*1 Aug. S086518. 2002.] [No. INC., INDUSTRIES, Respondent, Plaintiff
DART COMPANY, Defendant INSURANCE UNION COMMERCIAL Appellant.
Counsel Breitman, Selman Selman, Neil H. Jeffrey C. Segal Lynette Klawon for Defendant and Appellant. Bunshoft,
Hancock Rothert & Killion, Paul J. Max H. Stern and Kate Cutler for London Market Insurers as Amicus Curiae on behalf of Defendant and Appellant. Rein &
Wiley, Laura A. Fielding, Foggan, Daniel E. Troy, Kimberly Bien Hrabosky; & Summers and Elliot L. Bien for Insurance Environmental Litigation Association as Amicus Curiae on behalf of Defendant and Appellant.
Luce, Forward, Hamilton & Bird; James E. Scripps, Fitzgerald, Charles A. Block, Jenner & A. Stephanie Scharf and Paul M. Smith for Plaintiff and Respondent.
Bill Lockyer, General, Attorney Randall P. and Julian O. Borcherding Standen, General, Deputy Attorneys for the Insurance Commission for the State of California as Amicus Curiae on behalf of Plaintiff and Respondent. Wallace, Jackson & Gabriel A. Jackson and P. for Kelly- William Buranich Moore Paint Company and as Amici Curiae on behalf of Unisys Corporation Plaintiff and Respondent.
Zevnick Horton Guibord Michel Y. Horton McGovern Palmer & Fognani, and Industries, Inc., David S. Cox Amicus behalf of for ITT as Curiae on Plaintiff and Respondent.
Adleson, Hess, & W. and Michelle Shewaga Hess M. Duane Kelly, Randy behalf Association as Amicus Curiae on L. for California Trustee’s Fogliani and Respondent. of Plaintiff Jr., L. Darwin, A. and Karin & Richard C. Robert Burling, Long,
Covington Am- of America as Kizer for Research Manufacturers Pharmaceutical icus on of Plaintiff and Respondent. Curiae behalf Martel, Alexander, Heffes; S. Michele Farella Braun & Deborah David L. Oakland, Davis Board of Port Commis- City Ballati and Pamela H. for and Respondent. sioners as Amicus Curiae on behalf Plaintiff Halbreich, Brobeck, Harrison, M. M. Peterson and & David Thomas Phleger Arthur Mac Arthur Company Fisher for Western Mac Maruly Company as Amici Curiae on behalf of Plaintiff and Respondent. Bach; A. United Kill Olick John MacDonald for Anderson &
Amy of Plaintiff and Respondent. Amicus Curiae on behalf Policyholders Opinion an must
MORENO, J. us to determine what insured This appeal requires lost destroyed establish its under a rights in order to prove that the insured had introduced sufficient The trial court found policy. material provi evidence to substance secondary prove policy’s held that sions, Appeal The Court of and rendered insured. judgment actual of those provi was instead to words required insured that the sions, As conclude appear, reversed the will we judgment. erroneous, judg and therefore reverse Court Appeal’s holding be on ment, of review to determined with some issues outside scope remand.
Facts 1960’s, the late Rexall Drug Company (Rexall), From 1940’s until Industries, one of a of Dart Inc. was plaintiff (Dart), in interest predecessor manufactured and marketed of pharmaceutical companies number used estrogen widely synthetic a drug diethylstilbestrol (DES), prescription time to prevent miscarriages. at the general liability carried comprehensive this Rexall
Throughout period, its three by primary issued in policies sequence insurance under (CGL) carriers: Employers Assurance Ltd. Liability Corporation, (Employers), pre- decessor in interest of defendant Commercial Union Insurance Corporation (Commercial 1946-1951; for the Union), years Mutual Liberty Insurance 1951-1966; Company (Liberty for the Mutual), years and Continental Insur- ance for the Company (Continental), years 1967-1981. onward,
From the claimants mid-1970’s a number of large alleging per- sonal caused to injuries DES actions for exposure began filing damages against DES manufacturers nationwide. The majority claimants were adult women whose mothers had ingested DBS while claimants were in who, útero and when themselves, reached they childbearing age manifested and cancerous precancerous lesions, and cervical vaginal as well as various deformities of their reproductive organs resulting infertility miscar- Brown Superior Court riages. (See generally 44 Cal.3d (1988) 1049 [245 412, 751 P.2d 470]; Sindell v. Abbott Laboratories Cal.Rptr. 132,
Cal.3d 588 924, Cal.Rptr. 607 P.2d 2 A.L.R.4th 1061].) Many Dart, were filed complaints both in against California and in other jurisdictions, alleging to DES in exposure each of the time foregoing peri- ods. Dart tendered the defense of these Union, actions to Commercial Mutual, Liberty and Continental. All three carriers denied refused to provide a defense. 1984,
In October Dart filed the action for present relief declaratory damages against Union, Commercial Mutual, Liberty and Continental. The primary relief sought was a declaratory Proc., judgment (Code Civ. 1060) § establishing policies defendants to sold Dart and its predecessor them obligate provide defense to the DES actions and to Dart indemnify for any liability assessed it in against those actions. 1986,
In October Dart settled with Mutual Liberty and Continental. Com- mercial Union declined to in the participate settlement. The issue remaining case, in the accordingly, was whether Dart was entitled to a defense and from indemnity Commercial Union under the in effect for the period of September 1, 1951, i.e., September No. Employers Policy CL92302.1 The question was complicated by fact that the undisputed lost and neither has party been able to find it or a This it. copy fact, see, as we shall has led to the issue of law we address in this principal case.
This case has a long convoluted and has been the procedural history, subject no fewer than four and four decisions of the Court appeals We Appeal. review that briefly history. 1Although the policy actually Employers, issued Commercial Union succeeded Employers’ therefore, simplicity, liabilities. if it generally For we shall refer to the Likewise, prede
had been issued Commercial Union. our references to Dart include its *7 cessor Rexall. trial Dart for preference
After moved pretrial proceedings, various denied, the shortly and court dismissed The motion was thereafter setting. Proc., it to trial within five Civ. years. (Code the action for failure bring In the the Court of 583.310, Appeal Dart first 583.360.) appealed. appeal, §§ for held the court abused its discretion motion denying prefer- trial Industries, ence, and for trial. Inc. Commer- (Dart and reversed remanded Industries B047651) [nonpub. opn.] (Dart cial Union Ins. Co. (Feb. The that the trial had denied Dart’s properly court also concluded court I).) held Dart prove and that at trial must summary judgment, motion for evidence, a of by preponderance rejecting contents of the insurance policy clear convincing contention that must be and proof by Commercial Union’s evidence. Barrett, sitting
The in 1993 before Newell initially Judge case was tried and the of a Dart undertook to existence substance without jury. Charles by of the lost means of the of testimony material terms Obrion, & which an Russell Co. served Pyne, (Obrion), employee a bro- Commercial Union’s Employers, predecessor insurance agent for account the relevant as well as various during period, ker the Dart an- items of evidence. Barrett entered a minute order documentary Judge Union tentative in favor of Commercial on nouncing ground a decision a liability. that Dart not the lost limits of Dart proved policy’s requested had Proc., Barrett died before Judge statement Civ. but (Code 632), of decision § a judge signed judgment such a statement. A second issuing thereupon based Barrett’s minute order. Dart Judge appealed Commercial Union on that a second ground and the reversed the on Appeal judgment Court on the first only judge’s a based sign judgment not authorized judge Industries, Inc. v. Union Ins. Co. (May tentative Commercial (Dart decision. 26, 1995, B083165) [nonpub. opn.].) Miller, Judge
The for retrial to Loren Jr. assigned By stipulation, case was the record to him for decision on basis of submitted matter parties trial, clerk’s including of the reporter’s transcripts first trial, exhibits, the first and new briefs. testimony given a videotape record, Miller order announcing After this entered minute reviewing Judge decision in favor of Dart. He then issued a statement of a tentative decision Com- accordingly. Union’s and entered judgment at Commercial request, mercial Union appealed. Miller’s statement decision Judge held Appeal Court to adequately explain as a matter of law because failed
insufficient on a of issues identified factual or basis for his decision number legal “prin- the Court of constitute Appeal Commercial Union deemed Proc., On this 632). ground, issues at trial” Civ. (Code controverted cipal § *8 the Court of reversed the Appeal judgment with directions to Miller to Judge a issue new statement of decision certain additional issues and to addressing Industries, (Dart enter a new judgment based thereon. Inc. v. Commercial 27, 1997, Union Ins. Co. (June B105886) [nonpub. opn.].) As directed the Court of by and after further Miller Appeal hearing, Judge issued a substantially more detailed statement of decision and 29-page decision, In the judgment. statement of the court reviewed at the length evidence to its support findings Dart conducted a (1) diligent and exhaustive search the it; for lost but policy, was unable to find Dart (2) the existence of the proved evidence; policy by the was secondary (3) policy “manuscript policy, insured,” that was custom meaning tailored to the form; rather than a standard covered Dart’s (4) policy Rexall predecessor for the single five-year 1, 1946, term from 1, 1951; September September (5) policy provided coverage product liability claims for bodily injuries occurring during policy period, caused DES including injuries exposure during that but not period manifesting themselves until after the ended; period (6) policy provided occurrence-based coverage that would cover injuries initiated of the ingestion drug during policy period but after manifesting period; (7) limits of policy’s were liability $100,000 $300,000 per person accident, and occurrence or per with a $300,000 annual product limit; liability aggregate did not (8) deductible; contain a (9) covered defense costs separately from the limits of liability.
The court then reviewed the case law to its support conclusion that the “trigger coverage” under the to DES rather than exposure manifestation of the ensuing injury many later. Because Dart’s years several primary Union, (Commercial Mutual, carriers and Conti- Liberty nental) different proposed triggers coverage, court recognized for either potential benefits; inadequate or double recovery recovery result, avoid that the court found equitable—and method adopted—the allocating i.e., insurers’ obligations devised that Commer- parties, cial Union should of the pay only percent indemnity costs of defense and in actions Dart against arising from DES the 1946-1951 exposure during policy period.
In the 21, 1998, the court ensuing judgment, (1) entered on December declared the in accord with the parties’ liabilities under the rights $1.9 decision; statement of some foregoing awarded Dart damages $550,000 costs, million for local defense allocated portion for the costs, $260,000 for insured’s national defense coordinating counsel million; $1.4 interest 1992 of some indemnity, plus prejudgment through *9 50 Commercial Union that Dart is entitled to recover from declared (3) in and settlements incurred Dart after 1992 by of the defense costs percent the 1945-1951 during actions for from DES damages arising exposure Commercial Union period. appealed again. the this time on the judgment, ground
The Court of reversed Appeal again the of the of fact the was to trier support findings that evidence insufficient to lost because Dart failed on the material terms of the policy, principally to From Dart’s earlier stipulation the actual produce language policy. trial, the the inferred that on the of first Court of retry Appeal the case record offer, it to and on that ground Dart conceded has no additional evidence has in to enter remanded the cause to the trial court with directions judgment Commercial Union. favor of an
Dart for We its to determine what granted petition review. petitioned to its a rights insured must in order establish under lost the in Court of held that evidence correctly and whether the policy, Appeal trial the case bar was the court’s findings regarding at insufficient support the contents of the lost policy.
I 1521, law. Code section subdivision statutory We with Evidence begin of otherwise content a be (a), provides writing may proved by “[t]he evidence,” exists secondary admissible when excepting genuine dispute “[a] the exclusion” justice requires material terms of concerning writing be evidence would unfair.” “[ajdmission secondary or when of the contents of a is testimony regarding writing specifi- admission of oral 1523, in that such governed by part, section which cally provides, pertinent “if the have or possession is admissible does not testimony proponent . . . either the control or a . . . original copy writing ] [n] [f writing writing reasonably propo- nor a was copy procurable other means. . . .” (Cf. nent use of court’s available process Evid., Fed. 28 1004(1), U.S.C.) Rules rule that lost are of the venerable common law rule
These statutes codifications v. be evidence. In Folsom’s Executors proved by secondary documents may 461, Cal. court stated: “The rule ... for Scott 6 (1856) ‘that of a lost a bona secondary paper, requires admission of evidence fide it made it in the where unsuccessfully place search has been diligent further, found;’ be ‘the is to show party expected likely most faith reasonable all sources degree he has in exhausted a good nature of case would information and means of which discovery were accessible and which naturally suggest, him.[’]” As was elaborated in P. Cal. 803] Kenniff Caulfield “ instrument, ‘If over the or that is (Kenniff): any suspicion hangs design- withheld, should be made into the reasons for its edly rigid inquiry But where there is no such all that to be non-production. suspicion, ought fact, required reasonable to obtain the courts in such diligence original—in ” cases are extremely Questions liberal.’ at whether the search (Id. p. 42.) was sufficient in scope and was conducted faith are addressed to the good court, discretion of the trial and will not be disturbed on absent abuse appeal 41-42; of discretion. see (Id. pp. also Guardianship Levy (1955) *10 Cal.App.2d 249-250 P.2d 320].) [290 A of the rule that the contents of lost documents be corollary may evidence is that the proved by secondary law does not contents of require such 467, documents be verbatim. In Posten v. proved Rassette 5 Cal. (1855) the owner of real a example, property gave written of power attorney his fire, Parker. The document was agent, but the accidentally destroyed by owner took later, no to revoke the steps power. A on the same year acting Parker sold power, to a third property This court affirmed a person. trial, judgment of the At recognizing validity sale. who notary witnessed deed of sale testified he had seen the of power attorney that it question, had authorized Parker to sell the and that the property, document had been destroyed by fire. This court held that the testimony existence, sufficient to loss, establish the and contents of the of power “In attorney. the case of lost instruments where no has been copy preserved, it is not be expected contents, witnesses can recite its word for word.” at (Id. p. 469.)
This rule was reaffirmed in
(Id. 58; Von v. VonHasseln 122 (1953) Cal.App.2d at Hasseln p. 13 ,)2 P.2d [264 205] secondary few the of many types
The lost document cases illustrate a of a missing courts have admitted to contents of evidence that for this have often admitted oral example, testimony instrument. For courts 43; Rassette, 5 Cal. at Posten v. supra, 140 Cal. purpose. (Kenniff, supra, p. 605, 611-612 469-470; Robinson Cal.App.2d at v. Thornton 271 pp. lease; gas testimony to repurchase contract Cal.Rptr. [lost [76 835] 249 137 at Levy, Cal.App.2d p. contracting party]; Guardianship supra, Cal.App. Deacon v. 88 [testimony letters]; Bryans (1928) lost recipient 322, notes]; 325 of witness who saw lost Seaboard [testimony promissory Ackerman, estab p. [testimony National Bank v. 16 at 57 supra, Cal.App. Trust Co. Hedstrom Union lishing judgment destroyed by fire]; record lease].) P. of drafter of lost [testimony (1908) Cal.App. 386] the lost (Kenniff, Courts have also admitted a standard form of document well as form used in lost p. drafting deed]), Cal. supra, [blank Production Co. v. United (Amoco evidence of a routine of a practice party deed; *11 1980) grantor’s States Cir. 619 F.2d 1389-1390 (10th [lost deeded]). routine of a mineral interest in all practice property reserving only The use was affirmed in the two secondary published of evidence Ben insurance In Clendenin v. California decisions lost involving policies. 674, damages son 117 a driver sued for his automobile (1931) Cal.App. truck, a and his by joined caused a collision with the defendant’s insurer court for the insurer subrogation judgment cause of action. The rendered the at Affirming even the latter could not the trial. though produce policy of held that the “shows that a diligent the Court evidence judgment, Appeal at the and bona but search the document was made unsuccessful fide found; further, most the contents of the policy where it was to be place likely by of of by testimony were shown the the insurer sufficiently employees at 678.) its records.” (Id. p.
In v. Prudential Ins. Co. Rogers Cal.App.3d (1990) disabled while by an who became covered Cal.Rptr. 499], employee totally his issued the defendant insurer sued after by a medical group major the insurer had benefits were terminated. Pursuant to company practice, the the its of several after destroyed years terminating plan; copies fire, he could a only had been destroyed by produce plaintiffs copy referring of its provisions brief announcement plan summarizing evidence, course, governing admissibility of comply with the rules 2Secondary must Code, including (Evid. 351) hearsay (id., rule generally, evidence relevance § § seq.). et the master for details The insurer coverage. moved for summary on the judgment ground that was relieved of terms of the liability missing policy, asking court to determine those terms by construing announcement alone. The court granted the motion. Reversing ensuing judgment, Court of Appeal explained that the trial court was not limited construing announcement. “Contents of a lost or destroyed memoran dum be ‘may shown an unsigned or oral evidence.’ copy [Citation.] Such evidence may include testimony . . . long-time employees [of who were familiar with the standard policy’s or provisions, copies insurer] of other sold at the same policies time which utilized similar provisions.” at (Id. p. 1137.)
Having established that the contents of a lost insurance be policy may proved by evidence, secondary the question remains—what must precisely be proved. In an action on an insurance that has not been lost it is well destroyed, settled that insured burden is on an to establish “[t]he that the occurrence the basis of its forming claim is within the basic scope And, coverage. once an insured has made this show [Citations.] ing, burden is on the insurer to prove the claim is excluded.” specifically (Aydin v. First Corp. State Ins. Co. 1183, 18 Cal.4th 1188 [77 Cal.Rptr.2d 959 P.2d The rule 1213].) applies whether irrespective the dispositive is policy language exclusions, found in clauses described as limitations, exceptions, conditions, or endorsements: is the “[I]t function served by policy not the language, location of language an insurance policy, determinative.” (Id. italics This rule p. added.) follows from the general rule found in Evidence Code section evidentiary 500 that law, “[e]xcept otherwise provided by party has burden of *12 proof to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting.”
We see no reason not to this rule to a that has been lost apply policy Thus, or destroyed without fraudulent intent on the of the insured. the part claimant has the burden of the fact that he or she was insured proving (1) under issue, the lost the of each policy the substance during period relief, i.e., essential to the policy provision essential to the claim for particu lar that the those are will vary insured claims. Which provisions case;3 from case as the material to the decisions often refer to them simply v. terms of the American Ins. Co. Cal. lost Nat. policy. (See, e.g., involved, injury no reason to offer evidence example, personal 3“For if a claim is there is Policies, Missing liability.” (Brown Sayad, Locating policy property damage that the & covers Policyhold Be Found—From the Proving the Existence and Terms Policies That Cannot and Prac. Course Handbook Series Perspective, Practising Law Inst. Commercial Law er’s 1, 131, (Mar. 1986) 165-166.) 382 PLI/Comm. Paraclete, 534; v. 529, Inc. Underwriters Cir. 93 F.3d Servants (9th 1996) 822, turn, the In 827.) Great American Ins. (D.N.M. 1994) F.Supp. any provision insurer the burden of the substance of proving policy has Code, i.e., that . . . any provision “essential to the defense” (Evid. 500), § WellcomeCo. e.g., functions to defeat the insured’s claim. (See, Burroughs 1213, 1223; Emons 1986) F.Supp. Commercial Union Ins. Co. (S.D.N.Y. 185, Fire Ins. Co. Liberty (S.D.N.Y. 1982) F.Supp. Industries v. Mut. too, will be 189.) provisions, case-specific.4 Those
II outset, these the case bar. As at the the primary We rules to noted apply Policy (hereafter, issue at trial was whether No. CL92302 Employers Union entitled Dart a defense and from Commercial policy) indemnity to 1, 1946, and between from DES litigation arising exposure September 1, 1951. September Dart, insured, are on as the the burden of proof
Some matters which has nor in this It is that neither Dart Commercial undisputed case. undisputed reasonably has a of the and that Dart made a policy, Union now copy trial court therefore but unsuccessful search for the was diligent policy. or entitled that was and that it was lost to find lost policy destroyed, Accordingly, intent on the of Dart. destroyed part without fraudulent Dart court evidence offered secondary prove admitted properly Union not dispute point. material terms of Commercial does policy. It is in effect also was CGL undisputed 1, 1, that Commercial from September September to Dart’s in interest issued (Employers) Union’s predecessor find entitled to in interest The trial court was therefore predecessor (Rexall). in issue. during Again insured under period Dart was dispute Commercial Union does not point. erred in it to requiring
Dart contends the Court of Appeal of the specific evidence policy by introducing material provisions *13 in is not degree proof required presented 4An on this record is standard or issue that appeal (Dart I), Industries which ordered policy lost In its decision in the first insurance cases. case, by a proof held the standard is Appeal proper the first of the the Court trial Ins. (Searle Allstate v. case preponderance holding of the evidence. That is law the Life ensuing 1308]), and in Co. Cal.Rptr. 696 P.2d both 38 Cal.3d asked us to duly applied proof. parties that The have not trial and retrial the court standard issue; indeed, concedes petition answer to the for review Commercial Union address the in its case, that, that ‘clear and is principle unquestionable of law of the “under apply here.” therefore not reach issue. convincing’ standard does not We do As discussed taken. The is well point in those provisions. used language the contents of lost above, requirement such evidentiary there is no the Court of Although or otherwise. documents, they policies be be documents can that lost rule general acknowledges opinion Appeal Dart for evidence, present- faulted the court repeatedly secondary proved by at all “There is no evidence language: of the policy no evidence ing to show what There is no evidence in the policy. the words used concerning or manuscript policies standard was used Commercial (in sort of language There is no at any time). was issued (or at the time Dart’s policy or at all) at the time industry in the sort of was used language to show what evidence to show what There is no evidence at (or any time). Dart’s was issued policy the time Dart’s policy statute at if were any, required standard provisions, issued, usually incorpo- if were any, or what standardized provisions, or at any time).” the 1940’s (in into Commercial’s CGL policies rated is critical whenever that a language believe policy’s court concluded: “[W]e “we a CGL policy,” demands a defense or under indemnity an insured of the is indispens- in this that reference to the language hold case DES injury time between exposure able” because of substantial cases.
Thus, fashioning special understand the Court of Appeal’s holding we rule, an “actual language” rule with to insurance evidentiary respect policies, be may only proved repro- contents of such policies providing not, as a matter and that less does language, anything ductions of The Court of law, substantial evidence of these contents. constitute like that of any that the of an insurance meaning policy, reasoned Appeal that without contract, from its and concluded examining language is derived the contents of a cannot be determined. such language, of a contract to language it is a truism that we look to Although a contract has been lost its it is true when meaning, equally ascertain faith, unavailable, the law does not require and the actual good language Rather, above, the of the lost as discussed language. proponent of such proof (Kennijf, substance of the document. document need relevant only prove 469; 43-44; Rassette, 5 Cal. at Von p. at Posten v. supra, 140 Cal. supra, pp. 13; National Hasseln, at Seaboard p. Hasseln v. Von supra, Cal.App.2d Ackerman, Cal.App. p. 58.) Bank v. supra, cases that in most lost insurance from
Commercial Union contends actual language there is at least an approximation other jurisdictions, from policies preceding standardized through policies, policies, specimen Arms Co. v. Mut. Liberty e.g., Remington like. years, (See, subsequent 1420, 1427; WellcomeCo. Burroughs 810 F.Supp. Ins. Co. (D.Del. 1992) *14 1074 1222-1223; Co., at Employ
Commercial Union Ins. 632 supra, F.Supp. pp. Celanese 43 (1997) ers’ Assurance v. Hoechst Liability Corp. Corp. Yet it is undis 465 N.E.2d Mass.App. 612].) [684 that in the case there was a puted present manuscript policy5 specifically 1946-1951; for for it is therefore less five-year period written Dart or policies that standardized successor likely specimen policies, policies the contents of the We policy. would be available or useful establishing see no the lack of such “actual evidence should why language” reason When, here, it Dart from the benefits of its obtaining policy. preclude time that there was an insurance relevant undisputed policy covering faith and not recovered after and that the was lost period policy good search, there is no reason either in the law of contract or of evidence diligent to the but precise evidence that attests substance why secondary not.the be a matter of law to of an insurance should insufficient as language obligations. establish insurer’s contractual other, Commercial Union seeks to this case from noninsurance distinguish fewer and simpler lost document cases on the latter involved ground not However few or terms significant. many terms. distinction is legally deed, be, it for the of a lost there remains may necessary proponent power of a lost or a less than a insurance attorney money judgment—no proponent to the claim for relief.” each of its “essential policy—to prove provisions Code, 500.) (Evid. §
The trial court was thus correct in that “Dart must with declaring prove to the evidence the existence and terms of material secondary coverage that Dart is prove policy’s risk at issue. This does not mean required Rather, contents it must the substance of the Employers’ verbatim. As with sufficient evidence to show the DES claims.” Policy above, the trial court found in detail that Dart had the sub- proved noted evidence, secondary stance of the material terms of sufficient policy by next to to the challenges and entered We turn judgment accordingly. specific not they trial court’s on the were findings grounds supported substantial evidence. containing usually issued on standard forms terms explained: 5As we have “Policies ‘are Often, change willing modify drafted the insurer is conditions [insurer]. Sometimes, entirely nonstand “endorsements” .... issued is standard forms (Aerojet- ‘manuscript’ policy.” particular ard and drafted for the risk undertaken’—a so-called 38, 46, Corp. Transport Indemnity Co. Cal.Rptr.2d General 17 Cal.4th fn. al., Litigation (The Rutter 909], Croskey Practice Insurance quoting P.2d et Cal. Guide: 3:33, employed industry- 1997) (Croskey).) These standard forms are often Group p. 3-6 ^ 3.33, (Croskey, supra, 3-6.) example A is an of a standard p. specimen wide. f Paraclete, American (See, e.g., Servants Inc. v. Great particular company. of a
Ins., supra, 829.) F.Supp. p.
1075 III one finding assertedly identified only The Court of Appeal opinion an occurrence-based that the lost was policy the evidence: unsupported the during policy for to DES coverage exposure in that it provided policy not discovered until if that were exposure even the caused injuries period not was opinion the ended. The Court of Appeal’s after policy period it but it finding, appears the of its to this objection clear as to basis entirely First, which identified testimony, concerns. Charles Pyne’s had two principal it occurrence-based, lacked value because probative essentially policy Second, corroborated evidence. by documentary and not “conclusory” was in fact occurrence- established that the was if Pyne’s testimony even term and based, detailed to define that sufficiently such was not testimony Commercial Union’s cover obligation related terms so as to establish from the of ingestion arose injuries ultimately claims individuals whose used language “Without evidence during any DES policy period. in of common words judicial interpretations Dart’s missing policy, ‘occurrence,’ ‘accident,’ in other CGL actually used phrases policies (e.g., with both disagree points. are irrelevant.” We ‘bodily injury’) First, a licensed insurance was not Pyne’s testimony conclusory. Pyne, broker, in Los Angeles during was of the Obrion office manager in effect. He became familiar with the years product liability was in coverage meetings a number of which policy by participating discussed; occasion, on another of Dart coverage manager was showed him about a matter. Pyne questioned trial court asked “Do recall whether or not saw an specifically you you Pyne, in that there was an occurrence this contract do assume provision you just in the “I it in the insur- occurrence contract?” saw provision Pyne replied, contract,” to make it clear he to an occur- referring ance and went on was is direct of a testimony rence-based This coverage provision policy. fact issue. Nor be corroborated documen necessary Pyne’s testimony was “ ‘ evidence or It is established that
tary testimony otherwise. well “[t]he ” (In re a judgment].’ witness . . . be sufficient” [single] may support [to see 76]; Marriage Cal.App.3d Cal.Rptr. of Slivka Code, evidence is required by also Evid. where additional [“[e]xcept § statute, credit is the direct of one witness who is entitled full evidence Moreover, in fact testimony sufficient for proof any fact”].) Pyne’s other claims product liability corroborated. Dart introduced evidence of two Hinkle claims—that Commercial Dart—known as and Boone against each, In the plaintiff successfully Union under the here issue. paid of an injuries by ingestion allegedly claimed caused damages bodily but not discovered until after harmful drug during policy period the names of their predecessors, ended. to the period Referring parties by *16 that “the Hinkle and Boone lawsuits against trial court found expressly in evidence of occurrence coverage. Rexall the 1950’s are further specific the filing of a with drug during Policy period Both cases involved ingestion also the ended. Both claims were Policy of claims after Employers period the Policy.” under paid by Employers Employers that it “proves The this evidence on Appeal ground Court of dismissed as not” that the Hinkle and The court reasoned that is nothing.” likely “[i]t or as an accommodation to Dart” rather Boone claims “were defended paid rejected an But the trial court had coverage. expressly than as obligation that “There no evidence produced Employ- this assertion as was speculative. Policy ers claims that were not covered under paid Employers ever claims as an that there uncovered any practice Employers pay was nor the Court of to its insureds.” Neither Commercial Union accommodation record, the trial evidence to the On this court’s contrary. cites Appeal any Hinkle it Commercial Union and paid conclusion that was that probable is reasonable its contractual comply obligation Boone claims with inference, v. Vita-Food (Overton and as such must be on upheld appeal. P.2d see also 757]; 370 Corp. (1949) Cal.App.2d [210 Crawford P.2d Nor anmay Southern Pac. Co. Cal.2d 183].) determination its for that of credibility court substitute appellate Pyne’s that his was so testimony the trial court. Commercial Union’s contention in foundation as to deserve no untrustworthy, self-contradictory lacking more than a that we redetermine his nothing credibility. credence is request not This we do. may insuffi- testimony
The Court of is also incorrect that was Appeal Pyne’s determination of whether covered policy detailed to ciently permit He during period. from of DES stemming ingestion policy injuries he of the term “occurrence meaning policy,” testified that knew . for “a . . happening it as one which is coverage provided defined [that] term, not be might but which during would . . . take place policy term.” He also testified that discovered until the expiration policy Moreover, the trial covered from defective injuries products. policy personal similar to the factually that were injuries court also found DES-related Hinkle Boone claims and inferred reasonably covered in the injuries evidence, it did not although DES as well. Such injury Dart’s covered policy the trial court’s was sufficient language, support reproduce initiated during covered DES injuries that Dart’s finding outside it. manifesting but period there holding erred sum, Appeal that the Court
In we conclude the lost policy provided finding evidence to support no substantial for inju- included claims that such coverage occurrence-based manifesting not term but during DES exposure ries caused the term ended. until after
IV of other a number that Dart failed to prove Commercial Union contends in the Court of Appeal not discussed terms of the lost policy material had court, however, sufficiently found that Dart trial expressly opinion. show the record Union must therefore such term. Commercial each proved *17 conclude that to those We findings. of substantial evidence support devoid do so. has failed to limits of of that the findings Union first complains
Commercial $300,000 $100,000 per per person under the were policy limit For occurrence, $300,000 year. liability aggregate per with a product both limits, documentary the trial court relied on the first of these two in was a letter written The evidence testimony. documentary evidence Obrion, Bennett, in the Boston office of Herb an Pyne by agent 1970 claim the covered a certain to a as to whether query by Pyne policy replying Union letter that Commercial Rexall In his Bennett by Dart). explained (now it, but stated that according and could not produce had discarded policy $300,000. The $100,000 and to Bob Forrest the limits were policy primary who had negotiated found that Forrest was Obrion partner court Rexall account for for the terms of and was policy personally responsible authority that Obrion had agency The court further found many years. On this of a Union policy. out information about the terms Commercial give of a as an authorized admission basis, the court found the letter admissible the trial court erred Code, Commercial Union contends (Evid. 1222.) party. § admitting testimony. in such “ 1 either in the of making is said an agent,
The rule is that “whatever time, the perfor or at the and accompanying a contract for his principal, act, ... of the particular within the his scope authority, mance any of of effect, is, in said legal he is then engaged, contract or transaction which But declarations or admis as evidence .... his and admissible principal, making not authority, accompanying sions an of his own agent, not act, ... are contract, an in behalf of his principal, or the doing ’ . . (4 Wigmore . . . and are not admissible his binding upon principal Construction Co. Evidence, 1078, . v. Anson-Smith on 119. . p. .)” (Miller § In the 161, italics 131], added.) 166 Cal.Rptr. (1960) Cal.App.2d [8 case, 1970, letter evidence is that when the was present undisputed Union, written, still an and that Forrest Obrion was for Commercial agent firm, in that The reasonable was a albeit inactive. trial court made a partner inference and its that Obrion were authorized within partners scope their in the of business information course agency agreement supply Commercial Union’s insurance court regarding policies. appellate “[A]n reviews a trial court as to the of evidence for any ruling by admissibility abuse of discretion.” v. Alvarez 14 Cal.4th (People P.2d the trial court did not abuse Cal.Rptr.2d We conclude 365].) its discretion in the Bennett letter as a admission. admitting party
The court also relied on on the who declared that Pyne’s testimony point, to his on from his based his recollection knowledge, reading policy, $100,000 $300,000. limits again were Commercial Union exclu- credibility Pyne’s but questions testimony, question for the trial there sively court to resolve. We conclude was substantial evidence the trial limits. supporting finding regarding court’s
For its that the limit of finding liability aggregate had a products $300,000 that the trial court relied on per year, again Pyne’s testimony so also observed that if the annual provided. correctly court *18 limit were less than the claim product liability aggregate product liability per limit would be (i.e., $300,000), coverage illusory.
Commercial Union contends there was no substantial evidence to that the lost for a support finding policy provided coverage single 1, 1946, 1, term For this five-year Sept. finding, (from Sept. 1951). trial court relied on certain exhibits from 1961 documentary regarding to a adjustments single policy, that referred retrospective premium expressly 92302, term, No. CL for that corroborated designated by Pyne’s the lost to the same effect. Commercial Union that testimony speculates terms, could well have been for five successive with equally one-year in its but no evidence changes supports annual material possible provisions, that speculation.
Commercial Union next contends its contractual have been relieved or reduced an “other insurance” obligations may It found that the insurer had the clause.6 trial court argues erroneously clause, if the existence and terms of such a and that any, burden proving It clause is not an it failed to do so. contends that an “other insurance” liability insurance insurance” clauses “limit an insurer’s to the extent that other 6“Other “ 8-2, (Croskey, supra, 8-1.) become may p. the same ‘Other insurance’ clauses cover loss.” U insure the same risk at the same level coverage. only An relevant where several insurers Dart’s burden therefore was that coverage, but a condition of exclusion met, that failure been a clause have the conditions of such prove several rests on argument case. This the same is fatal to Dart’s contentions. Fortuna, an under- of Peter
First, to testimony Commercial Union points 1950’s, that establishing the 1940’s and during at Commercial Union writer three types had one of Union would have issued Commercial every policy null that rendered automatically clauses: one of “other insurance” “null and the same risk covering (a if there was other any void limit coverage to the rendered it null and void up one that clause); void” its own excess that within but over any of the other policy, paid the. coverage one that excess” clause); prorated limits “null and void (a Second, Commercial Union rata” clause). the two policies (a “pro between or “null and void if contained a “null and void” reasons that Dart’s policy if there for indemnification clause, then it not be liable with excess” would At least these costs. rata to cover policies were other insurance with pro insurance policies that there are two primary some courts have held when “other insurance” clause the same one with a rata covering injury, pro in excess of other only to indemnify another with a clause that agrees insurance, liable until the former’s policy the latter insurer does not become Indent. Co. Donahue Constr. Co. v. Transport limits have been reached. (See In 291, and cases cited 632], therein.) Cal.Rptr. (1970) Cal.App.3d insurance” fact, rata “other pro Dart’s successor insurers had with policies a continuous Third, injury that under argues clauses. Commercial Union be liable for insurers would Dart’s successor trigger theory coverage,- initiated in a later but manifesting period. occurrences during period v. Admiral Ins. Co. 10 Cal.4th Montrose Chemical Corp. (See contends Commercial Union 913 P.2d Thus Cal.Rptr.2d 878].) 689 [42 clause in the policy of “other insurance” type Dart’s failure to prove *19 Commercial Union’s would leave a court unable to determine whether words, In other extinguished. for the relevant was reduced or liability period provision to the substance of a policy it Dart has failed argues essential to its claim for relief. “other clause of the insurance” type
We disagree ignorance precise altogether. to the insurer’s obligations in a lost can be used defeat insurance’ to prevent multiple clauses designed ‘other were “Historically, for a particular than one policy provided recoveries when more 65 Co. Casualty (1998) Fund Ins. Co. v. Maryland loss.” (Fireman’s hand, “other 1279, On the other 1304 Cal.Rptr.2d 296].) Cal.App.4th [77 (Id. 8-12, p. primary insurers.” at cannot arise between excess and dispute ‘other insurance’ If 8-3, original.) italics in 1080 clauses that to shift the burden from one attempt away primary
insurance” been the objects judicial insurer or to other insurers have wholly largely clauses, distrust. “[Pjublic ‘escape’ whereby coverage pur disfavors to of other This insurance. ports evaporate presence [Citations.] extent, clauses, to excess-only disfavor should also to a lesser apply, seek the loss falls another which carriers whenever within exculpation (CSE carrier’s limit.” Ins. v. Northbrook & Group Property Casualty 1839, Co. 23 see also 120]; 1845 (1994) Cal.App.4th Cal.Rptr.2d [29 496, Ins. Co. v. Indent. Co. 6 Cal.3d 508 Transport Argonaut (1972) [99 617, reason, P.2d for this the modem trend is to Partly 492 Cal.Rptr. 673].) contributions on a rata basis from all insurers require equitable pro primary “other in their Ins. regardless of insurance” clause type policies. (CSE 1845; see also Co. v. Ins. Co. Indemnity (2001) Group, at p. Pacific Bellafonte Fireman’s Fund Ins. 911]; 80 1236-1238 Cal.App.4th Cal.Rptr.2d [95 Co., Co. v. Maryland Cal.App.4th 1305-1306.) Casualty supra, pp. Whether or not the above rale is is clear that universally applicable, of successive insurers to cover a manifest- obligation primary continuously to is a issue from insurers each ing injury separate obligations other. As one Court of Appeal explained: “[Apportionment among multiple insurers must be from between an insurer and distinguished apportionment claim, its insured. When are on a multiple policies triggered single insurers’ to the ‘other insurance’ clauses of liability apportioned pursuant or under the doctrine of contribution policies equitable [citation] [cita- however, That has no insurers’ apportionment, bearing upon tions]. to the A rata allocation obligations policyholder. pro among [Citation.] insurers ‘does not their to their insured.’ respective obligations reduce is to insurers’ contractual obligation policyholder [Citation.] cover the full extent of the policyholder’s liability (up policy limits).” Industries, Inc. Aetna Co. World & (Armstrong Casualty Surety 1,105-106 also FMC v. Plaisted 690]; see Cal.App.4th Cal.Rptr.2d Corp. [52 This & Companies (1998) Cal.App.4th Cal.Rptr.2d 467].) on the risk is consistent with “the settled mle that an insurer when principle or or first manifests deteriorating damage injury continuous progressively entirety itself remains the insured for obligated indemnify Co., Chemical v. Admiral Ins. ensuing damage injury.” (Montrose Corp. 10 Cal.4th at supra, p. 686.)
Here, Union a primary the evidence is Commercial undisputed *20 Therefore, time even if Commercial insurer the relevant during period. clause, excess” “other insurance” all that Union had a “null and void with it kind of contribution would be established is that had a to seek some right It not relieve Commercial from successive insurers also liable to Dart. would or to Dart. Commercial either its to defend obligation indemnify Union from to of “other type inability Union is therefore incorrect that Dart’s a in its own as obligations primary insurance” clause found its cancels insurer. of is Union there insufficient evidence Commercial contends
Finally, indemnification claims Dart to defense and against justify DES particular ad- already partly on the trial court. We have obligations imposed discussed, As there is substantial evidence to dressed this contention. indeed injuries the trial court’s that the covered support question finding therefore from DES and that ingestion during policy period, arising Dart. But there is a Commercial Union had to defend and duty indemnify of DES claims Dart whether the evidence separate question presented us; it the amount of That is not before has justified damages. question a lost rather concerns to do with the contents of but nothing proving insurance claims in DES cases validity resolving relying against on less than an examination of each claim something individual insured. Keene v. Ins. Co. North America Cir. (See Corp. 1981) (D.C. 1040; Co., Ins. F.2d Co. v. Commercial Union Burroughs Wellcome include at Our did not this supra, F.Supp. p. 1218.) grant review issue. remand,
Therefore, is the terms of on the Court of Appeal apply findings, as delineated the trial court’s determine policy, whether there is sufficient of the trial court’s evidence amount support award of costs. damages defense
V is the cause Court of reversed and judgment Appeal remanded to the Court of with this consistent Appeal proceedings opinion. J., Kennard, Baxter, J., J., Chin, J., J., C.
George, Werdegar, concurred.
BROWN, I reluctantly J. concur. I other agree product liability
Like “evidence two majority, Inc. the Hinkle and [Industries, claims Dart against (Dart)]—known Insurance (Commercial Boone claims—that Commercial Union Company ante, here in issue” (maj. p. 1075) under Union) paid opn., the trial court’s that the occurrence-based supported finding policy provided *21 (id. a evidence at As the by preponderance pp. 1075-1076). “the trial court’s that it majority explains, conclusion was probable Commercial Union the Hinkle and Boone claims to with its paid comply inference, contractual is a reasonable such it be obligation as must (Id. on at Because Commercial Union’s "upheld appeal.” p. 1076.) payment was, itself, of these claims sufficient trial court’s support finding, I see no reason to on the of Charles rely highly testimony Pyne questionable in the Court of id. at reversing Appeal’s judgment. (See pp. 1075-1077.) I believe there was substantial the trial
Although support evidence standard, court’s under a of the evidence I findings preponderance would reach a different conclusion under a more Dart’s stringent standard proof. evidence of the substance consisted of dubious witness policy’s testimony and a few documents at the hinting terms. Even when viewed policy’s most light favorable to this evidence was sufficient judgment, barely support trial court’s that the covered the claims at issue finding If, contend, here evidence. amici curiae preponderance standard, trial court should have a clear and I applied convincing evidence would have affirmed Court of without hesitation. Appeal’s judgment as the from Unfortunately, majority correctly we are explains, precluded considering whether trial court should have a different “standard applied ante, degree law of the case. fn. proof’ by (Maj. opn., p. Therefore, I 4.) grudgingly join my colleagues reversing judgment the Court of Appeal.