LESLIE E. KOBAYASHI, District Judge.
Before the Court is Plaintiff Evanston Insurance Company's ("Evanston") Motion for Summary Judgment ("Motion"), filed on March 29, 2012. Defendants Eric Nagano, Hiroko Nagano, PMX, Inc. ("PMX"), and HC Builders LLC ("HC", all collectively "Defendants") filed their memorandum in opposition on June 29, 2012, and Evanston filed its reply on July 9, 2012. This matter came on for hearing on July 23, 2012. Appearing on behalf of Evanston was Bradford Bliss, Esq., and appearing on behalf of Defendants was Kevin Herring, Esq. Defendants Eric Nagano and Hiroko Nagano were also present. After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, Evanston's Motion is HEREBY GRANTED for the reasons set forth below.
Evanston filed its Complaint for Declaratory Relief ("Complaint") on October 31, 2011. The Complaint seeks a judicial determination that Evanston has no duty to defend or indemnify Defendants in Frederick M.C. Hu & Marie G. Hu v. Eric Nagano & Hiroko M. Nagano, Civil No. 11-1-1412-07, Circuit Court of the First Circuit, State of Hawai'i ("Hu v. Nagano"), and in an arbitration proceeding before Dispute Prevention & Resolution ("DPR") titled Frederick M.C. Hu & Marie G. Hu v. PMX, Inc. & HC Builders, LLC ("Hu v. PMX"). The parties to those proceedings, however, subsequently agreed to consolidate the claims in Hu v. PMX with the claims in Hu v. Nagano. Thus, the Hus' First Amended Complaint in Hu v. Nagano ("Hu Complaint") also names PMX and
Evanston issued two general liability insurance policies to PMX that were in effect from November 11, 2002 through November 11, 2004. [Evanston's Concise Statement of Facts in Supp. of Motion, filed 3/29/12 (dkt. no. 19) ("Evanston CSOF"), at ¶ 4 (citing Complaint, Exhs. A & B); Defs.' Separate Concise Statement in Opp. to Motion, filed 6/29/12 (dkt. no. 22) ("Defs.' CSOF"), at 2 (admitting ¶ 4 of Evanston CSOF).
Evanston issued six general liability insurance policies to HC that were in effect from January 18, 2005 through January 18, 2011. [Evanston CSOF at ¶ 5 (citing Complaint, Exhs. C-H); Defs.' CSOF at 2 (admitting ¶ 5 of Evanston CSOF).] Defendant Hiroko Nagano is Eric Nagano's wife, and she is the principal of HC. [Nagano Decl. at ¶ 4.]
The Hu Complaint alleges that: Eric Nagano held a contractor's license from approximately June 1993 until it was revoked in approximately March 2006; and Hiroko Nagano has held an active contractor's license since approximately September 2006. [Hu Complaint at ¶¶ 3, 6.] The Hus allege that there is "sufficient unity of interest" among Defendants to consider them "one and the same, and the `alter ego' of each other with respect to their obligations and duties" to the Hus and the claims in Hu v. Nagano. [Id. at ¶ 8.] Further, the Hus allege that Defendants are jointly and severally liable for the Hus' damages. [Id. at ¶ 9.]
On or about December 2, 2002, the Hus and PMX entered into a contract for the construction of a residence ("the Construction Contract") at 2263 Okoa Street, Honolulu, Hawai'i 96821 ("the Project").
Construction did not commence until approximately October 2004 and, even after
After the revocation of Eric Nagano's contractor's license, he presented the Hus with a letter agreement authorizing HC to take over the contract with Hiroko Nagano acting as general contractor. In conjunction with that letter agreement, Defendants represented that they would assume all of PMX's obligations under the Construction Contract.
The Hus allege that Defendants did not fulfill the obligations under the Construction Contract. Further, the Project was "grossly delayed" and the construction was "riddled with defects." [Id. at ¶ 31.] The Hus also allege that Defendants abandoned the Project "after repainting less than one-third of the home's mud-stained, stucco exterior[.]" [Id.] According to the Hu Complaint, HC fraudulently published an Owner's Notice of Completion for the Project on or about December 4, 2007, and the notice was filed in state court or about December 19, 2007. Defendants represented to the Hus that the construction was substantially complete. The Hus allege that, when they moved in on or about March 1, 2008, the residence was not usable because it had no electricity, no hot water, and no installed appliances. Further, parts of the flooring were either missing or incomplete. The Hus state that, on or about June 29, 2008, Eric Nagano acknowledged that Defendants had not fulfilled the obligations under the Construction Contract and that Defendants lacked the funds to do so. As a result, the Hus were forced to either perform work themselves or pay third parties for services they paid Defendants to provide. [Id. at ¶¶ 32-36, 38-39.]
The Hus also allege that, after they moved into the residence, "the first floor of the house flooded during several rainstorms as a result of the defective construction by [Defendants] on the second floor of the house." [Id. at ¶ 41.] The Hus incurred expenses for materials and labor to replace or repair numerous types of defective construction on the Project. They also allege that, as a result of Defendants' defective construction, their staircase and balcony are unsafe and there are severe humps in the hardwood floors. [Id. at ¶¶ 42-45.]
The Hu Complaint alleges the following claims: breach of contract ("Count I"); breach of warranties ("Count II"); breach of the covenant of good faith and fair dealing ("Count III"); fraud related to the letter agreement authorizing Frederick Hu to take over the Project as the owner-builder
Eric Nagano and Hiroko Nagano (collectively "the Naganos") tendered the defense in Hu v. Nagano to Evanston under the two policies issued to PMX and the six policies issued to HC. Evanston has provided a defense, but Defendants allege the defense is limited because Evanston: allowed default to be entered against the Naganos (the default was later set aside); delayed retaining experts; and limited the ability of the Naganos' retained counsel to perform necessary actions to advance the case. [Nagano Decl. at ¶¶ 9-10.]
In the instant Motion, Evanston argues that it does not have a duty to defend or indemnity Defendants against the Hus' claims because: none of the claims "constitute `property damage' caused by an `occurrence' as those terms are defined in the applicable insurance polices[;]" and the policies' exclusions of claims arising from a breach of contract preclude coverage for all of the Hus claims. [Mem. in Supp. of Motion at 1-2.]
Evanston emphasizes that the Hu Complaint alleges numerous breaches of the Construction Contract and numerous defects in the construction of the Hus' residence, but the Hu Complaint does not allege any claims sounding in negligence. All of the claims arise from Defendants' alleged intentional conduct. [Id. at 4-6.]
Evanston points out that the insuring language in each of the six policies is contained in Commercial General Liability Coverage Form CG 0001, [id. at 7,] which states, in pertinent part:
[Complaint, Exh. A (PMX Policy No. CL020200357) at 23;
[Id., Exh. A at 33; Exh. B at 33-34; Exh. C at 23-24; Exh. D at 22-23; Exh. E at 22-23; Exh. F at 24-25; Exh. G at 24-25; Exh. H at 35-36.]
Evanston argues that, under these terms and definitions, none of the Hus' claims are covered under the Policies. Evanston also urges the Court to follow Group Builders, Inc. v. Admiral Insurance Co., 123 Haw. 142, 148-49, 231 P.3d 67, 73-74 (Ct.App.2010), which Evanston argues held that a construction defect claim is not an "occurrence" under a commercial general liability ("CGL") policy and therefore breach of contract claims, as well as derivative tort claims based on alleged construction defects, are not covered under such policies. [Mem. in Supp. of Motion at 9.] Evanston also notes that this district court and the Ninth Circuit have reached the same conclusion, and Group Builders cited both of those cases with approval. [Id. at 10 (discussing WDC Venture v. Hartford Accident & Indem. Co., 938 F.Supp. 671, 677 (D.Hawai'i 1996); Burlington Ins. Co. v. Oceanic Design & Constr. Inc., 383 F.3d 940, 946 (9th Cir. 2004)).] Evanston urges the Court to grant the Motion and to conclude that the Hus' claims are not covered under the Policies pursuant to the logic and reasoning in those three cases. [Id. at 11-12.]
Although Evanston asserts that the foregoing is a sufficient ground to grant the Motion, Evanston also argues that the Policies contain explicit exclusions of breach of contract claims.
The PMX Policies contain the following Breach of Contract Exclusion:
[Complaint, Exh. A at 13, Exh. B at 39.]
Four of the HC Policies contain the following exclusion in the Combination General Endorsement, MSU-001 (06/04):
[Id., Exh. C at 31, Exh. D at 30, Exh. E at 29, Exh. F at 33.] The other two HC Policies contain the following exclusion: "This insurance does not apply to claims arising out of breach of contract, whether written or oral, express or implied, implied-in-law, or implied-in fact [sic] contract." [Id., Exh. G at 34, Exh. H at 11.]
Evanston argues that all of the Hus' claims "clearly have their origin in the contract between PMX, Inc. and the Hus for construction of their home." [Mem. in Supp. of Motion at 13.] Evanston therefore argues that, pursuant to the analysis in Group Builders, WDC Venture, and Burlington, this Court should grant the Motion and conclude that none of the Hus' claims are covered under the Policies. [Id. at 13-14.]
In their memorandum in opposition, Defendants emphasize that PMX purchased the first policy before entering into the Construction Contract. [Mem. in Opp. at 2.] Eric Nagano states that one of the primary reasons he purchased the Policies was because it was his understanding that CGL policies covered construction defect claims. He also states that Evanston provided it with defense and indemnity coverage for two other construction defect claims during the period in which the Policies were in effect. [Nagano Decl. at ¶¶ 12-13.]
Construction began on the Project in 2003, but the Hus thereafter made at least thirty-three significant change orders, which increased the cost of the Project by $191,000.00. [Id. at ¶¶ 17, 19.] Eric Nagano also states that the Project was delayed by the following unforeseeable events: a concrete strike; forty days of rain in February 2006 through March 2006; the Hus' failure to make timely payments; the failure of Indymac (the Hus' construction lender) to provide funds in a timely manner; and Indymac's collapse. Eric Nagano states he advanced construction costs and worked hundreds of additional hours after funding ran out. The total cost of the Project was $689,000.00, but PMX and Eric Nagano were only paid $411,856.09. [Id. at ¶¶ 20-21.] Eric Nagano emphasizes that the Hus did not sue him or PMX after they moved into their "completed home in early 2008." [Id. at ¶ 22.] Eric Nagano states that he had no knowledge of the flooding that allegedly damaged the Hus' residence until they filed the Hu Complaint. [Id. at ¶ 23.] Eric Nagano also emphasizes that there is no contract between the Hus and either himself, Hiroko Nagano, or HC. [Id. at ¶ 18.] Defendants point out that Eric Nagano filed a Counterclaim in Hu v. Nagano seeking his out-of-pocket and unreimbursed Project expenses. [Mem. in Opp. at 5.]
Defendants first argue that they reasonably expected that the Policies would cover the claims in the Underlying Proceedings and that this expectation was consistent with the intentions of insurers and insureds in general at the time Evanston issued the Policies. [Id. at 10.] Defendants state that the Group Builders decision created "a public policy crisis" and
House Bill 924, which became Act 83, enacted Haw.Rev.Stat. § 431:1-217, which states, in pertinent part:
§ 431:1-217(a) (emphasis added).
As Defendants point out, [Mem. in Opp. at 11,] House Bill 924 and Act 83 state:
2011 Haw. Sess. Laws Act 83, § 1 at 232. Act 83 also states that its purpose is "to restore the insurance coverage that construction industry professionals paid for and to ensure that the good-faith expectations of parties at the time they entered into the insurance contract are upheld." Id. at 233. Defendants argue that Hawai'i state courts consider the declarations in Act 83 to be "pronouncement[s] of law that appl[y] to [] or govern[] cases involving the issue of whether an insurer should provide coverage for construction defect claims." [Mem. in Opp. at 12 (citing Defs.' CSOF, Decl. of Steven R. Gray ("Gray Decl."), Exh. 3
Defendants argue that: the Hus' alleged damages clearly constitute "property damage" as defined in the Policies; there is no dispute that the alleged damages took place within the territory covered by the Policies; and there is no dispute
Defendants argue that the Policies' definitions of "occurrence" are ambiguous because there are no definitions of the critical term "accident" in any of the Policies. Defendants therefore urge the Court to determine the meaning of "occurrence" according to Hawai'i case law as it existed in 2002. [Id. at 18.] Defendants assert that, in 2002, both Hawai'i state courts and the Ninth Circuit defined an accident according to whether the insured intended or expected the harmful results of the conduct at issue. [Id. at 18-19 (some citations omitted) (citing Hawaiian Holiday, 76 Hawai'i at 170, 872 P.2d at 234; Baugh Constr. Co. v. Mission Ins. Co., 836 F.2d 1164, 1169 (9th Cir.1988)).] Eric Nagano states that he did not intend or expect defects in the construction of the Project, or any part thereof, nor did he intend or expect to provide or install any defective materials or supplies. Further, he did not know of any defects in the home until the filing of Hu v. Nagano. [Nagano Decl. at ¶¶ 16, 23.] Defendants emphasize that the Hu Complaint only alleges intentional conduct in the fraud claims regarding the notice of completion and Frederick Hu's owner-builder status. The breach of contract and construction defect claims do not allege intent.
Defendants next argue that, because claims alleging breach of contract can be occurrences, they are within the Policies' initial grant of coverage. Further, Hawai'i case law in 2002 held that construction defect claims could still be occurrences even if the complaint also contained a breach of contract claim. Defendants argue that the Policies' inclusion of breach of contract exclusions shows that the initial grants of coverage included breach of contract claims. [Id. at 22-23.] Defendants argue that the Policies' breach of contract exclusions only apply to breach of contract claims, not claims
Further, Defendants argue that the Hu Complaint alleges construction defect claims, which do not constitute claims arising out of breach of contract. Defendants point out that prior correspondence from Evanston and its counsel acknowledged that the Hus' claims "arise from alleged improper and deficient workmanship during construction[.]" [Id. at 26-27 (emphasis omitted) (quoting Gray Decl., Exh. 8
Defendants argue that the breach of contract exclusion only excludes Count I. Further, Count I only applies to PMX because only PMX was a party to the Construction Contract. Defendants argue that the other seven counts of the Hu Complaint allege duties that are separate and apart from the Construction Contract. Defendants therefore assert that the sole breach of contract claim, which the Hus assert against only PMX, does not excuse Evanston from its duty to defend. [Id. at 28-29.]
Defendants next argue that, under Hawai'i law, Evanston was required to look beyond the effect of the pleadings to determine whether the possibility of coverage existed, and Evanston was required to conduct a reasonable investigation of the facts of the case. [Id. at 30-31 (some citations omitted) (citing Dairy Rd. Partners v. Island Ins. Co., 92 Haw. 398, 414-15, 992 P.2d 93, 109-10 (2000)).] Defendants argue that Evanston failed to look beyond the pleadings, and Evanston denied coverage merely because the Hu Complaint did not contain explicit allegations of negligence. Defendants contend, based on California case law, that the mere fact that Defendants did not expect the alleged damages to occur is enough to trigger coverage. [Id. (discussing Montrose Chem. Corp. v. Super. Ct. (Canadian Universal), 6 Cal.4th 287, 24 Cal.Rptr.2d 467, 861 P.2d 1153, 1164 (1993)).] Defendants also argue that Evanston had a duty to investigate the Hu Complaint's claim that the other Defendants would assume PMX's obligations under the Construction Contract. Defendants contend that Evanston's conflicting characterizations of the claims in the Hu Complaint, as well as Evanston's actions while it provided the defense in Hu v. Nagano, are further indications of its bad faith denial of coverage. [Id. at 31-32.] Evanston failed to authorize the retention of experts for the defense, and Evanston has stated that it is unable to locate information about previous cases in which it provided coverage for
Defendants urge the Court to deny the Motion because it exposes them to a risk of inconsistent verdicts. In Dairy Road, 92 Hawai'i at 417, 992 P.2d at 112, the Hawai'i Supreme Court recognized that facts which were uncontroverted at the time of tender may be significantly altered during discovery or trial. If the court in a coverage action concludes there is no coverage, but the court in an underlying action later concludes, based on new evidence, that there was a possibility of coverage, the insured would be barred from recovering post-trial attorneys' fees and costs from the insurer. This is fundamentally unfair to the insured, and therefore Dairy Road held that an insurer may not rely on extrinsic facts which are in dispute in the underlying action to deny coverage. [Id. at 33-34.] Defendants argue that Evanston has placed it at an even greater risk of inconsistent verdicts than the risk in Dairy Road because of Evanston's inability to locate information about prior covered construction defect claims and because Evanston authorized an investigation into whether Eric Nagano has a criminal history. Such an investigation is outside of the pleadings in Hu v. Nagano and cannot be considered to deny coverage. [Id. at 34 (citing Gray Decl., Exh. 12
Finally, Defendants argue that Evanston's breach of their duty to defend constitutes a breach of the Policies, and the breach bars Evanston from raising policy defenses to coverage. Defendants also argue that Evanston is estopped from asserting defenses to coverage in the instant case because Evanston's defense of Defendants in Hu v. Nagano has not been vigorous and Defendants have been prejudiced. [Id. at 34-35 (citing Utica Mut. Ins. Co. v. David Agency Ins., Inc., 327 F.Supp.2d 922, 928 (N.D.Ill.2004)).]
In its Reply, Evanston first argues that § 431:1-217 does not preclude this Court from applying Group Builders and similar cases to the instant case. Evanston notes that Chief United States District Judge Susan Oki Mollway has ruled that House Bill 924, which resulted in the enactment of § 431:1-217, did not preclude her from granting summary judgment to the insurer based on WDC Venture and Burlington. Chief Judge Mollway noted that Burlington is controlling, and this district court cannot choose to ignore it. Defendants argue that Chief Judge Mollway's cases are directly on point and this Court should follow her reasoning. [Reply at 3-8 (discussing State Farm Fire & Cas. Co. v. Vogelgesang, 834 F.Supp.2d 1026, 1037-38 (D.Hawai'i 2011); Ill. Nat'l Ins. Co. v. Nordic PCL Constr., Inc., 870 F.Supp.2d 1015, 1028-29 (D.Hawai'i 2012)).]
Evanston also argues that this Court should disregard Defendants' submissions from National Union v. Sunset because those exhibits, and the information therein,
As to Defendants' argument that breach of contract claims are excluded under the relevant Policies but claims arising from a breach of contract are not excluded, Evanston points out that Defendants did not provide any legal authority supporting this proposition. Evanston also argues that such a distinction is untenable because it would not be possible to determine how closely related to a breach of contract claim another claim must be for the exclusion to apply. Moreover, Evanston reiterates that all of the claims in the Underlying Proceedings are breach of contract claims. [Id. at 11-12.]
As to Defendants' argument that only PMX was a party to the Construction Contract, Evanston argues that the Hus' breach of contract claims implicate all Defendants. [Id. at 12.] As to Defendants' argument that the Hus' claims arise from construction defects, Evanston argues that the defects allegedly occurred in the performance of the duties under the Construction Contract and therefore arise from a breach of contract. Evanston argues that there is no alleged duty independent from the contractual duties in this case. Thus, Evanston contends that Burlington bars coverage for such claims. [Id. at 13-14.]
Evanston therefore urges the Court to grant summary judgment in its favor.
Federal jurisdiction in this case is based on diversity. [Complaint at ¶ 2.] This Court has recognized that:
Tracy v. USAA Cas. Ins. Co., Civil No. 11-00487 LEK-KSC, 2012 WL 928186, at *6 (D.Hawai'i Mar. 16, 2012) (some citations omitted). This Court therefore looks to
This Court has also recognized the following principles of Hawai'i insurance law as set forth by the Hawai'i Supreme Court:
U.S. Fire Ins. Co. v. Estate of Campbell, Civil No. 11-00006 LEK-KSC, 2011 WL 6934566, at *4 (D.Hawai'i Dec. 30, 2011).
This district court has summarized the following relevant aspects of Hawai'i law regarding the duty to defend and the duty to indemnify.
Id. at *5.
As previously noted, the Policies impose: a duty to indemnify for damages that the insureds are legally obligated to pay because of covered bodily injury or property damage; and a duty to defend against any suit seeking those damages. The Policies, however, only provide coverage for bodily injury and property damage caused by an occurrence that takes place within the coverage territory. See supra pg. 1182. The central dispute in this case is whether the damages that the Hus seek were caused by an occurrence within the meaning of the Policies. Evanston urges the Court to follow Group Builders, and Defendants argue that § 431:1-217(a) and Act 83 preclude the Court from applying Group Builders.
The Court agrees with Defendants that, pursuant to § 431:1-217(a), the Court cannot construe the meaning of the term "occurrence" based on the holding in Group Builders because the ICA decided Group Builders on May 19, 2010. Thus, it was not in existence when Evanston issued the Policies, the most recent of which took effect on January 18, 2010. [Complaint, Exh. H at 2.] In order to construe the term occurrence, this Court must determine what the state of Hawai'i insurance law was at the time Defendants purchased the policy at issue.
According to the Hu Complaint, on or about July 1, 2003, the Hus provided Eric Nagano and PMX a letter authorizing the commencement of construction. Pursuant to the Construction Contract, construction was to commence within five days after receipt of that letter, and construction was to be completed within 220 days after the date construction was authorized to commence. [Hu Complaint at ¶¶ 12.b., 12.c, 14.] The Hus allege that Defendants breached the Construction Contract by failing to commence construction within five days and by failing to complete construction within 220 days. [Id. at ¶¶ 56.a, 56.b.] The alleged commencement breach would have occurred in July 2003, during the period of the first PMX policy, and the completion breach would have occurred in February 2004, during the period of the second PMX policy. These are the earliest alleged occurrences which Defendants contend trigger Evanston's duty to defend and duty to indemnify. The remainder of
Under the facts of this case, the Court concludes that the operative case law is that which existed at the time Evanston issued the first PMX policy, which took effect on November 11, 2002. [Complaint, Exh. A at 2.] Thus, even Burlington is not applicable because the Ninth Circuit decided Burlington in 2004. Further, Chief Judge Mollway's cases discussing House Bill 924, Act 83, and Haw.Rev.Stat. § 431:1-217(a) are distinguishable because they addressed policies to which Burlington applied. See Vogelgesang, 834 F.Supp.2d at 1037-38 (concluding that House Bill 924 did not affect the ruling because nearly all of the cases that Group Builders relied upon "predate 2006, the year State Farm issued to Defendants the first policy that could potentially provide coverage in this case. None of these cases suggests that the claims associated with the Okudas' contract with Defendants warrants coverage." (citing Burlington Ins. Co. v. United Coatings Mfg. Co., 518 F.Supp.2d 1241, 1249 (D.Hawai'i 2007) (reading WDC Venture, its progeny, and Burlington Ins. Co. v. Oceanic for the proposition that, "under Hawaii law, contract and contract-based tort claims are not within the scope of CGL policies") (internal quotation marks omitted))); Nordic PCL, 870 F.Supp.2d at 1030 (in action involving policies issued in 2007, noting that the court was "clearly bound by Burlington, in which the Ninth Circuit construed Hawaii law as not providing for insurance coverage for contract related claims").
This Court agrees with the reasoning in Vogelgesang, which did not apply Group Builders, but considered the state and federal cases that Group Builders relied upon. 834 F.Supp.2d at 1037-38. Further, as stated in Nordic PCL:
870 F.Supp.2d at 1032.
Similarly, this Court notes that many of the cases that the ICA cited in Group Builders and that the Ninth Circuit cited in Burlington predated the Policies in the instant case. In particular, the Ninth Circuit noted that the holding in Burlington "is consistent with the line of cases from the District of Hawaii that hold that contract and contract-based tort claims are not within the scope of CGL policies under Hawaii law." 383 F.3d at 949 (discussing WDC Venture v. Hartford Accident & Indem. Co., 938 F.Supp. 671 (D.Hawai'i 1996); CIM Ins. Corp. v. Masamitsu, 74 F.Supp.2d 975 (D.Haw.1999); CIM Ins. Corp. v. Midpac Auto Ctr., Inc., 108 F.Supp.2d 1092 (D.Haw.2000)). In Group
Group Builders, 123 Hawai'i at 147, 231 P.3d at 72 (alterations in Group Builders) (emphasis in original) (quoting Burlington, 383 F.3d at 948).
This Court also notes that the defendants in Nordic PCL relied on the same Hawai'i cases that Defendants urge this Court to follow in the instant case: Sentinel Insurance Co. v. First Insurance Co. of Hawai'i, Ltd., 76 Haw. 277, 875 P.2d 894 (1994); Hawaiian Holiday Macadamia Nut Co. v. Industrial Indemnity Co., 76 Haw. 166, 872 P.2d 230 (1994); Hurtig v. Terminix Wood Treating & Contracting Co., 67 Haw. 480, 692 P.2d 1153 (1984); and Sturla, Inc. v. Fireman's Fund Insurance Co., 67 Haw. 203, 684 P.2d 960 (1984). Nordic PCL, 870 F.Supp.2d at 1030-31. Chief Judge Mollway declined to follow those cases, noting that insofar as they "preceded Burlington and Group Builders. ... it is fair for this court to assume that the Ninth Circuit and the ICA took those Hawaii Supreme Court cases into account." Id. at 1030. This Court also declines to follow Sentinel, Hawaiian Holiday, Hurtig, and Sturla, to the extent that they are inconsistent with
This Court FINDS that all of the claims in the Hu Complaint are either contract claims or claims that arise from the contract. Pursuant to the Hawai'i case law regarding insurance, as it existed when Defendants first purchased the Policies, this Court CONCLUDES that the actions which form the basis of the Hus' contract claims and contract-based claims are not occurrences within the meaning of the Policies. Insofar as the Hus' claims are not within the Policies' initial grant of coverage, this Court need not reach the issue whether the breach of contract exclusions in the Policies apply. This Court therefore CONCLUDES that Evanston does not owe Defendants a duty to defend or a duty to indemnify them against the Hus' claims.
On the basis of the foregoing, Evanston's Motion for Summary Judgment, filed March 29, 2012, is HEREBY GRANTED. The Court DIRECTS the Clerk's Office to enter judgment in favor of Evanston. After the entry of judgment, Evanston may file a motion seeking "its attorneys' fees and costs associated with the prosecution of this action[.]" [Complaint at pg. 18.] The magistrate judge will consider the motion in the normal course and issue his findings and recommendation.
IT IS SO ORDERED.
