Court Opinion

ID: 2962277
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:55:40.460836+00
Date Added: 2024-06-11T11:42:27.782271
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USCA1 Opinion

	

                            United States Court of Appeals                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 93-1363                                 ALLAN S. BIRD, ETC.                                Plaintiff, Appellant,                                          v.                            CENTENNIAL INSURANCE COMPANY,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                [Hon. Walter Jay Skinner, Senior U.S. District Judge]                                          __________________________                                 ____________________                                        Before                         Torruella and Stahl, Circuit Judges,                                              ______________                         and DiClerico,* U.S. District Judge.                                         ___________________                                 ____________________            Robert B. Carpenter, with  whom Louis J. Scerra, Jr., Donnalyn  B.            ___________________             ____________________  ____________        L. Kahn, and Goldstein & Manello, P.C., were on brief for appellant.        _______      _________________________            George C.  Rockas, with whom Paul  R. Devin and  Peabody & Arnold,            _________________            ______________      ________________        were on brief for appellee.                                 ____________________                                   December 1, 1993                                 ____________________        ____________________        *Of the District of New Hampshire, sitting by designation.                      STAHL, Circuit  Judge.  In this  appeal, plaintiff-                             ______________            appellant Allan S. Bird challenges the district court's entry            of summary judgment  against him and  in favor of  defendant-            appellee  Centennial  Insurance  Company  on  his  claim that            defendant breached  two  fidelity  insurance  policies  ("the            Policies").    After  careful  consideration  of  plaintiff's            arguments, we affirm.                                          I.                                          I.                                          __                                      BACKGROUND                                      BACKGROUND                                      __________                      Plaintiff is the general partner of fifteen limited            partnerships that  own and  operate residential  multi-family            housing  projects throughout the United States.  The projects            are  subsidized to  varying  degrees  by  the  United  States            Department  of Housing  and Urban  Development  ("HUD").   To            assist in the operation of the projects, the partnerships had            entered into certain management agreements  with Capital Site            Management  Company   ("Capital")  and/or   Asset  Management            Corporation ("Asset").   Capital managed all of  the projects            until September 1987, at which  time it became inactive.  The            agreements were then taken over by Asset, which can fairly be            described as the corporate reincarnation of Capital.                        John Panagako  was the  president and  treasurer of            Capital and  owned 50% of  the company's  stock.   Panagako's            wife, Janice Panagako, owned the  other 50%.  John and Janice            Panagako  were also the  only directors of  Capital; however,                                         -2-                                          2            Janice  Panagako's duties  were clerical  and secretarial  in            nature.   No  formal  directors'  meetings  were  ever  held.            Asset's structure was  identical to Capital's except  for the            fact that John Panagako was  Asset's sole shareholder.  It is            clear from the record that John Panagako had complete control            over both of these corporations.                      Each  of  the  management  agreements  contained  a            provision  requiring the  managing  agent,  i.e., Capital  or            Asset,  to procure fidelity insurance to protect against loss            due   to  fraudulent  or  dishonest  acts  committed  by  its            employees.  In relevant part, the provision states:                      19.   Fidelity  Bond.    The  Agent  will                      _____________________                      furnish, at  his  [sic]  own  expense,  a                      fidality [sic] bond  in the principal sum                      of  at  least  an  amount  equal  to  the                      [project's]  gross  potential  income for                      two  months and  is [sic]  conditioned to                                  ___  __        ___________ __                      protect the Owner  and [the Secretary  of                      _______ ___ _____  ___  ___ _________  __                      HUD    and    the    mortgagee]   against                      ___    ___    ___    _________                      misapplication  of project  funds by  the                      Agent and its employees.1                                            ____________________            1.  Plaintiff  contends that the  inclusion of this provision            was mandated by HUD "regulations."   However, the record does            not  reflect, and we cannot locate,  any HUD regulation which                                                         __________            affirmatively  requires  managing  agents  of  HUD-subsidized            properties  to purchase fidelity  bonds.  Rather,  it appears            that plaintiff's argument is premised upon (1) a provision of            the HUD  Handbook,    4381.5 REV-1,  which requires  property            managers to obtain  fidelity coverage for both  principals of            the  management  entity  and  "all  persons  who  participate            directly or indirectly  in the management and  maintenance of            the project and  its assets, accounts  and records"; and  (2)            the affidavit of G. Richard Dunnells, former Deputy Assistant            Secretary  for Housing Management  at HUD, which  states that            the  aforementioned  Handbook  provision  was promulgated  in            response to 24 C.F.R.    207.10, which requires the mortgagor            of HUD-insured properties "to keep the property  insured by a                                         -3-                                          3            (Emphasis  supplied).     Apparently  in  response   to  this            provision,  Capital  and  Asset  secured from  defendant  the            Policies at issue in this  litigation.  In relevant part, the            Policies  provided   coverage  for  the   "[l]oss  of  money,            securities and other property which the insured shall sustain            .  .  . through  any  fraudulent  or  dishonest act  or  acts            committed  by  any  of  the  employees  acting  alone  or  in                       __  ___  __  ___  _________            collusion  with  others."   (Emphasis  supplied).    The term            "employee" was then, in relevant part, defined as follows:                      [A]ny natural  person (except  a director                      or   trustee   of  the   insured,   if  a                      corporation, who  is not also  an officer                      or   employee  thereof   in  some   other                      capacity) while in the regular service of                      the insured in the ordinary course of the                      insured's business  during the  Effective                      Period of this insuring form and whom the                                                   ___ ____ ___                      insured . . . has the right to govern and                      _______       ___ ___ _____ __ ______ ___                      direct   in  the   performance  of   such                      ______   __  ___   ___________  __   ____                      service, but  does not  mean any  broker,                      _______                      factor,  commission merchant,  consignee,                      contractor    or    agent     or    other                      representative   of   the   same  general                      character.            (Emphasis  supplied).    Importantly,  however,  despite  the            directives  of paragraph 19 of the management agreements, (1)            only  Capital and  Asset  were named  as  insureds under  the            Policies,  and (2)  the terms of  the Policies  excluded from                                            ____________________            standard  policy  or  policies against  fire  and  such other            hazards  as the  Commissioner,  upon  the  insurance  of  the            mortgage, may stipulate."                                          -4-                                          4            coverage misapplications  by the  managing agents,  i.e., the            insureds, themselves.2                      By February  1989, plaintiff  had become  concerned            that  John Panagako was making improper payments from project            funds.   Accordingly,  plaintiff  terminated  the  management            agreements.    Subsequently,  plaintiff filed  a  state court            action against John  Panagako, Capital, and Asset  for breach            of  fiduciary   duty,   breach   of   contract,   conversion,            misrepresentation, fraud, money  had and received, breach  of            the covenant of good faith and fair dealing, and violation of            the Massachusetts Unfair  Trade Practices statute.   See Bird                                                                 ___ ____            v.  Capital Site Management  Co., Civil No.  89-1713-C (Mass.                ____________________________            Super. Ct. 1989).  A jury verdict was returned in plaintiff's            favor on all counts, and damages were ultimately  assessed at            nearly $1.2 million.                      In  July  1990,  plaintiff  initiated  the  instant            action in Massachusetts Superior Court, asserting that he was            entitled  to collect as  a third-party beneficiary  under the            Policies.  Defendant  removed the case to the  district court            and  subsequently moved for summary judgment, arguing that no            coverage existed because  plaintiff was not an  insured under            the Policies.   Thereafter, plaintiff obtained  an assignment                                            ____________________            2.  Specifically,  Exclusion  A  of  the  Policies  provided:            "This insuring form does not apply .  . . to loss due to  any            fraudulent, dishonest  or criminal  act by  any insured or  a            partner  therein, whether acting  alone or in  collusion with            others . . . ."                                         -5-                                          5            of all the right, title, and interest of Capital and Asset in            the  Policies,  and  moved  for  leave  to  file  an  amended            complaint  so  as  to  jettison  his third-party  beneficiary            theory and assert in its  place an entitlement to coverage as            a  direct beneficiary  under  the Policies.   The  motion for            leave to file the amended complaint was allowed.                      In January  1992, defendant  filed a  second motion            for summary judgment, arguing  primarily that plaintiff could            not collect  under the  Policies because  the fraudulent  and            dishonest acts giving rise to the claim were not committed by            an "employee" of the insureds,  but instead were committed by            the  insureds' "alter ego."3   Plaintiff opposed  the motion,            arguing  inter alia, that  defendant should be  estopped from                     _____ ____            denying  coverage  under  the  policies.    He  also filed  a            conditional  motion, pursuant to Fed.  R. Civ. P. 56(f),4 for                                            ____________________            3.  We  use  the term  "alter  ego"  as  a shorthand  way  of            identifying  any  natural person  whom the  corporate insured            does  not  have  "the  right  to govern  and  direct  in  the            performance of  [his/her]  service."   As  noted  previously,            under the terms  of the Policies,  such an alter  ego is  not            considered  an employee  of  the  corporate  insured.    And,            because  the Policies only cover fraudulent or dishonest acts            by   employees  of  the  corporate  insureds,  fraudulent  or            dishonest acts  by an alter  ego of the insureds  are outside            the scope of coverage.            4.  Rule 56(f) provides:                      When Affidavits  are Unavailable.   Should  it                      When Affidavits  are Unavailable.                 appear  from the affidavits of a party opposing the                 [Rule  56] motion that the party cannot for reasons                 stated  present  by  affidavit  facts essential  to                 justify  the  party's  opposition,  the  court  may                 refuse  the application for judgment or may order a                                         -6-                                          6            further  discovery  relevant  to  his  newly-raised  estoppel            argument.   In  February 1993,  the district  court issued  a            memorandum  and order granting  defendant's second motion for            summary  judgment.   In so  doing, the  court held  that John            Panagako was  not an employee  of the insureds, and  that the            Policies  therefore  did  not  cover  his  fraudulent  and/or            dishonest  acts.    See  supra  note 3.    It  also  rejected                                ___  _____            plaintiff's estoppel argument, reasoning that the doctrine of            "unclean hands" barred  any recovery by plaintiff.   Finally,            the court denied  plaintiff's Rule 56(f) motion.   It is from            these decisions that plaintiff appeals.                                         II.                                         II.                                         ___                              SUMMARY JUDGMENT STANDARD                              SUMMARY JUDGMENT STANDARD                              _________________________                      Summary judgment  permits a  court to  "`pierce the            boilerplate of the  pleadings and assay the parties' proof in            order  to  determine whether  trial  is  actually required.'"            Santiago v. Sherwin  Williams Co., 3 F.3d 546,  548 (1st Cir.            ________    _____________________            1993) (quoting Wynne  v. Tufts  Univ. Sch.  of Medicine,  976                           _____     ______________________________            F.2d 791, 794 (1st Cir. 1992),  cert. denied, 113 S. Ct. 1845                                            _____ ______            (1993)).     It  must   be  granted   when  "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                                            ____________________                 continuance to  permit affidavits to be obtained or                 depositions to be  taken or discovery to  be had or                 may make such other order as is just.                                         -7-                                          7            moving party is  entitled to a judgment as  a matter of law."            Fed.  R. Civ.  P. 56(c).   Our review  of the allowance  of a            summary judgment  motion is plenary.   Levy v. FDIC,  No. 92-                                                   ____    ____            2135, slip op. at 6 (1st Cir. Oct. 19, 1993).                      It  is  against  this  backdrop  that  we  evaluate            plaintiff's contentions.                                           III.                                         III.                                         ____                                     DISCUSSION5                                                                                     DISCUSSION5                                     ___________                      Plaintiff  essentially  makes  three  arguments  on            appeal:  (1) that the  district court erred in concluding, as            a  matter of  law,  that the  fraudulent  and dishonest  acts            giving  rise to  plaintiff's claim were  not committed  by an            employee of the  insureds, but instead were  committed by the            insureds' alter  ego; (2) that  the court erred  in rejecting            his  claim that  defendant should,  as  a matter  of law,  be            estopped  from denying coverage  under the Policies;  and (3)            that the  court erred in  denying his alternative  Rule 56(f)            motion for additional discovery on the issue of estoppel.  We            discuss each argument in turn.                 A.  Was John Panagako  an Employee of Capital and Allied                 A.  Was John Panagako  an Employee of Capital and Allied                 ________________________________________________________            or was he their Alter Ego?            or was he their Alter Ego?            __________________________                                            ____________________            5.  Because the parties agree  that Massachusetts law governs            this dispute,  and because  there is  at least  a "reasonable            relation" between the  dispute and  the forum  whose law  has            been  selected by the parties, we  will forego an independent            analysis of the  choice-of-law issue and apply  Massachusetts            law.   See Commercial  Union Ins. Co.  v. Walbrook  Ins. Co.,                   ___ __________________________     ___________________            Ltd., No.  92-2415, slip  op. at 2,  n.1 (1st Cir.  Sept. 28,            ____            1993).                                         -8-                                          8                        The  bulk of  plaintiff's  brief  is directed  at            attacking  the district court's  ruling that Panagako  was an            alter ego, and  not an employee,  of the corporate  insureds.            The attack  primarily is carried  out on two fronts.   First,            accepting the district court's conclusion that the definition            of  the term "employee" is unambiguous, plaintiff argues that            the court erred in concluding that John Panagako fell outside            the definition's  boundaries.    Second,  and  alternatively,            plaintiff argues that the definition of  the term employee is            ambiguous,  and that this  ambiguity must be  resolved in his            favor  under  Massachusetts  law.    E.g.,  Massachusetts Bay                                                 ____   _________________            Transp. Auth. v. Allianz Ins.  Co., Inc., 597 N.E.2d 439, 441            _____________    _______________________            (Mass.   1992).6    We  disagree  with  both  of  plaintiff's            positions.                      1.  Plaintiff's First Argument                       1.  Plaintiff's First Argument                      ______________________________                      In addressing plaintiff's  first argument, that the            Policies unambiguously  provide coverage  for the  fraudulent            and/or  dishonest acts committed  by John Panagako,  we begin                                            ____________________            6.  Relying  on a series  of cases regarding  corporate "veil            piercing," and defining the "alter ego defense" here at issue            as  the  mere  defensive application  of  this  veil piercing            doctrine, plaintiff also  devotes several pages of  his brief            to  arguing that Massachusetts courts would not recognize the            defense.      Plaintiff's   argument   in   this   regard  is            fundamentally  flawed.   The alter  ego  defense asserted  by            defendant  is not  a  common  law defense;  rather,  it is  a                          ___            defense derived from the language of the Policies themselves.                                 ___ ________ __ ___ ________ __________            As such, the  common law tort cases relied  upon by plaintiff            in his reverse  veil piercing argument are  inapposite to the            contract dispute before us.                                          -9-                                          9            with  some general  ground rules  for interpreting  insurance            contracts.   The  construction of  language  in an  insurance            contract is a legal determination, see J.I. Corp. v.  Federal                                               ___ __________     _______            Ins.  Co., 920  F.2d  118, 119  (1st  Cir. 1990)  (collecting            _________            Massachusetts cases), which  we review de novo,  see Falmouth                                                   __ ____   ___ ________            Nat'l Bank v. Ticor Title Ins. Co., 920 F.2d  1058, 1061 (1st            __________    ____________________            Cir. 1990).  Where there  is no ambiguity in the  language at            issue,  we will  interpret  it  "according  to  the  ordinary            meaning  of  the words  contained in  its provisions."   J.I.                                                                     ____            Corp.,  920 F.2d  at 119.    The language  of  a contract  is            _____            considered   ambiguous  only   if   its  terms   "are  fairly            susceptible to more than one construction."  Id.                                                         ___                      Where the  intention of the  parties as to  who are            employees is expressed  in a fidelity policy,  that intention            will be given effect.  See 13  Ronald A. Anderson and Mark S.                                   ___            Rhodes, Couch on  Insurance 2d,   46:25 at 33  (1982).  Here,                    ______________________            the  parties  agreed  that, inter  alia,  only  those natural                                        _____  ____            persons "whom the insured  . . . has the right  to govern and            direct  in the  performance  of  [their]  service"  would  be            "employees" covered by the Policies.   Thus, if John Panagako            was not subject to governance and direction by Capital and/or            Allied, he was not  an employee of the insureds as  that term            is defined by the Policies.                      As  we have said,  the record clearly  reveals that            John Panagako was not subject to governance  and direction by                                         -10-                                          10            Capital or Allied, in that he was in complete control of both            corporations.  He owned 50% of Capital's and 100% of Allied's            stock  and   was  the   president  and   treasurer  of   both            corporations.  He  and  his wife  Janice,  whose  duties were            clerical  and  secretarial  in  nature,  were  the  only  two            directors of the corporations.  No formal directors' meetings            were ever held.                      Indeed, plaintiff  does not  dispute the  fact that            John Panagako was in complete control  of Capital and Allied.            Instead,  he premises his  challenge to the  district court's            determination  that Panagako  was not  an  employee upon  two            contentions:  (1)  that the corporations had  the theoretical            right to govern  and direct Panagako, making  him an employee            under the terms of the  Policies; and (2) that "the right  to            govern and direct language was merely intended to distinguish            those  persons within the  corporation[s] whose acts  are not            covered  by the Policies (i.e., employees) from those persons            outside of the corporation[s]  whose acts are not  covered by            the Policies (i.e., independent contractors and the like)."                      With respect  to plaintiff's  first contention,  we            join those  courts that have  passed on the issue  and reject            the claim that  the theoretical right to govern  and direct a            dominant corporate actor  is sufficient to render  that actor            an employee under the definition of employee set forth in the            Policies.   See Employer's  Admin. Servs.,  Inc. v.  Hartford                        ___ ________________________________     ________                                         -11-                                          11            Accident and  Indem. Co.,  709 P.2d 559,  562-63 (Ariz.  App.            ________________________            1985); Kerr  v. Aetna  Casualty & Surety  Co., 350  F.2d 146,                   ____     _____________________________            154-55  (4th  Cir. 1965);  see  also, e.g.,  Matter  of World                                       ___  ____  ____   ________________            Hospitality  Ltd., 983  F.2d  650,  651-53  (5th  Cir.  1993)            _________________            (interpreting identical "right to govern and direct" language            in  a fidelity  policy as  excluding from  the  definition of            employee   a   majority   shareholder   who   dominated   his            corporation); California  Union Ins. v.  American Diversified                          ______________________     ____________________            Sav. Bank,  948 F.2d 556,  566 (9th Cir. 1991)  (same); Three            _________                                               _____            Garden Village Ltd.  Partnership v. United States  Fidelity &            ________________________________    _________________________            Guar. Co., 567 A.2d 85, 90-92 (Md. 1989) (same).  We think it            _________            apparent that the "right" to govern and direct referred to in            the Policies  must be more  than an ephemeral  right inhering            generally in  the corporate form;  rather, it must  have some            grounding in reality.  Cf.  Kerr, 350 F.2d at 154 (describing                                   ___  ____            corporation's "right,"  under circumstances similar  to those            presented here, as "unrealistic" and "theoretical").  In this            case, the argument  that Capital and Allied had  the right to            govern and  direct John  Panagako lacks  any credible  basis.            Accordingly, we  do not accept it.   Cf. J.I. Corp., 920 F.2d                                                 ___ __________            at  119 (insurance contracts should be construed according to            the "`fair and  reasonable meaning of the words  in which the                  ____      __________            agreement of the parties is  expressed'") (emphasis supplied)                                         -12-                                          12            (quoting Cody v.  Connecticut Gen. Life Ins. Co.,  439 N.E.2d                     ____     ______________________________            234, 237 (Mass. 1986)).7                      With respect to  plaintiff's second contention,  we            think  it   sufficient  to  state   that  the  interpretation            plaintiff would have  us ascribe to the "right  to govern and            direct" language in the Policies  is tortured to the point of            absurdity.  It is obvious  that this language, far from being            included  merely to  distinguish  employees  from those  non-            employee actors specified in the  Policies, materially limits            the definition of  the term "employee" to those  persons over            whom the corporate insureds have control.  Accordingly, we so                                            ____________________            7.  Our   conclusion    also   is    supported   by    policy            considerations.  As the Fifth Circuit has observed:                 A corporation can only act through its officers and                 directors.   When  one  person  owns a  controlling                 interest  in  the  corporation  and  dominates  the                 corporation's   actions,    his   acts    are   the                 corporation's  acts.   Allowing the  corporation to                 recover  for  the owner's  fraudulent  or dishonest                 conduct would essentially allow the corporation  to                 recover  for its own  fraudulent or dishonest acts.                 The   [fidelity]  bonds,   however,  were   clearly                 designed to  insure the corporations  against their                 employee's [sic]  dishonest acts and not  their own                 dishonest acts.            Matter   of  World  Hospitality,  983  F.2d  at  652  (citing            _______________________________            California  Union Ins.,  948 F.2d  at  566).   The fact  that            ______________________            plaintiff,  and not the  insureds, is seeking  coverage under            the  Policies   does  not   diminish  the   force  of   these            considerations  in this case,  for plaintiff is  pressing his            claim as an assignee.  As such, his rights under the Policies            are limited  to those  of  the assignors.   See  17 Couch  on                                                        ___     _________            Insurance 2d,   63A:267 at 146 (1983) ("It must be recognized            ____________            that the assignee can receive no greater rights than those of            the assignor.").                                         -13-                                          13            read it.  Cf. Plymouth Rubber Co. Inc. v. Insurance Co. of N.                      ___ ________________________    ___________________            Am., 465  N.E.2d 1234, 1238  (Mass. App. 1984)  (declining to            ___            "torture" the meaning  of a clause  in an insurance  contract            where  it was  understandable  in  its  "usual  and  ordinary            sense") (citation omitted).                      2.  Plaintiff's Second Argument                      2.  Plaintiff's Second Argument                      _______________________________                      Plaintiff's second  and alternative  argument, that            the definition of the  term "employee" is ambiguous and  that            this ambiguity must be resolved in his favor, requires little            discussion.   In making  his alternative  argument, plaintiff            does  not explain  how the  definition of  the term  might be            ambiguous.     Nor  does  he  make  any   attempt  either  to            distinguish or to disagree with  the several cases which have            treated  this very  definition as  unambiguous.   See,  e.g.,                                                              ___   ____            Matter of World  Hospitality, 983 F.2d at  651-53; California            ____________________________                       __________            Union  Ins., 948 F.2d  at 566-67;  Three Garden  Village, 567            ___________                        _____________________            A.2d  at 90-92;  Employer's Admin.  Servs., 709 P.2d  at 562.                             _________________________            Accordingly,  his  argument  being  perfunctory,  we  deem it            waived.  See  United States v. Innamorati, 996  F.2d 456, 468                     ___  _____________    __________            (1st Cir.)  (issues adverted to  in a perfunctory  manner and            without  developed  argumentation deemed  waived  on appeal),            cert. denied, 62 U.S.L.W. 3320 (Nov. 2, 1993).8            _____ ______                                            ____________________            8.  In  that   section   of   his   brief   where   plaintiff            perfunctorily   asserts  that   the   terms  "employee"   and            "insured," see infra note 9,  are ambiguous, he also seeks to                       ___ _____            introduce  extrinsic evidence that the Policies at issue were            mandated by HUD  "regulations," but see supra note 1.   In so                                            ___ ___ _____                                         -14-                                          14                      In  sum, we  reject  plaintiff's  challenge to  the            district  court's determination that John Panagako was not an            employee, but rather was  an alter ego, of the insureds.9                     B.  Should  Defendant be Estopped from  Denying Coverage                 B.  Should  Defendant be Estopped from  Denying Coverage                 ________________________________________________________            Under the Policies?            Under the Policies?            ___________________                      Plaintiff's  second  argument,  that  the  district            court  erred  in  refusing,  as  a matter  of  law,  to  hold            defendant estopped from  denying coverage, is based  upon his            claim that defendant knew of Capital's and Allied's corporate            structures  at  the  time  the  Policies  were  issued.   See                                                                      ___            Fidelity and Deposit  Co. v. USAFORM Hail Pool,  Inc., 318 F.            _________________________    ________________________            Supp.  1301, 1305, 1308-09 (M.D. Fla. 1970) (insurer estopped            from asserting  alter ego defense  where, inter alia,  it (1)                                                      _____ ____            stipulated that  the  dominant shareholder  was  an  employee                                            ____________________            doing, he asserts that this fact will help to enlighten us as            to the  meaning of  these purportedly  ambiguous terms.   See                                                                      ___            Rodriguez-Abreu  v. Chase Manhattan Bank, N.A., 986 F.2d 580,            _______________     __________________________            586 (1st Cir. 1993) (extrinsic evidence admissible to clarify            ambiguous contractual provisions).                   Even  if  we  were  to  assume  arguendo  the  truth  of                                                 ________            plaintiff's assertion, we do not see how such fact would tend            to clarify  anything at issue in this  litigation.   At most,            the "regulations" to which plaintiff draws our attention tend            to  reinforce the  perception  that  the  Policies  were  not            written  in accordance  with the  specifications  of HUD  and            paragraph  19 of  the management  agreements.   They do  not,                                                                     ___            however,  shed light on  what the parties  intended when they            included the disputed terms in the Policies.            9.  Because we so  rule, we need not  reach defendant's other            proffered basis for  affirmance, i.e., that Exclusion  A, see                                                                      ___            supra note  2, is applicable  because John  Panagako, as  the            _____            alter ego of  Capital and Allied, was an  "insured" under the            terms  of  the Policies.    Nor, obviously,  need  we discuss            plaintiff's cursory  argument that  the meaning  of the  term            "insured" in Exclusion A is ambiguous.                                         -15-                                          15            under  the fidelity bond, and (2) "knew everything" about the            insured's  operation), affirmed in part, vacated in part, 463                                   ________ __ ____  _______ __ ____            F.2d 4 (5th Cir. 1972).  While we think that the USAFORM case                                                             _______            is  easily distinguishable  from  the present  situation,  we            believe  that plaintiff's estoppel claim founders for an even            simpler  reason.    As  the  district  court  noted,  because            plaintiff  is proceeding  as the  assignee  of Capital's  and            Allied's rights  under the  Policies, he  is  subject to  any            defenses that defendant could have interposed against Capital            and Allied, the  assignors.  See Great Am. Ins. Co. v. United                                         ___ __________________    ______            States, 575 F.2d 1031,  1034 (2d Cir. 1978).  One  defense to            ______            the equitable  claim of estoppel is the  doctrine of "unclean            hands."   See Peabody Gas & Oil Co.  v. Standard Oil Co., 187                      ___ _____________________     ________________            N.E. 112, 113 (Mass. 1933) ("[O]ne must come  into a court of            equity with clean hands in order to  secure relief . . . .").            Here,  Capital  and  Allied  were  adjudged  liable  for  the            fraudulent and/or dishonest actions underlying this suit.  As            such, the district  court correctly ruled  that any claim  of            estoppel they  might have  asserted  against defendant  would            have failed  because of their  unclean hands.   Plaintiff, as            their assignee, is therefore subject to the same fate.                      Accordingly, we reject plaintiff's challenge to the            district  court's  refusal to  hold  defendant  estopped from            denying coverage.                 C.    Should  Plaintiff's Rule  56(f)  Motion  Have Been                 C.    Should  Plaintiff's Rule  56(f)  Motion  Have Been                 ________________________________________________________            Granted?            Granted?            ________                                         -16-                                          16                      Finally, plaintiff contends that the court erred in            denying his Rule 56(f) motion for additional discovery on the            issue  of  estoppel.   Once  again, his  argument  is without            merit.                       Rule  56(f) offers an  "`escape hatch'" to  a party            opposing a  summary judgment  motion who "genuinely  requires            additional  time to marshal  `facts essential to  justify its            opposition.'"  Mattoon  v. City of Pittsfield, 980  F.2d 1, 7                           _______     __________________            (1st Cir. 1992) (quoting Paterson-Leitch Co. v. Massachusetts                                     ___________________    _____________            Mun. Wholesale Elec. Co., 840 F.2d 985, 988 (1st Cir. 1988)).            ________________________            Under Rule 56(f), the movant  is required (1) to articulate a            plausible basis for  its belief that the  requested discovery            would raise a trialworthy issue,  and (2) to demonstrate good            cause  for failing to  have conducted the  discovery earlier.            Mattoon, 980  F.2d at  7.   Our  review of  an order  denying            _______            relief under Rule  56(f) is only for an  abuse of discretion.            Id.            ___                      As we have stated, plaintiff's estoppel argument is            doomed by the fact that, as an assignee, plaintiff is subject            to defendant's unclean  hands defense.  Moreover,  the record            reveals that  this defense must  prevail as a matter  of law.            It therefore follows  that there is no need  for discovery on            the issue of estoppel.                      Accordingly,  the district court  did not abuse its            discretion in denying plaintiff's Rule 56(f) motion.                                         -17-                                          17                                         IV.                                         IV.                                         ___                                      CONCLUSION                                      CONCLUSION                                      __________                      For  the reasons herein  stated, the district court            did not err in granting defendant's second motion for summary            judgment  and  denying  plaintiff's  Rule  56(f)  motion  for            additional discovery.                      Affirmed.  Costs to appellee.                      Affirmed.                      _________                                         -18-                                          18