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Cutter & Buck Inc. v. Genesis Insurance
Citation: 144 F. App'x 600Docket: No. 04-35218
Court: Court of Appeals for the Ninth Circuit; August 1, 2005; Federal Appellate Court
Cutter Buck, Inc. appeals a district court ruling that affirmed the validity of Genesis, Inc.'s rescission of its Directors’ and Officers’ insurance policies, asserting that the policies were procured through material misrepresentations. The appellate review of summary judgment is conducted de novo, focusing on whether any genuine issues of material fact exist and whether the law was correctly applied. Both parties agreed that no contested material facts were present and that Washington law governs the contract interpretation. The central issue is the severability provision in the 2002-2003 liability insurance contract. Cutter Buck admitted that its CFO, Steve Lowber, made material misrepresentations when obtaining the policies. Cutter Buck contended that the severability provision protected directors and officers without personal knowledge of these misrepresentations, while Genesis argued, and the district court found, that misrepresentations known to the signing officer were imputed to all directors and officers. The court confirmed the use of extrinsic evidence for contract interpretation, noting that the evidence did not reflect a clear intention of the parties. The court underscored Washington’s objective manifestation theory for contract interpretation, concluding that the district court rightly determined that Lowber’s knowledge of the misrepresentations justified Genesis's rescission of the policy. Cutter Buck also argued that Genesis waived its right to rescind due to actions taken following an August 2002 conference call, including a press release and a subsequent letter confirming coverage. The court ruled that these actions did not constitute a waiver, as waiver requires a voluntary and intentional relinquishment of a known right, which was not evidenced in this case. Voluntary relinquishment of a right indicates a conscious decision to waive it, necessitating clear intent. The August 12, 2002, press release informed the appellee of serious issues regarding certain transactions but did not disclose Lowber's knowledge or involvement. Under the severability provision, coverage was required unless evidence showed that Lowber knowingly misrepresented facts in the application. Since the appellee lacked such evidence until shortly before policy rescission, the district court correctly determined that no prior actions constituted a voluntary waiver of rights. Additionally, the district court's handling of the discovery order was appropriate; it recognized the narrow scope of attorney-client privilege under Washington law and thoroughly reviewed the contested documents in camera, resulting in a mix of privileged and non-privileged findings. The appellant failed to demonstrate any errors or abuse of discretion in these determinations and did not adequately preserve the record for appeal. Consequently, the district court's grant of summary judgment in favor of the appellee is affirmed, with the disposition being non-precedential per Ninth Circuit Rule 36-3.