81 Hawai'i 235, State Farm Mut. Auto. Ins. Co. v. GTE Hawaiian Telephone Co., Inc.

• Decision Date: 30 April 1996
• Docket Number: No. 17936,17936
• Citation: 915 P.2d 1336
• Parties: 81 Hawai'i 235 STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellant/Cross-Appellee, v. GTE HAWAIIAN TELEPHONE COMPANY, INC., Argonaut Insurance Company, Defendants-Appellees/Cross-Appellants, and George D. Survant, Defendant-Appellee.
• Court: Hawaii Supreme Court

Page 1336

915 P.2d 1336

81 Hawai'i 235

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Plaintiff-Appellant/Cross-Appellee, v. GTE HAWAIIAN TELEPHONE COMPANY, INC., Argonaut Insurance Company, Defendants-Appellees/Cross-Appellants and George D. Survant, Defendant-Appellee.

No. 17936.

Supreme Court of Hawai'i.

April 30, 1996.

Carleton B. Reid and John T. Hassler of Reid, Richards, & Miyagi, on the briefs, Honolulu, for plaintiff-appellant State Farm Mutual Auto. Ins. Co.

Jeffrey S. Portnoy and Peter W. Olson of Cades, Schutte, Fleming & Wright, on the briefs, Honolulu, for defendants-appellees GTE Hawaiian Telephone Company, Inc. and Argonaut Insurance Co.

Before MOON, C.J., LEVINSON, NAKAYAMA and RAMIL, JJ., and WEIL, Circuit Judge, in place of KLEIN, J., recused.

MOON, Chief Justice.

In this action for declaratory relief seeking a judicial determination of the rights and responsibilities under two contracts for automobile liability insurance, plaintiff-appellant State Farm Mutual Automobile Insurance Company (State Farm) appeals from the First Circuit Court's judgment, findings of fact (FOF) and conclusions of law (COL), entered after a bench trial on stipulated facts and exhibits, in favor of defendants-appellees GTE Hawaiian Telephone Company, Inc. (GTE), Argonaut Insurance Company (Argonaut) and George D. Survant. State Farm raises five arguments on appeal: (1) Argonaut is estopped from raising defenses to coverage under the holding of this court's decision in Sentinel Insurance Co., Ltd. v. First Insurance Co. of Hawai'i, Ltd., 76 Hawai'i 277, 875 P.2d 894 (1994); (2) the trial court erred in concluding that Survant was not a permissive user of the vehicle involved in the accident and, therefore, was not entitled to coverage under a policy of insurance written by Argonaut, wherein GTE was the named insured; (3) Argonaut's policy affords primary coverage for vehicles owned by GTE; (4) State Farm is entitled to reimbursement from Argonaut for settlement costs, attorneys' fees, and other expenses related to the underlying tort action; and (5) State Farm is entitled to its fees and costs incurred while pursuing this action for declaratory relief.

For the following reasons, we affirm the trial court's judgment entered in favor of GTE and Argonaut, albeit for different reasons than those employed by the trial court.

I. BACKGROUND

The stipulated facts that form the basis of the instant action are in pertinent part as follows: On Friday, November 13, 1987, at approximately 12:05 a.m., Survant, a GTE employee, was involved in a motor vehicle accident near the intersection of Waokanaka Place and Pali Highway. While traveling in a northbound direction on Pali Highway, allegedly to avoid someone on a bicycle or moped, Survant crossed the center line and collided head-on with a vehicle driven by Charles T. Aoki. Aoki's friend, Carianne Chang, was a passenger in Aoki's vehicle. Both Aoki and Chang were injured as a result of the collision.

At the time of the accident, Survant was employed as GTE's Building Fleet and Energy Manager as well as its Acting Director of Supply and Transportation. The vehicle that Survant was driving at the time of the accident, a 1985 Nissan station wagon (the company vehicle), was owned by GTE and insured by Argonaut. ¹ The parties dispute whether, at the time of the accident, Survant was operating the vehicle with GTE's permission. The Argonaut policy applicable to the company vehicle had a $100,000 limit for bodily injury liability.

At the time of the accident, GTE had at least two written regulations pertaining to the use of company vehicles. The regulations were disseminated to GTE employees. GTE's General Instruction No. 230.003 (as amended in 1979) provides in pertinent part:

USE OF COMPANY VEHICLES

2. GENERAL REGULATIONS

(for all employees)

2.01 All employees will be expected to observe the following regulations:

1. Must have proper authorization to use a company vehicle (see Sections 3 and 4) and have a valid driver's license.

....

3. Must observe safe driving principles as defined in the Company Safety Manual.

4. Must use the vehicle on company business only. The vehicle is not to be used for personal errands; to transport food, supplies, or employees for group luncheons; etc[.]

3. USE BY MANAGEMENT EMPLOYEES

3.01 Department heads may grant standing approval to certain management employees for use of specific company vehicle or pool cars during working hours (copy to motor pool attendant if for pool use).

3.02 An employee not having standing approval must obtain approval from his department head or authorized management personnel each time he needs a company vehicle during working hours.

3.03 Use of company vehicles outside of regular working hours is subject to the following regulations:

....

2. Standing approval may be granted to certain "call out" supervisors who are regularly called out after normal working hours due to the critical nature of their work. This approval can only be granted by the department head with the concurrence of his respective officer. This approval must be submitted in writing to the Supply and Transportation Director.

....

6. USE OF VEHICLES DURING EMERGENCIES

6.01 During emergencies, such as a severe equipment outage or when a critical installation must be cutover without delay, a department head may grant an employee the overnight use of a pool car. Under these conditions, the department head must submit his approval by phone to the Supply & Transportation Director, or his designee. The Supply & Transportation Director will authorize the Motor Pool Attendant to release a vehicle to the employee under these conditions.

6.02 The employee granted such use of a pool car will not use the vehicle for any purpose other than official business which includes the trip from the site of the emergency to the employee's home, and back to the motor pool.

6.03 In granting approval under these conditions, the department head will first consider the feasibility of having the employee report to the job site using his personal vehicle, and the availability of public transportation.

(Emphases added.)

In addition, GTE's General Instruction No. 714.004 (1987) provided in pertinent part:

COMPANY AUTOMOBILE ASSIGNMENT AND EXPENSES

1. GENERAL

1.01 The Company-provided automobile assigned to an individual employee is primarily intended for the business use by the employee to whom it is assigned, the personal use of the assigned automobile by the employee or a licensed driver in the immediate family is allowed.

1.02 Personal mileage or personal use, except for the use of vehicles as described in paragraphs 1.03.a and 1.03.b, is defined to include all miles driven while not on Company business and includes those miles driven between home and office each day.

1.03 Personal use of all other Company-provided automobiles is strictly prohibited, including automobiles used as follows:

a. Automobiles removed from premises as a condition of employment where the employee is on bonafide standby (the availability of an employee to respond at any time to a radio dispatch or similar call).

b. Automobiles removed from premises for the convenience of the Company because secure garage facilities are not available at or near Company premises (e.g., the danger of vandalism in the case of a vehicle parked overnight at a construction site).

2. ASSIGNMENT OF COMPANY-PROVIDED AUTOMOBILES

2.01 No one will be assigned a Company-provided automobile without the President's written approval.

(Underline emphases in original and bold emphases added). The company vehicle involved in the accident at issue was assigned to Survant in his capacity as Acting Director of Supply and Transportation, but was not assigned to Survant personally.

GTE also had in force, at the time of the accident, a Code of Business Conduct, applicable to all GTE employees, which provided in pertinent part:

Employees shall not misuse, loan, give, sell, destroy, waste, or dispose of Company vehicles, equipment, supplies, tools or other property; or services of any value without authorization, and they must be able to account for all property and services, etc., in accordance with instructions. Any other use must be on specific authorization of a supervisor or higher level of management. All supervisors have the additional responsibility for enforcing Company regulations and policies covering the purchase, disbursement, installation, use, loan, storage, and recovery of all Company properties and of exercising prudent judgment in the absence of specific rules and instructions.

....

Use of alcoholic beverages or use or possession of any narcotic, hallucinogen, depressant, stimulant, or marijuana by employees on or in Company property or while working on the job at any time is not permitted, and evidence of such conduct may result in disciplinary action.

(Emphases added.) Survant acknowledged receipt of the Code of Business Conduct as recently as April 30, 1986.

After his normal work day on Thursday, November 12, 1987, Survant drove to Henry Loui's Restaurant in the company vehicle. Survant left his office at GTE's Moanalua baseyard on Kikoweana Place between 5:00 and 5:30 p.m. and drove directly to the restaurant, which is located at 2850 Paa Street. Survant met two GTE co-employees, William Holt and Harold Fukumoto, and a friend of Fukumoto's, at the restaurant. During the course of the evening, the four men consumed appetizers and alcoholic beverages. In his deposition, Survant testified that he was drinking bourbon at the restaurant, but could not specifically recall how many drinks he had, although he did recall that he had more than one drink. Survant could not say with certainty that he had less than ten drinks. Fukumoto and his friend left the restaurant between 8:00 and 9:00 p.m. Holt and Survant stayed at the restaurant until approximately 11:30 p.m. Survant was on his way home to Kailua in the...