E.M.M.I., Inc. v. Zurich American Insurance Co.

Court of Appeal of California, Second District, Division Five · 2002 · Contracts

ContractsInsurance policy interpretationJeweler's block insurancecontractsinsurancejeweler's blockpolicy exclusionexception to exclusion

Facts

Plaintiff's salesperson, Brian Callahan, was driving to an appointment with two jewelry display cases locked in the trunk of his car. After hearing a rattling noise, he pulled over, left the car running with the keys in the ignition, and got out to inspect the tailpipe area while standing behind the car. An unidentified man brushed by him, entered the car, and drove away; the car was later recovered but the jewelry was missing. The policy excluded theft from any vehicle unless the insured, an employee, or another attendant was actually in or upon the vehicle at the time of the theft.

Issue

Whether a jeweler's block insurance policy covers theft from a vehicle when the insured's employee is outside the car, standing behind it and inspecting a possible mechanical problem, at the moment the thief drives the car away. Also, whether expert or industry-custom opinion could be used to interpret the policy term "upon."

Rule

Insurance policy language is interpreted in its ordinary and popular sense, and unambiguous language controls. In a jeweler's block policy excluding theft from a vehicle unless the insured or employee is actually in or upon the vehicle at the time of theft, "upon" means on the vehicle, and the word "actually" requires literal, real presence rather than mere proximity, attendance, intent, or observation. Opinion evidence on the meaning or scope of policy language is irrelevant to the court's task of interpretation.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nadia Verma, a salesperson for Sierra Crest Gems, parked on a street in Denver with gemstone trays locked in the SUV's cargo area. She stepped onto the rear bumper to reach the roof rack, and while still standing on the bumper, a thief entered through the driver's door and sped away with the stones.

Under a jeweler's block policy excluding theft from any vehicle unless the insured or employee is actually in or upon the vehicle at the time of theft, is the loss most likely covered?

Explanation. The majority held that unambiguous policy language controls, that "upon" means on, and that "actually" requires literal presence rather than mere proximity or attendance. Because Nadia was physically on the SUV at the moment of theft, the exception to the exclusion applies. Intent is irrelevant, and the policy does not require the merchandise to be on her person. (Derived from E.M.M.I., Inc. v. Zurich American Insurance Co. (n.d.).)