Illinois National Insurance v. Nordic PCL Construction, Inc. (870 F. Supp. 2d 1015, 2012)

United States District Court for the District of Hawaii 2012-04-26

Citations

Full opinion text

ORDER (1) GRANTING IN RELEVANT PART COUNTERCLAIM DEFENDANTS’ REQUEST FOR JUDICIAL NOTICE; (2) GRANTING IN PART AND DENYING IN PART COUNTERCLAIM DEFENDANTS’ MOTION TO DISMISS COUNTERCLAIM FILED OCTOBER 2k, 2011, AND GIVING NORDIC LEAVE TO AMEND IN CERTAIN RESPECTS; (S) DENYING COUNTERCLAIM DEFENDANTS’ MOTION TO STRIKE PORTIONS OF THE COUNTERCLAIM FILED OCTOBER 2k, 2011; (k) DENYING THIRD-PARTY DEFENDANT MARSH USA INC.’S MOTION TO DISMISS OR, IN THE ALTERNATIVE, STAY PROCEEDINGS IN FAVOR OF PENDING STATE ACTION; (5) DENYING DEFENDANT AND THIRD-PARTY PLAINTIFF NORDIC CONSTRUCTION, INC, F/K/A NORDIC CONSTRUCTION LTD.’S SUBSTANTIVE JOINDER TO THIRD-PARTY DEFENDANT MARSH USA INC.’S MOTION TO DISMISS OR, IN THE ALTERNATIVE, STAY PROCEEDINGS IN FAVOR OF PENDING STATE ACTION; AND (6) GRANTING THIRD-PARTY DEFENDANT MARSH USA, INC.’S MOTION FOR JUDGMENT ON THE PLEADINGS ON COUNTS V AND VI OF DEFENDANT/THIRD-PARTY PLAINTIFF NORDIC PCL CONSTRUCTION, INC.’S THIRD-PARTY COMPLAINT FILED OCTOBER 2k, 2011

SUSAN OKI MOLLWAY, Chief Judge.

I. INTRODUCTION.

This case involves a dispute about whether insurance benefits are available to a general contractor who built structures that allegedly have construction defects. Plaintiffs Illinois National Insurance Company (“Illinois National”) and National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) (collectively, the “Insurers”), commenced this action for declaratory relief against Defendant Nordic PCL Construction, Inc., f/k/a Nordic Construction, Ltd. (“Nordic”), on August 23, 2011. See Compl., ECF No. 1. Nordic filed a Counterclaim against the Insurers, see Countercl., ECF No. 10-1, and a Third-Party Complaint against Marsh USA, Inc. (“Marsh”). See Third-Party Compl., ECF No. 11.

The parties are now before the court on numerous motions: Counterclaim Defendants’ Request for Judicial Notice in Support of Their (1) Motion to Dismiss the Counterclaim and (2) Motion to Strike Portions of the Counterclaim, ECF No. 16 (“Request for Judicial Notice”); Counterclaim Defendants’ Motion to Dismiss Counterclaim Filed October 24, 2011, ECF No. 14 (“Motion to Dismiss Counterclaim”); Counterclaim Defendants’ Motion to Strike Portions of the Counterclaim Filed October 24, 2011, ECF No. 15 (“Motion to Strike”); Third-Party Defendant Marsh USA, Inc.’s Motion to Dismiss or, in the Alternative, Stay Proceedings in Favor of Pending State Action, ECF No. 33 (“Marsh’s Motion To Dismiss Or Stay”); Defendant and Third-Party Plaintiff Nordic PCL Construction, Inc., f/k/a Nordic Construction Ltd.’s Substantive Joinder to Third-Party Defendant Marsh USA Inc.’s Motion to Dismiss or, in the Alternative, Stay Proceedings in Favor of Pending State Action, ECF No. 36 (“Nordic’s Joinder”); and Third-Party Defendant Marsh USA, Inc.’s Motion for Judgment on the Pleadings on Counts V and VI of Defendant/Third-Party Plaintiff Nordic PCL Construction, Inc.’s Third-Party Complaint, ECF No. 29 (“Marsh’s Motion for Judgment on the Pleadings”).

The court GRANTS IN RELEVANT PART the Insurers’ Request for Judicial Notice to the extent it covers matters relevant to these motions; GRANTS IN PART the Insurers’ Motion to Dismiss Counterclaim, but gives Nordic leave to amend the Counterclaim in certain respects; DENIES the Insurers’ Motion to Strike; DENIES Marsh’s Motion To Dismiss Or Stay and Nordic’s Joinder; and GRANTS Marsh’s Motion for Judgment on the Pleadings.

II. BACKGROUND.

This action arises out of alleged construction defects involving two projects on which Nordic acted as the general contractor. Nordic is a defendant in a pending state court action with respect to one of the projects and says it spent more than $400,000 on repairs with respect to the other project. Nordic tendered the defense of the pending state court action to the Insurers and sought reimbursement of the cost of repairs already performed. The Insurers responded by filing this action to determine their rights under the insurance policies issued to Nordic.

A. The Insurance Policies.

1. The CGL Policy.

In or around 2007, Illinois National issued Commercial General Liability Policy No. GL 161-68-33 (the “CGL Policy”) to Nordic. See CGL Policy, attached as Exhibit “A” to Compl., ECF No. 1-1. The CGL Policy was effective from May 1, 2007, to May 1, 2008. Id. Section I, Coverage A of the CGL Policy “applies to ‘bodily injury’ and ‘property damage’ only if: (1) The ‘bodily injury’ or ‘property damage’ is caused by an ‘occurrence’ that takes place in the ‘coverage territory[.]’” Id. at 23 (Policy page numbers referred to are at the top of the page, as in “page 23 of 64,” not at the bottom right). “Occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Id. at 35. The CGL Policy excludes coverage for “ ‘[bjodily injury’ or ‘property damage’ for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement.” Id. at 24.

2. The Umbrella Policy.

In or around 2007, National Union issued Commercial Umbrella Liability Policy No. BE 5685754 (the “Umbrella Policy”) to Nordic. See Umbrella Policy, attached as Exhibit “B” to Compl., ECF No. 1-2. The Umbrella Policy was effective from May 1, 2007, to May 1, 2008. Id. Section I of the Umbrella Policy provides coverage if “the Bodily Injury or Property Damage is caused by an Occurrence that takes place anywhere, and the Bodily Injury or Property Damage occurs during the Policy Period.” Id. at 6. “Occurrence” is defined in the Umbrella Policy as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Ml such exposure to substantially the same general harmful conditions will be deemed to arise out of one Occurrence.” Id. at 25. The Umbrella Policy excludes “liability for which the Insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement.” Id. at 10.

B. The Alleged Construction Defects.

1. Kapahulu Safeway.

Nordic constructed a grocery store for Safeway, Inc. (“Safeway”), at 900 Kapahulu Avenue in Honolulu, Hawaii. Compl. ¶ 8, ECF No. 1. Nordic’s contract, signed in September 2006, required Nordic to build not only the store, but also a 165-space, rooftop parking deck, retail shops, and related improvements. Id. ¶ 10; Countercl. ¶ 5, ECF No. 10-1. The parking deck was to consist of a floating conCrete “wearing slab” topped with sealant. Compl. ¶ 10, ECF No. 1.

Shortly after opening for business in 2007, Safeway allegedly had significant leaks. Id. ¶ 11. In January 2008, Safeway allegedly notified Nordic that the leaks had damaged interior fixtures and equipment, that Safeway lost profits during remedial work, and that the “wearing slab” was uneven and cracking. Id.; Countercl. ¶ 14, ECF No. 10-1. In October 2008, Safeway sent Nordic a letter demanding that Nordic repair the parking deck. Id. ¶ 15. Nordic allegedly forwarded the demand letter to AIG Domestic Claims, Inc. (“AIG”), the Insurers’ representative. Id. AIG agreed to appoint counsel for Nordic, subject to a reservation of rights. Id. ¶ 16. AIG allegedly followed up with a second letter to Nordic, pointing out that “[tjhere are several provisions of the policies that may preclude or limit coverage for this matter,” but not explicitly asserting that the claim did not involve an “occurrence” under the Policies. Id. ¶ 18.

On or around June 22, 2009, Safeway commenced suit, Safeway, Inc. v. Nordic PCL Construction, Inc., Case No. 09-1-1414-06 (the “Safeway Action”), against Nordic for alleged construction defects in the Circuit Court of the First Circuit, State of Hawaii. Compl. ¶ 12, ECF No. 1. Safeway’s complaint alleged breach of contract, breach of the covenant of good faith and fair dealing, negligence, gross negligence, breach of express and implied warranties, unjust enrichment, negligent misrepresentation, intentional misrepresentation, and declaratory relief. Id. Nordic tendered the Safeway Action to the Insurers under the CGL Policy and Umbrella Policy (collectively, “the Policies”). Id. ¶ 13. Illinois National is providing Nordic with a defense in the Safeway Action, and both Illinois National and National Union have reserved their rights under their respective policies. Id. Notwithstanding the provision of a defense, Nordic claims that it is incurring costs and attorney’s fees for independent counsel to protect its interests, because “the appointed insurance defense counsel lacks the staff and resources” to manage discovery. Countercl. ¶ 21, ECF No. 10-1.

2. Moanalua Shopping Center.

The other project that is the subject of the present lawsuit is Moanalua Shopping Center, a strip mall and two-story office building at 930 Valkenburg Street in Honolulu, Hawaii. Compl. ¶ 8, ECF No. 1. Pursuant to a contract dated July 18, 2005, MSC, LLC (“MSC”), hired Nordic to construct the Moanalua Shopping Center. Id. ¶ 15. Nordic finished construction in or around September 2006, but in or around September 2009, the United States Department of the Navy, one of the tenants at the shopping center, complained about a number of construction defects. Id. ¶ 16.

MSC informed Nordic of the Navy’s complaints and asked Nordic to remedy the alleged defects (the “Moanalua Claims”). Id. ¶ 17; Countercl. ¶¶ 24-25, ECF No. 10-1. Nordic allegedly tendered the Navy’s complaints to the Insurers’ agents and repaired the Moanalua Shopping Center. Id. ¶ 27. In or around September 2010, the Insurers, through their agents, promised to investigate the claims and any potential coverage, while reserving their rights. Id. ¶¶ 28-29. Nordic alleges that the Navy and MSC are satisfied with Nordic’s repairs, but that Nordic has not been reimbursed by the Insurers for repair costs totaling over $460,000. Id. ¶ 31. There is no pending construction defect lawsuit regarding the Moanalua Claims. Id. ¶ 30.

C. Procedural History.

The Insurers commenced this declaratory action in this court on August 23, 2011. See Compl., ECF No. 1. The Complaint asserts two claims, one seeking a declaration that the Insurers have no duty to provide a defense or indemnification regarding the Safeway Action, the other seeking such a declaration regarding the Moanalua Claims. Id.

Along with its Answer, Nordic filed a Counterclaim against the Insurers. See Countercl., ECF No. 10-1. The Counterclaim asserts breach of contract, breach of the covenant of good faith and fair dealing, misrepresentations and omissions of material fact, and bad faith, and seeks declaratory relief against the Insurers. Id.

Nordic also filed a Third-Party Complaint against Marsh, the broker that had procured the Policies from the Insurers for Nordic. See Third-Party Compl., ECF No. 11. Nordic alleges that it reasonably believed that the Policies would provide completed operations insurance coverage for the types of construction defects alleged in the Safeway Action and Moanalua Claims. Id. ¶ 8. The Third-Party Complaint asserts breach of contract, negligence, promissory estoppel, breach of fiduciary duties, implied indemnity, and contribution and equitable subrogation.

III. THE INSURERS’ REQUEST FOR JUDICIAL NOTICE.

The court begins by addressing the Insurers’ request that the court take judicial notice of the Policies at issue in support of their Motion to Dismiss Counterclaim and Motion to Strike.

Rule 201 of the Federal Rules of Evidence “permits a court to take judicial notice of adjudicative facts not subject to reasonable dispute.” United States v. Chapel, 41 F.3d 1338, 1342 (9th Cir.1994). “Adjudicative facts are simply the facts of the particular case.” Advisory Committee Notes to Fed.R.Evid. 201. However, “Judicial notice of adjudicative facts must be approached cautiously because it dispenses hvith traditional methods of proof and removes the fact noticed from the province of the jury.” United States v. Jaimes, 297 F.Supp.2d 1254, 1256 (D.Haw.2003) (citing Fed.R.Evid. 201, advisory committee notes to subdivision (b)). Accordingly, judicial notice is appropriate only when the matter is established “beyond reasonable controversy,” Lee v. City of L.A., 250 F.3d 668, 690 (9th Cir.2001), or is a fact “beyond reasonable dispute,” Jaimes, 297 F.Supp.2d at 1256.

The Insurers ask the court to take judicial notice of the two insurance policies at issue in this case. The Policies were attached to the request for judicial notice, as well as to the Complaint, but were not accompanied by a declaration attesting to their authenticity.

Nordic points out that it denied the authenticity of the Policies in its Answer, which stated that the documents “speak for themselves.” Nordic also argues that the Policies it received from Marsh differ from those presented by the Insurers. In a declaration, Kenneth Spence, a Nordic official who attests to the differences in the Policies, states that the CGL Policy in his possession differs from the Policies offered by the Insurers:

6..... Among other things, the amount of the policy premium is struck through on the first page of the copy of the purported CGL Policy attached to the Request for Judicial Notice, but not in the copy of the purported CGL Policy provided by Marsh.

7. In addition, both copies of the purported CGL Policy contain a Notice stating that it “does not form a part of your insurance contract” but nevertheless purporting to provide information about the policy.

Decl. of Kenneth Spence ¶¶ 6-7, attached to Request for Judicial Notice, ECF No. 42-1. Spence also states that versions of the Umbrella Policy differ in two ways:

9. ... The second page of the copy of the purported Umbrella Policy attached to the Request for Judicial Notice does not appear in the copy of the purported Umbrella Policy provided by Marsh.

10. Further, the final page of the copy of the purported Umbrella Policy attached to the Request for Judicial Notice, titled “Violation of Communications or Information Law Exclusion Endorsement,” differs from its apparent counterpart at the end of the copy of the purported Umbrella Policy provided by Marsh.

Id. ¶¶ 9-10.

The court grants the Insurers’ request for judicial notice of the Policies, but the judicial notice is limited to the portions of the Policies quoted or relied on in the present order. Nordic challenges the authenticity of the Policies, but the specific differences it identifies are unrelated to the salient issues now before this court. The discrepancies alleged by Nordic fail to create a reasonable dispute regarding the relevant contractual provisions. At most, Spence “question[s] which copy (if either) is a complete, accurate and authentic copy of the [Policies].” Decl. of Kenneth Spence ¶¶ 8, 11, ECF No. 42-1. At the hearing on the present motions, Nordic conceded that none of the identified differences was relevant to any issue before this court. Therefore, with respect to passages construed or relied on by the court, this court takes judicial notice of the Policies, finding those passages not in dispute.

IV. THE INSURERS’ MOTION TO DISMISS COUNTERCLAIM.

The court now turns to the Insurers’ Motion to Dismiss Counterclaim. The parties focus the bulk of their arguments on whether the claims in the Safeway Action or the Moanalua Claims involve an “occurrence” as defined in the Policies. For the reasons discussed below, the court grants in part and denies in part the Motion to Dismiss Counterclaim.

A. Standard.

Under Rule 12(b)(6), a court is generally limited to reviewing the contents of the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.2001); Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir.1996). If matters outside the pleadings are considered, the Rule 12(b)(6) motion is treated as one for summary judgment. See Kearns v. Tempe Tech. Inst., Inc., 110 F.3d 44, 46 (9th Cir.1997); Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir.1996). However, courts may “consider certain materials — documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice — without converting the motion to dismiss into a motion for summary judgment.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir.2003).

On a Rule 12(b)(6) motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. Fed’n of African Am. Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir.1996). However, conclusory allegations of law, unwarranted deductions of fact, and unreasonable inferences are insufficient to defeat a motion to dismiss. Sprewell, 266 F.3d at 988. Additionally, the court need not accept as true allegations that contradict matters properly subject to judicial notice or allegations contradicting the exhibits attached to the complaint. Id. Dismissal under Rule 12(b)(6) may be based on either: (1) lack of a cognizable legal theory, or (2) insufficient facts under a cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1988) (citing Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.1984)).

To survive a Rule 12(b)(6) motion to dismiss, a claimant must make factual allegations sufficient to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true even if doubtful in fact. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Accord Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (Rule 8 “does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.”). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal citations omitted). The complaint must “state a claim to relief that is plausible on its face.” Id. at 570, 127 S.Ct. 1955. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949.

As the Ninth Circuit has recently stated:

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.

Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir.2011).

B. Breach Of Contract.

The Insurers first argue that Nordic fails to state a claim for breach of contract in Count I and a claim for declaratory relief in Count V, because the alleged construction defects are not “occurrences” as defined by the Intermediate Court of Appeals (“ICA”) in Group Builders, Inc. v. Admiral Insurance Co., 123 Hawai’i 142, 231 P.3d 67 (Ct.App.2010) (“Group Builders ”), and by the Ninth Circuit in Burlington Insurance Co. v. Oceanic Design & Construction, Inc., 383 F.3d 940, 944 (9th Cir.2004) (“Burlington”). Bound by the Ninth Circuit’s decision in Burlington, this court agrees with the Insurers that the underlying damage was not caused by any “occurrence” as defined in the main coverage provisions of the Policies and therefore is not covered.

1. The Alleged Damage Was Not Caused By An “Occurrence” Under The Policies.

The crux of the parties’ dispute concerns whether the alleged construction defects were caused by an “occurrence.” The language of the CGL Policy and the Umbrella Policy defines an “occurrence” as an “accident.” The Insurers’ position is that the alleged construction defects are deficiencies in Nordic’s satisfaction of its contractual duties, and that a breach of contract is not an accident. Nordic says that the defects arise out of alleged negligence, which is in the nature of an accident.

To resolve this dispute, which is before this court based on diversity jurisdiction, the court looks to state law. See Snead v. Metro. Prop. & Cas. Ins. Co., 237 F.3d 1080, 1090 (9th Cir.2001) (stating that federal courts sitting in diversity apply state substantive law and federal procedural law). When interpreting state law, a federal court is bound by the decisions of a state’s highest court. Ariz. Elec. Power Coop. v. Berkeley, 59 F.3d 988, 991 (9th Cir.1995). In the absence of such a decision, a federal court attempts to predict how the highest state court would decide the issue, using intermediate appellate court decisions, decisions from other jurisdictions, statutes, treatises, and restatements as guidance. Id. See Burlington, 383 F.3d at 944 (“To the extent this case raises issues of first impression, our court, sitting in diversity, must use its best judgment to predict how the Hawaii Supreme Court would decide the issue.” (quotation and brackets omitted)).

Under Hawaii law, general rules of contract construction apply to the interpretation of insurance contracts. Dawes v. First Ins. Co. of Haw., Ltd., 77 Hawai’i 117, 121, 883 P.2d 38, 42 (1994). Insurance policies must be read as a whole and construed in accordance with the plain meaning of their terms, unless it appears that a different meaning is intended. See id. at 131, 883 P.2d at 42; Haw. Rev. Stat. § 431:10-237 (“[e]very insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy”).

Because insurance contracts are contracts of adhesion, they must be construed liberally in favor of the insured, and any ambiguities must be resolved against the insurer. Put another way, the rule is that policies are to be construed in accordance with the reasonable expectations of a layperson. Dawes, 77 Hawai’i at 131, 883 P.2d at 42.

The burden is on the insured to establish coverage under an insurance policy. See Sentinel Ins. Co., Ltd. v. First Ins. Co. of Haw., Ltd., 76 Hawai’i 277, 291 n. 13, 875 P.2d 894, 909 n. 13 (1994) (as amended on grant of reconsideration). The insurer has the burden of establishing the applicability of an exclusion. See id. at 297, 875 P.2d at 914.

The insurer owes the insured a duty to indemnify “for any loss or injury which comes within the coverage provisions of the policy, provided it is not removed from coverage by a policy exclusion.” Dairy Road Partners v. Island Ins. Co., Ltd., 92 Hawai’i 398, 413, 992 P.2d 93, 108 (2000). The obligation to defend an insured is broader than the duty to indemnify. The duty to defend arises when there is any potential or possibility for coverage. Sentinel, 76 Hawai’i at 287, 875 P.2d at 904.

The ICA, the Ninth Circuit, and this court have all previously held that claims that arise from alleged breaches of contract do not involve accidents or “occurrences.” Because the claims asserted against Nordic in the Safeway Action, as well as the Moanalua Claims, arise from Nordic’s alleged breach of construction contracts, they are not covered by the Policies.

In Group Builders, the ICA considered the definition of “accident” set forth in Hawaiian Holiday Macadamia Nut Co., Inc. v. Indus. Indem. Co., 76 Hawai’i 166, 872 P.2d 230 (1994) (“Hawaiian Holiday”), and Burlington. Group Builders, a named insured under a commercial general liability insurance policy issued by Admiral, had subcontracted to build a portion of a hotel. Group Builders, 123 Hawai’i at 143, 231 P.3d at 68. The insurance policy covered claims alleging “bodily injury” or “property damage” if “caused by an ‘occurrence.’ ” Id. at 145, 231 P.3d at 70. “The policy define[d] ‘occurrence’ as ‘an accident, including continuous or repeated exposure to substantially the same general harmful conditions.’” Id.

After Group Builders completed the job, the hotel discovered significant mold growth within the new construction and sued various contractors, including Group Builders, for breach of contract, negligence, and negligent misrepresentation, among other claims. Id. at 144, 231 P.3d at 69. Admiral refused to defend or indemnify Group Builders, and the state circuit court granted summary judgment to Admiral on the issue. Id.

The ICA affirmed. Applying the Hawaii Supreme . Court’s definition of “accident,” as addressed by the Ninth Circuit in Burlington, the ICA concluded that the hotel’s claims were not covered. “In Hawaii,” the ICA explained, “an occurrence ‘cannot be the expected or reasonably foreseeable result of the insured’s own intentional acts or omissions.’ ” Id. at 147, 231 P.3d at 72 (quoting Burlington, 383 F.3d at 948). If Group Builders “breached its contractual duty by constructing a substandard home, then facing a lawsuit for that breach is a reasonably foreseeable result.” Id. at 147, 231 P.3d at 72 (quoting Burlington, 383 F.3d at 948). The ICA said that the cases cited by the plaintiffs as allowing coverage in other jurisdictions constituted the minority position on this issue. Id. at 148, 231 P.3d at 73. The ICA held not only that “breach of contract claims based on allegations of shoddy performance are not covered under CGL policies,” but also that “tort-based claims, derivative of these breach of contract claims, are also not covered under CGL policies.” Id. at 148-49, 231 P.3d at 73-74. Accord WDC Venture v. Hartford Accident & Indem. Co., 938 F.Supp. 671, 679 (D.Haw.1996) (explaining that “[tjhere is simply no reason to expect ... a comprehensive liability policy which has, as its genesis, the purpose of protecting an individual or entity from liability for essentially accidental injury ... or property damage” to cover “contractual-based allegations”).

The ICA’s reliance in Group Builders on the Ninth Circuit’s decision in Burlington was express and heavy. Burlington involved a contractor that brought suit against homeowners for whom it had constructed a single-family residence. 383 F.3d at 943. The homeowners filed a counterclaim for, among other things, breach of contract, alleging that the contractor had improperly designed or constructed the foundation of the residence, resulting in damage to the property. Id. The insurer, Burlington, agreed to defend the contractor under a reservation of rights, then filed an action seeking a ruling that the insurance policy did not cover the homeowners’ counterclaim. Id. Like the Policies before this court, the insurance policy in Burlington defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Id.

The Ninth Circuit, applying Hawaii law, stated:

The counterclaim then alleges that Oceanic breached its contractual duty by constructing a residence “substantially inferior to the standard of care and quality which had been agreed.” Other than a breach of that contractual duty, the facts in this case do not reflect a breach of an independent duty that would otherwise support a negligence claim. In Hawaii, an occurrence “cannot be the expected or reasonably foreseeable result of the insured’s own intentional acts or omissions.” Hawaiian Holiday Macadamia Nut, 872 P.2d at 234 (citing AIG Hawaii Ins. Co. [v. Estate of Caraang, 74 Haw. 620], 851 P.2d [321] at 329 [ (1993) ]). If Oceanic breached its contractual duty by constructing a substandard home, then facing a lawsuit for that breach is a reasonably foreseeable result.

Id. The Ninth Circuit also cited several District of Hawaii cases for the proposition that contract-based tort claims are not within the scope of CGL policies under Hawaii law. Id. at 949. See CIM Ins. Corp. v. Midpac Auto Center, Inc., 108 F.Supp.2d 1092, 1099-1100 (D.Haw.2000) (the insurer had no duty to defend claims for breach of contract because they were either based on the contract or premised on the existence of the contractual relationship between the parties); CIM Ins. Corp. v. Masamitsu, 74 F.Supp.2d 975, 986 (D.Haw.1999) (claims of fraud, misrepresentation, promissory estoppel, and breach of contract did not trigger a duty to defend as they were contract or contract-based claims and not within the scope of coverage); WDC Venture, 938 F.Supp. at 677-79 (“Since [the insured] seeks recovery here for tort and contract claims that arise from the contractual relationship, the court finds that the underlying lawsuits are outside the scope of policy coverage in this case.”).

In the present case, the Insurers argue that the Policies’ definition of “occurrence” excludes construction defects that are not the result of an “accident.” They argue that, because the claims in the underlying litigation are contract-based, the Insurers, under Burlington and Group Builders, have no duty to defend or indemnify. Nordic and Marsh, conversely, take the position that the Hawaii Supreme Court’s decisions in Sentinel, Hurtig v. Terminix Wood Treating & Contracting, Co., 67 Haw. 480, 692 P.2d 1153 (1984), and Sturla, Inc. v. Fireman’s Fund Insurance Co., 67 Haw. 203, 684 P.2d 960 (1984), are controlling, and that Group Builders and Burlington ignored those precedents.

The position advanced by Nordic and Marsh runs afoul of hierarchy and chronology. With respect to hierarchy, this court is clearly bound by Burlington, in which the Ninth Circuit construed Hawaii law as not providing for insurance coverage for contract-related claims. While Nordic and Marsh say the Ninth Circuit misconstrued Hawaii law, it is futile for them to seek this court’s departure from the Ninth Circuit’s analysis. The “law of the circuit” rule is “the rule that a published decision of this court constitutes binding authority which ‘must be followed unless and until overruled by a body competent to do so.’ ” Gonzalez v. Arizona, 677 F.3d 383, 390 n. 4 (9th Cir.2012) (en banc) (quoting Hart v. Massanari, 266 F.3d 1155, 1170 (9th Cir.2001)). This court is obligated to follow the Ninth Circuit’s decision in Burlington and may not choose to ignore the law of the circuit.

With respect to chronology, Nordic and Marsh are relying on Hawaii Supreme Court cases that preceded Burlington and Group Builders. Thus, it is fair for this court to assume that the Ninth Circuit and the ICA took those Hawaii Supreme Court cases into account.

Only one of the Hawaii Supreme Court cases Nordic and Marsh rely on was decided after Burlington. In Tri-S Corporation v. Western World Insurance Company, 110 Hawai’i 473, 135 P.3d 82 (2006), the insured and its executive officer brought suit against their insurer for failure to defend or indemnify under the CGL policy. The underlying action involved the death of a construction worker from “electrical discharge from high voltage power lines.” Id. at 478, 135 P.3d at 87. The decedent’s estate filed suit against the executive officer, arguing that he had wilfully and wantonly breached the duty to provide a safe workplace. The insurer refused to provide a defense, arguing that the CGL policy did not cover the wrongful death. The circuit court found in favor of the insureds, and the insurer appealed.

On appeal, the Hawaii Supreme Court was faced with, among other things, determining whether the conduct alleged in the underlying suit constituted an “occurrence” within the meaning of the policy. Holding that the insureds had established at least the potential of coverage, the court agreed with the trial court that the insurer’s duty to defend had been triggered. The court said that the term “occurrence” did not exclude wilful and wanton conduct. The court then focused on language providing that bodily injury “expected or intended” from the standpoint of the insured was excluded from coverage. See id. at 493,135 P.3d at 102.

Thus, although Tri-S did examine whether a claim involved an “occurrence,” that was not the main focus of that case which, in any event, concerned wilful and wanton conduct, not a breach of contract.

In the present case, there is no allegation of wilful or wanton misconduct by Nordic. Moreover, Tri-S involved wrongful death, not a matter analogous to Nordic’s alleged breach of the construction contract. Tri-S by no means undercuts the analysis in Burlington as to whether a construction defect is an “occurrence” under a CGL policy.

The Ninth Circuit’s decision in Burlington could be said to have been validated by the ICA in Group Builders. While the ICA is clearly not the Hawaii Supreme Court, it bears noting that, in the seven and a half years since Burlington was decided, neither the Hawaii Supreme Court nor the ICA has criticized that decision. This court therefore applies Burlington in ruling that the Safeway Action and the Moanalua Claims arise from Nordic’s contractual relationships, not “occurrences.”

Nordic and Marsh argue that House Bill No. 924, passed by the legislature as Act 83 shortly after the ICA’s decision in Group Builders, legislatively overturned Group Builders. The text of the bill proclaims:

The legislature further finds that the 2010 decision of the Hawaii Intermediate Court of Appeals in Group Builders, Inc. v. Admiral Ins. Co., 123 Hawai’i 142, 231 P.3d 67 (Haw.Ct.App.2010), creates uncertainty in the construction industry, and invalidates insurance coverage that was understood to exist and that was already paid for by construction professionals. Prior to the Group Builders decision, which held that commercial general liability policies do not cover bodily injury or property damage arising from construction defects, construction professionals entered into and paid for insurance contracts under the reasonable, good-faith understanding that bodily injury and property damage resulting from construction defects would be covered under the insurance policy. It was on that premise that general liability insurance was purchased.

The purpose of this Act is to restore the insurance coverage that construction industry professionals paid for and to ensure that the good-faith expectations of parties at the time they entered into the insurance contract are upheld.

2011 Hawaii Laws Act 83 (H.B. 924). The recently enacted statute provides:

(a) For purposes of a liability insurance policy that covers occurrences of damage or injury during the policy period and that insures a construction professional for liability arising from construction-related work, the meaning of the term “occurrence” shall be construed in accordance with the law as it existed at the time that the insurance policy was issued.

Haw. Rev. Stat. § 431:l-217(a) (2011).

Section 431:l-217(a) requires that the Policies be interpreted under the law as it existed in 2007. Even if this statute ostensibly nullifies Group Builders by “restoring” pre-Group Builders law, the statute does not purport to nullify any decision preceding Group Builders. The Ninth Circuit decided Burlington in 2004, so it cannot be said to have created new confusion or to be suddenly upsetting insureds’ settled expectations. Nor does the legislature address the effect of other cases relied on by the ICA in Group Builders. See Burlington Ins. Co. v. United Coatings Mfg. Co., 518 F.Supp.2d 1241 (D.Haw. 2007); WDC Venture v. Hartford Accident & Indem. Co., 938 F.Supp. 671 (D.Haw.1996); Hawaiian Holiday Macadamia Nut Co. v. Indus. Indem. Co., 76 Hawai’i 166, 872 P.2d 230 (1994). Those cases predate the effective date of the CGL Policy. Given this chronology and the express statement in section 431:l-217(a) that insurance policies are to be construed in accordance with the law at the time the policies were issued, this court concludes that the Policies in issue in the present case, issued in 2007, continue to fall under the Ninth Circuit’s 2004 analysis in Burlington. See State Farm Fire & Cas. Co. v. Vogelgesang, 834 F.Supp.2d 1026, 1036-37 (D.Haw.2011) (holding that HB 924 did not affect the court’s conclusion that a construction defect was not covered as an “occurrence” under a CGL policy because, even if the new statute invalidated Group Builders, preexisting law provided an adequate basis for the court’s conclusion). To the extent the Policies provide that only damage caused by an “occurrence” triggers coverage, the Policies provide no coverage with respect to the Safeway Action or the Moanalua Claims.

2. Nordic Does Not Adequately Plead A Claim Based On Completed Operations Provisions.

Nordic and Marsh argue that, even absent an “occurrence,” Nordic is entitled to coverage under the “products completed operations hazard” provisions in the CGL and Umbrella Policies. They claim that, as Nordic paid an additional premium for this coverage, the completed operations provisions must cover something other than what provisions requiring an “occurrence” cover.

The CGL Policy has a “Definitions” section that states:

“Products-completed operations hazard”:

a. Includes all “bodily injury” and “property damage” occurring away from premises you own or rent and arising out of “your product” or “your work”....

CGL Policy at 35, ECF No. 1-1. The “Definitions” section also says:

“Your work”:

a. Means:

(1) Work or operations performed by you or on your behalf; and

(2) Materials, parts or equipment furnished in connection with such work or operations,

b. Includes:

(1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of “your work,” and

(2) The providing of or failure to provide warnings or instructions.

Id. at 36. The Umbrella Policy has virtually identical language. See Umbrella Policy at 26, 28, ECF No. 1-2.

No party points this court to any portion of the Policies setting forth the scope of coverage provided for completed operations. That is, in the CGL Policy, words and terms are defined, but the parties do not refer the court to any “insuring agreement” applicable to completed operations that is akin to, for example, Coverage A in the CGL Policy. This court assumes that there is such an insuring agreement, given references in the CGL Policy to a “Products/Completed Operations Liability Coverage Form (PCO),” which appears to be separate from the CGL form. See ECF No. 1-1 at 7. The “Definitions” section does not define “completed operations” as limited to bodily injury or property damage caused by an occurrence. The closest thing the “Definitions” section comes to mentioning an occurrence is the reference to bodily injury and property damage “occurring away from premises” owned or rented by Nordic. This use of “occurring” goes to location, not to any accident. It is therefore not immediately clear from the definition that the analysis of “occurrence” is applicable, although there may be an insuring agreement not identified for the court that clarifies this.

The court is hampered by the parties’ failure to brief the completed operations issue thoroughly in their memorandums in support of and in opposition to motions. References to completed operations provisions are cursory. See, e.g., Third-Party Def. Marsh USA Inc.’s Partial Substantive Joinder in Def. Nordic PCL Construction, Inc.’s Opp’n to [Doc. 14] Pis.’ Mot. to Dismiss Counterclaim filed Oct. 24, 2011 at 12, 19, ECF No. 51; the Insurers’ Reply Mem. of Points & Authorities in Supp. of Mot. to Dismiss at 24-25, ECF No. 54. It was at the hearing on the present motions that Marsh and Nordic sought to highlight this argument, pointing out that neither Burlington nor Group Builders discussed any completed operations provision. Marsh further argued that the completed operations coverage provided Nordic with additional, optional coverage that was priced into the Policies. See Tr. of Various Mots, at 11:12-17, 49:16-22, ECF No. 68. When the court asked the Insurers what the completed operations coverage provided in return for that additional premium, the Insurers were unable to provide the court with any explanation or example. See id. at 51:17-57:7. The court directed the parties to file supplemental briefs addressing this limited issue. See id. at 57:14-15.

Notwithstanding references in the CGL Policy to a separate “PCO” form, the Insurers argue in their supplemental brief that completed operations coverage is a part of the coverage provided by the standard CGL form in Coverage A, rather than a separate, optional coverage or endorsement. See Supplemental Briefing Re: “Products-Completed Operations Hazard” at 1, ECF No. 61. They argue that a claim that falls within the completed operations coverage does not escape the requirement that the injury or damage have been caused by an accident. Id. at 2. The Insurers say that the completed operations provisions would cover Nordic’s liability for faulty workmanship that ended up causing injury to a shopper, not to a party Nordic contracted with. Coverage for injury or damage to a contracting party, according to the Insurers, is barred by Burlington even under the completed operations provisions. Id. at 3-4.

Nordic responds that completed operations coverage must be an optional coverage requiring an additional premium because the Declarations page appears to list an “advance premium” for completed operations coverage. See Reply Mem. Re: “Products-Completed Operations Hazard” [Doc. 61] 2, ECF No. 65. Nordic argues that, in the Insurers’ example, claims by both Safeway and the shopper would be covered by the completed operations coverage, as there is no language in the Policies suggesting a distinction. Id. at 4. Nordic also points to two “Exclusions” that are part of Coverage A. Exclusion 2(Z), for instance, provides:

This insurance does not apply to:

1. Damage To Your Work

“Property Damage” to “your work arising out of it or any part of it and included in the “products-eompleted operations hazard”. This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.

CGL Policy at 26, ECF No. 1-1. Reply Mem. Re: “Products-Completed Operations Hazard” [Doc. 61] 5, ECF No. 65 (quoting CGL Policy at 36, ECF No. 1-1).

The court wishes the Insurers had explained why they read Coverage A as necessarily inapplicable to an injury to a shopper, such that completed operations coverage would serve a necessary function by providing coverage in that instance. With respect to Nordic’s position, whether the “advance premium” was an additional charge (as opposed to, for example, going only to the timing of payment in an “advance” charge) is unclear. If it was not an additional amount, then Nordic possibly cannot rely on any additional cost to argue that it is entitled to additional coverage. The Declarations page includes a reference in connection with completed operations coverage to a coverage limit of $2,000,000. The court cannot tell if this is a separate completed operations aggregate limit or a repetition of the general aggregate limit. See CGL Policy at 2, ECF No. 1-1. This may be material to the issue of whether additional coverage amounts are available. Compare CGL Policy, Section V, ¶ 16(b)(3) with CGL Policy Endorsement for “Designated Construction Projects General Aggregate Limit” ¶ C, ECF No. 1-1, at 35, 45. Indeed, the very Declarations provisions that Nordic relies on say more than once that “products-completed operations are subject to the general aggregate limit,” indicating that the completed operations provisions do not necessarily make a larger dollar amount of coverage available. Of course, even if the same dollar cap applies, the circumstances under which insurance coverage is afforded may increase with the purchase of completed operations coverage. The record is simply presently insufficient to establish what is in effect.

Finally, Nordic urges the court to consider evidence outside of the pleadings, such as the Deposition of Daniel F. Conway, attached to Nordic’s supplemental filing, even though the matter is presented in the context of a motion to dismiss.

It appears to the court that Nordic did not clearly state in its Counterclaim what specific provisions or language its contract claim is grounded in. The inadequate briefing concerning the completed operations coverage may possibly be chalked up to the way Nordic pled its contract claim.

To sufficiently state a breach of contract claim, Nordic had to plead “(1) the contract at issue; (2) the parties to the contract; (3) whether Plaintiff performed under the contract; (4) the particular provision of the contract allegedly violated by Defendants; and (5) when and how Defendants allegedly breached the contract.” Honold v. Deutsche Bank Nat’l Trust Co., Civ. No. 10-00625 JMS/BMK, 2010 WL 5174383, *3 (D.Haw. Dec. 15, 2010) (citing Otani v. State Farm Fire & Cas. Co., 927 F.Supp. 1330, 1335 (D.Haw.1996) (“In breach of contract actions, ... the complaint must, at a minimum, cite the contractual provision allegedly violated. Generalized allegations of a contractual breach are not sufficient.”)).

A number of cases have imposed this requirement in insurance cases. In Otani the insured sued her automobile insurer for no-fault benefits. The insurer moved to dismiss the breach of contract claim on the ground that the insured failed to identify the specific policy provisions allegedly breached. Relying on Au v. Au, 63 Haw. 210, 221, 626 P.2d 173, 181 (1981), which held that a breach of contract claim may be dismissed when the contractual provision is not specified, the district court dismissed the breach of contract claim because the insured only “levie[d] general allegations of a contractual breach” instead of pointing to contractual provisions. Otani, 927 F.Supp. at 1335-36. Similarly, in Hataishi v. State Farm Mutual Automobile Insurance Co., Civ. No. 95-00732 HG, 1995 WL 867880 (D.Haw. Dec. 12, 1995), the insured argued that the insurer had breached the insurance policy by failing to perform in a timely fashion. Citing Au, the district court concluded that the insured’s failure to identify a contractual provision requiring timely performance warranted dismissal. Id. at *2.

Instead of identifying the specific contractual provisions (either by page or section references, section titles, or quotes) that the Insurers allegedly breached, Nordic describes six nonexclusive ways in which the Insurers allegedly breached the Policies:

(a) Misrepresenting the coverage afforded under the Policies;

(b) Failing to disclose, prior to the issuance of the Group Builders opinion, any intention by the Insurers that the Policies would not cover construction defects;

(c) Failing to transmit responses to Nordic’s tenders that were based on thorough investigations, provided reasonable explanations for the reservation of rights and applied good-faith interpretations of the applicable law;

(d) Unreasonably refusing to acknowledge coverage under the Policies and to participate in good-faith efforts to settle the underlying claims;

(e) Failing to reimburse Nordic for the costs of supplementing the defense provided by appointed defense counsel; and

(f) Failing to reimburse Nordic for the costs expended on the Moanalua Repairs.

Countercl. ¶ 61, ECF No. 10-1.

Like the insured in Otani Nordic does not in the Counterclaim cite any provision within the Policies that the Insurers allegedly breached. The only description that is sufficient to give the Insurers adequate notice of what they allegedly breached is Item (b). That item’s reference to Group Builders and the lack of coverage for construction defects keys up the “occurrence” provisions. Neither Item (b) nor any other description keys up other specific provisions. While Nordic contends that its 90-paragraph Counterclaim gave the Insurers a “basic understanding of the claims,” see Opp’n to Mot. to Dismiss Countercl. at 27, ECF No. 45, Nordic’s own failure to refer to any specific completed operations provision in its briefs suggests that Nordic itself was not looking to particular completed operations terms. To the extent Nordic could nevertheless be said to have relied on specific completed operations provisions in its breach of contract claim, that portion of Count I is dismissed as inadequately pled. The court does not here make any ruling on the viability of a completed operations claim. See, e.g., Countercl. ¶ 61(d)-(f), ECF No. 10-1.

The breach of contract claim is dismissed. With respect to the “oecurrence”based portion of that claim, the dismissal is without leave to amend, but Nordic is given leave to amend that claim in other respects.

C. Count II Does Not State A Claim.

Count II alleges a breach of the covenant of good faith and fair dealing. The Insurers contend that Count II is ambiguous and request a more definite statement under Rule 12(e). Rule 12(e) provides: “If a pleading to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, the party may move for a more definite statement before interposing a responsive pleading.” Fed.R.Civ.P. 12(e).

Specifically, the Insurers argue that Nordic’s allegation that they breached the covenant of good faith and fair dealing by taking “actions inconsistent with their obligations under the Policies and the interests of the insureds, including Nordic,” Countercl. ¶ 66, ECF No. 10-1, is unclear and insufficient to advise them of the alleged wrongdoing. See Mot. to Dismiss Countercl. at 26-27, ECF No. 14.

Because the court dismisses Count I for breach of contract, it also dismisses Count II. Nordic fails to identify the specific contractual provisions that the Insurers allegedly breached, and the court is unable to identify what obligations Count II is based on. Nordic is granted leave to amend the Counterclaim as to Count II to state a claim for. breach of the covenant of good faith and fair dealing, separate and apart from a claim based on the “occurrence” issue discussed earlier in this order. Any amendment should clarify how, if at all, Count II differs from Count IV, which alleges bad faith. If there is no difference, one of those claims should be dropped.

D. Count III Insufficiently Pleads Both Fraudulent and Negligent Misrepresentation.

The Insurers argue that Count III, which alleges misrepresentations and omissions of material facts, is insufficiently pled. This court agrees.

Count III says that the Insurers “purposely or negligently made material misrepresentations and failed to disclose material information in connection with the Policies.” Countercl. ¶ 69, ECF No. 10-1.

The court looks first at misrepresentations or omissions that Nordic claims the Insurers “purposely” made. Rule 9(b) of the Federal Rules of Civil Procedure requires that, when fraud or mistake is alleged, “a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” Fed.R.Civ.P. 9(b). An allegation of fraud is sufficient under Rule 9(b) if it “identifies the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations.” Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir.1993) (internal citations and quotations omitted). To sufficiently identify the circumstances that constitute fraud, a plaintiff must identify such facts as the times, dates, places, or other details of the alleged fraudulent activity. Id. A plaintiff must plead these evidentiary facts and must explain why the alleged conduct or statements are fraudulent:

Averments of fraud must be accompanied by “the who, what, when, where, and how” of the misconduct charged. Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir.1997) (internal quotation marks omitted). “[A] plaintiff must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about the statement, and why it is false.” Decker v. GlenFed, Inc. (In re GlenFed, Inc. Sec. Litig.), 42 F.3d 1541, 1548 (9th Cir.1994).

Vess v. Ciba-Geigy Corp. USA 317 F.3d 1097, 1106 (9th Cir.2003). Allegations of fraud based on information and belief do not satisfy Rule 9(b) if the factual bases for the belief are not included. Neubronner, 6 F.3d at 672.

The Hawaii Supreme Court has referred to intentional misrepresentation as interchangeable with fraudulent misrepresentation. See Ass’n of Apartment Owners of Newtown Meadows ex rel. its Bd. of Dirs. v. Venture 15, Inc., 115 Hawai’i 232, 263, 167 P.3d 225, 256 (Haw.2007). To survive a motion to dismiss an intentional or fraudulent misrepresentation claim, a plaintiff must allege that (1) false representations were made by the defendant, (2) with knowledge of their falsity (or without knowledge of their truth or falsity), (3) in contemplation of the plaintiffs reliance upon them, and (4) the plaintiff detrimentally relied on them. Hawaii’s Thousand Friends v. Anderson, 70 Haw. 276, 286, 768 P.2d 1293, 1301 (1989). The circumstances constituting the alleged fraud must be pled with particularity. Fed.R.Civ.P. 9(b). Rule 9(b)’s purposes are to provide defendants with notice that allows them to defend against a charge, to protect those whose reputation would be harmed by an accusation of fraud, and to prohibit plaintiffs from unilaterally imposing upon the court, the parties, and society social and economic costs without some factual basis. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir.2009).

The Insurers correctly note that Nordic did not plead the date(s) or location(s) of the alleged fraud, or the person^) making the alleged misrepresentations. Nor does Nordic articulate the facts underlying any belief as to the Insurers’ fraudulent intent. Most troubling is the inadequacy of the allegations concerning the content of any fraudulent misrepresentation.

First, because Count III encompasses both fraudulent misrepresentations and negligent misrepresentations, it should, but does not, provide any indication as to which statements are alleged to have been made fraudulently, and which negligently. Nordic may not evade Rule 9’s particularity requirements by saying that misrepresentations were made either fraudulently or negligently.

Second, Nordic leaves open the possibility that it is basing its claim on statements that Nordic has not yet even hinted at. Thus, Nordic identifies within Count III only one specific misrepresentation and one specific omission, but precedes the description of those specific items with the words, “For example, and without limitation.” See Countercl. ¶ 70.

Third, Nordic begins Count III by realleging “the allegations contained in all 'of the foregoing paragraphs as if fully set forth herein.” Id. ¶ 68. This incorporation by reference is sometimes referred to as a “shotgun” or “puzzle” pleading. A “shotgun” pleading incorporates all preceding allegations into a count. A “puzzle” pleading requires opponents and the court to match alleged representations up with allegations regarding their fraudulent nature. While the Ninth Circuit has not addressed the issue of whether “shotgun” or “puzzle” pleadings typically fail to satisfy Rule 9, see Prim Ltd. Liability Co. v. Pace-O-Matic, Inc., Civ. No. 10-00617 SOMKSC, 2012 WL 263116, at *5-6 (D.Haw. Jan. 30, 2012), in the present case the pleadings do not satisfy Rule 9 because it is impossible to identify all of the realleged statements forming the bases of Nordic’s fraudulent misrepresentation claim.

To the extent Count III alleges negligent misrepresentation, those allegations are not governed by Rule 9(b). In a negligent misrepresentation claim, Hawaii law requires that “(1) false information be supplied as a result of the failure to exercise reasonable care or competence in communicating the information; (2) the person for whose benefit the information is supplied suffered the loss; and (3) the recipient relies upon the misrepresentation.” Blair v. Ing, 95 Hawai’i 247, 269, 21 P.3d 452, 474 (2001) (citing Restatement (Second) of Torts § 552). See Peace Software, Inc. v. Hawaiian Elec. Co., Inc., Civ. No. 09-00408 SOM-LEK, 2009 WL 3923350, at *6 (D.Haw. Nov. 17, 2009) (relying on Blair for the Hawaii standard for negligent misrepresentation). Because a negligent misrepresentation claim does not require intent, it is not subject to Rule 9(b). See id. at *8; see also Bush v. Rewald, 619 F.Supp. 585, 608 (D.Haw.1985). Negligent misrepresentation is subject only to Rule 8, which requires a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. Rule 8(a)(2).

Notwithstanding the lack of a particularity requirement for negligent misrepresentation, the court dismisses the negligent misrepresentation portion of Count III because, as written, it allows Nordic to spring on the Insurers an unlimited number of unidentified misrepresentations. When a count encompasses both fraudulent and negligent misrepresentations and the court dismisses the fraudulent misrepresentation portion as inadequately pled under Rule 9, the court sometimes permits the negligent misrepresentation portion to proceed based on the assumption that all identified statements form the bases of the negligent misrepresentation portion of the count. Count III, however, is not conducive to such treatment, as it is notably short on specific examples, which are identified “without limitation.” This is less than the “short and plain statement of the claim” required by Rule 8.

Count III is dismissed as inadequately pled, although Nordic is given leave to file an amended complaint more adequately asserting this claim.

E. Count IV Sufficiently Pleads Bad Faith, Except To the Extent Based on Fraud.

The Insurers contend that Counts I (breach of contract), II (breach of the covenant of good faith and fair dealing), and IV (bad faith) are grounded in fraud and so are subject to Rule 9’s particularity requirement. Counts I and II, discussed above, are dismissed on other grounds. With respect to Count IV, the court notes that dismissal of an entire claim under Rule 9(b) is only appropriate when either fraud is a necessary element of the claim or the plaintiff “allege[s] a unified course of fraudulent conduct and rel[ies] entirely on that course of conduct as the basis of a claim.” Vess, 317 F.3d at 1103.

Fraud is not a necessary element of a bad faith claim in Hawaii. See Best Place, Inc. v. Penn America Ins. Co., 82 Hawai’i 120, 133, 920 P.2d 334, 347 (1996) (adopting the test in Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032 (1932), and stating that, under that test, “the insured need not show a conscious awareness of wrongdoing or unjustifiable conduct, nor an evil motive or intent to harm the insured”).

Nor does Nordic “rely entirely on” a fraudulent course of conduct. Count IV relies on several bases, including fraud. Paragraph 83 of the Counterclaim refers, for example, to the Insurers’ alleged failure to thoroughly investigate matters and failure to transmit appropriate responses to Nordic’s tenders. Such matters are at least arguably not grounded in fraud. Thus, the entirety of Count IV is not subject to dismissal based on Rule 9.

This does not mean, however, that Rule 9’s particularity requirement has no relevance to Count IV. Count IV does include some allegations of fraud. See, e.g., Countercl. ¶ 82 (“the Insurers have fraudulently, and in bad faith continued to disclaim defense and indemnity coverage”). When a claim is based on some fraudulent and some nonfraudulent conduct, “only the allegations of fraud are subject to Rule 9(b)’s heightened pleading requirements.” Vess, 317 F.3d at 1104. To the extent Count IV is based on fraud, it is insufficiently pled. Its in