The First Circuit reversed the district court's denial of the insureds' claim for coverage despite not being able to locate the actual policy. Cardigan Mt. School v. N.H. Ins. Co., 2015 U.S. App. LEXIS 8725 (1st Cir. May 27, 2015).
In 2013, the school received a demand letter asserting a claim based upon events that allegedly occurred during the 1967-1968 school year. The record before the First Circuit did not include the details of what occurred. The school sought a defense from New Hampshire Insurance Company under a policy the school argued had been issued during the relevant time period.
New Hampshire rejected the request. It was unable to locate any policy covering the school during the relevant time period. New Hampshire argued it was not the school's carrier at the time of the alleged incidents.
The school filed suit, seeking a judgment adjudicating and declaring the existence of, and the school's rights under, a policy issued by New Hampshire. The district court granted New Hampshire's motion to dismiss, concluding that the school's complaint did not plausibly show the existence of the policy.
On appeal, the First Circuit noted that the complaint did not include a direct allegation that the insurance policy existed. Instead, it alleged that an accounting firm prepared an audit report for the school dated September 1971. The report stated that from September 1970 to September 1971, the school had a "Special Multi-Peril" policy from New Hampshire, which included $1,000,000 in "General Liability" Coverage.
The school's complaint alleged that "Cornelius Bakker, the school's business manager between 1967 and 1970, is certain the school had insurance during his tenure." The complaint further alleged that Bakker worked with a local insurance broker to secure coverage for the school. And the complaint alleged that Bakker did not believe that the school changed carriers while he was the business manager between 1967 and 1970.
The First Circuit found these allegations to be specific and factual enough to survive a motion to dismiss. The school alleged specific facts concerning an audit report that tended to show that it had a policy from New Hampshire as of 1971. The school then linked that allegation to the recollections of specific individuals who were involved in the relevant events and believed both that the school had a general liability policy in the preceding years, including the crucial 1967-1968 school year, and that there had been no change in carrier during that period of time.
There is no Hawaii case law regarding burdens of proof and the necessary showing to demonstrate coverage for years in which a policy cannot be located. This case should be of interest to Hawaii practitioners faced with disputed issues of coverage where there is evidence of a policy but no actual policy.