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New Hampshire District Court Holds Insured has Burden of Proving Existence of Disputed Policy

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The United States District Court for the District of New Hampshire recently ruled that where parties disputed the existence of an insurance policy, the insured has the burden of proving the policy’s existence. Cardigan Mountain School v. New Hampshire Insurance Company, 14-CV-116LM, 2014 WL 4979855 (D.N.H. October 2, 2014). 

In the spring of 2013, Cardigan Mountain School (“Cardigan”), an independent all-boys boarding school, received notice of a potential legal claim arising from events that were alleged to have taken place during the 1967-1968 school year. Cardigan unsuccessfully attempted to locate the insurance policy that it believed was in place at the time of the alleged incident. However, Cardigan assembled certain circumstantial evidence that it contended was sufficient to demonstrate that New Hampshire Insurance Company (“NHIC”), insured Cardigan during the relevant period of time. 

Cardigan contacted NHIC’s parent company, American International Group (“AIG”) to inquire whether AIG had any relevant records. AIG was unable to find any evidence of applicable policy and refused to provide coverage for the potential claim. 

Thereafter, Cardigan filed a declaratory judgment action seeking a declaration that it was insured by NHIC during the 1967-1968 school year. In support of its position, Cardigan principally relied on a 1971 financial report which indicated that it was insured by NHIC from September 15, 1970, to September 15, 1971. Cardigan bolstered its position by including in its Complaint that:

  • Mr. Cornelius Bakker, Cardigan’s business manager from 1967 to 1970, did not believe that Cardigan changed insurance carriers during his tenure. It also noted that Mr. Bakker worked with A.B. Gile, Inc., a local insurance broker who, “upon information and belief,” had a close association at the time with NHIC; and,
  • Mr. Phillip Wheeler, one of the two principals at the auditing firm that prepared the 1971 financial report, recalled that, in preparing the 1971 report, auditors had compared the 1970 to 1971 financials to the 1969 to 1970 financials and that the auditors would have noted a change in insurance providers between those two periods had one occurred. 

NHIC moved to dismiss the claim, and the Court, applying New Hampshire law, granted the motion. In its decision, the Court first noted that although N.H.Rev.Stat. Ann. § 491:22 appeared at first glance to place the burden of disproving coverage squarely on NHIC, there was a distinction between the burden to prove coverage and the burden to prove the existence of an insurance policy in the first place.

The Court then ruled that where parties disputed the existence of an insurance policy, the insured had “the burden of proving the policy’s existence.” The Court found it would be “illogical” to impose a burden on an insurer to disprove the existence of a policy. 

In this case, the Court ruled that Cardigan failed to meet its burden of proving the existence of the policy that it contended was in place during the 1967-1968 school year. The Court reasoned that the 1971 financial report covered the period from September 1970 to September 1971, a full two years after the relevant period, and although it referenced NHIC, the financial report referred “exclusively to policies in place from 1970 to 1971.”

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