AIG Hawaii Ins. Co., Inc. v. Estate of Caraang

• Decision Date: 10 May 1993
• Docket Number: No. 15750,15750
• Court: Hawaii Supreme Court
• Parties: AIG HAWAII INSURANCE COMPANY, INC., Plaintiff-Appellee, v. The ESTATE OF Nelson CARAANG, Marcelo Caraang, and Angela Caraang, Defendants-Appellants, and Ilmar Godinez and Emanuel Vilamor, Defendants.

Page 321

851 P.2d 321

74 Haw. 620

AIG HAWAII INSURANCE COMPANY, INC., Plaintiff-Appellee, v. The ESTATE OF Nelson CARAANG, Marcelo Caraang, and Angela

Caraang, Defendants-Appellants,

and

Ilmar Godinez and Emanuel Vilamor, Defendants.

No. 15750.

Supreme Court of Hawai'i.

May 10, 1993.

Syllabus by the Court

1. A conclusion of law is not binding upon the appellate court and is freely reviewable for its correctness. A conclusion of law that is supported by the trial court's findings of fact and that reflects an application of the correct rule of law will not be overturned. However, a conclusion of law that presents mixed questions of fact and law is reviewed under the clearly erroneous standard because the trial court's conclusions are dependent upon the facts and circumstances of each individual case.

2. An insurance contract is construed according to the entirety of its terms and conditions as set forth in the policy.

3. Insurance policies are governed by statutory requirements in force and effect at the time the policies are written. Such provisions are read into each policy issued thereunder and become a part of the contract with full binding effect upon each party.

4. The fundamental starting point for statutory interpretation is the language of the statute itself. Where the statutory language is plain and unambiguous, the appellate court's sole duty is to give effect to its plain and obvious meaning.

5. The question whether bodily injury or death constitutes "accidental harm" must be answered from the viewpoint or perspective of the person claiming the status of an insured.

6. If the insured does something or fails to do something, and the insured's expected result of the act or omission is an injury to another person, then the injury is not caused by an "accident" and is therefore not within the coverage of an automobile liability insurance policy.

7. A gunshot injury sustained by the occupant of one motor vehicle at the hand of the occupant of another can constitute "accidental harm," thus giving rise to coverage, where there is a territorial "nexus" between the injury and "the operation, maintenance, or use" of the vehicles in question. However, in order for an insurer to owe an insured a duty to defend or indemnify with respect to claims arising out of the injury, the injury cannot be the expected or reasonably foreseeable result of the insured's own intentional acts or omissions.

8. An insurer may owe a duty to defend and indemnify an insured notwithstanding the intentional or even criminal conduct of a third person. An insured is potentially eligible for coverage if his conduct has been innocent or merely negligent, i.e., if viewed from his perspective the injuries suffered by the injured person are accidental. That being the case, an intentional act does not necessarily sever bodily injury caused thereby from the "use" of an insured motor vehicle.

9. Where a person claiming the status of an automobile liability insured fires a gun in the direction of another person with the intention of frightening the other person or striking the other person's vehicle, any resulting injury is not an accident from the actor's viewpoint or perspective. That physical injury might result from such an action is something that a reasonable person should anticipate and expect.

10. The objectively reasonable expectations of policyholders and intended beneficiaries regarding the terms of insurance policies will be honored.

Charles J. Ferrera and Adelina Simpliciano, on the briefs, Honolulu, for defendants-appellants The Estate of Nelson Caraang, Marcelo Caraang and Angela Caraang.

Carleton B. Reid and John T. Hassler, Reid, Richards & Miyagi, on the briefs, Honolulu, for plaintiff-appellee AIG Hawaii Ins. Co., Inc.

Before MOON, C.J., KLEIN, LEVINSON and NAKAYAMA, JJ., and Circuit Court Judge MILKS, Assigned by Reason of Vacancy.

LEVINSON, Justice.

The defendants-appellants The Estate of Nelson Caraang, Marcelo Caraang, and Angela Caraang (the Caraangs) appeal from the circuit court's (the trial court) declaratory judgment determining that the automobile insurance policy (the policy) issued to Bonifacio (Bonifacio) and Cathy (Cathy) Godinez by the plaintiff-appellee AIG Insurance Company, Inc. (AIG) does not require AIG to defend and indemnify the defendants Ilmar Godinez (Godinez) and/or Emanuel Vilamor (Vilamor) for bodily injury claims (the tort claim) arising out of the August 6, 1989 death of Nelson Caraang (Nelson). ¹

For the reasons set forth in this opinion, we reverse the trial court's judgment declaring that AIG does not have a duty to defend and indemnify Godinez under the policy and remand for entry of judgment in favor of the Caraangs and against AIG. In all other respects, we affirm.

I. BACKGROUND

The facts of the present case are undisputed. On the night of August 6, 1989, Godinez drove Vilamor to a party in a 1986 Ford Ranger Pickup (the truck) owned by Godinez's father (Bonifacio) and stepmother (Cathy). The truck was a "covered auto" under the policy. Pursuant to the policy, which provides bodily injury liability coverage (liability coverage) of $35,000.00 per person, AIG agreed to pay compensatory damages for bodily injury for which any "covered person" becomes legally responsible because of an "auto accident." The policy defines a "covered person" to include the "named insureds"--Bonifacio and Cathy--and any "family member" for the "ownership, maintenance or use of any auto" and "[a]ny person using [a named insured's] covered auto with [a named insured's] permission." The policy contains an intentional act exclusion that denies liability coverage to "any person who intentionally causes bodily injury...."

After remaining at the party for about ten minutes, Godinez drove Vilamor to the house of a friend. While at the house, Vilamor "did drugs." Following a telephone call, Vilamor asked Godinez to drive him to the Fernandez Fun Factory in Waikiki in order to meet the caller.

After leaving the Fernandez Fun Factory, Godinez drove Vilamor through Waikiki. While doing so, Godinez and Vilamor observed Nelson driving on Kuhio Avenue. There was a great deal of animosity between Vilamor and Nelson because Sherry Baclaan, Vilamor's former girl friend, had "broken up" with him in order to "go with" Nelson. About a week before the night of the incident, a dispute had taken place at Sherry Baclaan's home, during which Vilamor had "pulled" a small gun on Nelson.

As Godinez and Vilamor passed Nelson's vehicle, Nelson began to follow the truck and yell at them. Nelson shouted taunts peppered with profanity at Vilamor, proclaiming that he had a bigger gun than Vilamor and daring Vilamor to have a "shoot out." Vilamor instructed Godinez to keep driving; although Godinez attempted to elude Nelson, traffic was too heavy for him to do so. Meanwhile, Nelson repeatedly pulled alongside the truck as the two vehicles departed Waikiki onto the H-1 Freeway.

While on the H-1, Nelson tried to "cut off" the truck and force it to pull over. Hoping to evade Nelson, Godinez drove the truck onto the Pali Highway exit with Nelson's vehicle in hot pursuit. Proceeding up the Pali Highway, the truck was in the left-hand lane and Nelson's vehicle was in the right-hand lane. Nelson continued his exhortations regarding a "shoot out."

As the truck approached the Pali Tunnel, Godinez heard a loud "pop" sounding like a firecracker, turned his head toward Vilamor, and saw him standing on the passenger's seat with the upper half of his body protruding out of the window. Although Godinez knew that Vilamor owned a gun, Godinez did not know that he had it in his possession until Godinez heard the "pop." After the "pop," Vilamor sat down and was silent until Godinez drove the truck back toward Honolulu on the Likelike Highway. Vilamor then informed Godinez that he had shot Nelson. Nelson died as a result of the gunshot wound inflicted by Vilamor.

On October 13, 1989, AIG filed a complaint for declaratory relief in response to the tort claim asserted by the Caraangs against Godinez and Vilamor for the bodily injury to and death of Nelson. In the complaint, AIG denied any contractual duty to defend or indemnify Godinez and Vilamor on the grounds that: (1) the shooting was not an "auto accident" and the policy excluded coverage for any person who intentionally caused bodily injury; and (2) the shooting did not arise out of the ownership, maintenance, or use of any auto.

A jury-waived trial was conducted in the circuit court on August 12, 1991. The trial court subsequently rendered the following conclusions of law (COL): ²

1. An insurance company's obligation to defend and/or indemnify an insured is a purely contractual obligation and consequently depends on the language contained in the applicable insurance policy.

2. The terms of the insurance policy should be interpreted according to their plain, ordinary and accepted sense in common speech in line with the objectively determined reasonable expectations of a lay person.

3. The shooting death of Nelson ... did not arise out of an auto accident.

4. The shooting death of Nelson ... did not arise out of the ownership, maintenance or use of [the truck].

5. By shooting Nelson ..., defendant Vilamor intentionally caused bodily injury to Nelson....

6. An automobile insurance carrier's duty to defend an insured against claims made in the complaint arises when allegations of the complaint raise a "potentiality" for indemnification of the insured under the terms of the policy.

7. Objectively determined, defendant Godinez should have no reasonable expectations of either a defense or indemnification under the bodily injury liability coverage under [the policy] for claims made against him in [the tort claim] filed by [the Caraangs] for damages that arose out of the shooting death of Nelson....

8. Objectively determined, defendant Vilamor should have no reasonable...