77 Hawai'i 2, First Ins. Co. of Hawai`i, Ltd. v. Lawrence

• Decision Date: 16 September 1994
• Docket Number: No. 15465,15465
• Citation: 77 Hawai'i 2,881 P.2d 489
• Court: Hawaii Supreme Court
• Parties: Page 489 881 P.2d 489 77 Hawai'i 2 FIRST INSURANCE COMPANY OF HAWAI'I, LTD., Plaintiff-Appellant, v. Frederick D. LAWRENCE, Sr., Individually and as Guardian Ad Litem for Frederick D. Lawrence, Jr.; Carolyn A. Lawrence; Frederick D. Lawrence, Jr., Minor; Christopher T.F.K. Smith, Sr., Individually and as Special Administrator of the Estate of Christopher T.F.K. Smith, Jr.; Mary A.L. Smith; Cyd L. Smith, Individually and as Guardian Ad Litem for Keikilaniilipanio K. Smith, Iokua K. Smith and Tiare A. Smith, Minors; Eric Costillio; Orlando Bitanga, Minor; Raphael Bitanga, Individually and as Guardian Ad Litem for Orlando Bitanga; Catalina Bitanga; and Elmer Bitanga, Defendants-Appellees, and William Gaspar; Honolulu Police Department; City and County of Honolulu; John Does 1-10; Jane Does 1-10; Doe Partnerships 1-10; Doe Corporations 1-10; Doe "Non-Profit" Corporations 1-10; and Doe Governmental Entities 1-10, Defendants. Supreme Court of Hawai'i

Page 489

881 P.2d 489

77 Hawai'i 2

FIRST INSURANCE COMPANY OF HAWAI'I, LTD., Plaintiff-Appellant v Frederick D. LAWRENCE, Sr., Individually and as Guardian Ad

Litem for Frederick D. Lawrence, Jr.; Carolyn A.

Lawrence; Frederick D. Lawrence, Jr., Minor;

Christopher T.F.K. Smith, Sr., Individually and as Special

Administrator of the Estate of Christopher T.F.K. Smith,

Jr.; Mary A.L. Smith; Cyd L. Smith, Individually and as

Guardian Ad Litem for Keikilaniilipanio K. Smith, Iokua K.

Smith and Tiare A. Smith, Minors;

Eric Costillio; Orlando Bitanga, Minor; Raphael Bitanga,

Individually and as Guardian Ad Litem for Orlando

Bitanga; Catalina Bitanga; and Elmer

Bitanga, Defendants-Appellees,

and

William Gaspar; Honolulu Police Department; City and

County of Honolulu; John Does 1-10; Jane Does 1-10; Doe

Partnerships 1-10; Doe Corporations 1-10; Doe "Non-Profit"

Corporations 1-10; and Doe Governmental Entities 1-10, Defendants.

No. 15465.

Supreme Court of Hawai'i.

Sept. 16, 1994.

Reconsideration Denied Oct. 18, 1994.

Colbert M. Matsumoto (Leigh-Ann K. Miyasato and Ward F.N. Fujimoto, with him on the briefs, of Fujiyama, Duffy & Fujiyama), Honolulu, for plaintiff-appellant First Ins. Co. of Hawai'i, Ltd.

James J. Bickerton (William W. Saunders, with him on the brief, of Bickerton, Saunders, Dang & Bouslog), Honolulu, for defendants-appellees the Smiths.

Alan B. Burdick, Belchertown, MA, for defendants-appellees the Lawrences.

Wendell K. Kimura, on the amicus briefs, Honolulu, for amicus curiae, Hawai'i Insurers Council.

Wayne M. Sakai and Kunio Kuwabe of Burke, Sakai, McPheeters, Bordner & Gilardy, on the amicus briefs, Honolulu, for amicus curiae, Liberty Mut. Ins. Co.

James J. Bickerton and William W. Saunders, Jr. of Bickerton, Saunders, Dang & Bouslog, on the motion for reconsideration, Honolulu, for defendants-appellees the Smiths.

Colbert M. Matsumoto of Matsumoto, LaFountaine & Chow and Michael N. Tanoue of Tanoue & Tanaka, on the memorandum in opposition, Honolulu, for plaintiff-appellant First Ins. Co. of Hawai'i, Ltd.

Before LUM, C.J., ^* MOON and LEVINSON, JJ., HEEN, Intermediate Court of Appeals Associate Judge, in place of KLEIN, J., recused, and HAYASHI, ^** Retired Justice, assigned by Reason of Vacancy.

MOON, Chief Justice. ^***

In this action for declaratory relief, plaintiff-appellant First Insurance Company of Hawai'i, Ltd. (First Insurance) sought a judicial determination of its duty to defend and indemnify defendants-appellees Frederick D. Lawrence, Sr., Carolyn A. Lawrence, and Frederick D. Lawrence, Jr. (collectively, the Lawrences) under an automobile and homeowner's policy ¹ for the claims made against them in an underlying wrongful death action, Christopher T.F.K. Smith, Sr. v. Frederick D. Lawrence, Jr., Civ. No. 88-2531-08, filed in the First Circuit Court by defendants-appellees Christopher T.F.K. Smith, Sr., individually and as Special Administrator of the Estate of Christopher T.F.K. Smith, Jr.; Mary A.L. Smith; and Cyd L. Smith, Individually and as Guardian Ad Litem for Keikilaniilipanio K. Smith, Iokua K. Smith, and Tiare A. Smith, minors (collectively, the Smiths) [hereinafter, the Lawrences and the Smiths are collectively referred to as appellees]. ²

First Insurance appeals from the circuit court's denial of its motion for partial summary judgment on the issue of coverage regarding the Smiths' claims for negligent infliction of emotional distress (NIED). Essentially, the court held that the Smiths' NIED claims are separate, common-law torts and constitute "accidental harm" within the meaning of Hawai'i Revised Statutes (HRS) § 294-2(1) (1985). ³ The court also concluded that a separate liability coverage limit is available for each proven NIED claim. First Insurance also appeals the circuit court's denial of its motion for reconsideration of the court's aforementioned rulings.

For reasons discussed below, we hold that: (1) the statutory definition of accidental harm includes emotional distress; (2) although NIED claims are entitled to independent protection under general Hawai'i tort law, such claims under Hawai'i's No-Fault Law, HRS chapter 294, are derivative, subject to the exception discussed below; and (3) derivative claims are not subject to separate "each person" liability coverage limits. Based on the specific language of First Insurance's limitation of liability provision, which we believe to be consistent with the no-fault law, we also hold that the derivative NIED claims of the Smiths are subject to the single liability coverage limit applicable to Christopher's death. Accordingly, we affirm in part and reverse in part the circuit court's denial of First Insurance's motion for partial summary judgment. Because First Insurance's motion for reconsideration raised an issue that it could have and should have raised in its motion for partial summary judgment, we hold that the circuit court did not abuse its discretion in denying the motion for reconsideration.

I. FACTS

The basic facts of the underlying wrongful death action filed by the Smiths are not in dispute. On June 8, 1988, Frederick D. Lawrence, Jr. (Frederick) had been drinking beer with some friends, including Orlando Bitanga. Frederick, an unlicensed minor who was reportedly intoxicated at the time of the accident, was operating a vehicle owned by Bitanga's older brother. ⁴ Noticing that Frederick was having difficulty controlling the vehicle, the police attempted to stop him. While being pursued by the police, Frederick struck and killed Christopher T.F.K. Smith, Jr. (Christopher), a pedestrian. The Smiths were not involved in nor did they witness the accident.

On August 15, 1988, the Smiths--Christopher's parents, Christopher, Sr. and Mary; his wife, Cyd and their three children, Keikilaniilipanio, Iokua, and Tiare--filed their wrongful death action against numerous parties, including Frederick and his parents, Frederick Lawrence, Sr. and Carolyn Lawrence. At the time of the accident, the Lawrences were insured under an automobile insurance policy issued by First Insurance. First Insurance denied coverage for all the Lawrences and filed the instant declaratory judgment action, seeking a judicial determination of its rights and obligations under the personal automobile policy issued to the Lawrences.

First Insurance moved for partial summary judgment, contending that the Smiths' NIED claims, similar to loss of consortium and wrongful death claims, were derivative and, therefore, subject to a single limit of liability coverage under the policy. First Insurance also argued that recovery for accidental harm is limited to persons at the accident scene. The circuit court, relying on RODRIGUES V. STATE, 52 HAW. 156, 472 P.2D 509 (1970)⁵ and CAMPBELL V. ANIMAL QUARANTINE STATION, 63 HAW. 557, 632 P.2D 1066 (1981)⁶, held that NIED "is an independent tort requiring proof based on ordinary tort principles.... and exists apart from the underlying tort claimed by the 'host' tort plaintiff[.]" The circuit court also concluded:

Accordingly, claims for [NIED] differ from statutory wrongful death claims arising under H.R.S. § 663-3 and from common-law claims for loss of consortium. The latter claims are derivative of the injury to the spouse or other specified relative. See Hara v. Island Insurance Co., Haw[.] , 759 P.2d 1374 (1988); Doi v. Hawaiian Insurance & Guaranty Co., 6 Haw[.] App. , 727 P.2d 884 (1986).

Because the tort of [NIED] is a separate, common-law tort[ ] and constitutes "accidental harm" arising out of a motor vehicle accident, a separate liability coverage limit is available to cover the emotional distress claim proved by each of the Smith Parties.

First Insurance subsequently filed a motion for reconsideration or clarification of the circuit court's ruling, which the court denied; First Insurance appealed.

II. STANDARD OF REVIEW

"On appeal, an order of summary judgment is reviewed under the same standard applied by the trial courts. Summary judgment is appropriate where the moving party demonstrates that there are no genuine issues of material fact and it is entitled to judgment as a matter of law." Reed v. City and County of Honolulu, 76 Hawai'i 219, 225, 873 P.2d 98, 104 (Sup.1994) (citing Kaneohe Bay Cruises, Inc. v. Hirata, 75 Haw. 250, 258, 861 P.2d 1, 6 (1993)).

III. DISCUSSION

As stated previously, the circuit court held that emotional distress constitutes "accidental harm," within the meaning of HRS § 294-2(1). The court also held that the Smiths' NIED claims are separate, common-law torts existing separate and apart from the "host" tort plaintiff. As such, the court determined that a separate liability coverage limit is available for each proven NIED claim. We address each of these rulings in turn.

However, because the insurance policy at issue here utilizes the phrase "bodily injury" instead of "accidental harm," we preliminarily address whether the terms are, as First Insurance contends, synonymous. We begin with the well-settled principle that " '[i]nsurance policies are governed by statutory requirements in force and effect at the time such policies are written.... Such provisions are read into each policy issued thereunder, and become a part of the contract with full and binding effect upon each party.' " AIG Hawai'i Ins. Co. v. Estate of Caraang, 74 Haw. 620, 633, 851 P.2d 321, 328 (1993) (citing National Union Fire Ins. Co. v. Ferreira, 71 Haw. 341, 345, 790 P.2d 910, 912 (1990)).

The statutory provision governing required policy coverage, HRS § 294-10(a), provides in relevant part that

[i]n order to be a no-fault policy, an insurance policy covering a motor vehicle shall provide ...

(1) Liability coverage of not less than $35,000 for all damages arising out of accidental harm sustained by any one person as a result of any one accident applicable to each person sustaining accidental harm arising out of ownership, maintenance, use, loading, or unloading, of the...