St. Paul Fire & Marine Insurance v. "K" Line America, Inc.
Docket: No. 02-55978
Court: Court of Appeals for the Ninth Circuit; October 30, 2003; Federal Appellate Court
K” Line America, Inc. (KAM) appealed the district court’s summary judgment in favor of St. Paul Fire and Marine Insurance Company (St. Paul), which was affirmed by the court. The review of the summary judgment was conducted de novo, applying California's substantive law due to the diversity action. St. Paul issued a claims-made insurance policy to KAM in 1992, renewing it annually until the last renewal covering January 1, 1998, to January 1, 1999. This policy provided coverage for claims made during the policy period, contingent on KAM not having knowledge or reasonable foresight of any negligent acts that could lead to claims at the time the policy took effect. From 1995 to 1997, KAM received specific information regarding potential liability for alleged negligent conduct but did not notify St. Paul until 1998. St. Paul then initiated a declaratory judgment action to clarify its lack of obligation to indemnify KAM for alleged negligence from 1995 and 1996. The district court agreed with St. Paul, concluding that each policy renewal constituted a new policy, meaning KAM lacked coverage under the 1998 renewal since it was aware of potential liability at that time. On appeal, KAM argued that a single policy existed from 1992 to 1998, asserting that the phrase "at the time this policy took effect" referred to 1992 and that coverage should apply as they were unaware of the negligence then. However, the court upheld the district court’s conclusion that renewals create distinct contracts for coverage and notice. Since KAM was aware of the potential liabilities when the 1998 renewal took effect, coverage was precluded under the policy’s express terms. The decision was affirmed, and the disposition is not intended for publication or citation in this circuit except under specific Ninth Circuit rules.