877 F. Supp. 2d 993
D. Haw.2012Background
- State Farm seeks a declaration of no duty to defend or indemnify the Wimberlys in an underlying Hawaii action.
- Underlying complaint, filed by Shimabukuro, alleges misrepresentation, negligence, breach of contract, and related theories tied to undisclosed wall defects.
- Wimberlys sold property at 1583 Aa Lani Street, Honolulu, with a disclosure statement prepared by the sellers and agent Matsuo.
- Wall patchwork repairs allegedly hidden; disclosure did not reveal wall condition; estimated repair exceeds $100,000.
- Policy is a Hawaii Rental Dwelling Policy; coverage includes bodily injury, personal injury, or property damage due to an occurrence, with exclusions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the underlying complaint allege an occurrence causing covered damages? | State Farm: claims are contract-based or intentional; no occurrence. | Wimberlys: potential negligence could be an occurrence. | No covered occurrence; claims fall outside policy terms. |
| Are breach of contract and fraud claims within coverage or excluded? | State Farm: breach/fraud are not covered as they arise from contractual/intentional conduct. | Wimberlys: some misrepresentation claims could be covered as negligent. | Claims arising from breach of contract/fraud are excluded from coverage. |
| Do Thompson decisions apply, creating potential coverage for negligent disclosure/repair claims? | State Farm: Thompson cases negate coverage potential here. | Wimberlys: Thompson may support some potential coverage for negligent repair. | Thompson distinctions render no coverage here; no potential negligent-exacerbation claim. |
| Does the alienated premises exclusion independently bar coverage? | State Farm: property damage to premises sold is excluded. | Wimberlys: exclusion may not apply to all underlying claims. | Alienated premises exclusion independently bars coverage. |
Key Cases Cited
- Burlington Ins. Co. v. Oceanic Design & Constr., Inc., 383 F.3d 940 (9th Cir. 2004) (focus on pleadings and underlying facts for coverage)
- Hawaiian Holiday Macadamia Nut Co. v. Indus. Indem. Co., 76 Haw. 166, 872 P.2d 230 (Haw. 1994) (negligence/contract claims not covered; interpretation favors insured)
- Dairy Road Partners v. Island Ins. Co., 92 Haw. 398, 992 P.2d 93 (Haw. 2000) (ambiguities resolved against insurer; complaint-allegation rule)
- Bayudan v. Tradewind Ins. Co., 87 Haw. 379, 957 P.2d 1061 (Haw. Ct. App. 1998) (rejection of mere label as triggering coverage)
- Allstate Ins. Co. v. Miller, 732 F. Supp. 2d 1128 (D. Haw. 2010) (underlying facts determine coverage; not all claims are covered)
- Thompson v. Davies, 2010 WL 2017101 (D. Haw. 2010) (negligent repair/repair-exacerbation claims can be potentially covered)