Hartford Fire Insurance Compan v. Westamerica Bank

Opinion

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS FILED FOR THE NINTH CIRCUIT APR 01 2013

MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

HARTFORD FIRE INSURANCE No. 11-16775 COMPANY, D.C. No. 2:09-cv-02451-JAM- Plaintiff - Appellant, DAD

v. MEMORANDUM* WESTAMERICA BANK,

Defendant - Appellee.

Appeal from the United States District Court for the Eastern District of California John A. Mendez, District Judge, Presiding

Argued and Submitted March 12, 2013 San Francisco, California

Before: FISHER, CALLAHAN and NGUYEN, Circuit Judges.

Hartford Fire Insurance Company appeals the district court’s grant of

summary judgment in favor of Westamerica Bank. We have jurisdiction under 28

U.S.C. § 1291, and we affirm.

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. 1. The district court properly determined that the set aside agreement

(Agreement) between Westamerica and Hartford, by its plain language, imposed

no obligation on Westamerica to ensure that construction work had been completed

before disbursing funds set aside to pay for that work. The Agreement authorized

Westamerica to make payment “on the authorization of” the borrower, without any

verification requirements, and explicitly provided that Westamerica “makes no

representations as to the use of such funds after such withdrawal,” that

Westamerica “undertakes no obligation to determine or insure . . . that such

improvements have been properly completed” and that “[Westamerica] will not be

responsible to the Borrower or to [Hartford] for proper use of funds disbursed.”

2. The extrinsic evidence Hartford proffered did not introduce any

ambiguity into Agreement. Evidence of industry usage “can be invoked only to

interpret, not to create, contractual terms.” 1 Witkin, Summary of Cal. Law (10th),

Contracts § 755 (citing Peiser v. Mettler, 50 Cal. 2d 594, 609 (1958)). There is no

evidence that Hartford’s executive’s expectations regarding the Agreement were

shared with Westamerica. See Banning Ranch Conservancy v. Superior Court, 193

Cal. App. 4th 903, 915 (2011) (“[A] party’s undisclosed subjective intent cannot be

used to override the contractual terms themselves.”). The provisions Hartford has

cited from the construction loan agreement between Westamerica and the borrower

2 were expressly for Westamerica’s benefit, and none obligated Westamerica to

verify completion before disbursing funds.

3. The district court properly granted summary judgment in favor of

Westamerica on Hartford’s conversion claim because that claim was dependent on

Hartford’s contract claim.

AFFIRMED.