Coll v. McCarthy, 14105

• Citation: 72 Haw. 20,804 P.2d 881
• Decision Date: 11 January 1991
• Docket Number: No. 14105,14105
• Court: Supreme Court of Hawai'i
• Parties: Edward COLL, Plaintiff-Appellant and Cross-Appellee, v. William J. McCARTHY, Defendant. HAWAIIAN INSURANCE & GUARANTY COMPANY, LTD., Defendant and Counterclaim Plaintiff-Appellee and Cross-Appellant, v. Edward COLL, Robert P. Marx and Glen J. Dryer, Counterclaim Defendants.

Page 881

804 P.2d 881

72 Haw. 20

Edward COLL, Plaintiff-Appellant and Cross-Appellee, v. William J. McCARTHY, Defendant.

HAWAIIAN INSURANCE & GUARANTY COMPANY, LTD., Defendant and Counterclaim Plaintiff-Appellee and Cross-Appellant, v. Edward COLL, Robert P. Marx and Glen J. Dryer, Counterclaim

Defendants.

No. 14105.

Supreme Court of Hawai'i.

Jan. 11, 1991.

As Amended Feb. 7, 1991.

Syllabus by the Court

1. Trial court's conclusion that claim was made in good faith and thus not frivolous presents mixed questions of fact and law. Where the court's conclusions are dependent upon the facts and circumstances of each individual case, the clearly erroneous standard of review applies.

2. Trial court's denial of attorney's fees is reviewed under the abuse of discretion standard. Discretion is abused whenever the court, in exercising it, exceeds the bounds of reason, all of the circumstances before it being considered.

3. Hawaii Motor Vehicle Insurance Law does not require an insurer to pay no-fault benefits directly to the medical provider. The law provides for payment of no-fault benefits to be made to the person injured.

4. There is no prohibition of a lump sum payment of the limits of no-fault benefits under Hawaii Motor Vehicle Insurance Law where the medical benefits and wage loss accrued exceeds the maximum limits of the no-fault benefits at the time the claim is made.

5. For a claim to be frivolous it must be manifestly and palpably without merit so as to indicate bad faith on the pleader's part such that argument to the court is not required.

6. HRS § 607-14.5 authorizes the trial court in its discretion to award a reasonable sum for attorney's fees based upon a specific finding that a party's claim was frivolous.

Glen J. Dryer, Hilo, for plaintiff-appellant and cross-appellee.

Roy Y. Yempuku (Gary S. Miyamoto with him, on the brief), Honolulu, for defendant and counterclaim plaintiff-appellee and cross-appellant.

Before LUM, C.J., and PADGETT, HAYASHI, WAKATSUKI and MOON, JJ.

MOON, Justice.

Plaintiff-Appellant Edward Coll (Coll) appeals from an order granting summary judgment in favor of Defendant and Counterclaim Plaintiff-Appellee Hawaiian Insurance & Guaranty Company, Ltd. (HIG). HIG cross-appeals from an order denying attorney's fees. We affirm the summary judgment in favor of HIG and reverse the order denying attorney's fees based on our finding that the complaint brought by Coll against HIG was frivolous.

I.

In April 1985, while riding his moped, Coll was injured as a result of being struck by an automobile owned by Dawn Murray (Murray). At the time of the accident, Murray was insured under an insurance policy issued by HIG. As the operator of a moped, Coll was not required to have no-fault insurance coverage of his own. Pursuant to HRS § 294-4(1)(A) (1985), ¹ HIG was required to assume the obligation as no-fault carrier for Coll.

Following the accident, Coll filed an application for no-fault benefits with HIG seeking to collect medical expenses totaling $15,663.30 as well as lost wages. Because Coll's claims exceeded the no-fault policy limit of $15,000.00, HIG tendered a lump sum payment of $15,000.00 to Coll by way of a draft made payable to him. The draft was forwarded to his then-attorney, Defendant William J. McCarthy (McCarthy), ² and bore the following notation on its face: "WHEN PROPERLY ENDORSED THIS DRAFT CONSTITUTES PAYMENT FOR: Maximum Limit of No-Fault Benefits payable under this policy." Coll then endorsed the draft to McCarthy, who deposited it into his client trust account at the Bank of Hawaii.

HIG subsequently tendered payment of an additional $25,000.00 to Coll in settlement of Coll's claims based on Murray's liability and obtained a release of all claims arising out of the accident. The settlement draft was also deposited into McCarthy's client trust account.

Sometime thereafter, Coll was unable to pay medical expenses owing to the Queen's Medical Center (Queen's) for treatment of injuries received as a result of the accident. In an action brought by Queen's, default judgment was entered against Coll in the amount of $13,259.30.

On February 9, 1988, Coll filed a complaint naming McCarthy and HIG as defendants. In his complaint, Coll alleged that HIG was negligent in paying the $15,000.00 no-fault benefits to McCarthy in violation of HRS Chapter 294, Hawaii Motor Vehicle Insurance Law. The allegations against McCarthy included accusations of conversion, fraud, and comingling of the amounts paid by HIG.

HIG counterclaimed against Coll alleging that the complaint was frivolous and constituted an abuse of process. As part of the counterclaim, HIG alleged that:

7. On September 18, 1985, HIG sent draft # R23919 in the amount of $15,000 made payable, "To the order of EDWARD COLL" to McCARTHY. Said payment was the no-fault insurance policy limits and said draft was endorsed by Coll and deposited into McCARTHY's trust account at the Kona Branch of the Bank of Hawaii on September 20, 1985.

In his Answer, Coll admitted the aforestated allegation.

On June 7, 1988, HIG filed a motion for summary judgment asserting that the no-fault benefits were paid to Coll, not McCarthy, and that the manner of payment (lump sum) did not violate HRS Chapter 294. Following a hearing on the motion, the trial court entered an order granting summary judgment. Subsequently, HIG filed a motion for attorney's fees on the grounds that Coll's claim was frivolous and, alternatively, that as the prevailing party, it was entitled to attorney's fees. The trial court denied the motion and in finding that Coll's claim was not frivolous stated:

Although this is a close question it would seem that the parties--the plaintiff made his claim in good faith. He may not have had the sufficient factual support to withstand the Motion for Summary Judgment, but the Court does not find that it is so clearly and palpably bad that no argument is able to convince the Court that the claim was without merit so the Court will deny the motion for attorney's fees.

Transcript of Proceedings at 15. Both Coll and HIG timely appealed.

II.

On review of a summary judgment, the standard to be applied by the appellate court is identical to that employed by the trial court. Under Rule 56(c) of the Hawaii Rules of Civil Procedure (HRCP), "a summary judgment will be rendered only if the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Miller v. First Hawaiian Bank, 61 Haw. 346, 349, 604 P.2d 39, 41 (1979).

"Questions of negligence and proximate cause are ordinarily not susceptible to summary adjudication. But where the facts are undisputed or are susceptible of only one reasonable interpretation, the trial court is under a duty to rule upon the question of negligence or proximate cause as a matter of law." De Los Santos v. State, 65 Haw. 608, 610-11, 655 P.2d 869, 871 (1982) (citing Pickering v. State, 57 Haw. 405, 557 P.2d 125 (1976); cf. Tsugawa v. Reinartz, 56 Haw. 67, 527 P.2d 1278 (1974)).

Therefore, with respect to Coll's appeal, the question before us is whether Coll has raised any genuine issue of material fact that would cause us to reverse the summary judgment granted by the trial court. It is clear that Coll has failed to do so.

In his complaint, Coll alleged that:

48. Defendant HIG paid to Defendant McCARTHY Fifteen Thousand Dollars ($15,000.00) representing Plaintiff's maximum no-fault benefits, in violation of Chapter 294 Hawaii Revised Statutes.

49. As a direct and proximate result of Defendant HIG's unlawful acts/omissions and/or negligence Plaintiff has suffered damages in an amount to be proven at the time of trial and as prayed for herein.

(Emphasis added.) The record plainly reflects and Coll admits that HIG tendered the maximum amount of no-fault benefits under its insurance policy directly payable to Coll, who endorsed the draft which was then deposited in McCarthy's trust account.

However, Coll argued in opposition to HIG's motion for summary judgment that the action taken by HIG in tendering the maximum no-fault benefits in lump sum to him, as opposed to paying the medical providers directly, was in violation of HRS § 294-4(2) (1985). We find this argument to be totally without merit.

HRS § 294-4(2) provides:

Payment of no-fault benefits shall be made as the benefits accrue, except that in the case of death, payment of the benefits may, at the option of the beneficiary, be made immediately in a lump sum payment.

In interpreting HRS § 294-4(2), as with any statute, we look to the plain and unambiguous language and give effect to the law according to its plain and obvious meaning. Strouss v. Simmons, 66 Haw. 32, 50, 657 P.2d 1004, 1016 (1982) (quoting In Re Hawaiian Telephone Co., 61 Haw. 572, 577-78, 608 P.2d 383, 387 (1980)). Nothing in HRS § 294-4(2), nor in any other provision of the Hawaii Motor Vehicle Insurance Law, requires an insurer to pay no-fault benefits directly to the medical provider. On the contrary, HRS § 294-4(1)(A) contains the language, "the insurer shall pay ... to the person [injured] an amount equal to the no-fault benefits payable to the person as a result of the injury[.]" (Emphasis added.) For this court to require that insurers pay benefits directly to the medical provider would be to fashion a requirement where the legislature has intended none.

Coll also argues that HRS § 294-4(2) mandates that a lump sum payment be made only in the case of death. We acknowledge that the statute provides that no-fault benefits shall be paid as the benefits accrue except for instances of death. However, there is no prohibition of lump sum payments where the accrued medical benefits and wage loss exceeds the maximum limits of the no-fault benefits at the time the claim is made. HRS § 294-4(3) (1985) provides in pertinent part:

Payment of no-fault benefits shall be made within thirty...