Mary Deguchi v. Allstate Insurance Company , 407 F. App'x 93 ( 2010 )

FILED
NOT FOR PUBLICATION OCT 29 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
MARY DEGUCHI; ERMANNO No. 08-17296
SCALAS,
D.C. No. 1:07-cv-00144-JMS-
Plaintiffs - Appellants, LEK
v.
MEMORANDUM *
ALLSTATE INSURANCE COMPANY,
Defendant - Appellee.
Appeal from the United States District Court
for the District of Hawaii
J. Michael Seabright, District Judge, Presiding
Argued and Submitted October 12, 2010
Honolulu, Hawaii
Before: HAWKINS, McKEOWN and RAWLINSON, Circuit Judges.
Plaintiffs Mary Deguchi and Ermanno Scalas (collectively “Plaintiffs”) appeal
the adverse summary judgment grant in their action against Allstate Insurance
Company (“Allstate”), arising out of the loss of their boat, the Princess Natasha,
which sank under suspicious circumstances while en route from Hilo to Honolulu a
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
few months after its purchase. Although Plaintiffs agreed to submit to an examination
under oath (“EUO”) as required by their policy, each refused to provide information
regarding their finances at the time of the loss. Plaintiffs sued Allstate, alleging
breach of contract and bad faith. The district court awarded summary judgment to
Allstate on all claims, and we affirm.
Even assuming the insurer must have some reasonable suspicion of fraud before
seeking financial information from its insureds in an EUO, there was ample
information in this case to raise suspicions and justify such an inquiry. Thus, the
Plaintiffs’ failure to answer reasonable questions regarding their financial situation
constituted a material breach of their obligations under the insurance contract, and
summary judgment was properly awarded to Allstate. See Barabin v. AIG, 921 P.2d
732, 738 (Haw. 1996); Halcome v. Cincinnati Ins. Co., 334 S.E.2d 155, 157 (Ga.
1985); Wright v. Farmers Mut., 669 N.W.2d 462, 466-67 (Neb. 2003).
Alternatively, Plaintiffs argue the district court abused its discretion by not
conditionally denying summary judgment and providing Plaintiffs an additional
opportunity to appear at an EUO and answer the questions they had previously refused
to answer. But courts have not been willing to enter such conditional judgments if
there is a pattern of noncompliance without a reasonable justification or if the
insurance company has been prejudiced by the passage of time. See Williams v.
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American Home Assur. Co., 97 A.D.2d 707, 709 (N.Y. App. Div. 1983) (“Particularly
in a case with such unusual circumstances, the insurance companies are entitled to
obtain, promptly and while the information is still fresh relevant information to enable
them to decide upon their obligations and protect against false claims. To give them
the information now, three and one-half years after the claimed loss, would be a
material dilution of their rights.”) (internal quotation marks and citation omitted).
Here, several years have passed since the loss, and the district court found Plaintiffs
had prejudiced Allstate from completing its investigation. Given the circumstances
of the loss, the Plaintiffs’ pattern of refusal to cooperate regarding their finances, and
Scalas’s refusal to answer even basic background questions about the boat purchase,
there was no abuse of discretion in denying Plaintiffs a second bite at the apple.
AFFIRMED.
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