Haole v. State
| Decision Date | 07 August 2006 |
| Docket Number | No. 27010.,27010. |
| Citation | 140 P.3d 377 |
| Court | Hawaii Court of Appeals |
| Parties | William HAOLE, IV, Plaintiff-Appellee, v. STATE of Hawai`i, Defendant-Appellee, and Matson Terminals, Inc., Defendant-Appellant, and John Does 1-20, Defendants. State of Hawai`i, Third-Party Plaintiff-Appellee, v. Eric Rapoza and McCabe Hamilton & Renny Co., Ltd., Third-Party Defendants-Appellants. |
John R. Lacy and Randolf L.M. Baldemor (of Goodsill Anderson Quinn & Stifel), Honolulu, on the briefs, for defendant-appellant Matson Terminals, Inc.
John S. Nishimoto, Diane W. Wong, and Zale T. Okazaki (of Ayabe Chong Nishimoto Sia & Nakamura), Honolulu, on the briefs for third-party defendants-appellants Eric Rapoza and McCabe Hamilton & Renny Co., Ltd.
Richard K. Griffith, on the briefs, for plaintiff-appellee.
Deirdre Marie-Iha and Dorothy D. Sellers, Deputy Attorneys General, on the briefs, for defendant-appellee State of Hawai`i.
The dispute in the instant appeal centers around the validity and enforceability of Hawai`i Administrative Rule (HAR) § 19-41-7 (2005), quoted infra, that imposes a duty upon, inter alia, owners and operators conducting unloading activities on state piers to defend and indemnify the State of Hawai`i (the State) against any and all claims arising from such activities, except where the State is proven to be solely and legally negligent. In this case, plaintiff-appellee William Haole, IV, an employee of third-party defendant-appellant McCabe Hamilton Renny & Co., Inc. (McCabe), was injured while riding as a passenger in an automobile being unloaded at the Honolulu Harbor. The vehicle was being driven by third-party defendant-appellant Eric Rapoza, who was also employed by McCabe. As a result of the accident, Haole brought a personal injury action against defendant-appellant Matson Terminals, Inc. (Matson), which had subcontracted with McCabe to conduct cargo loading and unloading activities, and defendant/third-party plaintiff-appellee Department of Transportation of the State of Hawai`i [hereinafter, the DOT or the State], which owns and manages the Honolulu Harbor. The State, in turn, cross-claimed against Matson and filed a third-party complaint against Rapoza and McCabe, essentially seeking to enforce HAR § 19-41-7's alleged duty to defend and indemnify provisions.
On October 5, 2004, the Circuit Court of the First Circuit, the Honorable Karen S. Ahn presiding, entered its order granting partial summary judgment in favor of the State. The circuit court concluded that Rapoza and McCabe [hereinafter, the McCabe parties], as well as Matson [hereinafter, Matson and the McCabe parties are collectively referred to as the appellants], owed a duty to defend the State in the action brought by Haole. The order was certified and entered as a final judgment, pursuant to Hawai`i Rules of Civil Procedure (HRCP) Rule 54(b) (2004),1 on December 16, 2004.
On appeal, the appellants essentially contend that the circuit court erred in (1) concluding that the appellants are required to defend the State pursuant to HAR § 19-41-7 because (a) the DOT did not have authority to promulgate and enforce HAR § 19-41-7 and (b) the regulation violates public policy. Matson additionally contends that the circuit court erred in (1) failing to address whether, under HAR § 19-41-7, the State was "solely and legally" negligent and (2) ruling that the State's claims are not barred by the Longshore and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. § 905(a) (1984).2 For the reasons discussed below, we conclude that the DOT did not have authority to promulgate HAR § 19-41-7; therefore, the regulation is not valid nor enforceable. Accordingly, inasmuch as HAR § 19-41-7 does not impose upon the appellants a duty to defend or indemnify the State against Haole's claims, we hold that the circuit court erred in granting summary judgment in favor of the State. Consequently, we vacate the December 16, 2004 final judgment and remand this case to the circuit court for further proceedings.
Sometime prior to December 2002, Matson hired McCabe to perform stevedoring work, including the loading and unloading of barges at Honolulu Harbor. Matson was a paying "tenant" and was assigned a storage space near Piers 25 and 26 by Harold Watanabe, a marine cargo specialist for the DOT's Harbors Division. In assigning the storage area, Watanabe was aware that Matson would be using the area to load and off-load vehicles. Matson did not sign a contract for the use of the storage area, nor did it enter into any formal agreement with Watanabe at that time.
On December 16, 2002, Rapoza (Haole's supervisor) and Haole were off-loading vehicles from the barge Waialeale, docked at Pier 29. While doing so, Rapoza allegedly offered Haole a ride in one of the vehicles, despite Matson's safety policy prohibiting passengers riding in vehicles being off-loaded. On the way to the storage/pick up area, the vehicle collided with a steel pipe that was apparently protruding approximately ten inches above the pier's flooring. Haole, who admittedly was not wearing a seatbelt, sustained unspecified injuries as a result of the collision.
The accident occurred near Piers 25 and 26 in the vicinity of Matson's storage/pickup area. At all relevant times herein, Piers 25 and 26 were owned, managed, and maintained by the State. Carter Luke, the maintenance engineer for the DOT's Harbors Division, testified at his deposition that the protruding pipe was probably part of an old "vapor recovery system" that had been used previously at the pier. According to Luke, the pipe should have been removed pursuant to a State demolition plan, which called for the removal of "everything above ground" along the piers. Luke stated that he had seen the protruding pipe several months before the accident and that, although there was vegetation around it, the pipe was visible during the day from at least one hundred feet away.
On June 6, 2003, Haole filed an amended complaint against both Matson and the State, alleging that their negligence in failing to remove the steel pipe caused his injuries. Subsequent to the filing of responsive pleadings by the State and the appellants, as well as the State's third-party complaint against the McCabe parties, the State tendered its defense to the appellants, pursuant to HAR § 19-41-7. The McCabe parties and Matson each rejected the State's tender in August 2003 and March 2004, respectively.
On May 27, 2004, the State moved for partial summary judgment against the appellants based upon the appellants' purported duty to defend the State against Haole's claims, pursuant to HAR § 19-41-7. The State maintained that the DOT's Harbors Division is statutorily authorized to promulgate HAR § 19-41-7 and that the rule was validly adopted. Relying on the plain language of the DOT's statutory rule-making authority, the State argued that all users of the State's commercial harbors are bound by its terms. Because the State believed it was not likely that it was "solely and legally negligent," it requested the circuit court to rule that the appellants were obligated, under HAR § 19-41-7, to defend the State in the Haole lawsuit.
The McCabe parties countered that HAR § 19-41-7 is: (1) not authorized by the DOT's governing statutes; (2) void as against public policy; and (3) unconstitutional. Matson made similar arguments and also contended that, even if HAR § 19-41-7 was enforceable, it did not apply because (1) the State was "solely and legally negligent" for the accident and (2) the State was barred from bringing its claim against Matson by the LHWCA, quoted supra at note 2. On July 13, 2004, Matson also filed a cross-motion for summary judgment against the State, asserting that it was not required to defend and indemnify the State. On the same day, Matson moved for summary judgment against Haole on the ground that his claims are barred by the exclusivity provision of the LHWCA. Thereafter, on August 5, 2004, the parties stipulated to a voluntary dismissal of Haole's claims against Matson, but agreed that the dismissal would not affect the existing cross-claims and cross-actions between the parties.3
On October 5, 2004, the circuit court ruled that the promulgation of HAR § 19-41-7 was a proper exercise of the DOT's delegated authority and made the following relevant findings:
1. The parties do not dispute the salient facts. Resolution of the following issues involves questions of law.
2. In [Hawai`i Revised Statutes (HRS) § 266-2 (1993), quoted infra], the State legislature delegated to [the DOT], "all the powers ... which may lawfully be exercised by or under the State relative to the control and management of commercial harbors, ... docks, ... piers, ... belonging to or controlled by the State, and all the shipping using the same."
3. [HRS § 266-2] further gives the DOT authority to "regulate the use of" commercial docks, piers, and landings; to adopt rules pursuant to [HRS chapter 91]; and to have all powers necessary to fully carry out" [HRS chapter 266].
4. [HRS § 266-3 (1993), quoted infra,] empowers the Director of [the DOT] to adopt rules necessary for "the proper regulation and control of all shipping in the commercial harbors ... and for the regulation and control of all other matters and things connected with such shipping." These rules have the force and effect of law. [HRS § 266-3].
5. Under [HRS § 266-4 (1993), quoted infra], limitations upon the jurisdiction and powers conferred on the DOT are "as may be imposed by the statutes of the State."
6. Thus, the [l]egislature delegated broad authority to [the] DOT.
7. Pursuant to these delegated powers, DOT's director promulgated HAR 19-41-7[, quoted infra,] and HAR 19-41-5[, see infra note 11] (hereinafter, "rules"). HAR 19-41-7 limits the duty to...
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