Joshua v. MTL, Inc.

• Decision Date: 29 December 1982
• Docket Number: No. 8177,8177
• Citation: 656 P.2d 736,65 Haw. 623
• Parties: John JOSHUA, Plaintiff-Appellant, v. MTL, INC. and Bobby E. Denson, Defendants-Appellees.
• Court: Hawaii Supreme Court

Page 736

656 P.2d 736

65 Haw. 623

John JOSHUA, Plaintiff-Appellant, v. MTL, INC. and Bobby E. Denson, Defendants-Appellees.

No. 8177.

Supreme Court of Hawai'i.

Dec. 29, 1982.

Reconsideration Denied Jan. 12, 1983.

Syllabus by the Court

1. Under § 294-6(a)(2), HRS, a person ineligible for no-fault benefits is barred from bringing a tort suit against the negligent operator of an insured vehicle even though such person has medical and/or rehabilitative expenses equal to the then current threshold amount.

2. The legislature has the power to abolish or modify a common law remedy if it does so within the scope of the provisions of Constitution of the State of Hawaii.

3. A classification factually based on poverty does not necessarily invoke the strict scrutiny test when the classification is challenged.

4. When discrimination is not based upon a per se suspect classification, the proper test for determining whether or not equal protection of the laws has been denied is whether the discrimination bears a rational relationship to the purpose of the statute.

5. Section 294-6(a)(2), HRS, is unconstitutional, but only as applied to persons ineligible for no-fault benefits, because there is no rational basis for barring such persons from bringing tort actions against negligent drivers of insured vehicles while permitting eligible persons to do so.

6. Section 294-36(b), HRS, is unconstitutional, but only as applied to persons ineligible for no-fault benefits, because it denies them equal protection of the laws by requiring them to bring suits against negligent drivers of insured vehicles within two years of the accident while allowing persons eligible for such benefits to bring such suits within two years of the last payment of such benefits.

Hayden F. Burgess, Waianae, for plaintiff-appellant.

David Waters, Goodsill Anderson & Quinn, Honolulu, for defendants-appellees.

Before RICHARDSON, C.J., and LUM, NAKAMURA, PADGETT and HAYASHI, JJ.

PADGETT, Justice.

This is an appeal from a judgment below granting the motion to dismiss appellant's complaint for personal injuries arising out of an automobile accident on the ground that the statute of limitations, § 294-36(b), HRS, had expired before the filing of suit. Because we hold that that section and § 294-6(a)(2), HRS, contravene the equal protection clause of Article I, Section 5 of the Constitution of the State of Hawaii, in that those statutes result in an impermissible discrimination against appellant who was not eligible for no-fault benefits, we reverse.

Appellant was injured on August 6, 1976 when his automobile, which was stopped, was struck by a MTL bus. According to appellant's affidavit, filed in opposition to a motion for summary judgment, he had an unexpired no-fault insurance card, but unbeknownst to him, his policy had been cancelled. ¹ Notice of cancellation had been sent to his parents' home but had failed to reach him. Consequently, although he was a public assistance recipient eligible for no-fault insurance upon such cancellation under the provisions of § 294-22(b)(2)(A), HRS, he had not applied for such coverage. Because of the cancellation, he was the owner of an uninsured vehicle involved in the accident. He was, therefore, expressly excluded from assigned risk coverage under § 294-23(b)(2)(A), HRS. More importantly, since his vehicle was uninsured, he was not eligible for the payment of no-fault benefits under §§ 294-3 and 294-5(c), HRS, even though the other vehicle was insured. ²

Appellant's medical expenses resulting from the accident did not total $1,500 until May of 1978, at the earliest. He did not file this suit until March 16, 1979.

Because appellant was not eligible to receive no-fault benefits, the court below ruled that he was required to bring his action within two years of the accident under § 294-36(b)(1), HRS, even though under § 294-36(b)(2), HRS, persons receiving no-fault benefits have until two years after the last payment of such benefits to commence suit.

Central to the disposition of this case is an understanding of the bar to tort actions imposed by § 294-6, HRS. Section 294-6, HRS, provides:

(a) Tort liability of the owner, operator or user of an insured motor vehicle, or the operator or user of an uninsured motor vehicle who operates or uses such vehicle without reason to believe it to be an uninsured motor vehicle, with respect to accidental harm arising from motor vehicle accidents occurring in this State, is abolished, except as to the following persons or their personal representatives, or legal guardians, and in the following circumstances:

(1) Death occurs to such person in such a motor vehicle accident; or injury occurs to such person which consists, in whole or in part, in a significant permanent loss of use of a part or function of the body; or injury occurs to such person which consists of a permanent and serious disfigurement which results in subjection of the injured person to mental or emotional suffering;

(2) Injury occurs to such person in a motor vehicle accident in which the amount paid or accrued exceeds the medical-rehabilitative limit established in section 294-10(b) for expenses provided in section 294-2(10)(A) and (B);

(3) Injury occurs to such person in such an accident and as a result of such injury the aggregate limit of no-fault benefits outlined in section 294-2(10) payable to such person are exhausted.

(b) No provision of this chapter shall be construed to exonerate, or in any manner to limit the liability of any person in the business of manufacturing, retailing, repairing, servicing, or otherwise maintaining motor vehicles, arising from a defect in a motor vehicle caused, or not corrected, by an act or omission in the manufacturing, retailing, repairing, servicing, or other maintenance of a vehicle in the course of his business.

(c) No provision of this section shall be construed to exonerate, or in any manner to limit the criminal or civil liability of any person who, in the maintenance, operation, or use of any motor vehicle:

(1) Intentionally causes injury or damage to a person or property; or

(2) Engages in criminal conduct which causes injury or damage to person or property; or

(3) Engages in conduct resulting in punitive or exemplary damages.

(d) No provision of this section shall be construed to abolish tort liability with respect to property damage arising from motor vehicle accidents.

Section 294-6(a)(2), HRS, thus requires that in order for a tort action to be brought by a person, or on a claim (which does not fall within the provisions of §§ 294-6(a)(1) or (3), HRS):

"Injury occurs to such person [i.e. appellant] in a motor vehicle accident in which the amount paid or accrued exceeds the medical-rehabilitative level established ...." ³

Appellant's counsel assumed that his client had to incur $1,500 in medical bills before he could bring suit even though he was not receiving no-fault benefits, but that thereafter, § 294-6(a)(2), HRS, posed no bar to the suit.

Appellees' counsel, at oral argument, agreed that there was a bar to the suit without $1,500 in medical expenses but also agreed that once that limit was reached, the statutory bar of that section no longer existed even though there was no no-fault coverage. ⁴ Appellees' counsel's further position, however, was that appellant must file suit within two years of the accident. Obviously, in the case where the $1,500 is not paid or accrued until more than two years after the accident, appellees' position creates an anomaly between the two bars to action. (Section 294-6(a)(2), HRS, as construed by counsel for both appellant and appellees and § 294-36(b)(1), HRS.)

Thus, if § 294-6(a)(2), HRS, is construed so as to allow suits by persons barred from receiving no-fault benefits if they have medical and/or rehabilitative expenses of $1,500 or more, then under § 294-36(b)(2) an injured but ineligible person could bring a suit if his or her medical expenses reached the limit on the last day of the second year, provided suit was filed that day, but not if the limit was reached one day later. Appellees' suggested solution to the obviously illogical result of this anomaly would be for appellant to file suit within two years from the accident and then have the court somehow put the action on hold until the required level of medical expenses had been reached. Needless to say, there is no statutory basis for such a procedure and any such action by the court would directly violate § 294-6, HRS.

In the legislative history of § 294-6(a)(2), HRS, we find the following statement in House Conf.Comm.Rpt. No. 13, 1973 House Journ. 1222:

(15) The Bill provides for the partial abolition of tort liability with respect to the ownership, operation, and maintenance or use of a motor vehicle except under specified circumstances ...

(6) If he is entitled to no-fault benefits and the medical and rehabilitative benefits exceed the limit to be set by the insurance commissioner ...

(Emphasis added.)

The statute was amended by Act 168 of the Session Laws of 1974. The $1,500 threshold was established by that amendment. In the legislative history of that amendment, it is stated:

Section 294-6(a)(2) ... we are confident that the $1,500 should account for the vast majority of claims for no-fault benefits.

(Emphasis added.) Senate Stand.Comm.Rpt. No. 467-74, 1974 Senate Journal 940.

We think it clear that the legislature intended that the exception to the abolition of tort liability under § 294-6(a)(2), HRS, should apply (as the exception in 294-6(a)(3) unambiguously does) only to persons eligible for no-fault benefits. We so construe that provision.

The statutory scheme is complete and rational insofar as it affects persons eligible to receive no-fault benefits. There is no constitutional impediment to its operation with respect to them. ⁵

The question is whether the exception created by § 294-6(a)(2), HRS, only as applied to appe...