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DNA PLANT TECH. CORP. v. NAVIGATORS INS. CO.

September 4, 1996

DNA PLANT TECHNOLOGY CORPORATION, Plaintiff,
v.
NAVIGATORS INSURANCE COMPANY, Defendant.



The opinion of the court was delivered by: FISHER

 FISHER, District Judge,

 The following facts are undisputed. DNAP, founded in 1981, is a small biotechnology company that develops premium fruits and vegetables. Product lines include celery, carrots, cherry tomatoes and peppers. These products are marketed through a subsidiary which sells the produce to wholesale and retail markets. In 1986, DNAP began to develop a line of full-size tomatoes. According to DNAP, from 1986 to 1992, DNAP invested approximately $ 7 million to develop a superior hybrid tomato seed for full scale commercialization. The seed chosen for commercialization was designated hybrid seed 91389 ("389").

 In 1992, DNAP contracted with Asgrow Seed Company in Thailand for the production in Thailand of the hybrid seek necessary to support DNAP's commercial production plans. In April 1993 Asgrow harvested DNAP's tomato seed and arranged for shipment from Asgrow's facility in Thailand to Asgrow's facility in Gonzalez, California. The seeks were shipped as part of an Asgrow shipment of 173 boxes. Shipment occurred via United Airlines from Thailand to Japan and then to San Francisco. Initially, the entire shipment was placed on United Flight 844 in Thailand. Flight 844 proceeded to Taipei, Japan where it landed and a portion of the cargo was placed on board United Flight 828. Flight 844 then proceeded directly to San Francisco. Flight 828 proceeded to San Francisco via Tokyo, Japan.

 Of the 173 boxes, 2 boxes were the property of DNAP. The remaining boxes in the shipment were the property of Asgrow. Of the two boxes, one contained approximately twenty pounds of the 389 seed. This box represented DNAP's seed crop for the 1993-1994 premium tomato harvest and is the subject of this suit.

 In late April 1993, DNAP was notified by Asgrow that the box containing the specially developed hybrid tomato seek was missing. DNAP claims the loss of seeds resulted in a significant loss as a result of DNAP's inability to supply customers with the hybrid tomato. DNAP seeks both damages for loss of the seeds and business interruption loss under the policy.

 The final pretrial issue to be resolved involves the burden of proof. In the November 28, 1995, opinion of this court, I held that coverage for property loss and business interruption loss would be provided under the policy so long as the seeds were lost within the United States. In reaching this determination I noted that under New York law, the party seeking coverage bears the burden of bringing its claim within the basis terms of the insurance policy. The burden then shifts to the insurer to establish the claim is governed by a policy exclusion.

 On June 4, 1996, I instructed the parties to brief the issue of which party would bear the burden of establishing the location of the loss of seeds at trial. The relevant policy provisions are set forth in PP 9-11. Paragraph nine sets forth the territorial limits of the policy. Paragraph ten sets forth the scope of coverage and paragraph eleven sets forth that all risks are covered unless otherwise excluded.

 9. TERRITORY

 
This policy covers within the 50 states compromising the United States of America, the District of Columbia, Puerto Rico, the Virgin Islands, and Canada

 10. COVERAGE

 
Except as hereinafter excluded, the ...

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