The facts of this case are not disputed. On February 17, 2000, a jewelry sales representative, Brian Callahan (Callahan), left his home with two “hard cloth garment bags” containing jewelry. Some of the jewelry was owned by E.M.M.I, Inc. (E.M.M.I.) a manufacturer and marketer of jewelry. The bags were in the trunk of his vehicle. Hearing noise from the rear of his vehicle, he stopped, exited the vehicle, and investigated the tail pipe while the vehicle remained running and with the keys in the ignition. He remained within two feet of the vehicle. An unknown person got into the vehicle and drove off leaving Callahan in the street. The vehicle was recovered and the jewelry was not.

E.M.M.I. was insured with a jewelers block policy issued by the Zurich American Insurance Company (Zurich). The policy was on an all risk basis for the jewelry; any loss or damage was covered, unless excluded. One exclusion provided that Zurich would “not pay for loss caused by or resulting from theft from any vehicle unless, you, an employee, or other person whose only duty is to attend to the vehicle are actually in or upon such vehicle at the time of the theft.” Callahan was specifically designated to carry E.M.M.I.’s jewelry.

E.M.M.I. filed a claim with Zurich and because E.M.M.I. could not show that Callahan was touching the vehicle at the time of the theft, the claim was denied. E.M.M.I. filed suit because Callahan had remained in close proximity to the vehicle during the theft. Zurich filed for summary judgment because Callahan was not in or upon the vehicle at the time of the theft. The trial court ruled in favor of Zurich and E.M.M.I. filed an appeal.

The appellate court upheld the decision noting that Callahan was crouched down behind the vehicle and inspecting the exhaust system and that "actually in or upon" does not mean close proximity.

E.M.M.I. Inc. v. Zurich American Ins. Co., No. S109609, Supreme Court of California, February 23, 2004