California Supreme Court Rewrites an Insurance Policy -- 

Jewelers Block Insurers Beware -- 

Seventh Circuit & Majority Rejects California Supreme Court

The United States Court of Appeals for the Seventh Circuit in  Hanover Insurance Company v. A.M.I. Diamonds Company, 397 F.3d 528 (7th Cir. 02/08/2005) explained how the California Supreme Court’s conclusions in E.M.M.I. Inc. v. Zurich American Ins. Co., 84 P.3d 385, 388-89 (Cal. 2004) are preposterous and the reasons why the exclusion for losses occurring from a motor vehicle where the insured is neither in or upon the vehicle at the time of loss, is necessary.

 

E.M.M.I., the Seventh Circuit concluded "is an outlier." To read "upon" to mean "near" would open "a large loophole of uncertain limits, something the precedent refused to do. Since the "in or upon" language appears in two places, once with regard to the diamonds and once with regard to the salesman, the Seventh Circuit, intelligently concludes: "If "in or upon" is given the same meaning in both places, and "upon" means "near," then the exclusion is inapplicable if the diamonds are merely near the vehicle, and not in it -- which would be preposterous."

 

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