State Farm Fire & Casualty Company v. Kaaihue et al

Filing 32

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT re 18 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 12/13/13. "For the foregoing reasons, summary judgment is granted in favor of State Farm. This disposes of all claims and all partie s in this action. Accordingly, the Clerk of the Court is directed to enter judgment in favor of State Farm and to closethis case." (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electron ic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
STATE FARM FIRE & CASUALTY
COMPANY, an Illinois
Corporation,

)
)
)
)
Plaintiff,
)
)
vs.
)
)
HENRY K KAAIHUE, JR.; and
)
ADVANCED HOME BUILDER, LLC, a )
Hawaii Company,
)
)
Defendants.
)
_____________________________ )

CIVIL NO. 13-00185 SOM/BMK
ORDER GRANTING MOTION FOR
SUMMARY JUDGMENT

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
I.

INTRODUCTION.
Plaintiff State Farm Fire & Casualty Company asks this

court to determine that it has no duty under homeowner’s and
umbrella insurance policies issued to Defendant Henry K. Kaaihue,
Jr., to defend or indemnify him with respect to claims filed
against him in state court.1

Because the state-court complaint

does not assert claims for which there is any possibility of
coverage under the insurance policies, State Farm has no duty to
defend or indemnify arising from those policies.

1

State Farm also sought a declaration concerning
whether it must provide insurance coverage to Defendant Advanced
Home Builders, LLC. At the hearing, counsel for Advanced Home
Builders represented that it had not tendered and would not be
tendering a defense of the state-court action to State Farm. In
reliance on this representation, State Farm dismissed all claims
concerning Advanced Home Builders.

II.

BACKGROUND FACTS.
On January 30, 2013, Allstate Insurance Personal Lines,

as subrogee of Steven and Faith Coloma, filed a state-court
action against Five M Plumbing, LLC, Kaaihue, and Advanced Home
Builders.

See ECF No. 19-2.

This state-court complaint alleged

that Allstate’s insured, Steven Coloma, had property on which he
was constructing a new house.

See State-Court Complaint ¶ 7.

In

relevant part, the state-court complaint alleges that “Coloma
hired Kaaihue, and/or his company, Advanced [Home Builders,] to
assist with various tasks through the construction project.”
¶ 9.

Id.

The state-court complaint further alleges that improper

construction practices caused two water lines to separate at
different times, resulting in substantial damage.

¶¶ 10-12.

Allstate allegedly paid an insurance claim by Coloma of
$150,731.44.

Id. ¶ 13.

Two claims were asserted against Kaaihue in the statecourt complaint.

First, Allstate asserted a breach of contract

claim, alleging that Kaaihue and/or Advanced Home Builders had
contracted with Coloma to provide various services for the
construction of Coloma’s home; that implied in this contract was
that all work performed would be done in a reasonable,
professional manner, consistent with industry standards; and that
Kaaihue and/or Advanced Home Builders had breached the contract
by failing to ensure that the water lines were properly

2

connected, causing damage for which Allstate paid insurance
claims of $150,731.44.

See State-Court Complaint ¶¶ 24-27.

Second, Allstate alleged that Kaaihue and/or Advanced
Home Builders had been negligent in failing to properly connect
the water lines during the construction of Coloma’s house.

The

negligence claim incorporates by reference the preceding
paragraphs of the state-court complaint, including the breach of
contract allegations.

It then alleges that Kaaihue owed a duty

to ensure that all plumbing work was installed in a reasonably
safe, professional manner that was consistent with industry
standards, but that Kaaihue breached that duty, causing damage.
See State-Court Complaint ¶¶ 28-29, 31.
Kaaihue apparently tendered the defense of the statecourt action to his insurance carrier, State Farm, under his
homeowner’s and umbrella insurance policies.
Kaaihue’s homeowner’s insurance policy, number 51-BQ8918-4, listed him as the insured.
133.

See ECF No. 19-3, PageID #

Advanced Home Builders was not named as an additional

insured under the policy.

See id.

The personal liability

section of Kaaihue’s homeowner’s insurance policy, Coverage L,
provides insurance coverage when “a claim is made or a suit is
brought against an insured for damages because of bodily injury
or property damage to which this coverage applies, caused by an
occurrence.”

See ECF No. 19-3, PageID # 151.

3

The policy defines

“occurrence” as “an accident, including exposure to conditions
which results in . . . bodily injury . . . or . . . property
damage.”

Id., PageID # 138.

The homeowner’s insurance policy

excludes from coverage bodily injury or property damage that
(1) “is either expected or intended by the insured,”
(2) “aris[es] out of business pursuits of any insured,” and/or
(3) “aris[es] out of the rendering or failing to render
professional services.”

Id., PageID # 152.

It also excludes

from Coverage L “liability . . . assumed under any unwritten
contract or agreement, or by contract or agreement in connection
with a business of the insured.”

Id., PageID # 153.

Kaaihue also had a personal liability umbrella policy,
number 51-BW-5154-5, with State Farm.
# 163.

See ECF No. 19-4, PageID

This policy covered Kaaihue and Jamie Bell-Kaaihue, but

not Advanced Home Builders.

See id.

Like Kaaihue’s homeowner’s

insurance policy, the umbrella policy excludes coverage for
losses (1) “arising out of any insured providing or failing to
provide a professional service,” (2) “arising out of any
insured’s business property or business pursuits of any insured,”
or (3) “bodily injury or property damage which is . . . expected
or intended by the insured.”

Id., PageId # 174, 176.

The

umbrella policy also excludes from coverage “liability imposed on
or assumed by any insured through any unwritten or written
agreement.”

Id., PageID # 176.
4

III.

SUMMARY JUDGMENT STANDARD.
Summary judgment shall be granted when “the movant

shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
R. Civ. P. 56(a) (2010).

Fed.

See Addisu v. Fred Meyer, Inc., 198

F.3d 1130, 1134 (9th Cir. 2000).

The movants must support their

position that a material fact is or is not genuinely disputed by
either “citing to particular parts of materials in the record,
including depositions, documents, electronically stored
information, affidavits or declarations, stipulations (including
those made for the purposes of the motion only), admissions,
interrogatory answers, or other materials”; or “showing that the
materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.”

Fed. R. Civ. P. 56(c).

One of the principal purposes of summary judgment is to identify
and dispose of factually unsupported claims and defenses.
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
Summary judgment must be granted against a party that fails to
demonstrate facts to establish what will be an essential element
at trial.

See id. at 323.

A moving party without the ultimate

burden of persuasion at trial--usually, but not always, the
defendant--has both the initial burden of production and the
ultimate burden of persuasion on a motion for summary judgment.

5

Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102
(9th Cir. 2000).
The burden initially falls on the moving party to
identify for the court those “portions of the materials on file
that it believes demonstrate the absence of any genuine issue of
material fact.”

T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors

Ass’n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Celotex Corp.,
477 U.S. at 323).

“When the moving party has carried its burden

under Rule 56(c), its opponent must do more than simply show that
there is some metaphysical doubt as to the material facts.”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986) (footnote omitted).
The nonmoving party must set forth specific facts
showing that there is a genuine issue for trial.
Serv., Inc., 809 F.2d at 630.

T.W. Elec.

At least some “‘significant

probative evidence tending to support the complaint’” must be
produced.

Id. (quoting First Nat’l Bank of Ariz. v. Cities Serv.

Co., 391 U.S. 253, 290 (1968)).

See Addisu, 198 F.3d at 1134 (“A

scintilla of evidence or evidence that is merely colorable or not
significantly probative does not present a genuine issue of
material fact.”).

“[I]f the factual context makes the non-moving

party’s claim implausible, that party must come forward with more
persuasive evidence than would otherwise be necessary to show
that there is a genuine issue for trial.”

6

Cal. Arch’l Bldg.

Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468
(9th Cir. 1987) (citing Matsushita Elec. Indus. Co., 475 U.S. at
587).

Accord Addisu, 198 F.3d at 1134 (“There must be enough

doubt for a ‘reasonable trier of fact’ to find for plaintiffs in
order to defeat the summary judgment motion.”).
All evidence and inferences must be construed in the
light most favorable to the nonmoving party.
Inc., 809 F.2d at 631.

T.W. Elec. Serv.,

Inferences may be drawn from underlying

facts not in dispute, as well as from disputed facts that the
judge is required to resolve in favor of the nonmoving party.
Id.

When “direct evidence” produced by the moving party

conflicts with “direct evidence” produced by the party opposing
summary judgment, “the judge must assume the truth of the
evidence set forth by the nonmoving party with respect to that
fact.”
IV.

Id.
STATE FARM HAS NO DUTY TO DEFEND OR INDEMNIFY KAAIHUE.
A.

General Law Concerning Insurance Policies.

This is a diversity action.

See Complaint ¶¶ 4-5.

Federal courts sitting in diversity apply state substantive law
and federal procedural law.

See Snead v. Metro. Prop. & Cas.

Ins. Co., 237 F.3d 1080, 1090 (9th Cir. 2001).

When interpreting

state law, a federal court is bound by the decisions of a state’s
highest court.

Ariz. Elec. Power Coop. v. Berkeley, 59 F.3d 988,

991 (9th Cir. 1995).

In the absence of such a decision, federal

7

courts attempt to predict how the highest state court would
decide the issue, using intermediate appellate court decisions,
decisions from other jurisdictions, statutes, treatises, and
restatements as guidance.

Id.; see also Burlington Ins. Co. v.

Oceanic Design & Constr., Inc., 383 F.3d 940, 944 (9th Cir. 2004)
(“To the extent this case raises issues of first impression, our
court, sitting in diversity, must use its best judgment to
predict how the Hawaii Supreme Court would decide the issue.”
(quotation and brackets omitted)).
Under Hawaii law, general rules of contract
construction apply to the interpretation of insurance contracts.
Dawes v. First Ins. Co. of Haw., 77 Haw. 117, 121, 883 P.2d 38,
42 (1994).

Insurance policies must be read as a whole and

construed in accordance with the plain meaning of its terms,
unless it appears that a different meaning is intended.

Id. at

121, 883 P.2d at 42; First Ins. Co. of Haw. v. State, 66 Haw.
413, 423, 665 P.2d 648, 655 (1983); see also Haw. Rev. Stat.
§ 431:10-237 (Michie 2011) (“[e]very insurance contract shall be
construed according to the entirety of its terms and conditions
as set forth in the policy”).
Because insurance contracts are contracts of adhesion,
they must be construed liberally in favor of the insured, and any
ambiguities must be resolved against the insurer.

Put another

way, the rule is that policies are to be construed in accordance

8

with the reasonable expectations of a layperson.

Tri-S Corp. v.

W. World Ins. Co., 110 Haw. 473, 489, 135 P.3d 82, 98 (2006)
(citations omitted); Dawes, 77 Haw. at 131, 883 P.2d at 42.
The burden is on the insured to establish coverage
under an insurance policy.

See Sentinel Ins. Co. v. First Ins.

Co. of Haw., 76 Haw. 277, 291 n.13, 875 P.2d 894, 909 n.13 (1994)
(as amended on grant of reconsideration).

The insurer has the

burden of establishing the applicability of an exclusion.

See

id. at 297, 875 P.2d at 914.
The duty to indemnify is owed “for any loss or injury
which comes within the coverage provisions of the policy,
provided it is not removed from coverage by a policy exclusion.”
Dairy Road Partners v. Island Ins., 92 Haw. 398, 413, 922 P.2d
93, 108 (2000).

The obligation to defend an insured is broader

than the duty to indemnify.

The duty to defend arises when there

is any potential or possibility for coverage.
at 287, 875 P.2d at 904.

Sentinel, 76 Haw.

However, when the pleadings fail to

allege any basis for recovery under an insurance policy, the
insurer has no duty to defend.

Pancakes of Haw. v. Pomare

Props., 85 Haw. 286, 291, 944 P.2d 83, 88 (1997).

In other

words, for State Farm to obtain summary judgment on its duty to
defend, it must prove that it would be impossible for a claim in
the underlying lawsuit to be covered by Kaaihue’s insurance

9

policies.

See Dairy Road Partners, 92 Haw. at 412-13, 922 P.2d

at 107-08.
B.

State Farm Has No Duty to Defend or Indemnify
Kaaihue Under the Policies.
1.

The Breach of Contract and Negligence Claims
Asserted in the State-Court Action Do Not
Trigger a Duty to Defend or Indemnify Kaaihue
Because They are Not Based on “Occurrences.”

The breach of contract and negligence claims asserted
in the underlying state-court action do not trigger State Farm’s
duty to defend or duty to indemnify.

Neither claim involves an

“occurrence,” or an accident.
In Burlington Insurance Company v. Oceanic Design and
Construction, Inc., 383 F.3d 940, 946-48 (9th Cir. 2004), the
Ninth Circuit Court of Appeals, applying Hawaii law, considered
the definition of “accident” as discussed by the Hawaii Supreme
Court in Hawaiian Holiday Macadamia Nut Co. v. Industrial
Indemnity Company, 76 Haw. 166, 872 P.2d 230 (1994).

The Ninth

Circuit determined that Burlington Insurance Company owed no duty
to defend Oceanic Design and Construction, Inc., against contract
and contract-related tort claims under a commercial general
liability (“CGL”) insurance policy.

Oceanic had contracted to

build a single-family residence for certain homeowners.
943.

Id. at

After construction was completed, the homeowners refused to

pay Oceanic because they were not satisfied with the work.

Id.

Oceanic sued the homeowners in Hawaii state court, alleging that
10

they had breached the contract by failing to pay for the
construction.

Id.

The homeowners filed a counterclaim against

Oceanic, asserting claims for, among other things, negligent
breach of contract and negligent infliction of emotional
distress.

Id.

Burlington agreed to defend Oceanic subject to a

reservation of Burlington’s rights under the CGL policy and filed
a federal action seeking a declaration that it owed no duty to
defend or indemnify Oceanic.

Id.

The federal district court

granted summary judgment in favor of Burlington, concluding that
the homeowners’ claims against Oceanic were not covered by the
insurance policy.

Id. at 944.

Oceanic appealed.

Id.

On appeal, the Ninth Circuit noted that the insurance
policy “cover[ed] claims for liability for ‘bodily injury’ or
‘property damage’ if ‘caused by an occurrence,’” which was
defined “as ‘an accident, including continuous or repeated
exposure to substantially the same general harmful conditions.’”
Id. at 943, 945.

Applying the Hawaii Supreme Court’s definition

of “accident,” the Ninth Circuit concluded that the homeowners’
claim for negligent breach of contract was not covered by the
policy, reasoning:
In Hawaii, an occurrence cannot be the
expected or reasonably foreseeable result of
the insured’s own intentional acts or
omissions. If Oceanic breached its
contractual duty by constructing a
substandard home, then facing a lawsuit for
that breach is a reasonably foreseeable
result.
11

Id. at 948 (quotation marks omitted).
In Burlington, the underlying complaint alleged a
breach of contract based, in part, on alleged failures to plan,
supervise, inspect, and construct a residence.

Because the

allegations of breaches of duty merely described how the contract
to build a residence was breached, the Ninth Circuit stated that
“the Court cannot fairly construe this language to state a
separate independent cause of action for negligence.”
Burlington, 383 F.3d at 948.

Those claims were contract-related

tort claims that did not trigger the duty to defend.
In 2010, the Intermediate Court of Appeals (“ICA”) for
the State of Hawaii decided Group Builders, Inc. v. Admiral
Insurance Company, 123 Haw. 142, 231 P.3d 67 (Ct. App. 2010).
The ICA examined Burlington and noted that authorities were split
as to whether defective workmanship was an “occurrence” for
purposes of a CGL policy.

The ICA further noted that the

majority of jurisdictions held that claims of poor workmanship
were not “occurrences.”

See 123 Haw. at 148, 231 P.3d at 73.

The ICA adopted the majority position and held that, “under
Hawai`i law, construction defect claims do not constitute an
‘occurrence’ under a CGL policy.

Accordingly, breach of contract

claims based on allegations of shoddy performance are not covered
under CGL policies.”

Id.

12

In 2011, Hawaii enacted a statute that applied to all
liability insurance policies issued and in effect as of June 3,
2011.

That statute, section 431: 1-217(a), states
For purposes of a liability insurance policy
that covers occurrences of damage or injury
during the policy period and that insures a
construction professional for liability
arising from construction-related work, the
meaning of the term “occurrence” shall be
construed in accordance with the law as it
existed at the time that the insurance policy
was issued.

Section 431: 1-217(a) does not appear to be applicable because it
applies to insurance policies insuring “a construction
professional for liability arising from construction-related
work.”

Here, Kaaihue is not seeking coverage under an insurance

policy that insures a construction professional for liability.
Instead, he is seeking coverage under his homeowner’s and
umbrella insurance policies.

Even if section 431: 1-217(a)

applies, the law in effect at the time the insurance policy
issued was that of Burlington and Group Builders.
Recently, this court examined another CGL policy,
determining that contract claims concerning construction defects
are not occurrences.

See Ill. Nat’l Ins. Co. v. Nordic PCL

Constr., Inc., 870 F. Supp. 2d 1015, 1027-28 (D. Haw. 2012).
Although not “occurrences” under the CGL policy, the court noted
that there might be other claims that could be asserted against
the insurer.

For example, the court noted that a bad faith claim

13

might be asserted against the insurer.

See id, 2013 WL 5739639,

*7 (D. Haw. Oct. 22, 2013).
Burlington, Group Builders, and Nordic involved CGL
insurance policies.

Here, Kaaihue seeks insurance coverage under

his homeowner’s and personal umbrella insurance policies for
claims arising out of a contract to help construct a house.

This

case therefore presents an even stronger case than Burlington,
Group Builders, and Nordic for a determination that the statecourt complaint does not allege anything that can be considered
an “occurrence” for purposes of the policies.

Allstate’s breach

of contract and negligence claims based on allegations of poor
workmanship are simply not claims covered under Kaaihue’s
insurance policies because they are not “occurrences.”

Instead,

they involve claims that Kaaihue did not properly connect water
pipes, making it reasonably foreseeable that property damage
would flow from that allegedly shoddy workmanship.
Kaaihue argues that the claims against him in the
state-court complaint are not factually supported; he contends
that he did not actually install the plumbing that caused the
problems.

See Declaration of Henry K. Kaaihue, Jr., ¶ 5, ECF No.

27-1, PageID # 198.

His denial of liability does not trigger

insurance coverage.

Hawaii adheres to the “complaint allegation

rule.”

Burlington, 383 F.3d at 944 (citing Pancakes of Hawaii,

14

Inc. v. Pomare Props. Corp., 85 Haw. 286, 994 P.2d 83 (Haw. Ct.
App. 1997)).

In that regard,

The focus is on the alleged claims and facts.
The duty to defend “is limited to situations
where the pleadings have alleged claims for
relief which fall within the terms for
coverage of the insurance contract. ‘Where
pleadings fail to allege any basis for
recovery within the coverage clause, the
insurer has no obligation to defend.’”
Id. at 944-45 (citing Hawaiian Holiday Macadamia Nut Co. v.
Indus. Indem. Co., 76 Haw. 166, 872 P.2d 230)).

Here, the state-

court complaint fails to allege any claim for which there is
coverage, as none of the alleged damage was caused by an
“occurrence.”
Kaaihue also argues that there is an “occurrence”
because the complaint asserts a claim of negligence.

At the

hearing, Kaaihue clarified this argument, noting that Allstate’s
negligence claim does not describe the source of any duty
underlying the claim.

Kaaihue argues that the negligence claim

in the state-court complaint should not be read as duplicative of
the breach of contract claim; he says that the duty referred to
in the negligence count must be based on something other than the
contract, such as carelessness in bumping into the pipes or
providing advice.

But there is no pleading requirement

preventing duplicative claims, and neither of Kaaihue’s
hypothecations involves a fair reading of the state-court
complaint.

Applying the complaint allegation rule, the court
15

reasonably reads the negligence claim asserted against Kaaihue in
the state-court complaint as alleging that the duty flowed from
the provision of the professional services for which Coloma paid
Kaaihue, even if Coloma did not at the outset hire Kaaihue
specifically to work on the water pipes.
The state-court complaint alleges that Coloma hired
Kaaihue (and/or his company) “to assist with various tasks
throughout the construction project.”
¶ 9; see also ¶ 24.

See State-Court Complaint

It alleges that water lines at the house

separated, causing substantial damage.

Id. ¶¶ 10-11.

It then

alleges that a “subsequent investigation” indicated that the
water lines separated “due to improper construction practices and
a failure to properly attach and bond polyvinyl chloride pipes
together during installation of the plumbing system.”

Id. ¶ 12.

It further alleges that, implied in Kaaihue’s contract with
Coloma, was a requirement that “all work would be performed in a
reasonable, professional manner and consistent with industry
custom and standards.”

Id. ¶ 25.

It then alleges that Kaaihue

and/or his company breached the contract “by failing to ensure
the . . . plumbing lines within the newly constructed house were
properly connected and bonded.”

Id. ¶ 26.

The negligence claim then “realleges all preceding
paragraphs as though fully set forth herein.”

Id. ¶ 28.

The

negligence claim goes on to allege that Kaaihue owed a duty to
ensure that all plumbing “would be installed in a reasonably

16

safe, professional manner and installed consistent with industry
custom and standards.”

Id. ¶ 29.

Under these circumstances, the

only reasonable reading of the state-court complaint is that
Kaaihue owed a duty to construct the house in a professional
manner as a result of his contract to assist with various tasks
throughout the construction project.

This in no way implicates

any “occurrence.”
2.

Coverage for the Breach of Contract and
Negligence Claims Is Excluded Under Both
Policies.

Although the underlying state-court complaint asserts
what it calls a negligence claim, there is no possibility of
insurance coverage under the policies because the coverage
excludes business pursuits and professional services.
Accordingly, even if the court assumes that the underlying
complaint asserts a claim of property damage arising out of an
“occurrence,” the purported negligence claim would be excluded
from coverage.
Both the homeowner’s and the umbrella insurance
policies excluded coverage for liability arising out of a
contract.

The homeowner’s policy excludes from Coverage L

“liability . . . assumed under any unwritten contract or
agreement, or by contract or agreement in connection with a
business of the insured.”

Id., PageID # 153.

The umbrella

policy excludes from coverage “liability imposed on or assumed by
any insured through any unwritten or written agreement.”
17

Id.,

PageID # 176.

The state-court complaint alleges that Coloma

hired Kaaihue and/or Advanced Home Builders to assist with
various tasks throughout the construction project.
Court Complaint ¶¶ 9, 24.

See State-

It alleges that Kaaihue and/or his

company breached the contract by failing to perform construction
work in a reasonable, professional manner consistent with
industry custom and standards.

Id. ¶¶ 25-27.

Based on the same

facts, the state-court complaint alleges that Kaaihue (and/or his
company) owed a duty to ensure that the house’s plumbing was
installed in a reasonable, professional manner consistent with
industry custom and standards.

Id. ¶ 29.

The state-court

complaint asserts negligence based on a breach of that duty.
¶ 30.

Id.

These allegations “arise out of” Kaaihue’s contractual

duties with respect to the construction of Coloma’s house.

The

homeowner's and umbrella policies exclude coverage for liability
“arising out of” a contract (or in connection with an insured’s
business).

The exclusions bar coverage notwithstanding Kaaihue’s

statement denying that he installed the faulty pipes, as this
court is required by Hawaii law to look to the allegations of the
state-court complaint, not to an insured’s defense.

See

Burlington, 383 F.3d at 944.
Both policies also exclude coverage for liability
“arising out of” the provision of or failure to provide
professional services and “arising out of” Kaaihue’s business
pursuits.

See Homeowner’s Policy, ECF No. 19-3, PageId # 152;

18

Umbrella Policy, ECF No. 19-4, PageId # 174.

The state-court

complaint is clearly based on Kaaihue’s business conduct or
provision of professional services, as it is allegedly based on
his faulty installation of plumbing arising out of a construction
contract.

See Armed Forces Ins. Exchange v. Transam. Ins. Co.,

88 Haw. 373, 379, 966 P.2d 1099, 1105 (Ct. App. 1998) (defining
“business pursuits” as used in homeowner’s policies as referring
“to activities which are conducted on a regular or continuous
basis, for the purpose of earning income, profit, or as a means
of livelihood”); Homeowner’s Policy, ECF No. 19-3, PageID # 137
(defining “business” as “a trade, profession or occupation”);
Umbrella Policy, ECF No. 19-4, PageID # 169 (also defining
“business” as “a trade, profession or occupation”).

Coverage is

therefore excluded under the “business pursuits” and
“professional service” exclusions of the policies.

Again,

although Kaaihue denies having installed the faulty pipes and
claims that, because he was not licensed to install the pipes,
the installation could not be considered his profession, the
court adheres to the complaint allegation rule in determining
that the state-court complaint does not assert a claim for which
there is any possibility of coverage.
at 944.

See Burlington, 383 F.3d

Instead, the state-court complaint alleges that

liability arises out of Kaaihue’s contract for professional
services concerning the construction of the house.

Such

liability falls outside the coverage provided by the policies

19

because it "arises out of" Kaaihue’s business pursuits and
professional services.
Kaaihue’s argument that there should be coverage
because he did not actually install the faulty pipes ignores the
contours of the claim against him.

Kaaihue cannot create

coverage for uncovered claims by disputing the factual predicate
of the claims.

For example, assuming that an insurance policy

excluded coverage for “intentional conduct,” an insurer would
have no duty to defend or indemnify its insured from a case
involving alleged intentional conduct, even if the insured
claimed that he or she had been misidentified in the underlying
complaint.

Regardless of whether the insured committed the

“intentional act,” coverage would be excluded for an assertion of
an “intentional act.”

The court's focus must be on the

allegations in the state-court complaint, not on what the insured
says the facts are.

See Burlington, 383 F.3d at 944-45.

The court is not without sympathy for any wrongly sued
insured who seeks insurance coverage.

However, the governing law

does not broaden an insurer’s coverage obligations based on an
allegedly inaccurate factual premise in a claim against the
insured.
C.

No Rule 56(d) Continuance is Warranted.

In his declaration, Kaaihue suggests that the court
should continue the hearing on the summary judgment motion.
Kaaihue Decl. ¶ 14, ECF No. 27-1, PageID # 201.
20

See

Pursuant to Rule

56(d) of the Federal Rules of Civil Procedure, after a motion for
summary judgment is filed, “if a nonmovant shows by affidavit or
declaration that, for some specified reasons, it cannot present
facts essential to justify its opposition, the court may:
(1) defer considering the motion or deny it; (2) allow time to
obtain affidavits or declarations or to take discovery; or
(3) issue any other appropriate order.

Fed. R. Civ. P. 56(d).

In 2010, FRCP Rule 56 was amended, and the advisory committee
noted that “Subdivision (d) carries forward without substantial
change the provisions of former subdivision (f).”
P. 56(d) advisory comm. nn.

Fed. R. Civ.

Accordingly, the case law regarding

subdivision (f), prior to the amendments, applies.

Rule 56(d) of

the Federal Rules of Civil Procedure therefore permits a district
court to continue a summary judgment motion “upon a good faith
showing by affidavit that the continuance is needed to preclude
summary judgment.”

California v. Campbell, 138 F.3d 772, 779

(9th Cir. 1998) (interpreting the former Rule 56(f) of the
Federal Rules of Civil Procedure).
A party requesting a Rule 56(d) continuance bears the
burden of (1) filing a timely application that specifically
identifies relevant information; (2) demonstrating that there is
some basis to believe that the information sought exists; and
(3) establishing that such information is essential to resist the
summary judgment motion.

See Emp’rs Teamsters Local Nos. 175 &

505 Pension Trust Fund v. Clorox Co., 353 F.3d 1125, 1130 (9th

21

Cir. 2004) (citation omitted); accord Moss v. U.S. Secret Serv.,
572 F.3d 962, 966 n.3 (9th Cir. 2009) (“Rule 56([d]) requires a
party seeking postponement of a summary judgment motion to show
how additional discovery would preclude summary judgment and why
it cannot immediately provide specific facts demonstrating a
genuine issue of material fact.” (punctuation, quotation marks,
and citation omitted)).
Kaaihue says that a planned deposition was postponed,
but he fails to explain why a continuance of the present motion
is therefore necessary.

He does not, for example, explain what

facts a deponent might have provided or how those facts could
demonstrate that there is a genuine issue of fact precluding
summary judgment.

No Rule 56(d) continuance is justified under

the circumstances.
V.

CONCLUSION.
For the foregoing reasons, summary judgment is granted

in favor of State Farm.

This disposes of all claims and all

parties in this action.

Accordingly, the Clerk of the Court is

directed to enter judgment in favor of State Farm and to close
this case.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, December 13, 2013.

/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge
State Farm Fire & Casualty Co. v. Kaaihue, Jr., Civ. No. 13-00185 SOM/BMK; ORDER

GRANTING MOTION FOR SUMMARY JUDGMENT

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