82 Hawai'i 363, Hunt v. First Ins. Co. of Hawaii, Ltd., 16515

• Decision Date: 09 May 1996
• Docket Number: No. 16515,16515
• Citation: 922 P.2d 976,82 Hawaii 363
• Parties: 82 Hawai'i 363 Grisell HUNT, Plaintiff-Appellant, v. FIRST INSURANCE COMPANY OF HAWAII, LTD., Joanne Toby Vogel, John Does 1-10, Jane Does 1-10, Doe Corporations 1-10, Doe Partnerships 1-10, Doe Joint Ventures 1-10, and Doe Governmental Entities 1-10, Inclusive, Defendants-Appellees.
• Court: Hawaii Court of Appeals

Page 976

922 P.2d 976

82 Hawai'i 363

Grisell HUNT, Plaintiff-Appellant, v. FIRST INSURANCE COMPANY OF HAWAII, LTD., Joanne Toby Vogel, John Does 1-10, Jane Does 1-10, Doe Corporations 1-10, Doe

Partnerships 1-10, Doe Joint Ventures 1-10, and Doe

Governmental Entities 1-10, Inclusive, Defendants-Appellees.

No. 16515.

Intermediate Court of Appeals of Hawai'i.

May 9, 1996.

Certiorari Granted May 24, 1996.

Certiorari Dismissed by Stipulation

Sept. 23, 1996.

Syllabus by the Court

1. Customer sustained injuries after she slipped and fell while grocery shopping. At the time, the grocery store was covered by a commercial general liability policy that included a requirement for the store's insurer to pay medical expenses for bodily injury caused by accidents at the store. When the insurer paid for some, but not all, of the customer's related medical expenses, she sued insurer for, inter alia, breach of contract and various statutory violations.

2. This opinion decides that: (1) the customer is an intended third party beneficiary who has enforceable contractual rights under the medical provision of the above policy; (2) the general prohibition on direct action against insurers is not applicable in the instant case; (3) no private cause of action exists under Hawai'i Revised Statutes (HRS) Chapter 431, Article 13; and (4) the customer had no standing to sue insurer under HRS §§ 480-2 and -13 because she was not a "consumer" as defined by HRS § 480-1.

Dwayne Stephen Lerma and Jo Anne E. Goya (Lerma & Goya, of counsel), on the briefs, Hilo, for plaintiff-appellant.

Robert P. Richards, Ralph J. O'Neill and L. Darlene Mitchell (Reid, Richards & Miyagi of counsel), on the briefs, Honolulu, for defendants-appellees First Insurance Company of Hawaii, Ltd. and Joanne Toby Vogel.

Before ACOBA and KIRIMITSU, JJ., and Circuit Judge BLONDIN in place of BURNS, C.J., Recused.

KIRIMITSU, Judge.

In an insurance contract dispute, plaintiff-appellant Grisell Hunt (Hunt) appeals from the Third Circuit Court's (1) August 13, 1992 Order Granting Partial Summary Judgment; (2) September 16, 1992 Order Denying Plaintiff's Motion for Reconsideration and Granting Plaintiff's Request for Rule 54(b) Certification of the Order Granting Motion for Partial Summary Judgment filed herein on August 13, 1992; and (3) September 24, 1992 Final Judgment Upon Less Than All of the Claims. All of the foregoing were filed in favor of defendants-appellees First Insurance Company of Hawaii, Ltd. (First Insurance) and Joanne Toby Vogel (Vogel). ¹

For the reasons stated below, we affirm in part and vacate in part.

I. BACKGROUND

On July 10, 1990, Hunt sustained injuries after she slipped and fell on WD-40 lubricant while grocery shopping at the KTA Super Stores (KTA) in Hilo, Hawai'i. At the time of Hunt's slip and fall, KTA was covered by a commercial general liability policy (Policy), policy no. CPP 7018785 01, issued by First Insurance. This Policy included, inter alia, a medical payment coverage, requiring First Insurance to pay medical expenses for bodily injury caused by accidents at KTA.

On September 4, 1990, Hunt's attorneys contacted First Insurance and requested information about the medical-payment coverage limits of First Insurance's Policy that was effective at Hunt's July 10, 1990 slip and fall.

On September 11, 1990, Michael Anderson (Anderson), a claims adjuster for First Insurance, responded to the September 4, 1990 letter and advised Hunt that the medical payment coverage limit was $5,000. To process Hunt's medical payments, Anderson explained that First Insurance needed a signed medical authorization, copies of medical bills, and names of medical providers. However, Anderson made no mention of any time limit for Hunt to submit her claim for medical expenses.

On November 5, 1990, Hunt submitted a signed medical authorization to First Insurance. On various dates covering the period from July 31, 1990 through August 26, 1991, Hunt submitted demands to First Insurance for payment of medical bills and included copies of the bills from Hunt's medical providers. ² According to Hunt, First Insurance paid 100% of Hunt's initial four demands for payments which included the cost for missed appointments as well.

On January 28, 1991, First Insurance informed Hunt that her claims adjuster, Anderson, was no longer working for First Insurance and that her claims were reassigned to another claims adjuster, Vogel. First Insurance also notified Hunt that it would not be able to process her pending, current, and future claims until it brought its files up to date. For example, First Insurance awaited a medical report concerning Hunt's current course of treatment and whether any apportionment was warranted due to Hunt's previous injuries sustained in an automobile accident on or about April 4, 1990. Subsequently, First Insurance denied all of Hunt's requests to Vogel for payment of medical expenses, including the request for expenses to consult with a Honolulu medical specialist.

In a letter dated July 29, 1991, First Insurance informed Hunt that it would pay its 30% apportionment of Hunt's medical expenses incurred through July 10, 1991, when the coverage for medical expenses expired, or up to the Policy's limit of $5,000. Although offering no clear basis for this 30% apportionment, First Insurance's July 29, 1991 letter suggests that this apportionment was based in part on preexisting injuries that Hunt sustained in an earlier automobile accident on or about April 4, 1990. The letter further stated that as of July 29, 1991, "[First Insurance] paid a total of $1,636.04 in medical expenses on behalf of [Hunt]."

On August 8, 1991, Hunt informed First Insurance that, inter alia, (1) she had previously requested a copy of the applicable Policy, but First Insurance intentionally withheld a copy, and (2) First Insurance's actions with regard to Hunt's medical claims constituted malicious and unfair settlement practices.

On August 22, 1991, First Insurance responded that "Hawaii law does not require that we provide a copy [of the Policy]." First Insurance further stated: "With regard to your allegations of unfair claims settlement practices, our review of the files shows no indication that we mishandled [Hunt's] claim."

On August 27, 1991, Hunt filed her Complaint against First Insurance and Vogel (hereinafter collectively, First Insurance) alleging, inter alia, breach of the KTA insurance contract, bad faith breach of the insurance contract, and various violations of Hawai'i Revised Statutes (HRS) Chapters 431 (Insurance Code) and 480 (Monopolies; Restraint of Trade). ³

On May 8, 1992, First Insurance filed a motion for partial summary judgment. On August 13, 1992, the circuit court filed its Order Granting Motion for Partial Summary Judgment ruling that:

1. [Hunt], the injured third party, does not have privity with [First Insurance], the insurer, Olekele [sic] Sugar Co. v. McCabe, Hamilton & Renny Co., 53 Haw. 69, 487 P.2d 769 (1971);

2. [Hunt] does not have a private cause of action pursuant to HRS, section 431:13-103; and

3. [Hunt] does not have a cause of action under HRS, sections 480-2 and 480-13, nor for the violation of the above-statutes.

On August 19, 1992, Hunt filed Plaintiff's Motion for Reconsideration of Order Granting Partial Summary Judgment filed on August 13, 1992. On September 16, 1992, the circuit court filed its Order Denying Plaintiff's Motion for Reconsideration and Granting Plaintiff's Request for Rule 54(b) Certification of the Order Granting Motion for Partial Summary Judgment filed on August 13, 1992. Thereafter, Hunt filed a timely notice of appeal.

II. STANDARD OF REVIEW

A summary judgment order is reviewed under the same standard applied by the trial court. State v. Tradewinds Elec. Serv. and Contracting Inc., 80 Hawai'i 218, 222, 908 P.2d 1204, 1208 (1995). Summary judgment is proper where, viewing all evidence in the light most favorable to the non-moving party, there is no genuine issue as to any material fact and the moving party clearly demonstrates that he or she is entitled to judgment as a matter of law. Id.

The construction and legal effect given an insurance contract provision governing the right to medical expenses under the Policy is a question of law, which we review de novo. Romero v. Hariri, 80 Hawai'i 450, 459, 911 P.2d 85, 94 (App.1996) (citing Hawaiian Isles Enter. Inc. v. City and County of Honolulu, 76 Hawai'i 487, 489, 879 P.2d 1070, 1072 (1994)).

The question of whether Hunt has a private cause of action under HRS § 431:13-103, HRS § 480-2, and HRS § 480-13 is also a question of law, which we review de novo. BLT Advertisement Co., Inc. v. Edades, 80 Hawai'i 270, 272, 909 P.2d 598, 600 (App.1995) (citing Kuhnert v. Allison, 76 Hawai'i 39, 43, 868 P.2d 457, 461 (1994)). III. DISCUSSION

The dispositive issue on appeal is whether the trial court erred in granting First Insurance's motion for partial summary judgment. In granting this partial summary judgment, the circuit court ruled that: (1) Hunt does not have privity with First Insurance; (2) Hunt does not have a private cause of action pursuant to HRS § 431:13-103; and (3) Hunt does not have a cause of action under HRS §§ 480-2 and -13. On appeal, Hunt challenges all three rulings.

A. The trial court erred in granting partial summary judgment on the breach of contract claim on the grounds of Hunt's lack of privity with First Insurance.

Privity of contract is "[t]hat connection or relationship which exists between two or more contracting parties." Black's Law Dictionary 1199 (6th ed. 1990). However, the absence of privity is generally not a valid defense in actions for damages in contract, since courts have, inter alia, "extended the right to sue for injuries or damages to third party beneficiaries[.]" Id. (citation omitted). See, e.g., Dawes v. First Ins. Co. of Hawai'i, Ltd., 77 Hawai'i 117, 128 n. 12, 883 P.2d 38, 65 n. 12 (...