*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

---oOo---

________________________________________________________________

C. BREWER AND COMPANY, LTD., Respondent/Plaintiff-Appellant,

vs.

MARINE INDEMNITY INSURANCE COMPANY OF AMERICA; 

FIREMAN’S FUND INSURANCE COMPANY OF HAWAII; and 

JAMES RIVER INSURANCE COMPANY,

Petitioners/Defendants-Appellees,

and

INDUSTRIAL INDEMNITY COMPANY; INDUSTRIAL INSURANCE

COMPANY OF HAWAII, LTD.; NATIONAL UNION FIRE INSURANCE COMPANY

OF PITTSBURGH; UNITED STATES FIRE INSURANCE COMPANY;

LIBERTY MUTUAL INSURANCE COMPANY; TIG INSURANCE COMPANY;

COLUMBIA CASUALTY COMPANY; THE HOME INSURANCE COMPANY; 

RELIANCE INSURANCE COMPANY; LEXINGTON INSURANCE COMPANY; 

CIGNA PROPERTY AND CASUALTY INSURANCE CO.; PACIFIC EMPLOYERS 

INSURANCE CO., INC.; SCOTTSDALE INSURANCE COMPANY; 

FIRST STATE INSURANCE CO.; KILAUEA IRRIGATION CO., INC.;

KEHALANI HOLDINGS CO., INC.; STATE OF HAWAIʻI; and 

HAWAII INSURANCE GUARANTY ASSOCIATION; 

Respondents/Defendants-Appellees,

and

STATE OF HAWAIʻI, 

Respondent/Third-Party Plaintiff-Cross-Appellant,

vs.

Electronically Filed

Supreme Court

SCWC-28958

27-MAR-2015

10:24 AM
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-2-

MARSH USA, INC., Respondent/Third-Party Defendants-Appellees,

and

KEHALANI HOLDINGS COMPANY, INC.,

Respondent/Third-Party Plaintiff-Cross-Appellant,

vs.

UNITED NATIONAL INSURANCE COMPANY; COMMONWEALTH INSURANCE

COMPANY; ALEXANDER HOWDEN LIMITED; INTEGRITY INSURANCE

COMPANY; HAWAIIAN INSURANCE & GUARANTY COMPANY, LIMITED;

HOLLAND-AMERICA; INTERNATIONAL INSURANCE COMPANY;

TRADEWIND INSURANCE COMPANY, LIMITED; and 

ISLAND INSURANCE COMPANY, LIMITED,

Respondent/Third-Party Defendants-Appellees.

________________________________________________________________

SCWC-28958

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS

(ICA NO. 28958; CIV. NO. 06-1-0140)

MARCH 27, 2015

NAKAYAMA, ACTING C.J., McKENNA, POLLACK, AND WILSON, JJ., AND 

CIRCUIT JUDGE KUBO, IN PLACE OF RECKTENWALD, C.J., RECUSED

OPINION OF THE COURT BY McKENNA, J. 

I. Introduction

On March 14, 2006, a large portion of the Kaloko Dam 

(“Dam”) in Kīlauea, Kauaʻi collapsed, releasing over three 

million gallons of water, resulting in the loss of seven lives 

as well as extensive property damage (“Dam Breach”). At the 

time of the Dam Breach, James Pflueger (“Pflueger”) owned the 

Dam. Pflueger filed a lawsuit in the Circuit Court of the First 

Circuit seeking damages and indemnification from C. Brewer and

Company, Ltd. (“C. Brewer”) for claims brought against him 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-3-

arising out of the Dam Breach. Pflueger v. State, Civ. No. 06–

1–1391 (“Pflueger complaint”). According to the Pflueger 

complaint, C. Brewer sold him property, including the Dam, while 

aware of the Dam’s questionable structural stability. C. Brewer 

then filed a complaint in the Circuit Court of the Fifth Circuit 

(“circuit court”) seeking rulings regarding obligations owed by 

seventeen insurance companies that had issued various insurance 

policies to C. Brewer covering different time periods.

This opinion addresses issues arising out of the 

policy issued to C. Brewer by James River Insurance Company 

(“James River”), a commercial general liability (“CGL”) policy1

in effect at the time of the Dam Breach. The circuit court 

granted summary judgment in favor of James River, ruling that a 

“Designated Premises Endorsement” (“DPE”), which purported to 

limit coverage to specific premises listed in a separate 

“Schedule of Locations” (“Schedule”), precluded coverage. The 

circuit court ruled that James River was therefore not required 

to defend or indemnify C. Brewer against Pflueger’s claims. On 

 

1 CGL policies are “third-party” policies, which “provide[]

coverage for the insured’s liability to another . . . wherein the carrier 

generally assumes a contractual duty to pay judgments recovered against the 

insured arising from the insured’s negligence.” Sentinel Ins. Co. v. First 

Ins. Co. of Hawaiʻi, 76 Hawaiʻi 277, 289, 875 P.2d 894, 906 (1994).

Generally, a CGL policy “is not limited to accidents on the business 

premises, but rather has at least nationwide coverage.” 3 New Appleman 

Insurance Law Practice Guide § 30.04[3][a] (2015). See also 9A Couch on 

Insurance § 129:2 (“Commercial general liability policies are not . . . 

strictly confined to operations performed on the insured’s business 

premises.”).
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-4-

appeal, the Intermediate Court of Appeals (“ICA”) concluded that 

the parties’ intent as to the DPE was ambiguous, and remanded 

the case for a determination of the parties’ intent regarding 

the DPE.

James River raised the following question on 

certiorari: 

Did the ICA gravely err when it reversed the circuit 

court’s finding that the “Limitation of Coverage to 

Designated Premises Endorsement” in the James River 

liability policy issued to C. Brewer, considered in the 

context of the entire policy, unambiguously precludes 

coverage as a matter of law, for the bodily injury and 

property damage claims stated against C. Brewer in 

underlying actions arising from the March 2006 failure of 

the Ka Loko Dam and Reservoir.

We hold that the James River DPE provides coverage for

injury and damage that occurs on premises not listed in the 

Schedule if the injury or damage arises out of the ownership, 

maintenance or use of a designated premises. In determining 

whether an injury or damage arose out of the use of a designated

premises, we adopt the legal interpretation of “arising out of” 

in American Guarantee and Liability Insurance Co. v. 1906 Co., 

129 F.3d 802 (5th Cir. 1997): “The phrase ‘arising out of’ is 

ordinarily understood to mean ‘originating from,’ ‘having its 

origin in,’ ‘growing out of,’ or ‘flowing from.’ In the 

insurance context, this phrase is often interpreted to require a 

causal connection between the injuries alleged and the objects 

made subject to the phrase.” 129 F.3d at 807. We therefore 

hold that the DPE unambiguously provides coverage for negligence 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-5-

claims against C. Brewer arising out of the use of designated 

premises. 

We further hold that language in a designated premises 

endorsement “must be clear and unequivocal[]” to convert a CGL 

policy to a premises liability policy2 that limits coverage to 

injuries occurring on specific premises. American Empire 

Surplus Lines Insurance Co. v. Chabad House of North Dade, Inc., 

771 F. Supp. 2d 1336, 1343 (S.D. Fla. 2011), aff’d, 450 F. App’x 

792 (11th Cir. 2011). In this case, the DPE is not sufficiently 

“clear and unequivocal” to limit coverage to injuries occurring 

on the designated premises, as argued by James River. Thus, the

DPE does not limit liability to injury and damage occurring on 

designated premises. 

Therefore, the circuit court erred in granting summary 

judgment in favor of James River, and the ICA erred in 

concluding that it is necessary to determine the parties’ intent 

 

2 A premises liability policy is a type of general liability 

insurance that limits coverage to specific premises identified in the policy. 

See 3 New Appleman Insurance Law Practice Guide § 30.04[3][a] (2015) (“Some 

types of general liability insurance, however, are premises-specific. The 

most common such policies are Garage policies and policies of Owners’,

Landlords’ and Tenants’ (“OLT”) insurance.”) A premises liability policy is 

“[a] very common form of liability insurance [] which insures the owner, 

occupier, or operator of real property against liability incident to his 

ownership or use of the premises.” Am. Guarantee, 129 F.3d at 808 (quoting 

11 Couch on Ins. § 44:379 at 551 (2d. ed. 1982)). The purpose of a premises 

liability policy “is simply to protect against liability arising from the 

condition or use of the building as a building[,] [and is] distinguish[able] 

from insurance against liability arising from the nature of the enterprise or 

activity conducted” in the building itself. Id. (quoting 11 Couch on Ins. § 

44:379 at 551).
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-6-

as to the effect of the DPE. Accordingly, we affirm in part and 

vacate in part the ICA’s October 22, 2013 judgment, and instruct 

the circuit court to further proceed consistent with this 

opinion.

II. Background

A. Kaloko Dam and Irrigation System

The Kaloko Irrigation System (“System”) was 

constructed in the late 1800s by Kilauea Sugar Company (“KSC”), 

a C. Brewer subsidiary, to collect and distribute water to 

irrigate sugar cane fields in Kīlauea, Kauaʻi. The System relied 

on rain water from a State-owned mauka3 watershed, which was 

funneled through ditches, flumes, and gates into the Kaloko 

Ditch, then into the Kaloko Reservoir (“Reservoir”). The water 

was held in the Reservoir by the earthen Dam, and then 

distributed through flumes, ditches, and pipes to sugar cane 

fields makai4 of the Reservoir. 

KSC exited the sugar cane industry in about 1970 and 

stopped maintaining the System, which then fell into disrepair. 

In 1971, C. Brewer began to sell off some of its lands, 

 

3 In this context, mauka connotes inland or toward the mountains. 

See Mary Kawena Pukui & Samuel H. Elbert, Hawaiian Dictionary 242, 485 

(1986).

4 In this context, makai means ocean. See Pukui & Elbert, supra, 

at 225.
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-7-

specifically those makai of the Dam, which were later developed 

for agricultural or residential uses. 

In 1977, the State of Hawaiʻi (“State”) and C. Brewer 

entered into an agreement that required C. Brewer to, among 

other things, restore and expand the System.5 C. Brewer formed 

the Kilauea Irrigation Company (“KIC”) to satisfy its 

obligations to the State, revitalize the System, and sell System 

water to local farmers for irrigation. 

In February 1987, KIC entered into a Water Rights 

Agreement (“WRA”) with an owner of property adjoining C. 

Brewer’s land. The WRA made KIC solely responsible for

operating, inspecting, maintaining, and repairing the System and 

Dam. In 1987, C. Brewer sold the land under the Reservoir to 

Pflueger.

B. Circuit Court Proceedings

James River’s CGL policy was the only policy in effect 

on the date of the Dam Breach. Before filing suit, C. Brewer 

tendered the defense of the Pflueger complaint to James River, 

which refused to defend.

 

5 In exchange, the State promised to end its condemnation 

proceedings over certain C. Brewer agricultural parcels in Kilauea.
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-8-

C. Brewer’s second amended complaint (“complaint”)6

noted that C. Brewer was a named insured under James River 

policy number 00013398-0, policy period 12/15/2005 to 

12/15/2006. According to the complaint, the insuring agreement 

under the policy stated:

We will pay those sums that the insured becomes legally 

obligated to pay as damages because of “bodily injury” or 

“property damage” to which this insurance applies. . . . 

This insurance applies to “bodily injury” and “property 

damage” only if: (2) The “bodily injury” or “property 

damage” occurs during the policy period[.] 

Accordingly, C. Brewer alleged that the James River policy 

covered claims against it related to the Dam Breach. C. Brewer

also asserted that James River was obligated to defend and 

indemnify it because none of the policy’s exclusions applied.

James River moved for summary judgment, arguing inter 

alia, that various endorsements and exclusions in its policy 

precluded coverage for damages from the Dam Breach. In 

particular, James River argued that the policy’s DPE limited 

coverage to liability arising out of the ownership, maintenance,

 

6 C. Brewer’s complaint alleged the following regarding the 

Pflueger complaint:

40. The Pflueger Complaint alleges that Plaintiff’s 

negligent acts and/or omissions (i.e. failure to inspect, 

maintain, and/or repair the dam) caused continuous, 

incremental and indivisible physical injury to tangible 

property - Pflueger’s dam . . . . 

41. On January 19, 2007, plaintiffs in the Pflueger 

suit stated in interrogatory responses that the failure of 

Plaintiff herein failed to maintain the Dam from before 

1982 to March 14, 2006 . . . .
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-9-

or use of specifically identified premises. The Dam site was 

not listed as a designated premises.

The circuit court granted summary judgment in favor of 

James River based upon the DPE, concluding that it unambiguously 

precluded coverage for claims against C. Brewer arising out of 

the Dam Breach, and that, therefore, James River was not 

obligated to provide a defense or coverage to C. Brewer. In 

granting summary judgment, the circuit court concluded that the 

James River policy contained no ambiguous terms, and that C. 

Brewer’s assertion of coverage for claims arising out of the 

“use” of its corporate headquarters exceeded the bounds of the 

plain and ordinary meaning of the policy terms.

C. Appeal to the ICA

On appeal, the ICA noted: 

The key question is whether the language ‘arising out of 

the ownership, maintenance, and use of the [designated] 

premises’ can be interpreted to encompass the use of C. 

Brewer’s business headquarters (one of the designated 

premises) to make negligent business decisions that caused 

personal injury and property damage outside of the 

designated premises.

C. Brewer & Co. v. Industrial Indem. Co, No. 28958 (App. Aug. 7, 

2013) (mem.), at 34.

The ICA concluded that the parties’ conflicting 

interpretations of the DPE were reasonable, and held the DPE 

ambiguous as being reasonably susceptible to more than one 

meaning. C. Brewer, mem. op. at 36 (citing Hawaiian Ass’n of 

Seventh-Day Adventists v. Wong, 130 Hawaiʻi 36, 45, 305 P.3d 452, 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-10-

461 (2013)) (“A contract is ambiguous when its terms are 

reasonably susceptible to more than one meaning.”). In so 

concluding, the ICA explained: 

The use of the language “arising out of the ownership, 

maintenance, and use of the premises” suggests that the 

parties may have intended to restrict coverage to injuries 

and damages occurring on the designated premises. However, 

the designated premises endorsement applies not only to 

bodily injury and property damage, but also to “personal 

and advertising injury” arising out of the use of the 

designated premises. 

Id. The ICA concluded that the inclusion of “advertising 

injury” in the DPE suggested that the parties may have intended 

to include coverage for negligent decisions made at designated 

premises that results in injury and damage elsewhere. The ICA

reasoned that while decisions made at C. Brewer’s corporate 

headquarters would likely be the cause of any advertising 

injury, the resulting injury would occur off designated 

premises. Id. 

Accordingly, the ICA held that the James River policy 

was ambiguous as to whether the DPE barred coverage, and thus

raised a genuine issue of material fact with respect to the 

parties’ intent.7 C. Brewer, mem. op. at 32, 37. The ICA 

 

7 In further support of the conclusion that a genuine issue of fact 

with respect to the parties’ intent existed, the ICA stated in a footnote 

that there was “a suggestion in James River’s arguments, based on extrinsic 

circumstances, that C. Brewer was winding up its corporate affairs and thus 

intended to obtain a different kind of CGL policy -- one that would require a 

lower premium but provide more limited coverage.” C. Brewer, mem. op. at 37 

n.20. 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-11-

therefore vacated the circuit court’s Final Judgment and 

remanded to the circuit court. C. Brewer, mem. op. at 43.

III. Standard of Review

This court reviews a circuit court’s grant or denial 

of summary judgment de novo under the same standard applied by 

the circuit court. Dairy Rd. Partners v. Island Ins. Co., 92 

Hawaiʻi 398, 411, 992 P.2d 93, 106 (2000). “[S]ummary judgment 

is appropriate if the pleadings, depositions, answers to 

interrogatories, and admissions on file, together with the 

affidavits, if any, show that there is no genuine issue as to 

any material fact and that the moving party is entitled to 

judgment as a matter of law.” Id. (citation omitted).

This court must view all of the evidence and the 

inferences drawn therefrom in the light most favorable to the 

party opposing the motion. Maguire v. Hilton Hotels Corp., 79 

Hawaiʻi 110, 112, 899 P.2d 393, 395 (1997).

IV. Discussion

A. The Underlying Lawsuit

The Pflueger complaint alleged that C. Brewer was 

negligent with respect to (1) its obligation to maintain the 

System and (2) its entrustment of the maintenance and operation 

of the System to KIC, as follows:

92. Brewer, independently and through its whollyowned subsidiary, KIC, owed a duty of reasonable care to 

Plaintiffs and others to properly operate, inspect, repair 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-12-

and/or maintain the System, including the Dam and 

Reservoir.

93. Brewer, independently and through its whollyowned subsidiary, KIC, breached its duty to properly 

operate, inspect, repair and/or maintain the System, 

including the Dam, its appurtenant structures and/or the 

Reservoir.

. . .

96. Brewer owed a duty of reasonable care to 

Plaintiffs and others to ensure the proper operation, 

inspection, repair and/or maintenance of the System, 

including the Dam and Reservoir.

97. After its formation of KIC, Brewer knew or 

reasonably should have foreseen that KIC was not competent 

to operate and maintain the System in general and the Dam 

and Reservoir in particular.

98. Brewer knew or should have known that, because of 

its lack of expertise, knowledge and/or resources, KIC 

would operate, inspect, repair and/or maintain the System 

in a manner involving unreasonable risk to others.

99. Brewer was negligent in its entrustment of the 

System to KIC.

100. Brewer breached its duty to Plaintiffs and 

others by negligently entrusting KIC with the 

responsibility to operate, inspect, repair and/or maintain 

the System, including the Reservoir and Dam.

Therefore, the Pflueger complaint alleged that C. 

Brewer was obligated to pay Pflueger damages resulting from C. 

Brewer’s negligent acts or omissions, including its negligent 

entrustment of the system to KIC and its alleged failure to 

maintain the System, warn about the System’s unsafe conditions,

and adequately capitalize its land operations and the companies 

responsible for maintaining and repairing the Dam, which 

resulted in injury and damage due to the Dam Breach. 

James River’s obligation to indemnify C. Brewer for 

claims asserted against it by the Pflueger complaint depends 

upon whether the policy covers injury and damage occurring on 

undesignated premises that results from C. Brewer’s negligent 

acts or omissions arising from the use of designated premises. 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-13-

James River’s position is that the DPE precluded any possibility 

that it would be obligated to indemnify C. Brewer.

B. Construction of the Designated Premises Endorsement

We note a few general principles of law that will 

guide us in interpreting the policy at issue. First, “insurance

policies are subject to the general rules of contract 

construction; the terms of the policy should be interpreted 

according to their plain, ordinary, and accepted sense in common 

speech unless it appears from the policy that a different 

meaning is intended.” Dairy Rd. Partners v. Island Ins. Co., 92 

Hawaii 398, 411, 992 P.2d 93, 106 (2000) (brackets and citation 

omitted). Thus, policy language “must be construed liberally in 

favor of the insured and [any] ambiguities [must be] resolved 

against the insurer.” 92 Hawai‘i at 412, 992 P.2d at 107 

(alteration in original). Second, pursuant to Hawaii Revised

Statutes § 431:10-237 (1993): “Every insurance contract shall 

be construed according to the entirety of its terms and 

conditions as set forth in the policy, and as amplified, 

extended, restricted, or modified by any rider, endorsement or 

application attached to and made a part of the policy.” 

Moreover, “[b]ecause an insurer’s duty to defend its insured is 

contractual in nature, we must look to the language of the 

policy involved to determine the scope of that duty.” Sentinel, 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-14-

76 Hawaiʻi at 287, 875 P.2d at 904. “[W]henever the insurer 

relies on an exclusionary clause of a policy as a defense to 

liability, it has the burden of proving facts which bring the 

case within the exclusion.” Quinn v. Wilshire Ins. Co., 53 Haw. 

19, 21, 486 P.2d 59, 60 (1971). In addition, any ambiguity in 

an exclusionary clause is construed in favor of the insured and 

“strictly construed against the insurer.” Retherford v. Kama, 

52 Haw. 91, 470 P.2d 517 (1970). 

The DPE, titled, “Limitation of Coverage to Designated 

Premises,” states: “This insurance applies only to ‘bodily 

injury’, ‘property damage’, or ‘personal and advertising injury’ 

arising out of the ownership, maintenance or use of the premises 

shown in the above Schedule.” The DPE lists “Locations 1-3.” 

The parties are in agreement that “Locations 1-3” includes C. 

Brewer’s corporate headquarters at 311 Pacific Street, but not 

the Dam site.

James River and C. Brewer present conflicting 

interpretations of the DPE. James River argues that the DPE 

unambiguously limits coverage under the policy to liability for 

injury and damage on premises listed in the Schedule, and thus 

it has no obligation to defend or indemnify C. Brewer against 

the Pflueger lawsuit because the Dam site is not listed. C. 

Brewer argues that the DPE is ambiguous as to whether injury and

damage “arising out of” the “use” of listed premises is covered, 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-15-

contending that the “arising out of” language in the DPE 

requires broad construction in its favor.

We have held that “[a] contract is ambiguous when its 

terms are reasonably susceptible to more than one meaning.” 

Hawaiian Ass’n of Seventh-Day Adventist v. Wong, 130 Hawaii 36, 

45, 305 P.3d 452, 461 (2013). We therefore begin by analyzing 

whether the positions advanced by the parties are reasonable 

interpretations of the policy’s language.

James River cites to Union American Insurance Co. v. 

Haitian Refugee Center/Sant Refijie Ayisyin, Inc., 858 So.2d 

1076 (Fla. Dist. Ct. App. 2003), in support of its argument that 

the DPE must be construed to limit liability to designated 

premises. In Union American, a Haitian Refugee Center 

(“Center”) allegedly failed to provide adequate security at a 

street rally it sponsored located far from and unrelated to the 

Center’s headquarters, the designated premises, which led to the 

shooting of an individual at the rally by another individual in 

the crowd. 858 So.2d at 1077. The policy’s designated premises 

endorsement limited coverage to “bodily injury . . . arising out 

of [t]he ownership, maintenance or use of the premises shown in 

the [s]chedule and operations necessary or incidental to those 

premises[.]” Id. (first and second bracket in original; third 

bracket added) (quoting insurance policy at issue). The 

District Court of Appeal of Florida for the Third District 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-16-

(“appeals court”) reversed the lower court’s holding that the 

policy provided coverage, concluding that the designated 

premises endorsement effectively converted the CGL policy into a

premises liability policy despite the words “commercial lines 

policy” on the policy’s cover sheet. 858 So.2d at 1078 n.1, 

1079 (reversing judgment). The appeals court explained that 

providing coverage on the ground that the event was an operation 

necessary or incidental to the Center’s business involved a 

judicial rewriting of the policy by substituting “business” for 

the policy word “premises.” 858 So.2d at 1078. The appeals 

court stated: “This is a process in which we may not engage.” 

Id.

Union American concerned a wrongful death action based 

on an alleged failure to provide adequate security, while this 

case involves damages for C. Brewer’s alleged negligent

entrustment of the System to KIC and its alleged failure to 

disclose unsafe conditions, adequately capitalize KIC, or 

maintain the System. In addition, the injury in Union American

occurred in a manner unrelated to the Center. 858 So.2d at 

1077. 

In this case, however, the injury and damage arguably

relate to C. Brewer’s “use” of its corporate headquarters to 

make negligent business decisions. Union American is therefore 

distinguishable. 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-17-

C. Brewer contends that the policy provides coverage 

for injury and damage arising out of its “use” of its corporate 

headquarters to make negligent corporate decisions even though 

the resulting damage happened at the unlisted Dam site. In 

support, C. Brewer relies on American Guarantee and Liability 

Insurance Co. v. 1906 Co., 129 F.3d 802 (5th Cir. 1997) 

(applying Mississippi state law), a case in which the court 

construed a designated premises endorsement with language 

similar to the James River DPE, to include coverage for injuries

and damages occurring on a premises not listed in the 

endorsement.

In American Guarantee, an insurer sought a judgment 

that the CGL policy it sold to a Coca-Cola Bottling Company 

(“Coke Company”) afforded no coverage or defense for injuries 

arising out of a photography studio, wholly-owned and operated 

as a division of the Coke Company, in which the Coke Company 

chief executive officer’s (CEO) son, also an employee, 

surreptitiously videotaped female customers changing their 

clothes. 129 F.3d at 804. The designated premises endorsement 

at issue limited coverage to “‘bodily injury,’ ‘property 

damage,’ ‘personal injury,’ ‘advertising injury’ and medical 

expenses arising out of . . . [t]he ownership, maintenance or 

use of the premises shown in the Schedule and operations 

necessary or incidental to those premises[.]” 129 F.3d at 806
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-18-

(quoting insurance policy at issue). The studio, located a mile 

away from the Coke Company, was not a designated premises.

The Fifth Circuit held that the designated premises 

endorsement did not preclude coverage for negligence claims 

arising out of the use of the Coke Company headquarters, a 

designated premises, regarding supervisory actions over the 

studio and the CEO’s son. 129 F.3d at 808. The Fifth Circuit 

concluded that the designated premises endorsement unambiguously 

covered injuries occurring at uncovered premises if a causal 

connection between the injuries and “use” of a designated 

premises existed. See 129 F.3d at 807 (“[T]he phrase ‘arising 

out of’ the ‘use’ of the designated premises requires that there 

be a causal connection between the injuries . . . and the 

designated premises . . . .”). In construing a causal 

connection, the Fifth Circuit opined as follows: “The phrase 

‘arising out of’ is ordinarily understood to mean ‘originating 

from,’ ‘having its origin in,’ ‘growing out of,’ or ‘flowing 

from.’ In the insurance context, this phrase is often 

interpreted to require a causal connection between the injuries 

alleged and the objects made subject to the phrase.” Id.

(internal citation omitted).

The Fifth Circuit reasoned that the studio was owned 

and operated as a division of the Coke Company, the studio and 

Coke Company shared the same general checking account, employees 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-19-

of the studio were considered Coke Company employees, and all 

major business decisions concerning the studio, from the 

purchase of the equipment to the scope and ultimate termination 

of the business, were made at the Coke Company’s headquarters, a 

designated premises. 129 F.3d at 807-08. The Fifth Circuit 

held that “[u]nder the circumstances, a factfinder could find a 

causal connection between [the Coke Company] and [the CEO’s]

supervisory activities, the operation of the designated 

premises, and the injuries that resulted from [the CEO’s son’s]

intentional and tortious actions at [the studio].” 129 F.3d at 

808.

Similarly, in this case, the System was owned and 

operated by KIC, a C. Brewer subsidiary, KIC’s employees were 

considered employees of C. Brewer, and all major business 

decisions concerning the System, including the alleged failure 

to capitalize KIC, the entrance into various agreements to 

maintain the System, and the eventual sale of the land 

underlying the Reservoir, were apparently made at C. Brewer’s 

corporate headquarters. Therefore, a causal connection could 

possibly be found between C. Brewer and its entrustment of the 

System to KIC, the operation of the designated premises, and the 

injuries that resulted from C. Brewer’s allegedly negligent 

corporate decisions.
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-20-

In addition, by relying on Union American, James River 

seeks to rewrite the term “arising out of” to limit liability to 

injury and damage occurring on designated premises. Such a 

construction of the DPE would effectively convert the James 

River policy from a CGL policy to a premises liability policy 

that limits coverage to certain premises. James River’s 

argument contradicts the policy, which specifically states that 

it is a “commercial general liability” policy. In addition, 

such a construction contravenes general principles of insurance 

construction, which provide that policy language “must be 

construed liberally in favor of the insured and [any] 

ambiguities [must be] resolved against the insurer.” Dairy Rd. 

Partners, 92 Hawai‘i at 412, 992 P.2d at 107 (alteration in 

original).

In our view, American Empire Surplus Lines Insurance 

Co. v. Chabad House of North Dade, Inc., 771 F. Supp. 2d 1336 

(S.D. Fla. 2011), correctly analyzes the requirements for 

converting a CGL policy to a premises liability policy. The 

policy at issue in Chabad House is similar to the James River 

policy. Chabad House involved a “commercial general liability” 

policy that covered injury and damage occurring anywhere in the 

“coverage territory,” defined in the policy as encompassing, at 

minimum, the United States, Canada, and Puerto Rico, and also 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-21-

contained a similarly worded designated premises endorsement.8 

771 F. Supp. 2d at 1339, 1343.

Citing to American Guarantee, in which the designated 

premises were specifically incorporated into the policy on the 

declarations page so as to put the insured on notice that 

coverage was limited to certain premises, the Chabad House court 

held that language in a DPE used to convert a CGL to a premises 

liability policy “must be clear and unequivocal.” 771 F. Supp.

2d at 1343. We likewise hold that a DPE “must be clear and 

unequivocal[]” to convert a CGL policy to a premises liability 

policy in order to effectively limit coverage to injury or 

damage that occurs on undesignated premises. Id.

In this case, the James River DPE does not clearly 

convert the policy into a premises liability policy. The DPE is 

similarly incorporated by reference into the policy on the 

declarations page; however, the declarations page does not list 

the designated premises. Therefore, the DPE is not sufficiently 

clear and unequivocal to put the insured on notice and convert 

 

8 The designated premises endorsement in Chabad House states: 

“This endorsement modifies insurance provided under the following: Commercial 

General Liability Coverage Part.” 771 F. Supp. 2d at 1343 (quoting insurance 

policy at issue). It limits coverage to “‘bodily injury’, ‘property damage’, 

‘personal and advertising injury’ and medical expenses arising out of: (1) 

The ownership, maintenance or use of the premises shown in the Schedule . . .

and operations necessary or incidental to those premises.” Id. (quoting 

insurance policy at issue).
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-22-

the policy.

9 Accordingly, we reject James River’s argument to

construe the DPE as limiting coverage to injury and damage 

occurring on designated premises. See Dairy Rd. Partners, 92 

Hawai‘i at 412, 992 P.2d at 107 (holding that policy language 

“must be construed liberally in favor of the insured and [any] 

ambiguities [must be] resolved against the insurer.”). 

In further support of its position, C. Brewer contends 

that the inclusion of “personal and advertising injury” in the 

DPE “suggests that the parties may have intended to include 

coverage for negligent decisions made at a designated premises 

that resulted in injury and damages elsewhere.” (quoting C. 

Brewer, mem. op. at 36). C. Brewer also notes that Chabad House

found that the policy’s broad coverage territory, which included 

the United States, Canada, Puerto Rico, and, under certain 

circumstances, other parts of the world, contradicted the 

designated premises endorsement. James River asserts that C. 

 

9 We note that although the parties are in agreement that the Dam 

site was not a listed premises, the DPE does not clearly define which 

premises correspond to “Locations 1-3.” The declarations page contains a 

section titled, “Endorsements,” which refers the reader to a list of forms 

and endorsements in “attached schedule A.” “Schedule A” is essentially a 

table of contents, and includes the DPE. 

The DPE contains a section titled, “Schedule,” which reads 

“Premises: Locations 1-3” with no reference directing the reader on where to 

find the list of locations. To find the “Schedule of Locations,” the reader 

must refer to a form titled, “Policy Changes,” also listed on “Schedule A.” 

The “Schedule of Locations” section contained on the “Policy Changes” page 

lists three premises, including 311 Pacific Street, but also lists a number 

of vacant parcels identified by TMK number.
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-23-

Brewer’s interpretation is overly broad and renders the “arising 

out of” language meaningless.

As the ICA reasoned, decisions made at C. Brewer’s 

corporate headquarters would likely be the cause of any 

advertising injury; however, the resulting injury would not 

occur on designated premises. In addition, the James River 

policy’s broad coverage territory similarly encompasses the 

United States, Canada, Puerto Rico, and, under certain 

circumstances, other parts of the world.10 Therefore, C. 

Brewer’s arguments further support its interpretation of the 

DPE. 

C. Classification Limitation Endorsement

James River also argues that its classification 

limitation endorsement limits coverage only to “those operations 

specified . . . under the ‘description of operations’ or 

 

10 The James River policy defines “coverage territory” to mean:

a. The United States of America (including its territories 

and possessions), Puerto Rico and Canada;

b. International waters or airspace, but only if the injury 

or damage occurs in the course of travel or 

transportation between any places included in a. above; 

or

c. All other parts of the world if the injury or damage 

arises out of:

(1) Goods or products made or sold by you in the 

territory described in a. above;

(2) The activities of a person whose home is in the 

territory described in a. above, but is away for a 

short time on your business; or

(3) “Personal and advertising injury” offenses that 

take place through the Internet or similar 

electronic means of communication . . . .
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-24-

‘classification’ on the declarations of the policy.” As C. 

Brewer emphasizes, the declarations page does not contain a 

“Description of Operations,” but rather, a “Description of 

Business” in which the phrase “Real Estate Owners” was inserted. 

James River maintains that C. Brewer was not the owner of any 

real estate at the time of the accident and therefore, the 

classification limitation endorsement affirms that the policy, 

read as a whole, was clearly intended to provide coverage only 

for C. Brewer’s liability as the owner of real estate 

specifically listed in the Schedule. C. Brewer maintains that 

the classification limitation endorsement does not limit 

coverage to “land, owned or otherwise[,]” and that the phrase 

“Real Estate Owners” created ambiguity. 

The ICA concluded that the classification limitation 

endorsement did not resolve the ambiguity regarding coverage 

because the James River policy did not define “Real Estate 

Owners,” and the allegations in the Pflueger lawsuit “arguably 

implicated C. Brewer’s activities and operations as a real 

estate owner, such as [its alleged] failure[s] to warn about the 

unsafe condition of the Kaloko Dam and . . . to adequately 

capitalize its land operations and companies responsible for 

maintaining and repairing the Kaloko Dam.” C. Brewer, mem. op. 

at 38. 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-25-

Contrary to James River’s assertions, the 

classification limitation endorsement supports C. Brewer’s 

argument that the DPE does not preclude coverage for bodily 

injury and property damage on premises not listed in the 

Schedule. The limitation specifically states: “The coverage 

provided by this policy applies only to those operations

specified in the applications(s) [sic] for insurance on files 

with the Company and described under the ‘description of 

operations’ or ‘classification on the declaration of the 

policy.’” (emphasis added). Thus, the policy specifically 

applies to “operations” specified in the application, and not 

the specified “premises.” Moreover, it appears that C. Brewer 

was leasing the 311 Pacific Street property. Therefore, 

according to James River’s argument regarding the classification 

limitation endorsement, injury and damage that occur on premises

listed in the Schedule would be excluded from coverage because 

C. Brewer did not “own” the property listed. James River’s

argument is illogical and would require this court to rewrite 

the terms of the policy to ignore the premises specifically 

listed in the Schedule that C. Brewer did not own, despite their

clear inclusion in the policy.

Accordingly, the classification limitation endorsement 

also supports C. Brewer’s position that the policy was meant to 

cover injury and damage occurring on premises not listed in the 
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-26-

Schedule. Any ambiguities in this endorsement must also be 

construed against James River. See 92 Hawai‘i at 412, 992 P.2d 

at 107.

D. Additional Exclusions

The circuit court granted James River’s motion for 

summary judgment based on the erroneous conclusion that the DPE 

excluded coverage for injury and damage occurring on premises

not listed in the DPE Schedule. Therefore, the circuit court 

did not analyze the James River policy in its entirety to 

determine whether any other exclusions or endorsements James 

River asserted in its motion for summary judgment applied to 

preclude coverage under the James River policy.11 We decline to 

address for the first time on certiorari exclusions that the 

circuit court did not reach.

V. Conclusion

Adopting American Guarantee, we hold that the phrase 

“‘arising out of’ the ‘use’ of the designated premises requires 

that there be a causal connection between the injuries . . . and 

the designated premises[.]” 129 F.3d at 807. We further hold 

that the DPE unambiguously provides coverage for “bodily injury” 

 

11 James River included a number of exclusions in its motion for 

summary judgment that allegedly preclude coverage, including a “subsidence” 

exclusion, a provision limiting coverage to C. Brewer (and thus, precluding 

coverage for KIC), an irrigation and earth movement exclusion, and a 

provision excluding coverage for misrepresentation, fraud, and breach of the 

covenant of good faith and fair dealing.
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-27-

and “property damage” that bears a causal connection to the 

“use” of designated premises, regardless of where the injury or 

damage occurs. Applying American Guarantee to the facts of this 

case, we hold that the DPE unambiguously provides coverage for

negligence claims arising out of the use of C. Brewer’s 

corporate headquarters.

12 Thus, the parties’ intent as to the 

DPE is not at issue.

We therefore affirm in part and vacate in part the 

ICA’s October 22, 2013 judgment. We affirm that portion of the 

judgment to the extent that it vacated the circuit court’s

December 21, 2007 Final Judgment. We vacate in part that

portion of the judgment to the extent that it instructed the

 

12 Although the duty to defend was not raised on certiorari, it was 

raised in the circuit court and the ICA. We note that “the duty to defend 

‘rests primarily on the possibility that coverage exists. This possibility 

may be remote, but if it exists[,] the [insurer] owes the insured a 

defense.’” Sentinel Ins. Co. v. First Ins. Co. of Hawaiʻi, 76 Hawaiʻi 277, 

287, 875 P.2d 894, 904 (1994) (alteration in original) (citations omitted). 

Thus, the broader duty to defend rests on the possibility that the insured 

would be entitled to indemnification under the policy. See id. (“In order to 

determine whether [the insurer] had a duty to defend . . . , we must examine 

whether the underlying action raised the possibility that the [insured] would 

be entitled to indemnification under any of the policies issued by [the 

insurer].”). “All doubts as to whether a duty to defend exists are resolved 

against the insurer and in favor of the insured[.]” Id. (alteration in 

original) (citations omitted).
*** FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***

-28-

circuit court on remand to determine the parties’ intent 

regarding the DPE. On remand, we instruct the circuit court to 

proceed consistent with this opinion.

Keith K. Hiraoka, /s/ Paula A. Nakayama

Jodie D. Roeca,

Robert J. Romero, /s/ Sabrina S. McKenna

pro hac vice and 

Maria S. Quintero, /s/ Richard W. Pollack

pro hac vice, for 

petitioner/defendant- /s/ Michael D. Wilson

appellee James River 

Insurance Company /s/ Edward H. Kubo, Jr.

Kenneth R. Kupchak,

Tred R. Eyerly, and

Mark M. Murakami

for respondent/plaintiffappellant C. Brewer 

and Company, Ltd.