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

NOT FOR PUBLICATION FILED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
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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.
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