89 Hawai'i 254, Jenkins v. Liberty Newspapers Ltd. Partnership, 21114

Citation971 P.2d 1089
Decision Date20 January 1999
Docket NumberNo. 21114,21114
Parties89 Hawai'i 254, 27 Media L. Rep. 1513 Brian R. JENKINS, Plaintiff-Appellant, v. LIBERTY NEWSPAPERS LIMITED PARTNERSHIP, dba Honolulu Star Bulletin, Phillips Media Services, Inc., and Rick Daysog, Defendants-Appellees
CourtHawaii Supreme Court

Page 1089

971 P.2d 1089
89 Hawai'i 254, 27 Media L. Rep. 1513
Brian R. JENKINS, Plaintiff-Appellant,
Bulletin, Phillips Media Services, Inc., and Rick
Daysog, Defendants-Appellees
No. 21114
Supreme Court of Hawai'i.
Jan. 20, 1999.

Page 1090

[89 Hawai'i 255] John S. Edmunds, Ronald J. Verga, and Wesley D. Shimazu (of Edmunds Maki Verga & Thorn), on the briefs, Honolulu, for plaintiff-appellant Brian R. Jenkins.

Margaret Jenkins Leong, David J. Dezzani, and Kathleen Kelly (of Goodsill, Anderson, Quinn & Stifel), on the briefs, Honolulu, for defendants-appellees Liberty Newspapers Limited Partnership, dba Honolulu Star Bulletin, Phillips Media Services, Inc. and Rick Daysog.


Opinion of the Court by LEVINSON, J.

This case arises from the publication of a news article in the Honolulu Star-Bulletin, in which the plaintiff-appellant Brian Jenkins (hereinafter, "Brian" or "Jenkins") was mistakenly identified as the target of an investigation by the State of Hawai'i Insurance Commissioner. Jenkins appeals from (1) the circuit court's judgment as to all parties and (2) its orders granting the motions of the defendants-appellees Liberty Newspapers Limited Partnership, dba Honolulu Star-Bulletin, Phillips Media Services, Inc., and Rick Daysog (collectively, Liberty News) (a) for summary judgment on Jenkins's claim of negligence (Count I) and (b) for summary judgment on Jenkins's claims for actual malice and punitive damages (Counts II and III). On appeal, Jenkins argues that the circuit court erred: (1) in granting summary judgment as to Counts II and III because there were genuine issues of material fact as to whether Liberty News (a) had a high degree of awareness of the falsity of its published statements, (b) exhibited "reckless disregard" for the truth of its published statements, and (c) demonstrated "actual malice" by failing to notify the Associated Press of its error or publish a retraction in time to prevent republication by other newspapers that received the story from the wire service; (2) in granting summary judgment as to Count I because there were genuine issues of material fact as to whether Jenkins had suffered "actual injury" as a result of the false statement published by Liberty News; and (3) in entering judgment in favor of Liberty News, inasmuch as the underlying orders granting the motions for summary judgment were erroneous. We affirm the judgment and orders appealed from.


On May 24, 1995, the Hawai'i State Insurance Commissioner, Wayne Metcalf, filed an Ex Parte Petition for Seizure Order (the petition) against J.D. Jenkins & Company, Inc. (J.D. Jenkins), a Maui-based insurance agency. The petition and its supporting documents alleged a deficit in J.D. Jenkins' customer accounts and financial improprieties by the company's principals. It expressly requested that "the court order all court records pertaining to, or a part of, these proceedings be kept confidential as, and to the extent, provided by [Hawai'i Revised Statutes (HRS) ] § 431:15-203 [ (1993) ]." 1

Page 1091

[89 Hawai'i 256] Nevertheless, through inadvertence, the petition was placed in the public access bin at the first circuit court.

Daysog, a reporter for the Honolulu Star-Bulletin, obtained the petition from the public access bin, and, after soliciting comments from a number of persons identified in the petition, including inter alia, the Department of the Attorney General, Metcalf, and James Stone, J.D. Jenkins' attorney, wrote the following article, which was published in the May 26, 1995 edition of the Star-Bulletin:

The state has received court approval to seize a Maui insurance agency which the state said is insolvent and may have misappropriated customers' premiums.

Circuit Judge Herbert Shimabukuro Wednesday approved a confidential petition by state Insurance Commissioner Wayne Metcalf to take over J.D. Jenkins & Co., after Metcalf argued that the insurance agency's customer accounts had a deficit of more than $500,000.

"There is reasonable cause to believe that there had been embezzlement from the respondent insurer or other illegal conduct in, by or with respect to the insurer that if established would endanger assets in an amount threatening the solvency of the insurer," Metcalf said in court documents.

Jim Stone, attorney for Jenkins & Co., yesterday denied any wrongdoing by his client, saying the insurance agency has worked closely with the state and independent auditor, Coopers & Lybrand L.L.P., to resolve any shortfall.

Stone said that the company's officers--Margaret Jenkins, president, and Bill Jenkins, vice president--spent more than $200,000 of their own money to help reduce the shortfall from $740,562 in December to about $395,000. He added the Jenkins have applied for a loan to cover the balance of the deficit, which is collateralized by Margaret Jenkins' Maui home. Stone said the home has been appraised at $1 million.

"To suggest that there has been any malicious wrongdoing is clearly out of the picture," Stone said. "There is no jeopardy to our clients."

Metcalf declined comment on the matter yesterday, saying the court ordered the proceedings confidential. But in affidavits and letters obtained by the Star-Bulletin, the insurance commissioner and his chief examiner raised serious questions about the company's management:

According to Metcalf, more than $370,000 of customers' money was given to Margaret and Brian Jenkins as payment beyond their ordinary salaries, commissions and bonuses.

Metcalf said there was a risk that the Jenkins may make further questionable withdrawals or may fail to deposit trust funds.

Timothy Bogan, Chief examiner of the insurance division, noted that clients' premiums were mixed with agency funds and were not stored in a separate trust account as required by state law.

Stone, meanwhile, said the dispute is partly due to new accounting rules affecting insurance agencies. He said the state recently began to require insurance agencies to separate customers' premiums from the agencies' funds but that many companies have failed to do so.

The insurance division recently surveyed local insurance agencies and found that up to 17 firms were not in compliance with the new law, Stone said.

"A number of agencies have the same misunderstanding," Stone said. "Our client has done everything possible to cooperate."

Based in Wailuku, Jenkins & Co. is an insurance general agency which sells auto and home insurance, Stone said.

Page 1092

[89 Hawai'i 257] The state insurance division began its initial probe of the company in November 1994. The examination found a "long-standing and steadily increasing deficit" that grew to $654,924.47, a state deputy attorney general said in a memo supporting the seizure. The shortfall eventually grew to $740,562 before the Jenkins officers paid $200,000 to the client fund.

Under the seizure order, which expires July 24, the insurance commissioner can take possession of financial records and its day-to-day duties in order to rehabilitate the company.

(Emphasis added.)

The petition, in fact, made no allegations of improprieties by Brian, a Maui attorney, who was the son of Margaret Jenkins and the brother of Bill Jenkins, but who had never served as an officer or employee of J.D. Jenkins and whose only connection with the agency was that he had represented it as its attorney in connection with certain matters. Brian, however, was among those contacted by Daysog during his investigation of the story. He had asked Daysog to fax him a copy of the article after its publication. Upon reading the story, Brian was surprised to find himself mentioned in Daysog's story. He immediately called the Star-Bulletin and notified them of the misidentification. He was told by personnel of the newspaper that they "would look into it and get back to [him]."

Daysog later signed a declaration explaining how the error arose. Because he was unsure of the correct spelling of the plural form of the word "Jenkins," Daysog decided to avoid the problem by referring to the Jenkins by their first names, Bill and Margaret Jenkins. However, instead of reviewing the petition for the correct first names, he read a letter, which was attached to the petition as an exhibit, written on behalf of the agency to the State Insurance Commissioner and signed by Brian Jenkins as the agency's attorney. Accordingly, Daysog mistakenly substituted the name of Brian Jenkins for that of Bill Jenkins in the article.

Upon discovery of the error, the Star-Bulletin published a retraction on Monday, May 29, 1995. However, before the retraction appeared, the story was picked up by the Associated Press and printed in other newspapers, including The Maui News.

On July 27, 1995, Brian filed a complaint alleging negligence (Count I), actual malice (Count II), and a claim for punitive damages (Count III). On August 8, 1995, he filed a first amended complaint. On June 26, 1997, Liberty News filed a motion for summary judgment on Jenkins's claims in Counts II and III, arguing that (1) in the defamation context, "actual malice" required either subjective knowledge that the statement made was untrue or reckless disregard of its truth or falsity, (2) the uncontested facts showed that the false statement at issue was the result of an inadvertent error, which was insufficient to prove "actual malice," (3) while the petition was intended to be kept confidential by court personnel, Daysog obtained it lawfully, and, therefore, his knowledge that the court had not intended to release the information contained in it was not relevant to the question of whether he acted with "actual malice," and (4) Liberty News was entitled to summary judgment on Jenkins's claim for punitive damages, because, as a matter of law, punitive damages could not be awarded absent a showing of "actual...

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