PMI Mortgage Insurance v. American International Specialty Lines Insurance

MEMORANDUM ***

In this diversity action, PMI Mortgage Insurance Co. (PMI) sued American International Specialty Lines Insurance Company (AISLIC) for breach of an insurance contract and declaratory relief. AISLIC appeals from a final judgment entered against it after a bench trial. This case has been before this Court before, PMI Mortgage Ins. Co. v. American Int'l Specialty Lines Ins. Co., 394 F.3d 761 (9th Cir.2005). The remaining facts are well known to the parties and will not be repeated.

AISLIC argues that the district court erroneously shifted the burden of proving that the loss was not covered and the allocation between covered and uncovered losses to it, and that the district court improperly excluded expert testimony. We disagree and affirm.

The policy language in question, although part of the “Insuring Agreement,” clearly functions as an exception to the definition of a “Loss,” the functional equivalent of an exclusion to coverage, the burden of proof of which falls upon the insurer. Aydin Corp. v. First State Ins. Co., 18 Cal.4th 1183, 1188, 1191 , 77 Cal. Rptr.2d 537 , 959 P.2d 1213 (1998). Where the insurer has the burden of proving the lack of coverage, it also…