Court Opinion

ID: 181292
Source: CourtListenerOpinion
Date Created: 2010-12-17 01:02:23+00
Date Added: 2024-06-11T09:42:59.741449
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              DEC 16 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S . CO U RT OF AP PE A LS

                            FOR THE NINTH CIRCUIT

DAIRYAMERICA, INC., a California                    No. 09-17368
Corporation,
                                                    D.C. No.1:07-cv-00537-LJO-SMS
             Plaintiff - Appellant,                 Eastern District of California,
                                                    Fresno
  v.

NEW YORK MARINE AND GENERAL
INSURANCE COMPANY and CRUMP                         MEMORANDUM *
INSURANCE SERVICES d.b.a.
SOUTHERN MARINE & AVIATION
UNDERWRITERS et al.,

             Defendants - Appellees.

                   Appeal from the United States District Court
                       for the Eastern District of California
                   Lawrence J. O'Neill, District Judge, Presiding

                            Argued November 1, 2010
                          Resubmitted December 3, 2010
                            San Francisco, California

Before: GOULD and IKUTA, Circuit Judges, and MAHAN,** District Judge.

       *     This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
       **    The Honorable James C. Mahan, United States District Judge for the
District of Nevada, sitting by designation.

                                      Page 1 of 5
      Appellant DairyAmerica is a company engaged in the shipment of powdered

milµ. Appellee New Yorµ Marine and General Insurance Company ('NY Marine')

contracted with DairyAmerica to provide ocean marine cargo insurance, and

appellee Crump Insurance Services d.b.a. Southern Marine & Aviation

Underwriters ('Southern Marine') was the underwriter for that insurance policy.

The instant dispute involves DairyAmerica's loss of fifty-nine loads of powdered

milµ stored at a warehouse in Mississippi, which occurred while a temporary

insurance binder was in effect, but before the formal insurance policy from NY

Marine had issued.

      The NY Marine binder purports to cover '[l]awful goods and/or

merchandise consisting principally of, but not limited to, milµ powder of every

µind and description and other goods incidental to the business of the assured . . .

and/or all other interests handled by the assured in the course of their business . . .

whether in transit or store or elsewhere anywhere in the world.' (Supplemental

Excerpts of R. 266). However, the formal policy states: 'This insurance attaches to

all shipments commencing on or after August 11, 2005 and prior to October 1,

2006. . . .' (Supplemental Excerpts of R. 224). Twenty-three of the fifty-nine lost

shipments had been sent to the warehouse before the effective date of the policy,

                                      Page 2 of 5
whereas the other thirty-six arrived at the warehouse after the policy's effective

date. Accordingly, the dispute centers on whether DairyAmerica's agreement with

NY Marine covered the twenty-three, pre-policy-date shipments.

      The district court held that the insurance binder was the controlling

document at the time of the loss and that industry custom controlled the

interpretation of that document. In divining industry custom, the district court

evaluated conflicting expert testimony submitted by the parties and ultimately

granted summary judgment in favor of appellees NY Marine and Southern Marine.

We reverse and remand.

      This court reviews a grant of summary judgment de novo. Feldman v.

Allstate Ins. Co., 322 F.3d 660, 665 (9th Cir. 2003). Therefore, to uphold a grant of

summary judgment, this court must find that based on the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if

any, there is no genuine issue as to any material fact, and the moving party is

entitled to judgment as a matter of law. F ED. R. C IV. P. 56(c); Celotex Corp. v.

Catrett, 477 U.S. 317, 322 (1986). Additionally, this court must draw all justifiable

inferences in the non-moving party's favor. Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 254 (1986).

      The district court erred when it granted summary judgment in favor of the

                                     Page 3 of 5
appellees and found that no genuine issue of material fact existed in this case.

Under California law, a court must give both parties the opportunity to present

extrinsic evidence as to the parties' intent in drafting a contract. Trident Ctr. v.

Conn. Gen. Life Ins. Co., 847 F.2d 564, 569 (9th Cir. 1988) (citing Pacific Gas &

Elec. Co. V. G.W. Thomas Drayage & Rigging Co., 69 Cal. 2d 33 (1968)). Where a

case involves the scope of insurance coverage, the issue of intent is resolved using

extrinsic evidence of industry custom. Ermolieff v. R.K.O. Radio Pictures, 19 Cal.

2d 543, 550 (1942).

      Here, both parties presented extrinsic evidence as to custom in the marine

cargo insurance industry in the form of expert testimony. The district court did not

exclude appellant's expert's opinion, and that opinion meets the standard set forth

in the Federal Rules of Evidence. See F ED. R. E VID. 702 (allowing a qualified

expert to testify when 'scientific, technical, or other specialized µnowledge will

assist the trier of fact to understand the evidence or to determine a fact in issue').

Appellant's expert testified as to his understanding of marine cargo insurance

industry custom, which qualifies as specialized µnowledge. Both parties assert that

testimony on industry custom would assist the trier of fact in understanding the

meaning of the policy at issue.

      Accordingly, drawing all justifiable inferences in the appellant's favor, the

                                      Page 4 of 5
case would more properly be submitted to a trier of fact for adjudication, as it

involves weighing the relative probative value of the experts' opinions. See

Anderson, 477 U.S. at 255 (holding that credibility determinations and weighing of

the evidence are jury functions).

REVERSED AND REMANDED.

                                     Page 5 of 5
                                                                             FILED
                                                                              DEC 16 2010

                                                                         MOLLY C. DWYER, CLERK
                                                                           U.S . CO U RT OF AP PE A LS

DairyAmerica, Inc. v. N.Y. Marine & Gen. Ins. Co. et al., No. 09-17368

IKUTA, J., dissenting.

      In concluding that there is a genuine issue of material fact as to whether the

insurance issued by N.Y. Marine to DairyAmerica covered shipments that

commenced before the policy's inception date, the majority ignores controlling

California law. Insurance binders liµe the one issued by N.Y. Marine in this case

are incomplete, informal, and temporary contracts that are 'subject to the terms and

conditions of the policy to be issued or of the policy ordinarily used by the

company, or, if there is a standard policy in the jurisdiction, according to the terms

and conditions of that policy, and it is presumed that the parties contemplated such

a policy, containing such conditions and limitations.' Parlier Fruit Co. v.

Fireman's Fund Ins. Co., 311 P.2d 62, 71 (Cal. Ct. App. 1957) (quoting 44 C.J.S.

y 230, at 958); see also Chi. Title Ins. Co. v. AMZ Ins. Servs., Inc., 115 Cal. Rptr.

3d 707, 725 (Ct. App. 2010); Nat'l Emblem Ins. Co. v. Rios, 79 Cal. Rptr. 583,

586-87 (Ct. App. 1969); 16 Williston on Contracts y 49:53 (4th ed. 2010).

      Here N.Y. Marine's formal policy stated that the 'insurance attaches to all

shipments commencing on or after August 11, 2005 and prior to October 1,

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2006. . . .' Thus, the policy did not cover shipments commencing before August

11, 2005. Nor has DairyAmerica offered any evidence that the standard policy

ordinarily used by N.Y. Marine, or California's standard ocean marine cargo

policy, covers goods in transit before the policy's inception. The binder did not

alter the terms of the formal policy: it did not state that it covered goods in transit,

and no language in the binder is susceptible to that interpretation. Therefore, under

California law, the terms and conditions of the formal policy are controlling.

      The only evidence that DairyAmerica offers to support its contention that the

insurance policy covers shipments that commenced before the policy's inception

date is an expert's statement that a ''Lost or Not Lost' clause as used in ocean

marine insurance provides that the insurer will pay even if the loss insured against

has occurred prior to the effective date of the insurance.' But the 'lost or not lost

clause' in DairyAmerica's binder states only that the 'Geographical Limits' of the

insurance includes goods 'lost or not lost, from ports and/or places in the world

directly or via ports and/or places in any order' including shipment of the goods by

land, air or water and while the goods are in storage. The clause does not state that

it covers goods in transit, and cannot reasonably be interpreted as doing so.

      Since DairyAmerica did not obtain an insurance policy covering shipments

that commenced before August 11, 2005, and there is not a genuine issue of

                                            2
material fact as to this issue, I would affirm the district court.

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