Klopman v. Zurich American Insurance

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-1773
ANDREW KLOPMAN,
Plaintiff - Appellant,
and
GAYLE KLOPMAN,
Plaintiff,
versus
ZURICH AMERICAN INSURANCE COMPANY OF ILLINOIS,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Williams D. Quarles, Jr., District Judge.
(CA-04-2529-WDQ)
Argued: February 1, 2007 Decided: May 9, 2007
Before MOTZ, GREGORY, and SHEDD, Circuit Judges.
Affirmed by unpublished opinion. Judge Gregory wrote the opinion,
in which Judge Motz and Judge Shedd joined.
ARGUED: Daniel P. Doty, SCHULMAN & KAUFMAN, L.L.C., Baltimore,
Maryland, for Appellant. Linda S. Woolf, GOODELL, DEVRIES, LEECH
& DANN, L.L.P., Baltimore, Maryland, for Appellee. ON BRIEF:
Howard J. Schulman, SCHULMAN & KAUFMAN, L.L.C., Baltimore,
Maryland, for Appellant. Joseph B. Wolf, GOODELL, DEVRIES, LEECH
& DANN, L.L.P., Baltimore, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
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GREGORY, Circuit Judge:
The question before the Court is whether Andrew Klopman has
proven by “clear and positive” evidence that he had an insurance
policy with Zurich American Insurance Company of Illinois (“ZAICI”)
covering one of his rental properties. Finding that Klopman has
not met his burden of proof, we affirm the decision below granting
summary judgment to the insurance company.
I.
In October 2003, a former tenant sued Klopman in Maryland
state court for personal injuries arising from exposure to lead
paint at 3719 Towanda Avenue (“the property”), a rental property
Klopman owned from April 1983 until May 1984. Believing that ZAICI
had insured the property under a $300,000 policy, Klopman asked the
company to defend and indemnify him in the lawsuit. ZAICI refused,
claiming that it had not insured the property.
In June 2004, Klopman initiated this action for a declaratory
judgment that ZAICI is obligated to defend and indemnify him in the
lead paint lawsuit. ZAICI removed the action to federal court,
where the district judge granted summary judgment in ZAICI’s favor
because, the judge found, Klopman could not prove the existence of
an insurance policy by “clear and positive” evidence, as required
under Maryland law.
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Klopman does not have the original policy or a duplicate
because, he contends, a basement flood destroyed his business
records in 1992. Nonetheless, he maintains that his insurance
agent, Barton Keiser of Keiser & Keiser, obtained the insurance in
keeping with Klopman and Keiser’s routine practice of securing
insurance for the many investment properties Klopman owned.
Klopman and Keiser do not recollect whether Keiser ever
notified or was told by Klopman to notify an insurance carrier of
Klopman’s purchase of 3719 Towanda Avenue, whether they ever saw an
insurance policy listing the property as an insured property, or
whether Keiser ever provided Klopman with proof of insurance.
Rather, Klopman primarily bases his assertion that the property was
insured on a copy of a declarations page. A declarations page is
usually the first page of an insurance policy, exclusive of the
cover, and it contains limited information about the policy.
Klopman received the copy of the declarations page he has submitted
into evidence from an attorney he retained in 2001 for another lead
paint suit. The attorney received the document from an
investigator she hired because all of Klopman’s business records
were destroyed. The investigator, in turn, received the document
from an insurance broker with whom Klopman worked in the mid-1980s.
The declarations page indicates that it belongs to a ZAICI policy,
numbered Special Multi-Peril (“SMP”) 70 87 816, that was issued
through George F. Brown & Sons, a surplus lines broker and
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authorized agent of ZAICI.1 The declarations page contains
Klopman’s name and address and indicates that the policy’s coverage
period is May 27, 1982 to May 27, 1983 and its premium is
$2,505.99, including $72.99 for a state surplus lines tax. 3719
Towanda Avenue is not one of the three properties listed on the
declarations page (nor are several of the approximately nine other
properties Klopman owned that year). The declarations page does,
however, indicate that the policy incorporated by reference a form
L6415 or L6416. An L6415 or L6416 typically lists the additional
properties, if any, covered by a policy. Klopman does not have
this or any other form.
ZAICI’s extensive search for the alleged policy and a copy of
the declarations page was unsuccessful. ZAICI acknowledges that if
the policy in fact existed, it would have been destroyed by now
pursuant to the company’s policy of destroying files after ten
years.
II.
We review the district court’s summary judgment ruling de
novo, viewing the facts in the light most favorable to the
nonmoving party and drawing all reasonable inferences in that
1
Surplus lines insurance is a type of insurance available
when, due to the nature and severity of the risk, an insured cannot
obtain coverage from insurers authorized to do business in the
state of Maryland. See Md. Code Ann., Ins. § 3-301 (2005).
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party’s favor. See Varghese v. Honeywell Int’l, Inc., 424 F.3d
411, 416 (4th Cir. 2005). Summary judgment is justified if the
pleadings, depositions, answers to interrogatories, and affidavits
demonstrate that there is no genuine factual issue for trial and
that the moving party is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(c). “[J]udgment as a matter of law is proper
only if ‘there can be but one reasonable conclusion as to the
verdict.’” Varghese, 424 F.3d at 411 (quoting Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 250 (1986)).
The proponent of an original writing——here, Klopman——typically
must produce the writing to prove its contents. Fed. R. Evid.
1002. But if the original is lost or destroyed in good faith,
other evidence of the writing’s content is admissible. Fed. R.
Evid. 1004(1). As with all other issues of fact, the trier of fact
determines whether the asserted original ever existed and whether
the other evidence accurately reflects the original’s contents.
Fed. R. Evid. 1008.
Because the instant case is a diversity dispute between
alleged parties to an insurance contract, Maryland law governs as
to the burden of proof Klopman must meet. In Maryland, the
proponent of a lost insurance policy “must establish the fact of
loss and the terms and conditions of the policies by ‘clear and
positive’ evidence.” In re Wallace & Gale Co., 275 B.R. 223, 230
(D. Md. 2002), vacated in part on other grounds, 284 B.R. 557 (D.
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Md. 2002), aff’d, 385 F.3d 820 (4th Cir. 2004); see also Barranco
v. Kostens, 54 A.2d 326, 328 (Md. 1947) (“The evidence necessary to
establish a lost instrument and to prove its contents must be clear
and positive and of such a character as to leave no reasonable
doubt as to its terms and conditions.”).
Maryland courts have not yet clarified whether the “clear and
positive” standard approximates the “mere preponderance” standard
or the “clear and convincing” standard. Accordingly, federal
courts in Maryland have sometimes chosen one standard and sometimes
chosen the other. Compare Lowry’s Reports, Inc. v. Legg Mason,
Inc., 271 F. Supp. 2d 737, 757 n.3 (D. Md. 2003) (assuming that the
standard requires clear and convincing evidence), with Klopman v.
Zurich Am. Ins. Co., No. Civ. WDQ-04-2529, 2005 WL 1367080, at *2
n.5 (D. Md. June 7, 2005) (assuming that the standard requires
“substantially more than a preponderance”); see also Wallace, 275
B.R. at 230 n.6 (contrasting the standards chosen by various
courts). Rather than decide the standard’s meaning, we proceed
merely with the understanding that Klopman’s evidence must at least
“leave no reasonable doubt” as to the existence and the terms and
conditions of the insurance policy he insists ZAICI issued to him.
See Barranco, 54 A.2d at 328. Having done so, we find that there
is reasonable doubt if not as to the existence of policy #SMP 70 87
816, at least as to the terms and conditions of the policy.
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III.
We first consider Klopman’s evidence regarding the existence
of a policy issued to him by ZAICI. Klopman primarily relies on
the copy of the declarations page associated with policy #SMP 70 87
816.2 In addition, Klopman has shown that ZAICI revised a record
retention policy governing SMP policies, specifically, by June of
1984. From this, we may infer that, despite its protests to the
contrary, ZAICI indeed issued SMP policies in 1983 such as policy
#SMP 70 87 816.3 The copy of the declarations page, which bears
ZAICI’s name as the insurer and Klopman’s name as the insured, plus
the inference that ZAICI issued SMP policies is circumstantial
evidence that ZAICI issued an SMP policy to Klopman.
Klopman supplied additional evidence from his business
ledgers, copies of which show that he wrote two checks in 1982 to
Keiser & Keiser totaling the exact amount of the premium listed on
the declarations page. These ledgers plus the declarations page
2
We overlook the admissibility problems plaguing the copy of
the declarations page because Klopman’s claim fails whether or not
we deem the page admissible. In brief, those problems are that (1)
the copy of the page barely qualifies as a duplicate because it is
partially illegible and contains handwritten notes, (2) Klopman has
not offered evidence sufficient to authenticate the page, and (3)
the page constitutes hearsay. See Fed. R. Evid. 901(a), 801,
1001(4), 1003.
3
In ruling otherwise, the district court failed to take the
evidence in the light most favorable to Klopman. Instead, the
court credited the testimony of a ZAICI underwriter that, from 1978
to 1983, ZAICI issued stand-alone “Owner’s, Landlord’s and
Tenant’s” policies, not package policies like the SMP policy
identified on the declarations page.
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are circumstantial evidence that Klopman paid for policy #SMP 70 87
816 and therefore the policy existed. We note that ZAICI’s
inability to find the policy is not evidence, as ZAICI argues, that
the policy never existed. ZAICI acknowledges that if policy #SMP
70 87 816 in fact existed, ZAICI would have destroyed the policy
information pursuant to its record retention policy.
Klopman’s final evidence as to the existence of a policy
is that ZAICI defended and paid a claim under policy #SMP 70 87 816
in 1986. That year, Klopman settled a lawsuit by a former tenant,
Theresa St. Pierre, for injuries sustained in a September 12, 1982
slip and fall at 2828 Frederick Avenue, another rental property
Klopman owned. The settlement documents reflect that ZAICI, on
behalf of Klopman, paid St. Pierre $6,575 in exchange for St.
Pierre’s agreement to release ZAICI and Klopman from all claims and
demands. ZAICI’s own records confirm these details. A printout
titled “Claim Summary Information” from ZAICI’s database of
computerized claims information identifies the policy number (70 87
816), a claim number, a claimant named Theresa Arsenault,4 an
accident date of September 12, 1982, a brief description of the
claim (slip and fall), the amount paid to indemnify the claim
($6,575), a supervisor’s name, a date for the last activity on the
file, and the status of the claim (closed). Although Klopman’s
4
We may presume that Theresa St. Pierre was known by two
surnames because even Klopman’s documents from the lawsuit refer to
“Theresa St. Pierre” and “Theresa Arsenault.”
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name does not appear on ZAICI’s printout, the printout and
Klopman’s settlement documents together are circumstantial evidence
that Klopman had a policy numbered SMP 70 87 816 and issued by
ZAICI.5
In sum, viewing the evidence in the light most favorable to
Klopman, we find that he has produced sufficiently clear evidence
for a reasonable fact-finder to conclude that ZAICI issued policy
#SMP 70 87 816 to him.
IV.
Notwithstanding this initial showing, Klopman has not produced
similarly clear evidence as to the terms and conditions of policy
#SMP 70 87 816. Klopman argues, for example, that he has proved
the policy’s contents by placing into the record examples of the
form L6415 or L6416 noted on the declarations page. Such forms
typically list the additional properties covered by a policy and
specifically state that the policy covers those additional
properties. The sample forms in the record, however, are not
associated with policy #SMP 70 87 816, the policy Klopman alleges
5
A ZAICI claims specialist testified that ZAICI’s decision to
pay a claim does not mean that a policy existed. According to the
claims specialist, ZAICI paid claims in three circumstances: (1)
when a policy existed; (2) by mistake; or (3) when paying a claim
was cheaper than determining whether a policy existed. Construing
the evidence in the light most favorable to Klopman and drawing all
justifiable inferences in his favor means presuming that ZAICI paid
the St. Pierre claim associated with policy #SMP 70 87 816 because
the policy in fact existed.
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ZAICI issued him.6 More importantly, the forms are not clear
evidence of the terms and conditions of policy #SMP 70 87 816: the
forms unambiguously state that they are to be attached “to [the]
Policy . . . to complete said policy.” J.A. 58, 60. Thus, even if
the forms were the very forms associated with Klopman’s policy,
they would establish only the policy’s additional terms, not its
original or core terms. For this reason, it is immaterial that, as
Klopman emphasizes, a ZAICI underwriter testified that the sample
forms contained language that ZAICI would have used. The forms’
language is insufficient to meet Klopman’s burden.
To prove the policy’s contents further, Klopman highlights the
testimony by a ZAICI underwriter that, from 1978 to 1983, ZAICI
used standard policy forms pre-printed by the Insurance Services
Office. The record, however, contains none of these standard
policy forms. Nor does the record contain an example of any policy
ZAICI issued the year Klopman purchased and allegedly insured 3719
Towanda Avenue. Examples of standard policy forms or
contemporaneous policies issued by ZAICI would provide evidence of
the terms of Klopman’s lost policy.7
6
In fact, one of the forms has an expiration date indicating
that it expired three years before Klopman insists ZAICI issued him
a similar form. The other form bears no date at all.
7
For this reason, we note that Klopman’s reliance on Lowry’s
Reports, Inc. v. Legg Mason, Inc., 271 F. Supp. 2d 737 (D. Md.
2003), is misplaced. In Lowry’s Reports, a magazine publisher
sought to prove the existence of a lost magazine subscription
agreement. To meet its burden, the publisher (1) testified that it
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Klopman also seeks to prove the policy’s contents by way of an
affidavit from Keiser swearing to knowledge Keiser gained from over
thirty years as an insurance agent and broker. Keiser states in
relevant part:
Based on my personal experience and knowledge . . . it
was standard industry practice in 1982 and 1983 for
policies of insurance with liability coverage without
exception to contain language that stated, in effect,
that the insurance company would pay in behalf of the
insured all sums which the insured became legally
obligated to pay as damages because of bodily injury and
property damage to the extent of the insurance caused by
an occurrence and also pay for the cost of defense of any
law suit.
. . .
Based on my own standard and routine business practices
and those of Keiser & Keiser, as well as my years of
personal experience as an insurance broker . . . I am
able to state the following. Policy #SMP 70 87 816
contained language which stated that the insurance
company would pay, on behalf of the insured, all sums
which the insured became legally obligated to pay as
damages because of bodily injury and property damages to
the extent of the insurance caused by an occurrence and
arising out of the ownership, maintenance or use of the
insured premises and that the company had the duty to
defend any suit against the insured seeking damages on
account of such bodily injury or property damage.
required every subscriber to execute an identical subscription
agreement, (2) “offer[ed] several contemporaneous subscription
agreements, executed by others, as evidence of the terms of the
‘lost’ . . . agreement,” and (3) presented evidence of the
defendant’s annual payment to the magazine and the defendant’s name
and address on the magazine delivered. Id. at 757. Although, like
the publisher, Klopman testified that he added every new rental
property he purchased to the same ZAICI policy, he has not taken
the additional (and necessary) step of offering contemporaneous
policies to establish the terms of his lost policy.
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J.A. 588-89. Keiser’s statement, however, is not evidence that
leaves no reasonable doubt as to the terms and conditions of policy
#SMP 70 87 816. His supposition as to the policy’s contents omits,
for example, any exceptions or unique terms policy #SMP 70 87 816
might have contained. No court tasked with issuing a declaratory
judgment as to insurance coverage, as sought here, could consult
this bare testimony to determine the limits of ZAICI’s duty to
defend Klopman or the amount ZAICI might be legally obligated to
pay for damages related to 3719 Towanda Avenue.
Klopman’s final, unsuccessful attempt to prove the contents of
policy #SMP 70 87 816 relates to the policy’s limits. From an
answer to an interrogatory in the St. Pierre case, Klopman seeks to
prove that the policy provided liability coverage with limits of
$300,000. In the St. Pierre case, St. Pierre’s lawyers asked
Klopman to “[s]tate the limits of liability of insurance covering
falls on the said . . . property [2828 Frederick Avenue] and attach
a copy of your insurance policy to your Answer.” J.A. 103.
Klopman answered: “Limits on OLT [Owner’s, Landlord’s, and
Tenant’s] Insurance Policy are $300,000.00.” Id. Because both the
instant case and the St. Pierre case involved policy #SMP 70 87
816, and because the ZAICI underwriter testified that limits of
liability of $300,000 were not unusual in ZAICI policies between
1978 and 1983, Klopman argues that the answer to the interrogatory
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in the St. Pierre case establishes the policy limit in the instant
case.
Klopman’s argument fails. The interrogatory response Klopman
cites concerned his property at 2828 Frederick Avenue, not 3719
Towanda Avenue. We cannot be certain, then, that the limits
applicable to St. Pierre’s 1982 slip and fall at 2828 Frederick
Avenue——months before Klopman purchased 3719 Towanda Avenue——are
the same limits applicable to another tenant’s 1983 lead paint
injuries at 3719 Towanda Avenue. Moreover, none of Klopman’s
interrogatory responses in the St. Pierre case identified the
number, issuing insurer, or effective dates of the policy referred
to in the specific response Klopman cites, much less specific
language in the policy. The interrogatory asked Klopman to produce
the policy he relied on, but he did not. Consequently, Klopman’s
documents from the St. Pierre case shed little light on the terms
and conditions of policy #SMP 70 87 816, especially as those terms
relate to 3719 Towanda Avenue.
We do not allow a litigant faced with a motion for summary
judgement to “create a genuine issue of material fact through . .
. the building of one inference upon another.” Beale v. Hardy, 769
F.2d 213, 214 (4th Cir. 1985). Aside from evidence that ZAICI’s
limit of liability for an unrelated claim arising from an unrelated
injury on a different property during a different year was
$300,000, Klopman has not produced a single term or condition
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related to policy #SMP 70 87 816. In the absence of proof as to
the terms and conditions of the policy, we do not reach the
question of whether Klopman has proven by clear and positive
evidence that the policy actually covered 3719 Towanda Avenue.
V.
Although the case at bar is an action for declaratory
judgment, in considering whether summary judgment was properly
granted, the critical question remains “whether a fair-minded jury
could return a verdict for the plaintiff on the evidence
presented.” Anderson, 477 U.S. at 252. Because Klopman has failed
to present evidence “of such a character as to leave no reasonable
doubt” as to the terms and conditions of policy #SMP 70 87 816, we
cannot answer the question in the affirmative. Barranco, 54 A.2d
at 328. The decision below is affirmed.
AFFIRMED
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