                                                                           FILED
                             NOT FOR PUBLICATION                            MAY 17 2010

                                                                       MOLLY C. DWYER, CLERK
                      UNITED STATES COURT OF APPEALS                     U .S. C O U R T OF APPE ALS




                             FOR THE NINTH CIRCUIT



UNIONAMERICA INSURANCE                           No. 09-15766
COMPANY LIMITED, successor-in-
interest to St. Paul Reinsurance Company         D.C. No. 3:05-cv-01912-BZ
Limited, London,

                Plaintiff-counter-defendant -    MEMORANDUM *
Appellee,

  v.

THE FORT MILLER GROUP, INC.; et
al.,

                Defendants-counter-claimants
- Appellants.



                     Appeal from the United States District Court
                        for the Northern District of California
                   Bernard Zimmerman, Magistrate Judge, Presiding

                              Submitted May 13, 2010 **
                               San Francisco, California




        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: RYMER and McKEOWN, Circuit Judges, and FAWSETT, Senior District
Judge.***

      The Fort Miller Group, Inc., (“Fort Miller”) appeals the district court’s

decision allowing Unionamerica Insurance Company (“Unionamerica”) to rescind

its coverage of Fort Miller subsidiary Beeche Systems Corp. (“Beeche”). Fort

Miller also appeals an order of reimbursement to Unionamerica in the amount of

$1,548,292.32, for costs incurred covering Beeche, plus interest.

      Under California law, intentional or unintentional misrepresentation or

concealment of material information entitles the injured party to rescind a contract

for insurance. C AL. INS. C ODE §§ 330-32, 359. “The fact that the insurer has

demanded answers to specific questions in an application for insurance is in itself

usually sufficient to establish materiality as a matter of law.” Thompson v.

Occidental Life Ins. Co., 513 P.2d 353, 360 (Cal. 1973). Unionamerica’s agent,

U.S. Risk Underwriters, Inc. (“U.S. Risk”), requested information about the

products for which Fort Miller sought coverage, including “any product brochures

that [it] make[s] available to customers.” The district court did not err in

concluding that Fort Miller “failed to adequately disclose the true nature of

Beeche’s products when it failed to describe Beeche’s products in its preliminary


        ***
             The Honorable Patricia C. Fawsett, Senior United States District
Judge for the Middle District of Florida, sitting by designation.

                                           2
application and failed to provide any brochures about Beeche.” Fort Miller’s

subsequent handwritten addition, without other notice, was not sufficient to satisfy

the disclosure obligations because the policy was bound based on information in

the preliminary application.

      Fort Miller argues that U.S. Risk had a duty to inquire into the products it

insured, and its failure to do so waived its right to information of material facts.

While California’s Insurance Code does include a duty to inquire where the insured

“distinctly implied” material facts about the covered products, C AL. INS. C ODE

§ 336, the district court did not abuse its discretion in concluding that Fort Miller

failed to meet the burden of establishing facts necessary to demonstrate U.S. Risk’s

waiver of the right to material information. By failing to provide brochures,

accurate descriptions of its products, or even disclose the Beeche website, Fort

Miller failed to distinctly imply material facts that would trigger the duty to

inquire. “In California an insured may not ‘escape the consequences of his

deception by placing on the insurer the burden of investigating his verified

statements.’” Lattimore, 263 F.2d at 243 (quoting Robinson v. Occidental Life Ins.

Co., 281 P.2d 39, 42 (Cal. Ct. App. 1955)).

      AFFIRMED.




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