Unpublished Disposition, 940 F.2d 1535 (9th Cir. 1963)

MEMORANDUM^* 

Sanstorm, Inc. ("Sanstorm") manufactures sandblasting equipment and is a defendant in several silicosis-related personal injury lawsuits. Believing it was insured by The Hartford Accident & Indemnity Company ("Hartford"), Sanstorm filed this diversity action seeking defense and indemnity for the suits. Unfortunately, however, neither party has been able to locate an insurance policy. The district court found that Sanstorm failed to present sufficient evidence of a Hartford policy, and granted summary judgment for Hartford. We affirm. There is a genuine issue of fact as to the alleged policy's existence, but not its material terms.

* Standard of Review

"This court reviews de novo a grant of summary judgment." Smolen v. Deloitte, Haskins & Sells, 921 F.2d 959, 963 (9th Cir. 1990). The district court

shall grant summary judgment if the evidence "show [s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. This court must determine ..., viewing the evidence in the light most favorable to [Sanstorm, whether] there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law.

(citations omitted).

As the moving party, Hartford initially must demonstrate "that there is an absence of evidence to support [Sanstorm's] case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). To defeat the motion, Sanstorm must then "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, 477 U.S. 242, 250 (1986) (quoting Fed. R. Civ. P. 56(e)).

To show the existence of a "genuine" issue, [Sanstorm] must present some evidence establishing each element of [the] claims on which [it] would bear the burden of proof at trial. [It] "must produce at least some 'significant probative evidence tending to support the complaint.' "

Smolen, 921 F.2d at 963 (citations omitted).

II

Proof of a Lost Policy

When an insurance policy is lost or destroyed, its contents may be proved through "an unsigned copy or by oral evidence." Rogers v. Prudential Ins. Co., 218 Cal. App. 3d 1132, 1137 (1990) (quoting 1 Witkin, Summary of Cal.Law (9th ed. 1987) Contracts, Sec. 269, p. 265)). The party seeking coverage bears the burden of proving the existence of the policy as well as its material terms. See United States Fidelity and Guaranty Co. v. Thomas Solvent Co., 683 F. Supp. 1139, 1171 (W.D. Mich. 1988); UNR Indus. v. Continental Ins. Co., 682 F. Supp. 1434, 1447 (N.D. Ill. 1988). With regard to material terms, Cal.Ins.Code Sec. 381 provides that an insurance policy must specify:

(a) The parties between whom the contract is made.

(b) The property or life insured.

(c) The interest of the insured in property insured, if he is not the absolute owner thereof.

(d) The risks insured against.

(e) The period during which the insurance is to continue.

(f) Either:

(1) A statement of the premium, or

(2) If the insurance is of a character where the exact premium is only determinable upon the termination of the contract, a statement of the basis and rates upon which the final premium is to be determined and paid.

We must therefore decide whether Sanstorm offered evidence sufficient to present a genuine issue of fact regarding the existence of an insurance policy as well as each of the terms enumerated in Cal.Ins.Code Sec. 381.

III

Existence of the Policy

To establish the existence of an insurance policy, Sanstorm relies primarily on the deposition testimony of attorney Robert Buck. Buck represented Sanstorm in a 1963 products liability suit entitled McKenny v. Sanstorm Mfg. Co. and recalls that Hartford paid his legal fees in that action. Further, in response to a set of interrogatories served by McKenny, Buck stated that his defense of Sanstorm was based on an insurance policy issued by Hartford. The relevant interrogatories and Buck's answers follow:¹ 

1. At the time of the accident, occurrence, happenings and events, alleged in the Complaint herein, was there in effect one or more policies of insurance by or through which you are, or were, insured in any manner or to any extent, with primary or excess coverage, with respect to any of the claims, causes of action, injuries or damages alleged or claimed against you in said Complaint?

Yes.

2. If your answer to the preceding interrogatory is Yes, please state:

(a) the total number of such policies:

One.

(b) the name of the company issuing each policy:

Hartford Accident & Indemnity Company.

(c) the policy number of each policy:

57-LGX-102110.

(d) the complete wording of all named insureds on each policy:

Sanstorm Manufacturing Company.

(e) the limits of bodily injury, products-liability or public liability coverage of each policy:

$250,000.00 for injury to one person as a result of one occurrence. The foregoing answers are based on the accident on May 20, 1963.

Sanstorm also offers testimony that the prefix "57" indicates the policy was issued from Hartford's San Francisco regional office. The San Francisco region included Fresno, Sanstorm's location at the time.

In response, Hartford offers Buck's testimony that Hartford, on occasion, would pay for the defense of an action where no coverage under any insurance policy existed, as an "accommodation" to one of its insureds, or for reasons of "public relations." Buck testified, however, that although he specifically recalled instances where Hartford provided a so-called "accommodation" defense, the McKenny case was not such an instance.

The district court concluded, " [a]lthough the documents pertaining to the 1963 case arguably provide some evidence that, at some time, a products liability policy was issued to Sanstorm by Hartford, that evidence alone is insufficient to present a triable issue of fact in this case." Weighing Buck's testimony in the light most favorable to Sanstorm, however, we disagree with this finding and conclude that Sanstorm's evidence presents an issue of fact as to the existence of an insurance policy.

IV

The Policy's Material Terms

The district court also concluded that Sanstorm failed to offer evidence of the policy's material terms. On appeal, Sanstorm argues that Buck's testimony at least presented a genuine issue of fact as to each of the terms stated in Cal.Ins.Code Sec. 381. We disagree.

First, Sanstorm argues the period of coverage is established because the coverage sought is for accidents occurring on one particular day--May 20, 1963--which was the date of the accident in the McKenny suit.

Second, it argues the "premium" paid under the policy is established because " [t]he only rational inference that can be drawn from [Buck's] several years' defense is that there was consideration paid for such coverage." Further, Sanstorm argues, the premium is irrelevant to this action because it has no effect on the ultimate amount of coverage.

Third, it argues that Buck's 1963 defense of Sanstorm in a products liability case, under the policy numbered 57-LGX-102110, presents a triable issue of fact regarding the type of coverage afforded under the policy. It claims the prefix "LGX" indicates a "standard form comprehensive general liability policy used only by Hartford in California in the late 1950's and early 1960's.²  Hartford's LGX policies, Sanstorm argues, expressly included product liability coverage unless the policy contained a products exclusion clause. Sanstorm further asserts that numeric identifier 102110 is consistent with Hartford's numbering system for comprehensive general liability policies.

Fourth, Sanstorm argues that any limits on coverage are irrelevant because it seeks no more than the per person, per occurrence limit of $250,000.00, which it established through Buck's testimony.

Fifth and finally, it claims Buck's defense of Sanstorm and Hartford's payment of his fees presents an issue of fact regarding the parties to the contract.

Based on our review of the above evidence, we hold that Sanstorm did not present a genuine issue of fact on each of the material terms enumerated in Cal.Ins.Code Sec. 381. Specifically, we conclude that Sanstorm's evidence on the type of coverage provided by the policy--i.e., the "risks insured against"--is insufficient to survive summary judgment. Sanstorm asks us to infer that the Hartford policy covers product liability claims because it contained the LGX prefix and because " [t]he McKenny complaint clearly alleges a products liability claim." We find this evidence unpersuasive.

The notion that Sanstorm's standard LGX policies include product liability coverage unless such coverage is specifically excluded is of little probative value without some other evidence to show that this particular policy covered product liability claims. The bare assertion that a standard policy form contains product liability coverage unless specifically excluded does not entitle Sanstorm to a presumption that products coverage is provided under this policy, nor does it shift the burden of proving an exclusion to Hartford.

Sanstorm's assertion that the McKenny complaint involved a product liability claim is also unhelpful. It is well settled under California law that " [a]n insurer's duty to defend is much broader than the duty to indemnify." Safeco Ins. Co. of Am. v. Andrews, 915 F.2d 500, 501 (9th Cir. 1990). Indeed, " [a]n insurer bears a duty to defend its insured whenever there is any potential of liability that arguably comes within the scope of the insurance policy." Id. at 501-02; see also Bowie v. Home Ins. Co., 923 F.2d 705, 707 (9th Cir. 1991). The McKenny complaint also alleged a cause of action for negligence, rendering it impossible for us to draw an inference that the products liability claim triggered a duty on the part of Hartford to defend against the action.

Finally, we believe Sanstorm's evidence falls short of the standard established by California law, which requires that a lost insurance policy's material terms be proven by witnesses with a "direct recollection" of the policy's contents. Rogers v. Prudential Ins. Co., 218 Cal. App. 3d 1132, 1137 (1990). Sanstorm produced no such evidence.

In Rogers, the plaintiff sought coverage under a policy that had been destroyed by both parties. The defendant insurance company moved for summary judgment, arguing that the claim was time-barred because the action was filed nine years after the policy was cancelled. The plaintiff, on the other hand, argued that coverage could not be time-barred because the policy provided "lifetime benefits."

To determine the period of coverage, the defendant urged the court to consider a document which offered a general description of the policy's terms. The document, called a "plan announcement," indicated that benefits would terminate within a period of time after the policy was cancelled. Relying solely on the plan announcement, the trial court granted summary judgment for the defendant.

The Court of Appeal reversed, holding that the policy's time limits were "ambiguous" because the policy was lost. When a policy is ambiguous, the plaintiff must be given a "full opportunity to produce evidence" of the policy's terms, and summary judgment is inappropriate. However, summary judgment becomes appropriate if the potential evidence, viewed in the light most favorable to the plaintiff, cannot even sustain a finding that the disputed material term exists.³  Id. at 1136. The court noted:

[T]he trial court is [not] limited to interpreting the terms of the announcement, a document which by its own language states the extent of insurance for an individual is governed by the terms of the master policy.... Contents of a lost or destroyed memorandum "may be shown by an unsigned copy or by oral evidence." Such evidence may include testimony of long-time ... employees [of the defendant] who were familiar with the policy's standard provisions, or copies of other policies sold at the same time which utilized similar provisions. In short, [the plaintiff] is entitled to have the trier of fact determine the terms of the policy and then to have the complaint decided in accordance with those terms. Since the motion presents a triable issue of material fact, it was error to grant summary judgment.

Id. at 1137 (citations omitted).

Buck stated in his deposition that he had no direct or independent recollection of the policy or its terms. He was able to testify only that the 1963 interrogatory answers must be true because his practice has always been to answer interrogatories truthfully. This is not the type of testimony the Rogers court had in mind. Buck's testimony cannot possibly sustain a finding that the disputed term exists.

Again, the significant point is that the insured must offer evidence of every material term, or the claim fails. In the present case, we hold that Sanstorm's failure to offer probative evidence of the type of coverage afforded under the policy warranted summary judgment for Hartford.

V

Conclusion

Sanstorm was given a full opportunity to prove the existence and terms of the alleged insurance policy, but it failed to present a genuine issue of fact as to the material terms. The district court's grant of summary judgment for Hartford is therefore

AFFIRMED.