Unpublished Disposition, 899 F.2d 18 (9th Cir. 1990)

MEMORANDUM^** 

Robert and Katie Bedgood appeal the judgment of the bankruptcy court in favor of defendants. We review a decision of a bankruptcy court under the same standard as the district court--the bankruptcy court's findings of fact are reviewed under the clearly erroneous standard and conclusions of law are reviewed de novo. Ragsdale v. Haller, 780 F.2d 794, 795 (9th Cir. 1986).

Bedgood argues that LaPorta is equitably estopped from denying coverage. Sufficient authority exists to support the conclusion that LaPorta could be estopped from denying coverage had the accident occurred during the policy period. See, e.g., Allstate Ins. v. State Farm Ins., 679 P.2d 879 (Ore.1984) (estoppel where insured had reasonably relied on agent's representation of coverage); Hitt v. Cox, 737 F.2d 421 (4th Cir. 1984) (same) (Virginia law). Since the accident occurred after the expiration date stated on the certificate, however, estoppel can only apply if the certificate reasonably caused Bedgood to believe that the stated coverage would continue unchanged beyond that date.

He could not reasonably have made this assumption. Had Bedgood been the direct purchaser of the insurance, LaPorta might have been obligated to notify him that the coverage was being modified when the policy was renewed. But here SNM, and not Bedgood, was the insured party.

In other contexts, courts have found that the ultimate beneficiary is not entitled to notice of modifications upon renewal. For example, in Peel v. American Fidelity Assurance Co., 680 F.2d 374, 377 (5th Cir. 1982) the court held that the individual beneficiaries of a group health policy were not entitled to notice of a modification to the master plan where the group plan was administered by a central association. Analogously, "add-ons" to a fleet policy are not entitled to personal notice of changes in that policy. Since it is SNM that negotiates the policy and is contractually bound by it, only SNM could reasonably have expected notification of any changes to a policy. Bedgood's only basis for asserting coverage is a certificate containing an express expiration date. Under these circumstances, Bedgood could not reasonably rely on the certificate as a statement of post-expiration coverage.

Bedgood argues that LaPorta was duty bound to inform Bedgood that he did not have collision coverage. Bedgood cites to a Nevada statute to support this duty. Because Bedgood failed to raise this statutory theory at trial, the district court refused to consider it. We defer to the district court's decision, and we decline to now consider this argument. See Diamond Nat'l Corp. v. Lee, 333 F.2d 517, 528 (9th Cir. 1964). Bedgood has failed to demonstrate that the LaPorta was otherwise obligated to inform him that no collision coverage existed under the new policy.

Bedgood renews his trial argument that LaPorta is liable under a theory of negligent misrepresentation. Nevada apparently accepts the definition of that tort expressed in the Restatement (Second) of Torts Sec. 552 (1977).¹  Several Nevada decisions have applied this theory to hold banks liable for communicating false credit information about customers to third parties. See, e.g., Bank of Nevada v. Butler Aviation-O'Hare, 616 P.2d 398 (Nev.1980). Although the misstatement of insurance coverage could arguably fall within the scope of this theory, negligent misrepresentation requires "justifiable reliance." Bedgood has failed to show justifiable reliance to support liability under a negligent misrepresentation theory.

Any argument that SNM breached a fiduciary duty fails because SNM was found to have received no notice that Bedgood wanted collision coverage or that LaPorta had issued a certificate purporting to grant that coverage. SNM could not have breached a fiduciary duty of notification concerning information it reasonably had not acquired. See W. Prossor & W. Keeton, Law of Torts Sec. 106 (5th ed. 1984) (good faith required). Nothing in the record or the briefs indicates that the bankruptcy court's finding was clearly erroneous.

Because SNM was not aware that the certificate had been issued, SNM could not have misrepresented that the certificate coverage would continue. SNM's employment agreement clearly indicates that collision coverage is optional. We therefore find no basis for holding SNM liable for representing that Bedgood had such coverage.

AFFIRMED.