Stanford Law School - Robert Crown Law Library

Filed 2/23/04

IN THE SUPREME COURT OF CALIFORNIA

E.M.M.I. INC.,
Plaintiff and Appellant,
S109609
v.
Ct.App. 2/5 B152740
ZURICH AMERICAN INSURANCE
COMPANY, )

Los Angeles County
Defendant and Respondent. )
Super. Ct. No. BC 233731

We are called upon in this case to interpret the scope of an exception to a
provision excluding coverage in a “jeweler’s block” insurance policy. The
provision at issue exempted from coverage jewelry stolen from a vehicle unless
the insured was “actually in or upon such vehicle at the time of the theft.” The
question presented is whether the exception to that exclusion applies when the
insured is not in the vehicle but is in close proximity to the vehicle and is
attending to it when the theft occurs. We conclude the vehicle theft exclusion, as a
whole, is ambiguous and fails to plainly and clearly alert insureds that there is no
coverage if a theft occurs when the insured has stepped out of the vehicle but
remains in close proximity and is attending to it. We therefore hold that coverage
is not precluded as a matter of law and reverse the judgment of the Court of
Appeal.
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I. FACTUAL AND PROCEDURAL BACKGROUND
The facts in this case are simple and essentially undisputed. On February
17, 2000, Brian Callahan, a jewelry salesman, left his home with two “hard cloth
garment bags” containing jewelry (some of which belonged to E.M.M.I. Inc., a
manufacturer and marketer of jewelry) in the trunk of his vehicle. Shortly after
driving away from his home, he heard a clanking noise emanating from the rear of
the vehicle. Callahan stopped on the side of the road to investigate the source of
the noise, got out of the car and closed the car door but left the engine running.
He walked to the rear of the vehicle and, as he crouched down to visually inspect
the exhaust pipes, he felt someone pass quickly by him. When he looked up, he
saw an individual get into his car and drive away. Callahan was no more than
approximately two feet from the car during the entire time he was outside the
vehicle until the time of the theft. The police subsequently found the vehicle, but
the jewelry was missing.
E.M.M.I. was insured under a jeweler’s block insurance policy issued by
Zurich American Insurance Company (Zurich). The policy insured E.M.M.I.
against “risks of direct physical ‘loss’ to the covered [jewelry] except those causes
of ‘loss’ listed in the Exclusions.” Under Exclusions the policy provided that
Zurich would “not pay for ‘loss’ caused or resulting from . . . . [t]heft 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.” (Italics
added.) Callahan was specifically designated to carry E.M.M.I.’s jewelry.
E.M.M.I. submitted a claim to Zurich under the policy. Zurich’s field
adjuster was instructed to ascertain whether Callahan had been physically
touching the car when the theft occurred, and therefore had been “in or upon” the
car. Because E.M.M.I. was unable to show that Callahan had been physically
touching the vehicle when the theft occurred, Zurich denied the claim.
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On July 20, 2000, E.M.M.I. filed a lawsuit against Zurich for breach of
contract, breach of the implied covenant of good faith and fair dealing, and unfair
business practices. E.M.M.I. also sued its insurance agent, Vartan Karlubian, for
professional negligence.
The parties, E.M.M.I., Zurich, and Karlubian, subsequently filed cross
motions for summary judgment and summary adjudication. The superior court
granted Zurich’s motion for summary judgment and denied E.M.M.I.’s and
Karlubian’s motions. The court found that “where the insured was outside the car,
crouched down, inspecting the underneath exhaust pipes, before the sequence of
events of theft commenced, there unequivocally is no coverage under terms
requiring the insured to be in or upon the vehicle at the time of theft.”1
The Court of Appeal affirmed the resulting judgment. It ruled that
“[a]lthough [the salesman] was in close proximity to the car, he was not actually in
or upon it.” We granted review.
II. DISCUSSION
Jeweler’s block insurance, conceived at the turn of the last century,
provides coverage under a single policy for the “various risks inherent” in the
jewelry business. (Annot., Construction and Effects of “Jeweler’s Block” Policies
on Provisions Contained Therein (1994) 22 A.L.R.5th 579; 1 Couch on Insurance
(3d ed. 1997) § 1:57.) It “is different from most other traditional forms of
property insurance which are considered ‘named-peril’ insurance policies. Under
named-peril policies, an insurer agrees to indemnify its insured for losses resulting
from certain risks of loss or damage which are specifically enumerated within the
provisions of the policy. In contrast, under a jewelers’ block policy all risks of

1
The trial court also sustained Zurich’s evidentiary objections relating to
E.M.M.I.’s theory that Callahan may have been the victim of an organized
Columbian crime gang.
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loss or damage to jewelry may be insured, subject to certain exceptions.” (Star
Diamond, Inc. v. Underwriters at Lloyd’s, London (E.D.Va. 1997) 965 F.Supp.
763, 765 (Star Diamond).) Thus, the coverage language in this type of insurance
policy is quite broad, generally insuring against all losses not expressly excluded.
In the present case, the policy excluded from coverage theft from a vehicle unless
the insured or a designated employee was “actually in or upon” the vehicle at the
time of the theft. As the Minnesota Supreme Court has observed, “The
[exclusion] was obviously intended to cover any situation where a loss occurred
when the property was not protected by the presence of someone in or upon the
car . . . .” (Ruvelson, Inc. v. St. Paul Fire & Marine Ins. Co. (1951) 235 Minn.
243, 251 [50 N.W.2d 629, 634] (Ruvelson).)
A. Rules Governing Interpretation of Insurance Policies
As a question of law, the interpretation of an insurance policy is reviewed
de novo under well-settled rules of contract interpretation. (Waller v. Truck Ins.
Exchange, Inc. (1995) 11 Cal.4th 1, 18 (Waller).) “The fundamental rules of
contract interpretation are based on the premise that the interpretation of a contract
must give effect to the ‘mutual intention’ of the parties. ‘Under statutory rules of
contract interpretation, the mutual intention of the parties at the time the contract is
formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred,
if possible, solely from the written provisions of the contract. (Id., § 1639.) The
“clear and explicit” meaning of these provisions, interpreted in their “ordinary and
popular sense,” unless “used by the parties in a technical sense or a special
meaning is given to them by usage” (id., § 1644), controls judicial interpretation.
(Id., § 1638.)’ ” (Ibid.)
A policy provision is ambiguous when it is susceptible to two or more
reasonable constructions. (Waller, supra, 11 Cal.4th at p. 18.) Language in an
insurance policy is “interpreted as a whole, and in the circumstances of the case,
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and cannot be found to be ambiguous in the abstract.” (Ibid.) “The proper
question is whether the [provision or] word is ambiguous in the context of this
policy and the circumstances of this case. [Citation.] ‘The provision will shift
between clarity and ambiguity with changes in the event at hand.’ [Citation.]”
(Bay Cities Paving & Grading, Inc. v. Lawyers’ Mutual Ins. Co. (1993) 5 Cal.4th
854, 868.) Ambiguity “ ‘ “is resolved by interpreting the ambiguous provisions in
the sense the [insurer] believed the [insured] understood them at the time of
formation. [Citation.] If application of this rule does not eliminate the ambiguity,
ambiguous language is construed against the party who caused the uncertainty to
exist. [Citation.]” “This rule, as applied to a promise of coverage in an insurance
policy, protects not the subjective beliefs of the insurer but, rather, ‘the objectively
reasonable expectations of the insured.’ ” ’ [Citation.] ‘Any ambiguous terms are
resolved in the insureds’ favor, consistent with the insureds’ reasonable
expectations.’ ” (Safeco Ins. Co. v. Robert S. (2001) 26 Cal.4th 758, 763.)
Furthermore, policy exclusions are strictly construed (see e.g., Waller,
supra, 11 Cal.4th at p. 16; MacKinnon v. Truck Ins. Exchange (2003) 31 Cal.4th
635, 648), while exceptions to exclusions are broadly construed in favor of the
insured (Aydin Corp. v. First State Ins. Co. (1998) 18 Cal.4th 1183, 1192;
National Union Fire Ins. Co. v. Lynette C. (1991) 228 Cal.App.3d 1073.). “ ‘[A]n
insurer cannot escape its basic duty to insure by means of an exclusionary clause
that is unclear. As we have declared time and again “any exception to the
performance of the basic underlying obligation must be so stated as clearly to
apprise the insured of its effect.” [Citation.] Thus, “the burden rests upon the
insurer to phrase exceptions and exclusions in clear and unmistakable language.”
[Citation.] The exclusionary clause “must be conspicuous, plain and clear.” ’
[Citation.] This rule applies with particular force when the coverage portion of the
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insurance policy would lead an insured to reasonably expect coverage for the
claim purportedly excluded.” (MacKinnon, supra, at p. 648.)
B. Interpretation of the Vehicle Theft Exclusion and Exception
E.M.M.I. does not contend that Callahan, E.M.M.I.’s designated
salesperson, was “in” the vehicle at the time of the theft, but instead argues that he
was “upon” the vehicle. The controversy therefore centers on the meaning of the
term “upon” as it is used in the exception to the vehicle theft exclusion. While the
parties contend that the term “upon” is unambiguous as applied to the facts of this
case, they disagree on how that term should be defined.
Preliminarily, we reject Zurich’s contention that an ordinary and reasonable
person would understand the phrase “actually in or upon” only in a legal sense or
as a “legalism, used only for distinctly legal purposes.” We reject this
construction because it runs afoul of elementary rules of contract interpretation
that policy language is interpreted in its ordinary and popular sense (Waller,
supra, 11 Cal.4th at p. 18) and as a “layman would read it and not as it might be
analyzed by an attorney or an insurance expert.” (E.g., Crane v. State Farm Fire
& Cas. Co. (1971) 5 Cal.3d 112, 115; see Civ. Code, § 1638; id., § 1644 [“words
. . . are to be understood in their ordinary and popular sense, rather than according
to their strict legal meaning” unless used by the parties in that sense].) The policy
at issue in this case defines certain words, such as “we” and “us” and further
provides that “[o]ther words and phrases that appear in quotation marks have
special meaning.” Neither the phrase “actually in or upon” nor the term “upon” is
enclosed in quotation marks. Thus, nothing in the policy indicates or suggests that
the exception to the vehicle theft exclusion is to be construed in a specialized or
technical manner, or as Zurich contends – as used in statutes and ordinances.
Absent evidence that the parties intended the provision to have a specialized
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meaning, we must reject Zurich’s contention and construe the term in question as
would a layperson.
E.M.M.I. contends the exception to the vehicle theft exclusion applies in
this case because its salesman was in close proximity to the automobile when the
theft occurred. It rests on the fact that the word “upon” is interchangeable with
“on” and that the definition of “on” includes “in close proximity.” (Merriam-
Webster’s 10th New Collegiate Dict. (1995) pp. 811, 1298 [“a village [on] the
sea”]; Black’s Law Dict. (6th ed. 1990) p. 1088 [defining “on” as “upon; as soon
as; near to; along; along side of; adjacent to; contiguous to; at the time of;
following upon; during; at or in contact with the upper surface of a thing”].)
Zurich disagrees that close proximity is sufficient and implicitly relies on the
definition of “on” “indicat[ing] means of conveyance” (Merriam-Webster’s 10th
New Collegiate Dict., supra, at p. 811; Random House College Dict. (rev. ed.
1980) p. 1444), such as “on a ship” or “on a train” and the definition of “upon”
meaning “up and on; upward so as to get or be on” (Random House College Dict.,
supra, at p. 1444), such as “upon” a motorcycle.
Of course, the fact that a word carries multiple meanings does not by itself
render it ambiguous. (Bay Cities Paving & Grading, Inc. v. Lawyers’ Mutual Ins.
Co., supra, 5 Cal.4th at 868.) The context in which the word “upon” appears in
this policy and under the circumstances of this case, however, renders its meaning
ambiguous. Generally, one does not use the phrase “upon the vehicle” in ordinary
usage, especially in the sense of “traveling upon the vehicle.” Nor is the phrase
“upon the vehicle” generally used to mean in close proximity to a vehicle, as
E.M.M.I. contends. It is true that “upon” could refer to someone riding upon a
motorcycle or the running board of an antique car, such as: “the salesman must be
on or upon the motorcycle.” Along this line the Court of Appeal observed that
when the jeweler’s block policy was conceived in the early 1900’s, the words “on”
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or “upon” would have unambiguously applied to a horse or a horse-drawn
carriage, and today, the same holds true with respect to motorcycles. But there is
no indication that motorcycles are widely used by jewelry salespeople as a means
of transporting jewelry; thus an insured would not reasonably expect that “upon”
was intended to apply to motorcycles, as opposed to offering an alternative to the
requirement that the insured actually be in the vehicle.2 Moreover, the language in
the policy does not clearly alert the insured to Zurich’s restricted meaning, and it
is improbable that a reasonable insured would interpret the language to apply to
motorcycles, as opposed to automobiles. In short, neither definition squarely
supports the parties’ respective arguments. We therefore conclude the language in
the vehicle theft exception is ambiguous.
Although the main culprit for this ambiguity is the use of the word “upon”
to refer to a vehicle, the ambiguity is exacerbated by the use of the word “or.” The
exception to the vehicle theft exclusion is phrased in the disjunctive – “actually in
or upon” – and therefore a reasonable insured would likely interpret the exception
to mean that the insured must be either inside the vehicle, or in some other

2
Justice Chin, in dissent, agrees with the Court of Appeal, and argues the
words “on” and “upon,” viewed from a “historical perspective” unambiguously
referred to a “horse or horse-drawn carriage” when first used more than a century
ago to support his conclusion that in contemporary usage those words refer only to
vehicles such as motorcycles. (Dis. opn. of Chin, J., post, at p. 6.) This historical
meaning of the words used in a policy, however, does not illuminate the meaning
of the policy language to a reasonable layperson in contemporary times, who may
well be unaware of this historical meaning. Even accepting that the words once
unambiguously referred to horses and horse-drawn carriages, that clarity loses its
luster when applied to “vehicles” in a modern insurance policy. That is, words
that may once have been unambiguous, are not necessarily so when the context of
their usage has changed. In interpreting policy language, we construe it as would
a reasonable layperson, not an expert, attorney, or a historian. (Crane v. State
Farm & Cas. Co., supra, 5 Cal.3d at p. 115.)

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location relative to the vehicle. (See, e.g., Hougue v. Ford (1955) 44 Cal.2d 706,
712 [“In its ordinary sense, the function of the word ‘or’ is to mark an alternative
such as ‘either this or that’ ”].) Presented with such an alternative, we do not
believe a reasonable insured would construe the exception to the vehicle theft
exclusion to mean that the insured must be either inside or on top of the vehicle, or
that the term “upon” applies solely to motorcycles. An insured using an
automobile would not expect coverage to vanish when engaged in routine and
necessary activity such as stepping out of the car to retrieve the jewelry from the
backseat or trunk. Had the insurer intended the phrase “or upon” to apply solely
to the use of motorcycles or other means of transportations such as ships and
trains, it could, and should, have made this intention clear to the insured. The
insurer could have, for example, defined the meaning of “upon” in the context of
the policy language. This is a burden that rests squarely with Zurich, as the
insurer. (MacKinnon v. Truck Ins. Exchange, supra, 31 Cal.4th at p. 648.)
Finding the vehicle theft exclusion and its exception ambiguous, we must
resolve the ambiguity in favor of the insured, consistent with the insured’s
reasonable expectations. (Kazi v. State Farm Fire & Casualty Co. (2001) 24
Cal.4th 871, 879.) As noted above, the jeweler’s block policy at issue here
provided broad coverage against loss of the insured jewelry. Given that broad
coverage language, an insured would have a reasonable expectation that coverage
would be provided in this context – when the insured is in close proximity to the
vehicle and attending to it when the theft occurs. To construe the exception to the
vehicle theft exclusion, and specifically the word “upon,” as applying only to
situations in which the insured is inside or physically touching the vehicle would
upset the reasonable expectations of the insured. Such a narrow construction
would unreasonably preclude coverage when the insured exits the vehicle and
walks a short distance to retrieve the insured merchandise from either the backseat
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or the trunk of the vehicle, unless the salesperson keeps constant contact with the
car while walking toward the rear of the vehicle.3 The broad coverage language –
providing coverage for all losses except those expressly excluded – along with the
ambiguous language in the exclusionary provision, does not support this
construction. (See Star Diamond, supra, 965 F.Supp. at p. 767 [“Such an
interpretation would result in a denial of coverage for a loss occurring when the
insured stepped out of his vehicle to open a rear door or the trunk of his car to
retrieve the insured property.”].)
Because the exclusionary clause as a whole is ambiguous, it cannot be said
to be clear and plain in limiting coverage. (MacKinnon v. Truck Ins. Exchange,
supra, 31 Cal.4th at p. 649.) In no way does the policy language alert a reasonable
insured that coverage is lost by simply stepping outside of the vehicle. In such a
case, the insured is in close proximity to the jewelry and is providing some
protection against theft. That Zurich’s position is counterintuitive to what a
reasonable insured would expect is partly borne out by its response to a question
posed at oral argument. In that response, Zurich maintained that an insured
traveling by train would come within the exception to the vehicle theft exclusion if
the insured left the jewelry in one compartment while he or she walked to a
different compartment, such as the dining car, because such insured would be
“upon” the train. Thus, according to Zurich, an insured who remains in close
proximity to an automobile and is paying attention to it, providing a theft
deterrent, would not be covered under the policy, but an insured traveling by train
who leaves the jewelry completely unattended, thus providing no deterrence to

3
Zurich took the position at oral argument that when an automobile is
involved, the insured must be inside the vehicle for the exception to the
exclusionary provision to apply; simply touching the car would not be sufficient.
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theft, would be covered. This outcome cannot be said to be consistent with an
insured’s reasonable expectations.
Zurich further contends that the exception to the vehicle theft exclusion
does not apply in the present case because the purpose of the exception is “to
insure against theft by force or intimidation, but not by stealth.” The Court of
Appeal likewise observed: “As courts in other jurisdictions have explained, the
purpose of the provision is to cover a loss by theft from a car in the presence of
someone in or upon it, that is, theft by force or intimidation directed at those
present, but not by stealth alone.” We disagree. Nothing in the language of the
policy suggests such limitation. Rather, reading the exclusionary clause and the
exception in light of the broad coverage language (MacKinnon v. Truck Ins.
Exchange, supra, 31 Cal.4th 635), it appears most reasonable to read the exclusion
as applying when the vehicle and the insured jewelry were left unattended and,
hence, more vulnerable to thievery. Given the high incidence and relative ease of
car theft, it is reasonable that an insurer would exclude coverage for thefts from
unattended vehicles. (See, e.g., Ruvelson, supra, 50 N.W.2d at p. 634 [exclusion
“obviously intended to cover any situation where a loss occurred when the
property was not protected by the presence of someone in or upon the car”].)
Coverage for thefts from unattended vehicles might well command an increased
premium. But if the insured is “in or upon” the vehicle when the theft occurs, the
loss is covered whether or not the theft is accomplished by force or by stealth. A
thief, for example, may stealthily break into the trunk of a car while the insured is
sitting in the car. (See, e.g., Sphere Drake Ins. PLC v. Trisko (D.Minn. 1998) 24
F.Supp.2d 985, 989, affd. on other grounds (8th Cir. 2000) 226 F.3d 951, 955-956
[police detective describing situations where thieves, using special tools, were able
to break into a vehicle’s trunk unbeknownst to the vehicle’s occupant].)
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Our conclusion that the exception to the vehicle theft exclusion is not
limited to thefts accomplished by force or intimidation is bolstered by the fact that
the language in the exception uses the term “theft” as opposed to “robbery.”
Robbery requires the use of force or intimidation, while theft does not. (See, e.g.
2 Witkin and Epstein, Cal. Criminal Law (3d ed. 2000) Crimes Against Property,
§ 94, p. 125 [explaining that for a robbery to occur, “the property must be taken by
either force (violence) or fear (intimidation)]; People v. Ramkeeson (1985) 39
Cal.3d 346, 351 [“Theft is a lesser included offense of robbery; robbery has the
additional element of a taking by force or fear.”].) The common dictionary
definition of these terms also supports this distinction. For instance, Merriam-
Webster’s 10th New Collegiate Dictionary, supra, at page 1222, defines theft as
“the felonious taking and removing of personal property with intent to deprive the
rightful owner of it,” while robbery is defined as “larceny from the person or
presence of another by violence or threat” (id. at p. 1013).
Significantly, the word “theft” is used both in the vehicle theft exclusion
and its exception. Despite this, Zurich would have us find that the vehicle theft
exclusion applies generally to all thefts from a vehicle, while the exception applies
only to the greater crime of robbery. Accepting Zurich’s interpretation would
require that we give different meanings to the same term used in the same policy
paragraph. This would run afoul of the rule of contract interpretation that the
same word used in an instrument is generally given the same meaning unless the
policy indicates otherwise. (See, e.g., Palmer v. Truck Ins. Exchange (1999) 21
Cal.4th 1109, 1116-1117; Victoria v. Superior Court (1985) 40 Cal.3d 734, 741;
People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516,
526.) Had Zurich intended the exception to apply only to situations involving
force or intimidation, i.e., robbery, while the exclusion applied to theft, it should
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have used the more accurate term “robbery” to put the insured on notice. As
written, a reasonable insured would not interpret the language as Zurich contends.
Construing the ambiguous language in favor of the insured, in a manner
consistent with the insured’s reasonable expectations, and keeping in mind that
exclusionary provisions are narrowly interpreted while exceptions are broadly
construed, we hold that the exception to the vehicle theft exclusion applies when
an insured is in close proximity to the vehicle and is attending to it.
C. Judicial Interpretations
While this court has never had occasion to interpret the vehicle theft
exclusion at issue here, numerous decisions, including two from this state, have
interpreted or applied the same or similar language. Although the majority of
these decisions denied coverage, as explained below, they do not compel a
different outcome here.
Of the California cases, the most significant is Revesz v. Excess Ins. Co.
(1973) 30 Cal.App.3d 125 (Revesz). In that case, the Court of Appeal construed a
“salesman’s floater” policy with exclusion and exception provisions identical to
those at issue in this case. There, the salesman, in need of driving directions,
parked at a curb in front of a gas station, locked the ignition, got out, and took his
keys with him as he walked around in front of the car toward a parkway. Thirty
seconds after leaving his car and while he was still within two to three feet from it,
the salesman heard the car door close and saw a thief drive away in his car, which
contained his jewelry. The insured maintained that the term “upon” in the
exception to the policy exclusion should be interpreted to mean “ ‘in or about’ or
‘in close proximity to’ [the] vehicle while the insured is engaged in work
incidental to loading, unloading or transporting jewelry. Such interpretation
would provide coverage while the insured is walking to the rear of his car to
remove jewelry, or while he is changing a tire, or while he momentarily leaves his
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vehicle to obtain directions, the situation presented in [that] case.” (Id. at pp. 127-
128.) The Court of Appeal found it unnecessary to decide whether the term
“upon” should be interpreted as urged by the insured: “Having parked his vehicle
at the curb, locked the ignition, removed his keys, and left the vehicle for the
purpose of seeking information, he had temporarily abandoned the vehicle.” (Id.
at p. 129, italics added.) The exception to the exclusion therefore did not apply.
The court noted, however, “the word ‘upon’ might under some factual situations
require interpretation” and that “[t]he controlling factors are not the time interval
and the distance traveled but [the insured’s] intent and conduct.” (Id. at pp. 128-
129; see also Nissel v. Certain Underwriters at Lloyd’s of London (1998) 62
Cal.App.4th 1103 [no coverage for theft of jewelry from an unattended vehicle].)
The majority of cases from other jurisdictions similarly involve the
temporary abandonment of the vehicle, and hence, the courts in those cases
reached the same conclusion. In Ruvelson, supra, 50 N.W.2d 629, for instance, a
jewelry salesman parked and locked his vehicle, crossed the street, and entered a
hotel to purchase coffee. The salesman did not take the heavy jewelry with him
into the hotel because “ ‘[t]here were about six or eight steps to climb, and several
doors to be opened, in order to enter the [hotel].’ ” (Id. at p. 631.) After returning
to his vehicle two to four minutes later, the salesman found that his car window
had been broken and the jewelry taken. (Ibid..) The Minnesota Supreme Court, in
holding that the loss was not covered, concluded that the exception to the vehicle
theft exclusion was “clear and unequivocal;” requiring the insured to “be
[a]ctually in or upon the automobile when the loss occurs.” (Id. at p. 633, italics
added; see also Sphere Drake Ins. PLC v. Trisko, supra, 24 F.Supp.2d 985
[applying Minnesota law].)
Conceding that the salesman was “temporarily absent” from the vehicle at
the time of the theft (Ruvelson, supra, 50 N.W.2d at p. 631), the insured in
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Ruvelson argued that “upon” should be given a broad interpretation to include “
‘in proximity to,’ ‘in the neighborhood of,’ ‘in the presence of,’ or ‘in the charge
of.’ ” (Id. at p. 632.) The court rejected this interpretation, observing that courts
“have uniformly construed this and similar language adversely to the contentions
of the [insured].” (Id. at pp. 247-248, discussing Greenberg v. Rhode Island Ins.
Co. (1946) 66 N.Y.S.2d 457, 459 in which the court concluded that the word
‘actually’ in the exception “means that which exists in fact or reality, in contrast to
that which is constructive, theoretical or speculative.”)
In Royce Furs, Inc. v. Home Insurance Co. (1968) 291 N.Y.S.2d 529, a fur
salesman parked and locked his vehicle and entered a hotel to register. The
vehicle, which contained furs locked in the trunk, was parked six to 10 feet from
the hotel entrance and was visible from inside the hotel through a large window.
As the salesman returned to his vehicle, a man bolted into the car and drove off.
(Id. at p. 530.) The New York Supreme Court, Appellate Division denied
coverage because the salesman was not “actually in or upon” the vehicle when the
theft occurred, pointing out that the insured’s “representative was not in the
automobile, but was far enough from it to have given the thief the opportunity to
enter the car.” (Id. at p. 532.) Although noting that it would serve little purpose to
discuss other cases applying similar policy language because “each case must be
judged on its own factual situation,” the court observed “that in almost every
instance where similar clauses have been considered by the courts, coverage was
denied where the automobile was not attended; or where the insured, or the
employee, was not in or upon the car; or where there was no employee present
whose sole duty was to attend such vehicle.” (Id. at p. 531; see also Thomas Noe,
Inc. v. Homestead Ins. Co. (6th Cir. 1999) 173 F.3d 581 [insured inside house];
Centennial Ins. Co. v. Schneider (9th Cir. 1957) 247 F.2d 491 [car left unattended
as salesman talked with a client outside a jewelry store and later inspected the
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interior of the client’s new vehicle]; Tivoli Corp. v. Jewelers Mut. Ins. Co. (1996)
932 S.W.2d 704 [salesman inside check-cashing business]; Bliss Ring Co. v.
Globe & Rutgers Fire Ins. Co. (1955) 7 Ill.App.2d 523 [salesman left vehicle to
visit coffee shop]; Steinzeig v. Mechanics & Traders Ins. Co. (Mo.Ct.App. 1957)
297 S.W.2d 778 [vehicle parked on street overnight]; Cordova, Inc. v. Lloyd’s
Underwriters (1996) 643 N.Y.S.2d 543 [employee paying gas station attendant];
Wideband Jewelry Corp. v. Sun Ins. Co. of New York (1994) 619 N.Y.S.2d 339
[salesman six feet from vehicle]; Jerome I. Silverman, Inc. v. Lloyd’s
Underwriters (S.D.N.Y. 1976) 422 F.Supp. 89 [immaterial that insured kept
vehicle in sight]; Seelig v. St. Paul Fire & Marine Ins. Co. (E.D.N.Y. 1953) 109
F.Supp. 277 [vehicle left in parking garage]; Greenberg v. Rhode Ins. Co. (1946)
66 N.Y.S.2d 457 [insured inside restaurant]; Equity Diamond Brokers, Inc. v.
Transnational Ins. Co. (2003) 151 Ohio.App.3d 747 [salesman inside restaurant];
Princess Ring Co. Inc. v. Home Ins. Co. (R.I. 1932) 161 A. 292 [salesman 40 feet
from vehicle].)
Similarly, in American Stone Diamond, Inc. v. Lloyds of London (S.D.Tex.
1996) 934 F.Supp. 839, the insured was transporting jewelry in the trunk of his
automobile. He pulled into a gas station, refueled his vehicle, and went inside the
station to pay. He returned to his vehicle within minutes to find the jewelry had
been stolen from the trunk. The federal district court denied coverage, noting that
the insured “was not literally, physically, in or upon the car at the time of the
theft.” (Id. at p. 842.) The court stated: “Courts have consistently held nearly
identical policy language to be unambiguous and, based upon such exclusions,
have denied coverage to insureds who were not literally in or upon their vehicles
at the time of the losses, even though the insureds may have been only a short
distance away from the vehicle, watching the vehicle, or absent from the vehicle
for only a short period of time. [Citations.]” (Id. at p. 843.)
16

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In each of the above cases in which coverage was denied, the court held
that the insured was not “in or upon” the vehicle because the insured or designated
employee had temporarily abandoned the vehicle when the theft occurred.
However, in a case involving facts similar to those in the present case, coverage
was found where the insured’s representative, although not inside the vehicle or
touching it, was in close proximity to the vehicle and attending to it when the theft
occurred.
In
Star Diamond, supra, 965 F.Supp. 763, the insured drove into a gas
station and “[o]nce a pump was free, [he] parked his car, turned off the engine,
exited his car and walked to the rear of the driver’s side of his car where the pump
was located. As he approached . . . the pump, he bumped into his car several times
and . . . at no time was he more than nine inches from his car. When [the insured]
reached the pump, he inserted a credit card into the pump several times in an
attempt to authorize his purchase electronically. During this time, [the insured]
had his back toward his car.” (Id. at p. 764.) After repeated attempts to refuel, the
insured returned to his car, three to five minutes after exiting the vehicle, and
discovered that the bag containing the jewelry was missing.
The federal district court in Star Diamond held that coverage was not
precluded under the vehicle theft exclusion, concluding that the plain meaning of
the word “upon” as used in the exception to the exclusion encompassed “ ‘in or
into close proximity or contact with.’ ” (Star Diamond, supra, 965 F.Supp. at
p. 767, quoting Webster’s 3d New Internat. Dict. (1981) p. 2518.) The court
distinguished the cases discussed above in which coverage was denied, observing
that “[i]n each of the foregoing cases, the insured had temporarily abandoned,
walked away or diverted his attention from the vehicle . . . when the [theft]
occurred. These cases differ from the facts of this case. Here, the insured
17

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remained inches from his vehicle after he exited and was attending to his vehicle
at the time the loss occurred.” (Star Diamond, supra, at p. 767.)
The court further found that the plain meaning of the exception to the
vehicle theft exclusion did not support the insurer’s contention that the insured had
to physically be in the vehicle when the theft occurred in order for the exception to
come into force, explaining that “this interpretation ignores the applicability of the
term ‘upon’ altogether.” (Star Diamond, supra, 965 F.Supp. at p. 767.) Rejecting
the insurer’s suggestion that “upon” was meant to apply to situations involving
motorcycles, the court stated: “By implication . . . [the insurer] contends that the
term ‘upon’ does not apply wherever it is physically possible for the insured to be
‘in’ the vehicle with the insured property.[4] However, the use of the disjunctive
‘or’ between the terms ‘in’ and ‘upon’ results in both terms modifying vehicle. If
[the insurer] wished to condition coverage on the requirement that the insured be
‘actually in’ the vehicle at the time of the loss, it could easily have drafted the
exception to achieve this result.” (Ibid.)
The court found “that the term
‘upon’ encompasses situations where the insured is actually attending to his
vehicle to facilitate the transport of insured property [and] should thus include
instances where the insured exits his vehicle to tend to the insured property in the
back seat or trunk, change a tire or refuel his vehicle, and is physically adjacent to
and attending to the vehicle.” (Ibid., accord, Lackow v. Ins. Co. of North America

4
Zurich makes a similar argument. It contends that the phrase “actually in or
upon” is ordinarily understood to “encompass the occupancy of vehicles in every
way[]” which includes “the possibility by travel by means of the interior of
vehicles with interiors” or “the possibility of travel by means of the exterior of
vehicles without interiors” such as a bicycle.
18

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(1976) 382 N.Y.S.2d 529 [exception applied when insured’s employee was at the
rear of the vehicle opening the trunk at the time of the theft].)5
Zurich calls into question the Star Diamond decision because, according to
Zurich, the court incorrectly distinguished Royce Furs, supra, 291 N.Y.S.2d 529,
and Wideband Jewelry Corp. v. Sun Ins. Co. of New York, supra, 619 N.Y.S.2d
339 (Wideband), which held the exception inapplicable. Zurich places great
reliance on the fact that the theft in Royce Furs occurred while the insured’s
representative was walking back to his vehicle from the hotel at which he had just
registered, and hence his attention was no longer diverted. We find no
significance in this fact. The exception became inapplicable and the vehicle theft
exclusion operable once the insured’s representative temporarily abandoned the
vehicle by leaving it and entering the hotel. By so abandoning the vehicle, the
insured’s representative invited the sort of mischief from which the insurer sought
to insulate itself – theft of the insured jewelry resulting from the abandonment of
the vehicle.
Zurich similarly contends that the Star Diamond court incorrectly
distinguished Wideband, supra, 619 N.Y.S.2d 339. In a short, single-paragraph
discussion, the Wideband court held that the exception did not apply because the
insured’s employee was “approximately six feet away from his vehicle when the
thieves opened the trunk and stole” the jewelry. (Ibid.) While Zurich is correct
that the facts recited do not facially indicate that the insured’s employee had
abandoned, walked away, or diverted his attention from the vehicle, the fact that

5
This case presents a stronger case for coverage under the exception to the
vehicle exclusion. Unlike the insured in Star Diamond, the salesman here never
turned his back on the vehicle, but had it in sight the entire time he was outside.
Also, unlike the insured in Star Diamond, the salesman here actually saw the thief
enter the car and drive away with it and the jewelry. The insured in Star Diamond
was unaware the jewelry had been stolen until he returned to the vehicle.
19

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the insured’s employee was six feet away, and apparently unaware that thieves
were breaking into the trunk of his vehicle, permits the inference that the
employee had temporarily abandoned the vehicle. In any case, given Wideband’s
very limited discussion, it does not cast doubt upon the holding in Star Diamond.
Our holding that the insured in the present case was “upon” the vehicle
when the theft occurred is consistent with the cases discussed above in which
coverage was denied under the vehicle theft exclusion. In none of the cases in
which the court found the exception to the vehicle theft exclusion inapplicable and
denied coverage was the insured or its representative similarly “upon” the vehicle.
The insureds in those cases were not in close proximity and actually attending to
the vehicle when the theft occurred. Nonetheless, they claimed coverage under
the exception to the vehicle theft exclusion by advocating an interpretation of
“upon” that was inconsistent with the language and purpose of the policy
exclusion. The insured in Ruvelson, supra, 50 N.W.2d at page 631, for example,
contended that the exception applied, despite acknowledging the salesman was
“temporarily absent” from the vehicle when the theft occurred. The insured urged
that the term “upon” included, inter alia, the definition of “in the neighborhood
of.” (Id., at p. 632.) To accept that definition and allow coverage in that situation,
however, would render meaningless the terms in the vehicle theft exclusion and
its exception. Similarly, in Revesz the insured maintained that “upon” meant “ ‘in
close proximity to’ his vehicle and applied when the “insured [was] walking to the
rear of his car to remove jewelry, or while he is changing a tire, or while he
momentarily [left] his vehicle to obtain directions, the situation presented in [that]
case.” (Revesz, supra, 30 Cal.App.3d at pp. 127-128.) While the first two
situations would arguably come within the meaning of “upon” and hence the
exception, the latter situation would not because in such a situation the insured has
abandoned the vehicle, thus leaving it and the insured jewelry vulnerable to theft.
20

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In response to these and similar contentions, some courts have used broad
language that would appear to bar recovery whenever the insured was outside the
vehicle at the time of the theft. (See, e.g., Ruvelson, supra, 50 N.W.2d at p. 631
[noting that courts have uniformly rejected the insured’s contention that “upon”
means “ ‘in proximity’ ” and similar meanings]; American Stone Diamond v.
Lloyd’s of London, supra, 934 F.Supp. at. p. 843 [“Courts have consistently . . .
denied coverage to insureds who were not literally in or upon their vehicles at the
time of the losses, even though the insureds may have been only a short distance
away from the vehicle, watching the vehicle, or absent from the vehicle for only a
short period of time.”]; accord, Equity Diamond Brokers, Inc. v. Transnational
Ins. Co., supra, 151 Ohio.App.3d at p. 752; Cordova, Inc. v. Lloyd’s
Underwriters, supra, 643 N.Y.S.2d 534 [exception “has consistently been given a
literal construction rejecting various theories of constructive possession of the
vehicle”].) However, as explained above, the insureds in those cases were
advocating a very broad interpretation of the term “upon” that would encompass
their act of abandoning the vehicle. But because the insureds or the insureds’
salespersons had temporarily abandoned their vehicles in those cases, they were
not “upon” their vehicles as required by the exception to the vehicle theft
exclusion; those courts therefore were not called upon to decide whether the
exception would apply in the circumstances presented in the present case. In our
view, those courts fashioned a rule that was broader than necessary, given the
specific factual circumstances they confronted, namely, the temporary
abandonment of the vehicle. (See, e.g., Revesz, supra, 30 Cal.App.3d at pp. 128-
129 [declining to interpret the term “upon” since the insured had temporarily
abandoned the vehicle and was therefore in no sense “upon” it].) To the extent
these cases may be construed to deny coverage in all cases in which the insured
21

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was outside the vehicle at the time of the theft, irrespective of the insured’s
distance from the vehicle and the insured’s conduct, we disagree.
Finally, Zurich agrees with the Revesz court that an insured’s intent and
conduct must be considered in determining the applicability of the exception to the
vehicle theft exclusion. Zurich contends that the facts of Revesz and this case are
substantially similar and that E.M.M.I.’s salesman manifested the same intent and
conduct to temporarily abandon his vehicle, as did the insured in Revesz, when he
locked the ignition and left his vehicle to seek directions. We disagree.
In
Revesz, the insured intended to and did abandon his vehicle as he walked
away from it in search of directions. With his back to the car, he was not only
unable to observe his car, but apparently did not realize that someone was
breaking into it despite the fact the door was locked and the insured was only two
to three feet from the car. (Revesz, supra, 30 Cal.App.3d at p. 126.) Unlike the
insured in Revesz, the salesman here did not intend to and did not abandon his
vehicle when he walked to the rear to inspect the tailpipe area. His intent and
conduct was solely to attend to his vehicle without abandoning it or the jewelry
locked in the trunk.
For the reasons above, we conclude that the vehicle theft exclusion is
ambiguous and did not clearly and plainly apprise the insured that coverage would
be lost by merely stepping out of the car. Construing the exception in the
insured’s favor, we hold that E.M.M.I.’s salesman, who was approximately two
feet from and actually attending to his vehicle when the theft occurred, came
within the scope of the exception to the vehicle theft exclusion.6

6
E.M.M.I. also contends that the phrase “at the time of theft” found in the
exception to the vehicle theft exclusion “describes a period of time starting with
the commencement of a theft and ending with the culmination of the theft.” Our
holding above makes its unnecessary for us to address this alternative argument.
22

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III. DISPOSITION
Accordingly, we reverse the judgment of the Court of Appeal affirming
summary judgment in favor of Zurich.
MORENO, J.
WE CONCUR: GEORGE, C. J.
BAXTER,
J.
WERDEGAR,
J.
23

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DISSENTING OPINION BY KENNARD, J.

The majority holds that the words “actually in or upon” a vehicle in a
“Jeweler’s Block” insurance policy means in close proximity to a vehicle, not
actually in it or on it. (Maj. opn., ante, at p. 12.) I disagree. The majority’s
holding misreads the plain meaning of the language, and is contrary to the
holdings of the overwhelming majority of courts in other jurisdictions. We should
enforce the contract between the parties as it is written, not rewrite its terms.
I
Plaintiff E.M.M.I, Inc., doing business as Universal Fine Jewelry, sells
jewelry. Its salesman, Brian Callahan, was carrying jewelry in his car. When
Callahan heard a “clunking” noise coming from the car, he pulled the car over, got
out of the car while leaving its engine running, went to the back of the car and
bent over to look under the car. A thief ran by him, got into the car, and drove
away.
Defendant Zurich American Insurance Company (Zurich) insured E.M.M.I.
under a “Jeweler’s Block” policy. The policy excludes from coverage any loss
from a vehicle unless an employee is “actually in or upon such vehicle at the time
of the theft.” E.M.M.I. brought this action against Zurich to recover for the loss
under the policy. The trial court granted Zurich’s motion for summary judgment
because “there unequivocally is no coverage under terms requiring the insured to
be in or upon the vehicle at the time of the theft.” The Court of Appeal, after
reviewing the policy and applicable law in depth, affirmed, holding that the words
1

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“actually in or upon” do not mean close proximity. The majority reverses the
Court of Appeal. I would affirm its decision.
II
The applicable law is well established and clear. The ordinary rules of
contract interpretation apply to the construction of an insurance policy. (Safeco
Ins. Co. v. Robert S. (2001) 26 Cal.4th 758, 762-763; Bank of the West v. Superior
Court (1992) 2 Cal.4th 1254, 1264.) Judicial interpretation is controlled by words,
as they are understood in their ordinary and popular sense. (Civ. Code, § 1644;
Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18.) The function of the
court in interpreting an instrument “is simply to ascertain and declare what is in its
terms or in substance contained therein, not to insert what has been omitted, or to
omit what has been inserted.” (Code Civ. Proc., § 1858; Safeco Ins. Co. v. Robert
S., supra, at p. 764; Jensen v. Traders & General Ins. Co. (1959) 52 Cal.2d 786,
790.) Language cannot be found to be ambiguous in the abstract and courts are
“not to strain to create an ambiguity where none exists.” (Waller v. Truck Ins.
Exchange, Inc., supra, at pp. 18-19.)
The ordinary, common, and popular understanding of the words “actually
upon” mean in fact on a vehicle. Here, Presiding Justice Turner, writing for a
unanimous Court of Appeal panel, put it thus: “[T]he provision in question is
unambiguous. In its ordinary and popular usage (Civ. Code, § 1644; Bank of the
West v. Superior Court, supra, 2 Cal.4th at p. 1265), ‘upon’ is interchangeable
with ‘on.’ (E.g., Newbury House Online Dict. (1999) <http://nhd.heinle.com/nhd-
bin/searchNHD.pl> [as of July 22, 2002]; Merriam-Webster’s Collegiate Dict.
(10th ed. 1995) p. 1298; Webster’s New World Dict. (3d college ed. 1991)
p. 1466; Oxford English Dict. Online (2d ed. 1989) <http://dictionary.oed.com>
[as of July 22, 2002], [‘upon,’ prep.]; American Heritage Dict. (2d college ed.
1985) p. 1328.) Webster’s New World Dictionary, supra, at page 1466 defines
‘upon’ as follows, ‘[O]n (in various senses), or up and on: on and upon are
generally interchangeable, the choice being governed by idiom, sentence rhythm,
2

---

etc.’ ‘On’ can mean ‘in close proximity with,’ as in ‘a village [on] the sea,’ or
‘stay [on] your opponent.’ (Merriam-Webster’s Collegiate Dict., supra, p. 811.)
‘Upon’ can also mean ‘in or into close proximity or contact with’ as in ‘the enemy
is [upon] us,’ or ‘despondency fell [upon] me.’ (Webster’s 3d New Internat. Dict.
(1981) p. 2517.) But we have not found any definition of ‘on’ or ‘upon’ that
includes in close proximity to a car. (See Webster’s 3d New Internat. Dict.,
supra, p. 1574 [‘on’ is ‘used as a function word to indicate presence within,’ as in
‘rode there [on] a train,’ or ‘booked passage [on] an ocean liner’].)”
No one would understand the statement that “a person is on a car” to mean
that the person was standing next to the car or two feet away from it. There
simply is no room in this context to refuse to recognize and give meaning to the
ordinary and common understanding and usage of the words. The language is
clear. The use of the word “actually” in the phrase “actually in or upon” makes
what is already clear unquestionable. As numerous courts have already
recognized, the word “actually” in the phrase “clearly negates constructive
presence and possession. (See Royce Furs, Inc. v. Home Insurance Company
(1968) 30 App.Div.2d 238 [291 N.Y.S.2d 529, 530-531]; Phil G. Ruvelson, Inc. v.
St. Paul Fire & Marine Ins. Co. (1951) 235 Minn. 243 [50 N.W.2d 629, 633];
Greenberg v. Rhode Island Ins. Co. (1946) 188 Misc. 23 [66 N.Y.S.2d 457,
459].)” (Revesz v. Excess Ins. Co. (1973) 30 Cal.App.3d 125, 129.)
Not surprisingly, the overwhelming majority of courts that have addressed
this policy provision have also found it clear and unambiguous. Recently, in
American Stone Diamond, Inc. v. Lloyds of London (S.D. Texas 1996) 934 F.Supp.
839, 843, the court summarized and cited some of these decisions. “Courts have
consistently held nearly identical policy language [‘actually in or upon’] to be
unambiguous and, based upon such exclusions, have denied coverage to insureds
who were not literally in or upon their vehicles at the time of the losses, even
though the insureds may have been only a short distance away from the vehicle,
watching the vehicle, or absent from the vehicle for only a short period of
3

---

time. See, e.g., Williams v. Fallaize Ins. Agency, Inc., 220 Ga.App. 411, 469
S.E.2d 752 (1996) (exclusion applicable where insured was in store 25 feet from
vehicle at time of theft); Wideband Jewelry Corp. v. Sun Ins. Co. of N.Y., 210
A.D.2d 220, 619 N.Y.S.2d 339 (1994) (exclusion applicable where insured’s
employee was six feet from vehicle at time of theft); Jerome I. Silverman, Inc. v.
Lloyd’s Underwriters, 422 F.Supp. 89 (S.D.N.Y.1976) (exclusion applicable where
insured was temporarily away from vehicle at time of theft); Revesz v. Excess Ins.
Co., 30 Cal.App.3d 125, 106 Cal.Rptr. 166 (1973) (exclusion applicable where
insured was getting directions a few feet from vehicle at time of theft); Royce Furs,
Inc. v. Home Ins. Co., 30 A.D.2d 238, 291 N.Y.S.2d 529 (1968) (exclusion
applicable where insured was registering inside hotel for a few minutes while
vehicle was six to ten feet outside hotel at time of theft); American Charm Corp. v.
St. Paul Fire & Marine Ins. Co., 56 Misc.2d 574, 289 N.Y.S.2d 383 (1968)
(exclusion applicable where insured was in his home with vehicle locked in
adjacent garage at time of theft); Phil G. Ruvelson, Inc. v. St. Paul Fire & Marine
Ins. Co., 235 Minn. 243, 50 N.W.2d 629 (1951) (exclusion applicable where
insured was away from vehicle for a few minutes to use bathroom and drink cup of
coffee at time of theft). See especially JPM Associates, Inc. v. St. Paul Fire &
Marine Ins. Co., 109 Md.App. 343, 674 A.2d 562 (1996) (exclusion applicable
where insured was inside service station paying for gasoline at time of theft).” (See
also Annot., Construction and Effect of “Jeweler’s Block” Policies or Provisions
Contained Therein (1994) 22 A.L.R.5th 579, § 2.)
The words “actually in or upon” are clear and unequivocal. It is not for this
court to rewrite the parties’ contract by construing language to mean something it
does not mean.
Accordingly, I dissent.
KENNARD,
J.
4

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DISSENTING OPINION BY CHIN, J.
I respectfully dissent, for I cannot agree with the majority’s insurance
coverage interpretation. The insurance policy at issue excludes from coverage
jewelry stolen from a vehicle unless the insured was “actually in or upon such
vehicle at the time of the theft.” (Maj. opn., ante, at p. 1, italics added.) The
italicized language is unambiguous. It does not, as the majority insists,
contemplate coverage when the insured or its representative is “in close
proximity” to the vehicle or somewhere nearby at the time of the theft. Rather, the
insurer’s use of the phrase “actually in or upon such vehicle” was deliberate.
Jewelry invites theft. Jewelry in unattended vehicles especially invites theft. The
intent of the exclusion of theft when the insured is not actually, literally, in or
upon the car, is to ensure the actual presence of someone in or upon the car in
order to avoid a theft. (Ruvelson, Inc. v. St. Paul Fire and Marine Ins. Co. (Minn.
1951) 50 N.W.2d 629, 635 (Ruvelson).) Conversely, the absence of an actual
presence in or upon the unoccupied vehicle offers the criminal the opportunity to
steal. (Ibid.) Zurich did not insure against theft when the insured’s representative
was nearby or close to the car, but only when he was actually in or upon the
vehicle. Therefore, when Brian Callahan, who was in charge of the car containing
the jewelry, exited the vehicle and left the engine running, he increased the risk of
theft of the car and anything in it, including the jewelry. Under the insurance
policy’s plain language, and the many interpretative principles that guide us in
reviewing insurance coverage issues, the theft is excluded from coverage.
1

---

Jeweler’s block insurance was conceived by Lloyds of London at the turn
of the previous century. (JMP Associates, Inc. v. St. Paul Fire & Marine Ins. Co.
(Md. 1997) 693 A.2d 832, fn.1.) The “all risk” insurance is different from other
property or “named peril” insurance because the policy insures all risks of loss or
damage to the jewelry subject to certain exclusions. The policy contains an
exclusion for all jewelry theft as follows: “We will not pay for ‘loss’ caused by or
resulting from any of the following: [¶] . . . Theft from any vehicle unless you, an
employee, or other person whose sole duty is to attend the vehicle are actually in
or upon such vehicle at the time of the theft.” The exclusion and exception for
thefts that occur when the employee is “actually in or upon [the insured’s]
vehicle” has long been included in the policy. Although exceptions to exclusions
are construed broadly in the insured’s favor, courts will not strain to create an
ambiguity where none exists and unambiguous policy language controls. (Waller
v. Truck Ins. Exchange (1995) 11 Cal.4th 1, 18.)
Two California cases have considered a similar issue under comparable
jeweler’s block policies. In Revesz v. Excess Ins. Co. (1973) 30 Cal.App.3d 125
(Revesz) and Nissel v. Certain Underwriters at Lloyd’s of London (1998) 62
Cal.App.4th 1103 (Nissel), the Courts of Appeal denied coverage for the theft of
jewelry from a car because the subject vehicles containing the jewelry were parked
and left unattended. In both cases, the courts found the “actually in or upon the
jewelry” requirement unambiguous and concluded the drivers intended to abandon
their vehicles temporarily either to get directions or engage in other business. The
majority attempts to distinguishe these cases on the ground that Callahan did not
intend to abandon the vehicle or turn his attention away from it. Instead, he
wanted to inspect it in order to determine the origin of a rattling noise, and had to
exit the vehicle in order to conduct his inspection.
2

---

The majority places much emphasis on the fact that the court in Revesz,
supra, 30 Cal.App.3d at pages 128-129, looked to the insured’s intent and conduct
in determining whether the theft that occurred was after the insured salesman
stopped to ask for directions. Revesz found that by parking his car at the curb,
locking the ignition, removing the keys, and leaving the vehicle to seek
information, he had temporarily abandoned it. (Ibid.) In direct contrast to the
majority, however, Revesz concluded that the requirement that the insured or its
representative remain “actually in or upon the vehicle” was not ambiguous, and
placed great emphasis on the word “actually” to find no coverage. (Ibid.) Indeed,
Revesz specifically observed that temporary abandonment of the insured jewelry
can occur when the employee is “not actually in or upon his vehicle” and “the
thief is able to take possession of the vehicle and its contents without interference
from him.” (Ibid.) Thus, although Revesz stated that the insured’s intent was
relevant, it relied solely on the clear and explicit words of the policy, and not the
insured’s intent, in finding no coverage.
Nissel, supra, 62 Cal.App.4th at page 1103, is also instructive. There, two
thieves stole a bag containing diamonds and other items from the salesman’s
vehicle. (Id. at p. 1106.) Similar to the policy at issue here, the jeweler’s block
policy in Nissel excluded thefts from an automobile unless the insured (or its
permanent employee) at the time of the loss was “actually in or upon such
vehicle.” (Id. at p. 1107.) Although the insured made no claim that the policy
exclusion was unclear or ambiguous, the court held that because the employee was
not actually in or upon the vehicle when the theft occurred, the exclusion barred
coverage. (Id. at p. 1114; see also Taff v. Atlas Assur. Co. (1943) 58 Cal.App.2d
696, 701 [“If he should not leave his jewelry in his unguarded car exposed to the
hazards of theft, . . . his coverage was complete; but he did choose so to leave it,
he had got what he bought”].)
3

---

The majority of other state courts agree that the insured or its employee
must actually, literally, be in or on the vehicle in order for the exception to apply.
(See, e.g., American Stone Diamond, Inc. v. Lloyds of London (S.D.Tex. 1996)
934 F.Supp. 839, 843-844; see also Sphere Drake Ins. PLC v. Trisko (D.Minn.
1998) 24 F.Supp.2d 985, 992-996; Wideband Jewelry Corp. v. Sun Ins. Co. of
New York, Inc. (1994) 210 A.D.2d 220, 619 N.Y.S.2d 339 [no coverage when
employee six feet away from vehicle when theft occurred]; Greenberg v. Rhode
Island Ins. Co. (1946) 66 N.Y.S.2d 457, 459 (Greenberg) [car parked on street
while representative ate in restaurant].) As American Stone Diamond observed,
“[c]ourts have consistently held nearly identical policy language to be
unambiguous and, based upon such exclusions, have denied coverage to insureds
who were not literally in or upon their vehicles at the time of the losses, even
though the insureds may have been only a short distance away from the vehicle,
watching the vehicle, or absent from the vehicle for only a short period of time.”
(American Stone Diamond, supra, 934 F.Supp. at p. 843.) Even Revesz relied on
the majority of state cases that place “great emphasis on the word ‘actually,’
indicating that it clearly negates constructive presence and possession.” (Revesz,
supra, 30 Cal.App.3d at p. 129.)
The cases the majority relies on for support generally stand alone in their
conclusion that the requirement that the insured or its representative be “actually
in or upon such vehicle at the time of the theft” includes close proximity to the
vehicle. (Lackow v. Insurance Co. of North America (1976) 52 A.D.2d 579, 382
N.Y.S.2d 529; Star Diamond v. Underwriters at Lloyd’s, London (E.D.Va. 1997)
965 F.Supp. 763, 765.) Indeed as the Court of Appeal noted, neither of these
cases has been followed in any other jurisdiction. In Lackow, the court found
coverage under a similar policy when the insured’s employee was at the rear of the
vehicle opening its trunk at the time of the theft. The court interpreted the
4

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“actually in or upon such vehicle” at the time of the loss to include coverage when
the insured was close enough to the vehicle “to be able to observe a theft of the
contents.” (Lackow, supra, 52 A.D. at p. 579.) In Star Diamond, the company
president placed his knapsack full of diamonds on the floor behind the front seat
of his car. After he stopped at a gas station, and when he was not more than nine
inches from his car, the knapsack was stolen. (Star Diamond, supra, 965 F.Supp.
at p. 764.) The policy excluded theft of the jewelry unless the insured was “in or
upon the vehicle at the time of the loss.” (Id. at p. 765.) The court disregarded the
policy’s clear meaning and broadened coverage beyond the policy’s scope to hold
that the use of the disjunctive “or” between the words “in” or “upon” meant
coverage was not conditioned solely on the insured being “actually in” the vehicle.
In addition, the court concluded that the term “upon” should allow coverage when
the insured exits the car to attend to the vehicle. (Id. at p. 767.) Under the clear
and explicit policy language, this conclusion is questionable. As noted, no other
jurisdiction has followed the case, even though our majority plans to do so.
Standard dictionary definitions also undermine the majority’s strained
approach to insurance policy interpretation. As the Court of Appeal observed,
“upon” is interchangeable with the word “on.” (See, e.g., Webster’s Collegiate
Dict. (10th ed. 1995) p. 1298.) Whereas “on” can mean “in close proximity with,”
as in “a village on the sea” or as a function word to mean “presence within,” as in
“rode on a train” there is no definition of “on” or “upon” that includes in close
proximity to a car. The majority’s hypothetical in response to a comment made
during oral argument involving an insured who carelessly leaves jewelry in one
train compartment while walking to a different compartment strains the policy’s
application and ignores the standard rules of word usage and function.
In addition, as the Court of Appeal also noted, if we view the terms “on” or
“upon” from a historical perspective, those words “logically and unambiguously
5

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apply to a horse or a horse-drawn carriage. One would be upon rather than in a
horse or carriage. In modern times, the words ‘on’ or ‘upon’ would apply to a
motorcycle. In the ordinary sense of the words, whether one is ‘on’ or ‘upon’ a
vehicle means the same thing; the usage varies with the object.”
The majority of courts agree that the insurer’s use of the word “actually” is
also quite significant. Indeed, the courts adopting the majority view would agree
that placing the word “actually” in the beginning of the policy’s exception to the
exclusion to theft, “belies any argument that the exclusion can be avoided when
the insured is in close proximity to the car or is watching it.” In Greenberg, supra,
66 N.Y.S.2d at page 459, the court pointed out that, “Actual means that which
exists in fact or reality, in contrast to that which is constructive, theoretical or
speculative. [Citation.] [¶] We must give due recognition to the use of the word
‘actually’ and must conclude it was inserted and intended for a definite purpose –
to indicate the intention that presence in realitypresence in factwas required
and not a constructive or theoretical one.”
The majority also cites many rules of insurance policy interpretation to
support its holding. They all favor the view that there is no coverage here. For
example, the majority relies on the rule that an insurance policy is considered
ambiguous only when it is susceptible to two or more constructions. (Waller v.
Truck Ins. Exchange, supra, 11 Cal.4th at p. 18.) The phrase interpreted here,
“actually in or upon such vehicle at the time of the theft” is capable of one
meaning only: The insured must be in or upon the vehicle when the theft occurs
in order for coverage to apply. The rule is clearly stated by several courtsthat
“[t]he [exclusion] was obviously intended to cover any situation where a loss
occurred when the property was not protected by the presence of someone in or
upon the car.” (Ruvelson, supra, 50 N.W.2d at p. 634; maj. opn., ante, at p. 4.)
6

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The majority also acknowledges, but refuses to follow, the statutory
mandate to interpret written contract terms under their “clear and explicit”
meaning, and in their “ordinary and popular sense.” (Civ. Code, §§ 1644, 1638.)
Under these rules, we must find that the jeweler’s block theft policy requirement
that the insured party remain “actually in or upon the vehicle at the time of such
theft” to mean what it says. There is no ambiguity here. To hold otherwise
ignores the obvious intent of the specific and limited exception to the exclusion for
theft, and potentially risks increased premiums for jewelry theft protection, a risk I
cannot concede.
According to the clear and explicit words used in the jeweler’s block policy
before us, the insurer reasonably decided that actual presence of the insured or its
representative in the car would likely deter a thief, while the absence of an actual
presence offers the thief an opportunity to steal. As one court noted, “opportunity
makes the thief. If [the insured] had been in the automobile, probably the thief
would not have entered.” (Princess Ring Co., Inc. v. Home Ins. Co. (R.I. 1932)
161 A. 292, 293.) Long ago, insurance companies decided to insure against the
theft of jewelry in vehicles only if the insured or its representative took basic
precautions to guard against the theft. When the insured or its representative
leaves the car for any reason, the risk of theft increases. That is what happened
here. When Callahan left the car, with its engine running, to inspect a potential
problem, he was not “actually in or upon such vehicle at the time of the theft” as
the exception to the theft exclusion requires. He left the vehicle and its contents
7

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exposed to theft. The policy’s clear language excludes this theft from its
coverage.
CHIN, J.
I CONCUR:
BROWN, J.
8

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See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion E.M.M.I. Inc. v. Zurich American Insurance Company
__________________________________________________________________________________

Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted

XXX 100 Cal.App.4th 460
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S109609
Date Filed: February 23, 2004
__________________________________________________________________________________

Court:

Superior
County: Los Angeles
Judge: David A. Workman

__________________________________________________________________________________

Attorneys for Appellant:

Quisenberry & Kabateck, Kabateck & Kropff, John N. Quisenberry, Brian S. Kabateck, James B. Kropff,
Heather M. Mason, Suzanne L. Havens Beckman and Jerilyn Jacobs for Plaintiff and Appellant.

Cummins & White and Annabelle M. Harris for Vartan Karlubian and Cummins & White as Amici Curiae
on behalf of Plaintiff and Appellant.

__________________________________________________________________________________

Attorneys for Respondent:

Bishop, Barry, Howe, Haney & Ryder, Mark Koop, Jonathan Gross and Jay E. Framson for Defendant and
Respondent.

Deborah J. La Fetra for Pacific Legal Foundation as Amicus Curiae on behalf of Defendant and
Respondent.

1

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Counsel who argued in Supreme Court (not intended for publication with opinion):

Brian S. Kabateck
Kabateck & Kropff
555 West Fifth Street, 31st Floor
Los Angeles, CA 90013
(213) 996-8344

Mark Koop
Bishop, Barry, Howe, Haney & Ryder
2000 Powell Street, Suite 1425
Emeryville, CA 94608-1820
(510) 596-0888

2

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Opinion Information

Date:	Docket Number:
Mon, 02/23/2004	S109609

Disposition
Feb 23 2004	Opinion: Reversed

Dockets
Aug 30 2002	Petition for review filed   appellant E.M.M.I., Inc.
Sep 9 2002	Received Court of Appeal record   1 doghouse
Sep 18 2002	Received Court of Appeal record   2nd doghouse [being sent o/n]
Sep 20 2002	Request for depublication (petition for review pending)   by United Policyholders (non-party)
Sep 20 2002	Answer to petition for review filed   by counsel for respondent Zurich American Insurance Co. (timely filed per rule 40k)
Sep 24 2002	Opposition filed   by resp. Zurich to depub request
Sep 30 2002	Reply to answer to petition filed   appellant E.M.M.I., Inc.
Oct 23 2002	Petition for Review Granted (civil case)   Votes: George, CJ., Kennard, Baxter and Moreno, JJ.
Nov 1 2002	Certification of interested entities or persons filed   by counsel for resp
Nov 15 2002	Certification of interested entities or persons filed   by counsel for aplts
Nov 25 2002	Opening brief on the merits filed   appellant E.M.M.I, Inc. [rule 40k]
Dec 24 2002	Answer brief on the merits filed   Defendant/Respondent Zurich American Insurance Company
Jan 13 2003	Reply brief filed (case fully briefed)   by appellant EMMI, Inc.
Feb 11 2003	Received application to file amicus curiae brief; with brief   by Pacific Legal foundation.
Feb 13 2003	Received application to file amicus curiae brief; with brief   Vartan Karlubian and Cummins & White, LLP
Feb 19 2003	Permission to file amicus curiae brief granted   by Pacific Legal Foundation in support of resp. Any party may file an answer w/in 20 days.
Feb 19 2003	Amicus Curiae Brief filed by:   Pacific Legal Foundation in support of Resp.
Feb 24 2003	Permission to file amicus curiae brief granted   by Vartan Karlubian and Cummins & White LLP in support of aplt. Answers may be filed w/in 20 days.
Feb 24 2003	Amicus Curiae Brief filed by:   Vartan Karlubian and Cummins & White LLP in support of aplt
Sep 8 2003	Change of Address filed for:   aplt counsel Kabateck. (firm name changed too)
Oct 30 2003	Case ordered on calendar   12-2-03, 9am, San Jose
Dec 2 2003	Cause argued and submitted
Feb 23 2004	Received:   "Notice of Firm Name Change" counsel of record Kabateck & Garris for appellant E.M.M.I.
Feb 23 2004	Opinion filed: Judgment reversed   Majority opinion by Moreno, J. ------------------joined by George, C.J., Baxter & Werdegar, JJ. Dissent by Kennard, J. Dissent by Chin, J.---joined by Brown, J.
Mar 10 2004	Rehearing petition filed   by resp Zurich (40k)
Mar 15 2004	Time extended to consider modification or rehearing   (rehearing) to 5-21-04.
Mar 19 2004	Received application to file Amicus Curiae Brief   by Pacific Legal Foundation in support of resp's petn for rehearing
Mar 19 2004	Permission to file amicus curiae brief granted   by Pacific Legal Foundation in support of resp. Answers may be filed w/in 20 days.
Mar 19 2004	Amicus curiae brief filed   by Pacific Legal Foundation in support of resp
Apr 28 2004	Rehearing denied   Kennard, J., Chin, J., and Brown, J., are of the opinion the petition should be granted.
Apr 28 2004	Change of contact information filed for:   A/C Pacific Legal Foundation (address)
Apr 28 2004	Remittitur issued (civil case)

Briefs
Nov 25 2002	Opening brief on the merits filed
Dec 24 2002	Answer brief on the merits filed
Jan 13 2003	Reply brief filed (case fully briefed)
Feb 19 2003	Amicus Curiae Brief filed by:
Feb 24 2003	Amicus Curiae Brief filed by:
Mar 19 2004	Amicus curiae brief filed

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