North River Insurance Company v. H.K. Construction Corporation

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 13, 2021
• Docket: 20-16207
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 13 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

NORTH RIVER INSURANCE No. 20-16207 COMPANY, D.C. No. Plaintiff-Appellee, 1:19-cv-00199-DKW-KJM

v. MEMORANDUM* H.K. CONSTRUCTION CORPORATION,

Defendant-Appellant.

Appeal from the United States District Court for the District of Hawaii Derrick Kahala Watson, District Judge, Presiding

Submitted July 9, 2021** Honolulu, Hawaii

Before: NGUYEN, OWENS, and FRIEDLAND, Circuit Judges.

This insurance dispute concerns an “earth movement” exclusion to H.K.

Construction Corp.’s commercial general liability (“CGL”) policy. After a third

party sued H.K. for damage from a landslide H.K. caused, H.K.’s insurer, The

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). North River Insurance Co., sought declaratory relief that the exclusion provision

foreclosed coverage. The district court granted summary judgment in favor of

North River. H.K. appeals.

We have jurisdiction under 28 U.S.C. § 1291. We review de novo a district

court’s interpretation of insurance policy language. Trishan Air, Inc. v. Fed. Ins.

Co., 635 F.3d 422, 426 (9th Cir. 2011). We review for abuse of discretion the

district court’s rejection of H.K.’s equitable estoppel defense. See Lukovsky v. City

& County of San Francisco, 535 F.3d 1044, 1048 (9th Cir. 2008). We affirm.

1. The district court properly concluded that the earth movement exclusion

unambiguously precludes coverage. An insurance policy “should be interpreted

according to its plain, ordinary, and accepted sense in common speech consistent

with the reasonable expectations of a layperson.” Hart v. Ticor Title Ins. Co., 272

P.3d 1215, 1224 (Haw. 2012). A plain reading of the earth movement exclusion is

only susceptible to one reasonable interpretation: the exclusion applies to damage

from earth movement even if the “work or operation provided or performed by or

on behalf of [H.K.]” was a causal factor. The reasonable expectations doctrine does

not refer to the layperson’s assumptions about coverage; it refers to a lay reading

of the policy language. See Chase v. State Farm Fire & Cas. Co., 780 A.2d 1123,

1132 (D.C. 2001) (“[P]urchasers of insurance may often retain expectations that

are contrary to the language of their policies. . . . Nonetheless, the reasonable

2 expectations doctrine is not a mandate for courts to rewrite insurance

policies . . . .”). H.K. cites no authority suggesting that an earth movement

exclusion is contrary to public policy.

2. The district court properly rejected the argument that North River should

be estopped from denying coverage. In the absence of prejudice or evidence that

estoppel is required to prevent a manifest injustice, the doctrine of equitable

estoppel generally cannot be used to broaden a policy’s coverage. AIG Haw. Ins.

Co. v. Smith, 891 P.2d 261, 266 (Haw. 1995). H.K. has not established that it

suffered prejudice or manifest injustice when North River’s consultants gave the

injured party a report recommending an “overly-engineered” solution. North River

denied coverage just one day after providing the report to the injured party and

over 18 months before the injured party filed suit. H.K. has not demonstrated that

at the time North River denied coverage, it was no longer possible for H.K. to hire

its own experts, attempt a settlement with the injured party, or prepare its own

defense. See Delmonte v. State Farm Fire & Cas. Co., 975 P.2d 1159, 1171 (Haw.

1999) (holding that there was no detriment or manifest injustice when the insurer

issued a reservation of rights letter two months after assuming the insured’s

defense because the insured “exercised some control over the defense” during that

time).

AFFIRMED.