent to Western Waste by its insurance agent, Frank B. Hall & Co. The letter clearly expresses the tentative nature of the EMF.

As you know, the current Experience is .46. In view of the increase in losses, this modification will increase. We do not know at this time how much the modification will increase, but an educated guess puts it around .56 for the coming year. The Interstate Bureau will determine this and has the final say.

CR 31 at 97 (emphasis added). Thus, we need not address Western Waste's choice of law question; under any state's law, Texas Employers wins. The district court's granting of Texas Employers' motion for summary judgment is therefore AFFIRMED.