Black Silver is a retail operation and manages five boutiques in San Diego County. Between June 2006 and September 2008, Black suffered a loss in the amount of $65,000 because an employee removed property from all the locations. Sequoia Insurance Co. (Sequoia) provided Black Silver with two business owners policies. One was effective from February 1, 2007 to February 1, 2008 and the second from February 1, 2008 to February 1, 2009.
Black Silver alerted Sequoia of the loss and Sequoia reacted with a payment in the amount of $10,000. Black Silver sued Sequoia alleging that the loss was fully covered under the two policies, Sequoia responded with an additional payment of $10,000 as a result of the two consecutive policies. The payments were made under a coverage extender which was limited to $10,000 per policy and independent of the business personal property limits.
Following a bench trial, judgment was recorded as in favor of Sequoia with respects to Black Silver’s allegations for breach of contract and bad faith. Black Silver appealed, asserting that the coverage limitation was not conspicuous, plain, and clear. Black Silver appealed based upon policy wording. The coverage extender read as follows:
“As respects coverage under this endorsement, the following is added to the Businessowners Coverage Form Section I.A. Coverage, Subsection 5. Additional Coverages:
“Coverage for Employee Dishonesty is provided as described in Section I.G. Optional Coverages, Subsection 3. Employee Dishonesty of form BP 0003. The most we will pay under this coverage is the limit of insurance shown for Employee Dishonesty on Page 1 of this endorsement. The requirements of ERISA are provided by this coverage. The limit provided under this endorsement is an additional limit to limits provided under similar coverage if provided elsewhere in this policy. The deductible applicable to business personal property applies to losses under this coverage.”
There is no limit listed on the Declarations. The coverage extender refers to Form SEQ 1525 which does have spaces to enter the limit and applicable deductible. However, the spaces were blank.
The appellate court concluded that with the ambiguous language combined with a reference to “optional coverage,” one could easily interpret the coverage to be in addition to the business personal property limits. The part of the judgment that failed to provide Black Silver the balance of the claim was reversed. The issue was then remanded to the trial court to determine, based on this ruling, how much of Black Silver’s unreimbursed claim should be paid.
Black Silver Enterprises, Inc. v. Sequoia Ins. Co., No. D059682, 2013 WL 704925 (Cal. Ct. App. Feb. 27, 2013)
