Cite as 97 C.D.O.S. 9030
PFIZER INC., et al., Petitioners,
v.
THE SUPERIOR COURT OF ORANGE COUNTY, Respondent;
AETNA CASUALTY & SURETY COMPANY et al., Real Parties in Interest.
No. G021411
In the Court of Appeal of the State of California
Fourth Appellate District
Division Three
(Super. Ct. No. 718166)
COUNSEL
Troop, Meisinger, Steuber & Pasich, David W. Steuber, Martin D. Katz,
Jeffrey A. Rosenfeld, Covington & Burling, Mark H. Lynch, Timothy C.
Hester, Seth A. Tucker and Pierce O'Donnell for Petitioners.
No appearance for Respondent.
Sinnott, Dito, Moura & Puebla, Randolph P. Sinnott, John A. Dito, Debra
R. Puebla, Suzanne M. Rufflo, Simpson, Thacher & Bartlett, Barry R.
Ostrager, Andrew S. Amer, Elizabeth Bassin, Julie Levy and James D. Otto for
Real Parties in Interest.
Lynberg & Watkins, Charles A. Lynberg, Pamela H. Roth, Horvitz & Levy
and Peter Abrahams as Amici Curiae on behalf of Real Parties in Interest.
Filed October 29, 1997
Certified for Publication December 1, 1997
ORDER GRANTING REQUEST FOR PUBLICATION
THE COURT:
Pursuant to rules 976(b) and 978 of the California Rules of Court, the
request for publication of the opinion of this court filed October 29, 1997,
is GRANTED.
The opinion is ordered published in the Official Reports.
SONENSHINE, J.
WE CONCUR: WALLIN, ACTING P.J., and CROSBY, J.
Original proceedings; petition for a writ of mandate to challenge an order of
the Superior Court of Orange County, William F. McDonald, Judge. Writ
issued.
This case arises out of tort claims against Pfizer Inc. and Shiley
Incorporated (Pfizer) regarding the Bjork-Shiley Convexo/Concave (BSCC)
artificial heart valve. Three categories of claims were brought against
Pfizer: (1) claims where the valves actually fractured; (2) claims where the
valves continue to function, but the patients fear they will fracture; and
(3) claims where the patients had their valves removed and replaced with
other cardiac prostheses.
Subsequent to the filing of these claims, Dairyland Insurance Company sought
declaratory relief regarding its duties to defend and indemnify Pfizer in
the underlying tort litigation. Pfizer cross- complained against Aetna
Casualty and Surety Company (Aetna) and a number of other insurers seeking
declaratory relief and specific performance of the insurers' duties to defend
and indemnify. During the course of discovery, Pfizer sought via
interrogatories information regarding claims by other insureds who
manufactured surgically implanted medical devices, the type of devices made
and what event the insurers decided triggered the potential for coverage.
When the insurers refused this information, Pfizer brought a motion to compel
responses to the interrogatories. The trial court sustained the insurers'
objections.
[FOOTNOTE 1]
Pfizer then filed a petition for writ of mandate asking us to direct the
trial court to compel responses to the interrogatories. We stayed the trial
court proceedings and issued an alternative writ.
[FOOTNOTE 2] We now issue a peremptory writ granting Pfizer
the requested relief.
Factual and Procedural Background
The trial court bifurcated the litigation, designating Phase I as the
determination of "trigger of coverage" issue. It defined the trigger of
coverage issue as follows: "The `trigger of coverage' issue relates to
what must transpire `during the policy period' of the insurers' policies in
order to give rise to the insurers' obligations (subject to the other terms
and conditions of the policies). [¶] . . . `[T]rigger of coverage'
discovery also includes: . . . the existence of a duty to defend vs. a duty
to pay/reimburse defense costs, and the implications of the distinction
between these two obligations on the `trigger of coverage' issue (if
any)."
Pfizer sought three categories of information from the insurers: (1) the
identities of other medical device manufacturers, other than heart valves,
who had notified the insurers of potential or pending claims; (2) the types
of devices involved in those claims; and (3) what event had triggered
potential coverage. The insurers refused to respond and Pfizer brought the
underlying motion to compel. The insurers objected, claiming these
interrogatories sought irrelevant and inadmissible material, the request was
overly burdensome, and the responses would violate other insureds' privacy
rights. The discovery referee concluded the information sought was
"highly relevant" and, after Pfizer clarified it was not asking for any
documents, recommended granting the motion.
The insurers brought their objections to the trial court. After hearing
argument regarding the relevancy of the interrogatories, the court sustained
the insurers' objections and denied Pfizer's motion to compel discovery.
Discussion
Code of Civil Procedure section 2017, subdivision (a)
[FOOTNOTE 3] permits discovery of "any matter, not
privileged, that is relevant to the subject matter involved in the pending
action or to the determination of any motion made in that action, if the
matter either is itself admissible in evidence or appears reasonably
calculated to lead to the discovery of admissible evidence."
I. Relevance
The insurers maintain the requested information is irrelevant because these
comprehensive general liability (CGL) clauses are clear and unambiguous and
therefore not subject to interpretation. They are wrong because in the
discovery context relevant information is any matter which "might
reasonably assist a party in evaluating its case, preparing for trial, or
facilitating a settlement." (Glenfed Development Corp. v. Superior
Court (1997) 53 Cal.App.4th 1113, 1117.)
The parties dispute what triggers coverage. Pfizer claims implantation of the
valve is the determinative event. The insurers maintain coverage commences
from the time the valve causes bodily injury. Knowing the approach the
insurers have taken in similar situations is clearly helpful to Pfizer in
all aspects of the litigation process from preparation through trial or
settlement.
II. Admissibility
At issue here is the standard CGL clause which provides the insurer
"will pay . . . all sums which the insured shall become legally
obligated to pay as damages because of personal injury . . . to which this
insurance applies, caused by an occurrence. . . ." "Occurrence" is
defined as "an accident or a happening or event or continuous or
repeated exposure to conditions which unintentionally causes injury."
[FOOTNOTE 4] Pfizer claims the requested information is
admissible because it demonstrates the clause's ambiguity and once that is
established, it can further be used to prove the parties' intent at the time
they executed the contracts. Pfizer is correct on both points.
[FOOTNOTE 5]
Interpretation of insurance policies is governed by the rules of construction
applicable to contracts. (Montrose Chemical Corp. v. Admiral Ins. Co.,
supra, 10 Cal.4th at p. 666.) "Under statutory rules of contract
interpretation, the mutual intention of the parties at the time the contract
is formed governs its interpretation. (Civ. Code, § 1636.) Such intent
is to be inferred, if possible, solely from the written provisions of the
contract. (Id., § 1639.)" (Montrose Chemical Corp. v. Admiral Ins.
Co., supra, 10 Cal.4th at p. 666.) However, when a party claims the
language is ambiguous, i.e., reasonably susceptible of more than one
possible interpretation, the court must consider extrinsic evidence to
determine whether or not the instrument is in fact ambiguous. (Pacific
Gas & E. Co. v. G.W. Thomas Drayage Etc. Co. (1968) 69 Cal.2d 33,
36-37.) As stated by our Supreme Court nearly two decades ago, "The
test of admissibility of extrinsic evidence to explain the meaning of a
written instrument is not whether it appears to the court to be plain and
unambiguous on its face, but whether the offered evidence is relevant to
prove a meaning to which the language of the instrument is reasonably
susceptible." (Id. at p. 37.) If an insurance policy is ambiguous, the
ambiguity is resolved by interpreting the provisions in the manner the
insurer reasonably believed the insured understood the provisions at the time
of formation of the contract. (Montrose Chemical Corp. v. Admiral Ins.
Co., supra, 10 Cal.4th at p. 667; Civ. Code, § 1649.) If application
of this rule does not resolve the question, then the ambiguous language will
be construed against the party who created the uncertainty. (Montrose
Chemical Corp. v. Admiral Ins. Co., supra, 10 Cal.4th at p.
667.)
The insurers' reliance on date of implant for some claims and date of injury
or its manifestation for others will in and of itself establish ambiguity.
Once this is shown, the evidence is further admissible to prove the
reasonable expectations of the parties at the time the policy was issued.
(AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 822; Nestle
Foods Corp. v. Aetna Casualty & Surety Co. (D.N.J. 1990) 135 F.R.D.
101, 106-107.)
The insurers assert this evidence is in any event inadmissible because
requiring them to explain why they chose different triggering events would
lead to mini trials on each insurance policy. The insurers take an
unnecessary leap. The point is not why they have interpreted the same clauses
differently, but rather that they did. That in and of itself goes to
ambiguity and the insurers' reasonable belief Pfizer understood coverage
would be triggered by implantation.
III. Intrusiveness and Burden
Section 2017 requires the court to limit the scope of discovery "if it
determines that the burden, expense, or intrusiveness of that discovery
clearly outweighs the likelihood that the information sought will lead to
the discovery of admissible evidence." (§ 2017, subd. (c).) The insurers
assert the court properly exercised its discretion because the request seeks
private information and places too great a burden on the insurers.
We acknowledge insurers are generally precluded from disclosing private
information obtained in connection with an insurance transaction. (Ins.
Code, § 791.13.) Discovery of private information may be permitted,
however, as long as necessary precautions are taken to protect the privacy
interests affected. (See Schnabel v. Superior Court (1993) 5 Cal.4th
704, 712; Shaffer v. Superior Court (1995) 33 Cal.App.4th 993, 999.)
Pfizer seeks only the names of other insureds who manufacture surgically
implantable medical devices, the types of devices and the insurers'
determinations regarding trigger of coverage in those cases. This is a
minimal intrusion into the privacy interests of corporate insureds which
could easily be protected by an order prohibiting Pfizer from any further
disclosure or use of the information.
We also reject the insurers' assertion the process of finding the requested
information would be "extremely burdensome" for them. Unlike its
previous request which sought copies of all the other insureds' claims
files, this time Pfizer limits its request to answers to the interrogatories.
Therefore, the insurers are not required to physically sort through every
file in each insurers' possession. While it still may necessitate review of
numerous files involving many products, in this electronic age, much of this
can be done via computer records. We do not see this as an overly onerous
task considering the complexity of the litigation involved.
The insurers are right on one point. As written, the interrogatories require
the insurers to search every policy ever issued for the relevant
information. This overbroad request is easily resolved by an order limiting
the interrogatory responses to the same time periods as the effective dates
of the policies issued to Pfizer.
Disposition
Let a peremptory writ of mandate issue commanding the trial court to vacate
its order of February 7, 1997, and to enter a new order granting Pfizer's
motion to compel further responses to Interrogatory Numbers 68 through 70.
The court shall determine the time period for which such information must be
disclosed and include the same in the order. The previously issued stay is
dissolved. Costs are awarded to petitioners. (Cal. Rules of Court, rule
56.4.)
SONENSHINE, J.
WE CONCUR: WALLIN, ACTING P.J., and CROSBY, J.