Court: Court of Appeals for the Ninth Circuit; January 12, 2009; Federal Appellate Court
John Mannering appeals the district court's summary judgment favoring Hawaii Employers’ Mutual Insurance Company (HEMIC) regarding his claims, which include bad faith failure to defend, negligence, misrepresentation, estoppel, breach of fiduciary duty, conspiracy to defraud, breach of contract, breach of warranty, deceptive practices, and punitive damages. The appellate court has jurisdiction under 28 U.S.C. 1291. The court reverses the summary judgment on the failure to defend claim but affirms it on all other claims.
The court reviews summary judgment de novo, considering evidence in favor of the non-moving party to identify genuine issues of material fact and proper application of law. Mannering contends that HEMIC failed to clarify that the insurance policy did not cover United States Longshore and Harbor Workers (USL&H). His argument is rendered ineffective because he procured the policy through broker Scott Christensen, who recognized the absence of USL&H coverage.
Although the Hawaii Supreme Court has not explicitly addressed the issue, it is presumed that brokers act as agents of the insured. The court agrees with the district court's finding that Christensen was acting as Mannering’s agent, not HEMIC’s, and thus his knowledge of the policy's limitations is imputed to Mannering.
Summary judgment is deemed appropriate for claims of negligence, punitive damages, misrepresentation, promissory estoppel, estoppel, and deceptive practices. Mannering’s argument regarding breach of warranty is rejected, as HEMIC did not address the claim specifically, but the court found that the insurance policy contained no express warranty and Mannering's claims regarding implied warranties were unfounded, being applicable only to contracts for goods. Despite previously stating that the policy "insured nothing," Mannering now argues that it provided state workers’ compensation benefits, claiming HEMIC breached the contract by denying benefits to the decedents of his employee.
The court affirms the summary judgment on Mannering's claims of conspiracy to defraud and breach of fiduciary duties against HEMIC due to two main reasons: HEMIC had no obligation to provide USL&H coverage, and the evidence suggesting HEMIC conspired with Christensen to create false evidence was insufficient to defeat summary judgment. Additionally, the court reverses the summary judgment regarding Mannering's claim of bad faith failure to defend, noting that HEMIC acknowledged it had not paid for Mannering's appeal and failed to demonstrate that Mannering lacked reasonable grounds for appeal. The court's earlier opinion suggests the legal issues were sufficiently unsettled to warrant an appeal. Each party will bear its own costs on appeal. The disposition is affirmed in part and reversed in part, and it is not intended for publication or as precedent except as specified by 9th Cir. R. 36-3.
