Opinion ID: 733428
Heading Depth: 3
Heading Rank: 2

Heading: Then In Use

Text: 51 American's final issue on appeal is that the instruction was further inaccurate for failing to fully describe Hanover's burden in proving mutual mistake. American contends that by stating that Hanover was required to prove that American knew that Hanover intended to include the endorsement then in use, the district court effectively eliminated the requirement that Hanover prove American agreed to a policy exclusion that eliminated liability for subcontractor liability. In essence, the then in use language entitled the jury to find against American if it found that American had intended any professional liability exclusion to be included in the policy. 52 In contrast, Hanover contends that the jury was instructed that it had to find that American knew Hanover intended to include specific numbered exclusions referred to in the endorsement page of the umbrella policy. Hanover submits that the jury was not required to find that American intended the specific content of the endorsements. It contends that 53 [t]o argue that an insurance contract cannot be binding unless the insured knows the precise wording of the policy at the time the policy is bound ignores the issue before the Court and jury below. American knew, and indeed should have known based upon the circumstances and its experience, that the general liability policies would not include professional coverage in any respect. 54 Brief of Appellee, p. 31. 55 Hanover's argument, however, was rejected by this court in the earlier appeal from summary judgment. We specifically held that Hanover must prove more than that some professional liability exclusion endorsement was contemplated by American. We held instead that Hanover must prove by clear and convincing evidence that American actually agreed to the specific terms of the endorsement that Hanover seeks to add to the contract. Hanover's argument is foreclosed by our earlier decision. 56 The instruction as given improperly allowed the jury to find for Hanover if it proved that American should have known that Hanover intended to include whatever professional liability exclusion Hanover was then using. Inasmuch as American admitted that it intended the policy to include a professional liability exclusion for its own acts of professional negligence as opposed to the negligent acts of its subcontractors, such an instruction effectively decided the case. The instruction as given allowed reformation if the jury concluded only that American should have seen the endorsement number on the face page of the umbrella policy, regardless of whether it had any knowledge of the content of that endorsement. 57 To obtain reformation, however, Hanover has a significantly higher burden of proof. When Hanover negligently failed to include an endorsement that it claims was intended to be part of the policy, it assumed the substantial burden of proving the specifics of American's understanding in order to be entitled to reformation. In the absence of such proof by clear and convincing evidence, Hanover is bound by the contract as written--which includes no professional liability exclusion at all. 58 As we wrote in our earlier opinion, Hanover must prove that American actually intended that a specific professional liability exclusion should be integrated into the policy, as well as the exact scope of the restriction, including that the rider would eliminate coverage for American's vicarious liability for actions of professional negligence by its subcontractors. 33 F.3d at 731. The instruction as given improperly collapsed the required finding into a finding that American should have been on notice to discover what Hanover intended the terms of the endorsement to be. As such, the instruction was error.