                                                                           FILED
                           NOT FOR PUBLICATION                              JUL 24 2012

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




                            FOR THE NINTH CIRCUIT



ALLSTATE INSURANCE COMPANY,                      No. 10-15415
an Illinois Corporation,
                                                 D.C. No. 1:09-cv-00350-DAE-
              Plaintiff - Appellee,              BMK

  v.
                                                 MEMORANDUM *
DAVID A. NAAI, individually, and as
Trustee for the Herman H.A. Naai Trust
and Trustee for the Helen Y. Naai Trust;
HERMAN H.A. NAAI TRUST, David A.
Naai; HELEN Y. NAAI TRUST, David A.
Naai,

              Defendants - Appellants.



                    Appeal from the United States District Court
                             for the District of Hawaii
                     David A. Ezra, District Judge, Presiding

                        Argued and Submitted June 13, 2012
                                Honolulu, Hawaii

Before: SCHROEDER, CALLAHAN, and N.R. SMITH, Circuit Judges.




        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      In a tragic accident, Sherisse Thompson backed her vehicle over two

children on property owned by defendant David A. Naai, killing one of the

children and severely injuring the other. The children’s parents sued, and named

Naai as a defendant for negligently designing or constructing the property in such a

way that the resident manager’s building, and thus the parking for the building’s

visitors, was located in an area used by tenants’ children as a playground. Naai

was insured for liability through a policy issued by Plaintiff Allstate Insurance Co.

(“Allstate”), and tendered defense of the lawsuit to Allstate. Allstate filed a

declaratory relief action in district court seeking a declaration that there was no

possibility for coverage, and therefore Allstate owed Naai no defense for the

lawsuit. The district court granted summary judgment in Allstate’s favor, finding

the policy unambiguously excludes bodily injuries arising from motor vehicles.

Naai appeals. We affirm.

      “Hawaii insurance law provides for a broad duty to defend arising whenever

the pleadings raise a potential for indemnification liability of the insurer to the

insured.” Burlington Ins. Co. v. Oceanic Design & Const., Inc., 383 F.3d 940, 944

(9th Cir. 2004) (citing Hawaiian Holiday Macadamia Nut Co. v. Indus. Indem.

Co., 872 P.2d 230, 233 (Haw. 1994)). “In other words, ‘[t]he duty to defend is

limited to situations where the pleadings have alleged claims for relief [that] fall


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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.’” Pancakes of Haw., Inc. v. Pomare Props. Corp., 944 P.2d

83, 88 (Haw. Ct. App. 1997) (quoting Hawaiian Holiday Macadamia Nut Co., 872

P.2d at 233) (internal quotation marks omitted). The rule under Hawaiian law is

that insurance “policies are to be construed in accord with the reasonable

expectations of a layperson.” Tri-S Corp. v. W. World Ins. Co., 135 P.3d 82, 98

(Haw. 2006) (quoting Dairy Rd. Partners v. Island Ins. Co., Ltd., 992 P.2d 93, 107

(Haw. 2000)). However, “the rule is not applied without exception upon the mere

assertions of ambiguity. Rather, ambiguity is found [and the rule is followed] only

when the contract taken as a whole is reasonably subject to differing

interpretation.” Fortune v. Wong, 702 P.2d 299, 306 (Haw. 1985) (internal

citations and quotation marks omitted).

      Allstate denied Naai’s demand for coverage for the underlying lawsuit based

on the policy exclusion for bodily injury “arising out of the ownership; operation;

maintenance; use; occupancy; renting; loaning; entrusting; loading or unloading”

of a motor vehicle. The district court agreed that the policy unambiguously

excluded coverage for the injuries sustained in the accident. The exclusion is not

limited to the insured’s ownership, operation, maintenance, or use of an


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automobile; by its terms it does not cover bodily injury arising out of the operation

of any motor vehicle. Naai asks the panel to read into the policy a limitation that

the exclusion only applies to an insured’s motor vehicle. However, the Hawaii

Supreme Court has been consistent in warning that “[a] court must ‘respect the

plain terms of the policy and not create ambiguity where none exists.’” Smith v.

New England Mut. Life Ins. Co., 827 P.2d 635, 638 (Haw. 1992) (quoting First Ins.

Co. of Haw. v. Hawaii, 665 P.2d 648, 655 (Haw. 1983)).

      Allstate cites several cases that hold that the same or similar exclusions

unambiguously exclude coverage when the underlying injury is caused by a motor

vehicle. See Fortune, 702 P.2d at 306, Allstate Indem. Co. v. Russell, 345 F. App’x

264, 266 (9th Cir. 2009) (unpublished); Standard Mut. Ins. Co. v. Bailey, 868 F.2d

893 (7th Cir. 1989); Allstate Ins. Co. v. Keillor, 511 N.W.2d 702, 705 (Mich. Ct.

App. 1993)). Naai contends that the cases are distinguishable, because in each the

insured had some relationship with either the driver or the motor vehicle.

However, none of the cases relied on a relationship between the insured and either

the driver or the motor vehicle to find the exclusion unambiguous.

      The exclusion, as written, does not reasonably allow for different

interpretations. Only by reading in a limitation—an insured person’s ownership,

operation, maintenance, or use—can the policy be interpreted to potentially


                                         -4-
provide coverage. The children’s injuries unquestionably arose from the operation

of a motor vehicle. Therefore, the policy unambiguously excluded coverage for

the injuries no matter who was operating the motor vehicle at the time.

      Nor are we persuaded by Naai’s argument that, even if the policy

unambiguously excludes coverage for the accident, he had a reasonable

expectation of coverage that must be honored. The Hawaii Supreme Court has

been consistent in finding similar automobile exclusions unambiguous and

effective to bar coverage. See Oahu Transit Servs., Inc. v. Northfield Ins. Co., 112

P.3d 717, 722-24 (Haw. 2005).     Naai offers no explanation of how his expectation

of coverage could be deemed reasonable given that the policy unambiguously

excludes coverage.

AFFIRMED.




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