Mark Watson, Charles W. Watson and Norma L. Watson v. United States Fidelity and Guaranty Company, a Maryland Corporation

Plaintiffs, citizens of Hawaii, brought this diversity action seeking a declaratory judgment reforming an insurance policy issued by defendant, a Maryland corporation. The district court granted the relief sought. We reverse.

Plaintiff Charles and Norma Watson asked the Dillingham Company, Ltd., a Hawaiian insurance agency, to write an automobile insurance policy covering use by their minor son Mark (also a plaintiff) of a 1965 Volkswagen automobile owned by his mother. Dillingham concluded that, because Mark had been involved in several accidents, insurance could be obtained only through the Hawaii Automobile Assigned Risk Plan [Plan], under which high-risk applicants are randomly assigned to insurance companies licensed to do business in the state.

Mark went to Dillingham’s offices to apply for the Plan, partially filled out an application form, and signed the form and a blank duplicate. A Dillingham employee completed the form. As completed, it expressly requested issuance of a “non-owner policy.” However, certain responses to questions in the application indicated that coverage was desired for a particular private passenger automobile regularly used by Mark, and that Mark…