Crawley v. State Farm Mut. Auto. Ins. Co.

• Citation: 90 Haw. 478,979 P.2d 74
• Decision Date: 21 May 1999
• Docket Number: No. 21655.,21655.
• Parties: Antoinette CRAWLEY and Summer Baker, Plaintiffs-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee, and Toni Sales and Michelle Delacruz, Defendants.
• Court: Court of Appeals of Hawai'i

979 P.2d 74

90 Haw. 478

90 Hawai`i 478

Antoinette CRAWLEY and Summer Baker, Plaintiffs-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee, and Toni Sales and Michelle Delacruz, Defendants.

No. 21655.

Intermediate Court of Appeals of Hawai`i.

April 13, 1999.

Certiorari Denied May 21, 1999.

Melvin Y. Agena and Heidi M. Ho, on the briefs, Honolulu, for plaintiff-appellant Antoinette Crawley.

Birney B. Bervar, on the briefs, Honolulu, for plaintiff-appellant Summer Baker.

Margaret Jenkins Leong and Kathleen A. Kelly (Goodsill Anderson Quinn & Stifel), on the briefs, Honolulu, for defendant-appellee.

BURNS, C.J., WATANABE, and ACOBA, JJ.

Opinion of the Court by ACOBA, J.

We hold that where an automobile liability insurance policy provides coverage for non-owned cars, but limits that coverage to the named insured, his or her spouse, and/or their relatives, and "relative" is defined by the policy as a person related to and who lives with the named insured, the insurer is not required to defend or indemnify an insured parent for the tortious conduct of a minor child who does not live with such parent. We further hold that Hawai`i Revised Statutes (HRS) § 577-3 (1993), which imposes joint and several liability on parents for the tortious conduct of their minor children, does not as a matter of public policy impose a duty on an automobile insurer to defend or indemnify an insured parent for the tortious conduct of his or her minor child. The insurer is under no such obligation unless language in the policy itself would mandate coverage.

Because (1) the May 20, 1998 final judgment rendered by the first circuit court (the court) in favor of Defendant-Appellee State Farm Mutual Automobile Insurance Company (State Farm) and Defendants Michelle Delacruz (Michelle) and Toni Sales (Sales),¹ and (2) the June 10, 1998 judgment of the court denying the counter-motion for summary judgment filed by Plaintiffs-Appellants Antoinette Crawley and Summer Baker (collectively, Appellants) were consistent with the foregoing propositions, we affirm the said judgments.

I.

Appellants and State Farm agree that there are no material facts in dispute. On December 21, 1994, at approximately 4:40 a.m., Michelle was driving a GMC "Jimmy" automobile (the Jimmy). Appellants were her passengers. Michelle failed to stop at a stop sign at the intersection of Lumiaina and Lumiauau Streets in the City and County of Honolulu. The Jimmy collided with a pick-up truck and as a result, Appellants were injured.²

Michelle was seventeen years old and thus a minor at the time. She is the daughter of Sales and her former husband, Wendell Delacruz (Delacruz). Sales and Delacruz were divorced in 1985.

According to Michelle's declaration,³ she had been residing with her father for several years and "considered Delacruz's residence to be her permanent residence."⁴ Michelle reported she had "daily use of the Jimmy to get to and from school, and had use of the Jimmy every day for at least twenty-one consecutive days prior to the accident."

Delacruz owned the Jimmy and was insured under a liability policy issued by Allstate Insurance Company (Allstate). In August and September 1995, Appellants settled part of their claims for personal injuries with Michelle, Sales, Delacruz, and Delacruz's insurer, Allstate. Appellants each entered into a "Joint Tortfeasor Release and Indemnity Agreement" (the releases) in which Appellants released Michelle, Sales, and Delacruz from liability related to the accident "except to the extent of any applicable insurance monies available" under an automobile liability policy issued to Sales by State Farm. In consideration of the releases, Allstate agreed to pay each Appellant the "bodily injury policy limit, i.e., $35,000.00," under the Allstate policy.

At the time of the accident, Sales owned a Mazda MX3 automobile (the Mazda) and was insured under the State Farm policy. Sales was the "NAMED INSURED" and the Mazda was the "DESCRIBED VEHICLE" listed on the declarations page of the policy. Sales did not "own, use, possess or insure" the Jimmy, did not know Michelle was driving the Jimmy, and had not given Michelle permission to drive the Jimmy. When the accident occurred, Michelle was "not performing any tasks, errands, or favors" for Sales.

II.

A.

Appellants made a demand on State Farm for coverage of their personal injury claims⁵ under Sales's policy. The demand was rejected by State Farm.⁶

On May 22, 1996, Appellants filed a complaint for declaratory and injunctive relief⁷ against Michelle, Sales, and State Farm. The complaint sought a declaration that Sales, pursuant to HRS § 577-3,⁸ was liable for the tortious acts of her minor child, Michelle, that Michelle and Sales were "insured" persons under the State Farm policy, and thus, "insurance existed under the State Farm policy with respect to the injuries ... Appellants suffered in the accident."

B.

On December 5, 1997, State Farm filed its corrected⁹ motion for summary judgment on the basis (1) "that neither Michelle nor the Jimmy ... were covered under the State Farm policy," and (2) that Sales's potential vicarious liability under HRS § 577-3 was also not covered. A copy of the policy, copies of the releases, and the declarations of Michelle and Sales were attached to State Farm's motion.

On January 2, 1998, Appellants filed their opposition memorandum in which they argued that State Farm was "required to pay damages arising from the accident because. . . Sales was legally liable through HRS § 577-3 for the negligent acts of Michelle, her then minor daughter," and that coverage extended to the Jimmy under the "non-owned car" provision of the State Farm policy. Alternatively, Appellants contended that the definition of an "insured" under the "non-owned car" coverage provisions was ambiguous, and, thus, "the question of coverage should be liberally construed in favor of coverage." Finally, Appellants maintained that since the policy did not specifically exclude coverage for parental liability under HRS § 577-3, it covered Sales's vicarious liability thereunder.

On January 5, 1998, Appellants filed their counter-motion for summary judgment, raising the same arguments contained in their opposition memorandum. Included among the exhibits to Appellants' counter-motion for summary judgment were a copy of the State Farm policy and a "Stipulation Amending Child Custody and Child Support" dated October 27, 1986. According to the child custody stipulation, Sales and Delacruz were to "maintain joint legal custody" of Michelle and her brother, but Sales was awarded "sole physical custody" of the children.

On January 6, 1998, State Farm filed its reply memorandum to Appellants' opposition memorandum. State Farm argued that (1) Michelle was not an insured, (2) the Jimmy was not an insured vehicle, and (3) the facts of this case did not fit within the "non-owned car" endorsement. Further, State Farm asserted that its policy was not ambiguous and that the public policy underlying HRS § 577-3 did not mandate insurance coverage in this case.

C.

On February 27, 1998, the court entered an order denying Appellants' counter-summary judgment motion.

On March 9, 1998, the court entered an order granting State Farm's summary judgment motion. The court found that there were no genuine issues of material fact. It concluded that State Farm was entitled to judgment as a matter of law, because the State Farm policy did "not provide coverage for Michelle or Sales" for the following reasons:

a) First, the ... Jimmy operated by Michelle ... at the time of the ... accident was not a covered vehicle described in the State Farm policy. The ... Mazda... was the vehicle included ... under... the State Farm policy.

b) Second, the "use of other cars" coverage provided in the State Farm policy did not apply because the . . . Jimmy was not being operated by an "insured" at the time of the ... accident. It is undisputed that Michelle ... was the driver of the ... Jimmy. However, Michelle was not an "insured" under the State Farm policy....

The court subsequently entered the May 20, 1998¹⁰ and June 10, 1998 judgments referred to earlier.

III.

"`On appeal, an order of summary judgment is reviewed under the same standard applied by the trial courts.'" Pacific Int'l Servs. Corp. v. Hurip, 76 Hawai`i 209, 213, 873 P.2d 88, 92 (1994) (quoting Reyes v. Kuboyama, 76 Hawai`i 137, 138, 870 P.2d 1281, 1282 (1994)). Summary judgment is appropriately granted "`if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 104, 839 P.2d 10, 22, reconsideration denied, 74 Haw. 650, 843 P.2d 144 (1992) (quoting Gossinger v. Association of Apt. Owners of the Regency of Ala Wai, 73 Haw. 412, 417, 835 P.2d 627, 630 (1992)); Hawai`i Rules of Civil Procedure Rule 56(c).

As previously noted, the parties agree on the material facts. The sole issue on appeal, therefore, is whether the court correctly determined, as a matter of law, that the State Farm policy did not provide Sales with liability coverage. "`As a general rule, the construction and legal effect to be given an insurance contract is a question of law freely reviewable by an appellate court.' ... The determination of whether a contract is ambiguous is likewise a question of law that is freely reviewable on appeal." Brown v. KFC Nat'l Management Co., 82 Hawai`i 226, 239, 921 P.2d 146, 159, reconsideration denied, 82 Hawai`i 360, 922 P.2d 973 (1996) (quoting Cho Mark Oriental Food, Ltd. v. K & K Int'l, 73 Haw. 509, 519, 836 P.2d 1057, 1063 (1992)) (some citations omitted). This court reviews conclusions of law under the right/wrong standard. Wharton v. Hawaiian Elec. Co., 80 Hawai`i...