Lost Policy Discovery (NY)

Insurer ordered to produce specimen forms and a witness to testify on those forms.

A federal magistrate judge from the Western District of New York, applying New York law, held that policyholder American Precision Industries, Inc. (“API”) was entitled to deposition testimony and policy forms from an insurer in connection with its effort to prove up lost policies, and therefore granted API’s motion to compel.

API filed suit against Federal Insurance Company, Fireman’s Fund Insurance Company, and North River Insurance Company (“North River”) seeking a declaration that the insurers must defend and indemnify API in asbestos-related claims.  In relevant part, API sought coverage under an alleged commercial general policy, ML-208455 (“the Policy”), allegedly issued by North River to API.  While neither API nor North River had located the policy, API had produced secondary evidence of its existence, including contemporaneous certificates of insurance, correspondence, and premium audits referring to the Policy.  Nevertheless, North River refused to acknowledge that it issued the Policy.

Among other things, API sought discovery of “all liability forms and/or standard or form policy language North River used in drafting general liability insurance policies sold during the same period as the Policy that included an ‘ML’ prefix.”  North River refused to produce responsive documents.  API filed a motion to compel the production of the specimen forms and testimony regarding those forms.

The court summarized New York lost policy law as follows:  the policyholder bears the burden of showing that an insurance contract covers a loss; the policyholder can rely on secondary evidence to prove the terms and conditions of the lost policy, assuming the policyholder cannot locate the original policy; specimen or standard policy forms are accepted as evidence of a lost policy’s terms; witness testimony connecting the vital components of coverage can provide reliable and secondary evidence of a lost policy’s terms.  Based on this law, the court held:  “Given that neither party has been able to locate the Policy … the policy forms sought by API are indisputably relevant to its case and must be produced.”  The court also ordered North River to designate a witness to testify on the forms used during the relevant time frame.  American Precision Industries, Inc., v. Federal Ins. Co., No. 14-CV-1050, (W.D.N.Y. Feb. 26, 2018).