Opinion ID: 726140
Heading Depth: 2
Heading Rank: 2

Heading: Jenkins' Claims

Text: 13 We conclude that the district court did not err in granting summary judgment on the claim for negligent misrepresentation, nor did it err in dismissing the fraud claim on the pleadings and in denying specific performance and punitive damages. However, we disagree with the district court's basis for dismissing on the pleadings the deceptive-practices claim and conclude that claim must be remanded to the district court for further proceedings.
14 Jenkins appeals the district court's grant of summary judgment to Commonwealth (and denial of his motion for summary judgment in his favor) on his claim of negligent misrepresentation. A grant of summary judgment is reviewed de novo. Jesinger v. Nevada Federal Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). 15 Even if we assume that Jenkins raised a genuine issue of material fact as to whether Commonwealth represented to him that the title to Parcel 29 was marketable and free of any liens and defects other than those set forth in the insurance policy, summary judgment for Commonwealth was proper. The Hawai'i cause of action for negligent misrepresentation requires that Jenkins suffer damages. Chun v. Park, 51 Haw. 462, 462 P.2d 905, 909 (1969). He has come forth with no evidence to create a factual issue over whether he was damaged in purchasing Parcel 29 with a title that was otherwise than allegedly represented. Jenkins' failure to raise a genuine issue as to damage entitled Commonwealth to summary judgment. 16 Jenkins has also not raised a genuine issue of material fact as to any of his other allegations that Commonwealth negligently misrepresented its intentions (1) to fulfill its obligations under the policy, (2) to quiet title in Parcel 29, and (3) to investigate his claim. While Jenkins believes that Commonwealth had an obligation to quiet title to Parcel 29, the policy, as interpreted by the district court in a ruling not challenged by Jenkins, did not impose such an obligation on Commonwealth. Furthermore, Jenkins has offered no evidence beyond his mere allegation to prove that Commonwealth ever represented to him, subsequent to the issuance of the policy, that it would quiet title to the parcel. Commonwealth's letter of April 28, 1977 cannot be read to make such a representation. On summary judgment, of course, Jenkins cannot rest on mere allegations. United States v. Allen, 578 F.2d 236, 237 (9th Cir.1978). Finally, Jenkins can hardly complain about Commonwealth's alleged failure to investigate his claim when he failed to respond to its request that he identify any claims being made adverse to his title.
17 Jenkins appeals the district court's decision dismissing his fraud claim for failing to meet the pleading requirements of Federal Rule of Civil Procedure 9(b) in that it states neither the time, place nor specific nature of the fraudulent representations. A dismissal for failure to state a claim is reviewed de novo. Stone v. Travelers Corp., 58 F.3d 434, 436-37 (9th Cir.1995). 18 On appeal, the only argument Jenkins makes is that he should have been granted leave to amend the fraud count of his complaint rather than having that count dismissed. Even if Jenkins were allowed to amend his complaint, however, he could not properly allege a claim for fraud. His basic allegation is that Commonwealth sold him the title insurance policy covering Parcel 29 and represented thereby that it would faithfully perform its obligations pursuant to the terms of said policy ... when in fact [Commonwealth] never intended to perform its obligations under the policy. The district court, however, in its unchallenged decision on Jenkins' breach-of-contract claim, ruled that Commonwealth had not breached its contract with Jenkins because it had fulfilled its obligations under the policy. Thus, the alleged representation is not false, and therefore not fraudulent. Decker v. GlenFed, Inc. (In re GlenFed, Inc. Securities Litigation), 42 F.3d 1541, 1548 (9th Cir.1994) (en banc) (The statement in question must be false to be fraudulent.). Therefore, even if Jenkins had sought leave to amend, the district court could have refused to grant such leave, even given the strict review of such denials in light of the strong policy in favor of amendment. See, e.g., Thomas-Lazear v. Federal Bureau of Investigation, 851 F.2d 1202, 1206 (9th Cir.1988).
19 Jenkins appeals the district court's dismissal of his claim that Commonwealth violated § 480-2 2 of Hawai'i Revised Statutes, which declares that [u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are unlawful. The district court dismissed this statutory claim as precluded by certain provisions of the Hawai'i Insurance Code that provide only administrative remedies. A dismissal for failure to state a claim is reviewed de novo, Stone, 58 F.3d at 436-37, as is a district court's interpretation of state law, Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991); National Union Fire Insurance Co. v. Showa Shipping Co., 47 F.3d 316, 322 (9th Cir.1995). A complaint should not be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). We conclude the district court erred in finding § 480-2 preempted, so we must remand to allow the district court to consider whether Jenkins has stated a claim under any possible set of facts. 20 The court dismissed the claim because Genovia v. Jackson National Life Insurance Co., 795 F.Supp. 1036 (D.Haw.1992), held that § 480-2 does not apply to insurers. Genovia interpreted § 431:1-104 of the Hawai'i Insurance Code to preempt application of the general unfair-competition law in § 480-2 to insurers. 795 F.Supp. at 1045. Section 431:1-104 provides that [p]rovisions of this code relating to a ... particular matter prevail over provisions relating to ... such matter in general. Section 431:13-102 of the Insurance Code prohibits engaging in any trade practice which is defined in [Article 13 of the Insurance Code] as ... an unfair method of competition or an unfair or deceptive act or practice in the business of insurance. Article 13 includes six pages defining unfair methods of competition and unfair or deceptive acts or practices. 21 Were we writing on a clean slate, we might well accept as sound the conclusion of Genovia that the unfair-competition provisions of the Insurance Code preempt the state's more general unfair-competition statute, § 480-2. Both sections use exactly the same terms (albeit one in the singular and the other in the plural) to describe what is prohibited: any unfair method of competition and any unfair or deceptive act or practice. While the Insurance Code defines those terms in the insurance context in enormous detail, § 480-2 (and the chapter in which it occurs) offers no definition of those terms. 3 In addition, § 431:13-101 states the purpose of Article 13 of the Insurance Code to be defining, or providing for the determination of, [and prohibiting] all acts, methods, and practices which constitute unfair methods of competition or unfair or deceptive acts or practices in the insurance industry. 4 Haw.Rev.Stat. § 431:13-101 (emphasis added). 22 Genovia 's conclusion on preemption, however, may be implicitly inconsistent with the treatment of § 480-2 in Gonsalves v. First Insurance Co. of Hawaii, Ltd., 55 Haw. 155, 516 P.2d 720 (1973). The plaintiffs in that case sued an insurance company seeking treble damages for violation of § 480-2. 5 Id., 516 P.2d at 722. The plaintiffs argued that the [insurance] policy and the endorsement [in question] are drafted in such a complex and vague manner as to be misleading and deceptive. Id., 516 P.2d at 724. The Hawai'i Supreme Court affirmed the trial court's grant of summary judgment to the defendant insurance company on the merits: Defendant's policy, including the endorsement, is somewhat complex, but is neither vague nor misleading. Complexity, without more, does not make a document deceptive. Id., 516 P.2d at 725. It is true that no preemption argument appears to have been urged, but the court gave absolutely no indication that the plaintiffs had failed to state a claim because § 480-2 was preempted by the insurance code, despite the fact that the 1973 version of the insurance code contained both a particular provisions prevail section 6 and specific provisions on unfair competition and deceptive trade practices. 7 Gonsalves thus suggests that the Genovia court erred in ruling that the insurance code's unfair-competition provisions preempt the general unfair-competition provisions in § 480-2. 8 23 This suggestion is supported by the opinion of the Supreme Court of Hawai'i in the recently decided case The Best Place, Inc. v. Penn America Insurance Co., 82 Hawaii 120, 920 P.2d 334 (1996). In that case, the court recognized a tort cause of action for bad-faith refusal to pay a valid claim submitted by an insured under an insurance policy. The insurer in that case argued that no such claim should be recognized because the administrative remedies provided in the unfair-competition section of the Hawai'i Insurance Code, Article 13, were adequate and no additional remedies were necessary. The court rejected that argument and held that Article 13 did not preempt a private cause of action for tortious bad faith. In doing so, the court addressed the preemptive effect of Article 13 generally: 24 The existing administrative remedies, however, are not exclusive. Indeed, HRS § 431:13-202(b) (1993) provides that [n]o order of the Commissioner pursuant to this section or order of court to enforce it shall in any way relieve or absolve any person affected by the order from any other liability, penalty, or forfeiture required by law. This provision clarifies any question as to Article 13's preemptive effect. In addition, we glean from the legislative history of HRS § 413:13-202(b) that the legislature deemed the existing administrative remedies inadequate. 25 Id., 920 P.2d at 341. Of course, the opinion in Best Place does not directly resolve the preemption question presented in the case before us, since Best Place addressed whether Article 13 preempted a common-law claim and the instant case turns on whether Article 13 preempts another provision of the Hawai'i Revised Statutes. Nonetheless, the Best Place discussion of Article 13's preemptive effect, together with the decision in Gonsalves, convinces us that the Supreme Court of Hawai'i would not find that Article 13 preempts suits against insurers for deceptive trade practices in violation of § 480-2. 26 The unfair-competition count of Jenkins' complaint alleged, inter alia, that Commonwealth, in issuing the insurance policy, [led] him to believe that he was acquiring good and marketable title to the insured property and that in response to his claims Commonwealth initiated efforts to quiet title to the property, abandoned those efforts, and refused to disclose fully to him the status of his claims under the policy. Taking the allegations of the complaint as true, as we must on a motion to dismiss for failure to state a claim, we conclude that Jenkins has stated a claim for deceptive trade practices and the district court's dismissal was in error. 27 Section 480-13 of the Hawai'i Revised Statutes, the section that allows Jenkins to sue for a violation of § 480-2, requires that a plaintiff have sustained damages. [T]he mere existence of a violation is not sufficient ipso facto to support the action; forbidden acts cannot be relevant unless they cause private damage. Ai v. Frank Huff Agency, Ltd., 61 Haw. 607, 607 P.2d 1304, 1312 (1980). Jenkins' allegation that he has, as a direct and proximate result of Commonwealth's violation, sustained special and general damages suffices to withstand a motion to dismiss under Rule 12(b)(6). We note, however, that representations made to the district court and to this court appear to suggest that Jenkins' arrangement with the actual purchasers of the parcel has been concluded as originally anticipated, and he was able, despite any alleged clouds on the title, to unconditionally convey the parcel to that purchaser in a recorded deed. On remand, the district court will have to determine whether Jenkins can establish the damages that are an essential element of his unfair-competition claim. See Ai, 607 P.2d at 1311.