Dart Industries, Inc. v. Commercial Union Insurance Co.

This appeal requires us to determine what an insured must prove in order to establish its rights under a lost or destroyed insurance policy. The trial court found that the insured had introduced sufficient secondary evidence to prove the substance of the policy’s material provisions, and rendered judgment for the insured. The Court of Appeal held that the insured was required instead to prove the actual words of those provisions, and reversed the judgment. As will appear, we conclude that the holding was erroneous, and therefore reverse the Court of Appeal’s judgment, with some issues outside the scope of review to be determined on remand.

Facts

From the 1940’s until the late 1960’s, Rexall Drug Company (Rexall), predecessor in interest of plaintiff Dart Industries, Inc. (Dart), was one of a number of pharmaceutical companies that manufactured and marketed the prescription drug diethylstilbestrol (DES), a synthetic estrogen widely used at the time to prevent miscarriages.

Throughout this period, Rexall carried comprehensive general liability (CGL) insurance under policies issued in sequence by its three primary *1065 carriers: Employers Liability Assurance Corporation,…

I reluctantly concur.

Like the majority, I agree that the “evidence of two other product liability claims against Dart [Industries, Inc. (Dart)]—known as the Hinkle and Boone claims—that Commercial Union Insurance Company (Commercial Union) paid under the policy here in issue” (maj. opn., ante, at p. 1075) supported the trial court’s finding that the policy provided occurrence-based *1082 coverage by a preponderance of the evidence (id. at pp. 1075-1076). As the majority explains, “the trial court’s conclusion that it was probable that Commercial Union paid the Hinkle and Boone claims to comply with its contractual obligation is a reasonable inference, and as such it must be "upheld on appeal.” (Id. at p. 1076.) Because Commercial Union’s payment of these claims was, by itself, sufficient to support the trial court’s finding, I see no reason to rely on the highly questionable testimony of Charles Pyne in reversing the Court of Appeal’s judgment. (See id. at pp. 1075-1077.)

Although I believe there was substantial evidence to support the trial court’s findings under a preponderance of the evidence standard, I would reach a different conclusion under a more stringent standard of…

This appeal requires us to determine what an insured must prove in order to establish its rights under a lost or destroyed insurance policy. The trial court found that the insured had introduced sufficient secondary evidence to prove the substance of the policy's material provisions, and rendered judgment for the insured. The Court of Appeal held that the insured was required instead to prove the actual words of those provisions, and reversed the judgment. As will appear, we conclude that the holding was erroneous, and therefore reverse the Court of Appeal's judgment, with some issues outside the scope of review to be determined on remand.

Facts

Throughout this period, Rexall carried comprehensive general liability (CGL) insurance under policies issued in sequence by its three primary carriers: Employers Liability Assurance Corporation, Ltd. (Employers), predecessor in interest of defendant Commercial Union Insurance Corporation (Commercial Union), for the years 1946-1951; Liberty Mutual Insurance Company (Liberty Mutual), for the years 1951-1966; and Continental Insurance Company (Continental), for the years 1967-1981.

From the mid-1970's onward, a large number of…