Alvarado v. Kiewit Pacific Co., 19984.

• Citation: 92 Haw. 515,993 P.2d 549
• Decision Date: 02 February 2000
• Docket Number: No. 19984.,19984.
• Court: Supreme Court of Hawai'i
• Parties: Marcelo ALVARADO, Respondent-Appellant, v. KIEWIT PACIFIC COMPANY and Aetna Casualty & Surety Company, Petitioners-Appellees, v. Hygrade Electric Company, John Does 1-5, Jane Does 1-5, Doe Corporations 1-5, Roe Non-Profit Organizations 1-5, Doe Governmental Entities 1-5, Respondents-Appellees.

993 P.2d 549

92 Haw. 515

Marcelo ALVARADO, Respondent-Appellant, v. KIEWIT PACIFIC COMPANY and Aetna Casualty & Surety Company, Petitioners-Appellees, v. Hygrade Electric Company, John Does 1-5, Jane Does 1-5, Doe Corporations 1-5, Roe Non-Profit Organizations 1-5, Doe Governmental Entities 1-5, Respondents-Appellees.

No. 19984.

Supreme Court of Hawai`i.

February 2, 2000.

Glenn N. Taga (Kurt A. Gronau, Brian G.S. Choy with him on the brief), on the briefs, Honolulu, for petitioners-appellees.

Stanford H. Masui (Herbert R. Takahashi, Danny J. Vasconcellos and Rebecca L. Covert with him on the brief), on the briefs, Honolulu.

MOON, C.J., KLEIN, LEVINSON, NAKAYAMA, and RAMIL, JJ.

Opinion of the Court by KLEIN, J.

We granted the petition for a writ of certiorari filed by petitioners-appellees Kiewit Pacific Company (Kiewit) and their workers' compensation insurance carrier, Aetna Casualty and Surety Company (Aetna), to review the decision of the Intermediate Court of Appeals (ICA) in Alvarado v. Kiewit Pacific, 92 Hawai`i 524, 993 P.2d 558, (Haw.Ct.App. 1998) (hereinafter the "ICA opinion"). In Alvarado, respondent-appellant Marcelo Alvarado (Alvarado) appealed the circuit court's July 9, 1996 judgment granting Kiewit and Aetna's motion for reimbursement of their lien. The ICA vacated and remanded the circuit court's judgment, holding, inter alia, that: (1) the employer and insurance carrier were entitled to first lien only in amount of workers' compensation expended less their share of attorney's fees and expenses and (2) the employer's and their carrier's "share" of attorney's fees and expenses was to be based upon the amount of benefits already paid and the amount of future benefits they were relieved from paying, as a result of the settlement.

For the reasons set forth below, we essentially agree with the ICA's opinion, but granted certiorari to further explain and clarify the proper method to compute the distribution of a settlement or judgment pursuant to Hawai`i Revised Statutes (HRS) § 386-8 (1993).¹ Therefore, we remand this matter for proceedings consistent with this opinion and instruct the circuit court to enter judgment in the proper amount with respect to Kiewit and Aetna's share of the attorney's fees and costs derived from the settlement.

I. BACKGROUND

In September of 1991, Alvarado, a Kiewit employee, suffered a work-related injury, within the scope of his employment, when he was struck by a motor vehicle owned by Hygrade Electric Company (Hygrade). At the time of Alvarado's injury, Kiewit was insured by a policy of workers' compensation insurance through Aetna. Kiewit and Aetna accepted liability for Alvarado's workers' compensation claim and paid workers' compensation benefits to or on behalf of Alvarado.

Subsequently, on February 3, 1993, Alvarado filed a complaint against Hygrade seeking to recover damages resulting from the accident. On or about January 3, 1995, Hygrade made an offer of judgment to Alvarado in the amount of $110,000.00. On January 31, 1995, Kiewit and Aetna filed a motion for intervention, which the circuit court orally granted on February 8, 1995. Alvarado accepted Hygrade's offer and a judgment in favor of Alvarado was entered on April 5, 1995. Final judgment in favor of Kiewit and Aetna, against Alvarado, in the amount of $72,310.25 was entered on July 9, 1996.

II. THE ICA'S DECISION

The ICA's opinion outlined a method to distribute, between an employer and employee, the amount of a settlement recovered by an injured employee who prosecutes a third-party tortfeasor alone. The ICA determined that pursuant to HRS § 386-8, the starting point is: (1) the total amount of the judgment or settlement, less (2) the reasonable litigation expenses and attorneys' fees which are based solely upon the services rendered by the employee's attorney in effecting recovery both for the benefit of the employee and the employer, less (3) the amount of the employer's expenditure for compensation which is reduced by (4) the employer's "share" of expenses and attorney's fees.

The ICA held that the circuit court did not properly reduce the amount of the employer's expenditure for workers' compensation by the employer's share of the employee's attorney's fees and expenses. Thus, the ICA vacated in part the circuit court's August 4, 1995 order granting Kiewit's and Aetna's motion for reimbursement of workers' compensation lien and the July 9, 1996 circuit court judgment in favor of Kiewit and Aetna and against Alvarado, remanding the case for determination of Kiewit's and Aetna's share of Alvarado's attorney's fees and costs.

On May 5, 1998 Kiewit and Aetna applied for a writ of certiorari seeking review of the ICA opinion, which we granted on May 12, 1998.

III. DISCUSSION

A. Standard of Review

The interpretation of a statute is a question of law which the appellate courts review de novo. Brown v. Thompson, 91 Hawai`i 1, 9, 979 P.2d 586, 594 (1999) (quoting State v. Arceo, 84 Hawai`i 1, 10, 928 P.2d 843, 852 (1996)).

When construing a statute, our foremost obligation is to ascertain and give effect to the intention of the legislature, which is to be obtained primarily from the language contained in the statute itself. And we must read statutory language in the context of the entire statute and construe it in a manner consistent with its purpose.

When there is doubt, doubleness of meaning, or indistinctiveness or uncertainty of an expression used in a statute, an ambiguity exists.

In construing an ambiguous statute, the meaning of the ambiguous words may be sought by examining the context, with which the ambiguous words, phrases, and sentences may be compared, in order to ascertain their true meaning. HRS § 1-15(1)(1993). Moreover, the courts may resort to extrinsic aids in determining the legislative intent. One avenue is the use of legislative history as an interpretive tool.

Gray v. Administrative Dir. of the Court, 84 Hawai`i 138, 148, 931 P.2d 580, 590 (1997) (internal citations, quotation marks, brackets, ellipses, and footnote omitted).

This court may also consider "the reason and spirit of the law, and the cause which induced the legislature to enact it[ ] ... to discover its true meaning." Id. at 148 n. 15, 931 P.2d at 590 n. 15; HRS § 1-15(2) (1993).

Also, this court is bound to construe statutes so as to avoid absurd results. Keliipuleole v. Wilson, 85 Hawai`i 217, 222, 941 P.2d 300, 305 (1997). "A rational, sensible and practicable interpretation of a statute is preferred to one which is unreasonable[,] impracticable ... inconsisten[t], contradict[ory], and illogical[]." Id. at 221-22, 941 P.2d at 304-05 (original brackets and citation omitted) (brackets added).

Frank v. Hawaii Planing Mill Found., 88 Hawai`i 140, 144, 963 P.2d 349, 353 (1998) (some brackets added and some in original).

Amantiad v. Odum, 90 Hawai`i 152, 160-61, 977 P.2d 160, 168-69 (1999).

B. Analysis

In their petition for a writ of certiorari, Kiewit and Aetna contend that the ICA: (1) erred in holding that the circuit court has unfettered discretion to determine the share of attorney's fees and costs based on a percentage of workers' compensation benefits paid; (2) exceeded the proper scope of its review; and (3) erred in basing an employer's recovery of its workers' compensation lien on the contingent benefit it would receive in the form of relief from liability for future workers' compensation benefits. While we agree with the ICA's basic analysis, we granted certiorari to provide clarification and guidance to the circuit court on remand.

1. The circuit court retains some discretion to determine an employer's "share" of attorney's fees and costs pursuant to HRS § 386-8.

HRS § 386-8 provides in relevant part that:

If the action is prosecuted by the employee alone, the employee shall be entitled to apply out of the amount of the judgment for damages, or settlement in case the action is compromised before judgment, the reasonable litigation expenses incurred in preparation and prosecution of such action, together with a reasonable attorney's fee which shall be based solely upon the services rendered by the employee's attorney in effecting recovery both for the benefit of the employee and the employer. After the payment of such expenses and attorney's fee there shall be applied out of the amount of the judgment or settlement proceeds, the amount of the employer's expenditure for compensation, less his share of such expenses and attorney's fee. On application of the employer, the court shall allow as a first lien against the amount of the judgment for damages or settlement proceeds, the amount of the employer's expenditure for compensation, less his share of such expenses and attorney's fee.

(Emphases added.)

Inasmuch as HRS § 386-8 does not contain an express definition of "share," the term is ambiguous. However, legislative history provides us with explicit guidance of the legislature's intent when they amended HRS § 386-8. The current language of HRS § 386-8 was amended in 1973, with the addition of the language "less [the employer's] share of such expenses and attorney's fee." 1973 Haw. Sess. L. Act. 144 § 1 at 225-26.

The House of Representatives specifically stated:

This bill proposes to explicitly re-state the intent of the legislature to require an employer or insurance carrier to share in the payment of attorney's fees and costs in cases where an injured employee brings a third party action and there is a recovery from a third person which benefits both the employee and the employer. The court's interpretation which created a windfall for the employer was not intended by the legislature and legislation to explicitly provide a sharing of attorney's fees and costs is presently required.

Hse. Stand. Comm. Rep. No. 375, in 1973 House Journal, at 912 (emphasis added).

Moreover, as the Senate stated in its evaluation of this issue:

This bill proposes to explicitly re-state the intent of

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