Potentially Compromised Embryos not a Direct Physical Loss
Modern science allows an embryo to be created outside the body of a
woman and later implanted and grown to term. The in vitro fertilization
process allows more than one viable embryos to be created and they can
be stored for use later in a cryogenic tank.
Sherlene and Lawrence Wong (the Wongs) had stored some embryos at a
facility that kept them in a cryogenic tank that failed to maintain the
temperature necessary to store the embryos, following which the Wongs's
fertility doctor told them they should consider the embryos
"compromised" and "no longer viable, and lost."
In Sherlene Wong et al. v. Stillwater Insurance Company, A162893,
California Court of Appeals, First District, Second Division (June 30,
2023) the Wongs attempted to recover the value of the embryo's from a
homeowners insurance policy they maintained with Stillwater Insurance
(Stillwater). The policy was a specified perils policy that only insured
for "direct physical loss" that was "caused by any of the following
perils," going on to list 16 specified perils. The Wongs made a claim
for property damage, which Stillwater denied.
The Wongs sued, and Stillwater moved for summary judgment, on two bases:
the Wongs could not submit evidence of (1) "direct physical loss" or
(2) that "one of the sixteen specified perils occurred." The trial court
granted summary judgment.
BACKGROUND
Beginning in 2014, the Wongs pursued in vitro fertilization, working
with Aimee Eyvazzadeh, M.D., as their doctor. In 2015, the Wongs
completed an in vitro fertilization (IVF) cycle, and obtained four
viable embryos, one of which was implanted. As to the other three, as
Dr. Eyvazzadeh put it, after discussion with the Wongs they determined
to "bank the rest," which they did at Pacific Fertility Center (Pacific
Fertility or PFC), a facility in San Francisco that included several
cryogenic storage tanks that used liquid nitrogen to store human embryos
at very low temperatures. Specifically, the embryos were stored in Tank
4, which also contained embryos belonging to other people.
On or about March 4, 2018, Tank 4 failed to maintain the temperature
necessary to store embryos, as a result at least some (and possibly all)
of the embryos stored in that tank partially or totally thawed.
The Stillwater policy provided coverage for personal property the Wongs
"owned or used" while "anywhere in the world," with policy limits for
personal property of $502,720. The policy was a "specified perils"
policy,
The Proceedings Below
Stillwater filed a motion for summary judgment.
Eventually, the trial court filed its order granting the motion for
summary judgment concluding that Stillwater met its burden of
demonstrating that the causes of action alleged in the Wongs' complaint
cannot be established. Judgment was entered in favor of Stillwater, from which the Wongs filed an appeal.
DISCUSSION
The burden is on the insured to prove facts establishing the claimed
loss falls within the coverage provided by the policy's insuring clause.
No Evidence of Any Specified Peril
The Stillwater policy was, as noted, a "specified perils" policy.
ZALMA OPINION
Stillwater conceded that the embryos were "personal property" that could be insured under the homeowners policy, although arguments could have been made that they were not property any more than a child born from the embryo would be property. Regardless, it effectively argued that there was no evidence that the embryos were damaged or destroyed when the temperature in the cryogenic chamber rose nor was there evidence that the embryos suffered direct physical damage only that they were "worthless" to an IVF doctor.
