Mikelson v. United Services Automobile Association, No. 25217 (HI 5/12/2005)
| Decision Date | 12 May 2005 |
| Docket Number | No. 25217,25217 |
| Parties | MATHEW S. MIKELSON, Plaintiff-Appellee v. UNITED SERVICES AUTOMOBILE ASSOCIATION, Defendant-Appellant and JOHN DOES 1-25; JANE DOES 1-25; DOE CORPORATIONS 1-25; DOE PARTNERSHIPS 1-25; and DOE GOVERNMENTAL ENTITIES 1-25, Defendants. |
| Court | Supreme Court of Hawai'i |
Page 1
v.
UNITED SERVICES AUTOMOBILE ASSOCIATION, Defendant-Appellant and
JOHN DOES 1-25; JANE DOES 1-25; DOE CORPORATIONS 1-25; DOE PARTNERSHIPS 1-25; and DOE GOVERNMENTAL ENTITIES 1-25, Defendants.
APPEAL FROM THE FIRST CIRCUIT COURT, (CIV. NO. 99-1856).
On the briefs:
Myles T. Yamamoto, Terrance M. Revere & Jacqueline E. Thurston (Love Yamamoto & Motooka), for defendant-appellant.
Alan Van Etten & Mark G. Valencia (Damon Key Leong, Kupchak Hastert) for plaintiff-appellee.
MOON, C.J., LEVINSON, NAKAYAMA, AND ACOBA, JJ., AND CIRCUIT JUDGE WONG, ASSIGNED BY REASON OF VACANCY.
OPINION OF THE COURT BY ACOBA, J.
Defendant-Appellant United Services Automobile Association (Defendant) appeals from the June 19, 2002 judgment of the circuit court of the first circuit (the court)1 in favor of Plaintiff-Appellee Mathew S. Mikelson (Plaintiff) relating to underinsured motorist benefits. By this appeal, Defendant challenges the court's order denying Defendant's motion for order or declaration regarding choice of law, filed on April 30, 2001, and the court's findings of fact, conclusions of law, and order, filed on July 16, 2001.
For the reasons discussed herein, we hold that the court correctly (1) applied Hawai`i law on the choice of law question, (2) determined that Plaintiff was a resident of the named insured's household and, therefore, a covered person under the subject insurance policy for underinsured motorist benefits purposes, and (3) decided that the insurance policy exclusions were inapplicable. Accordingly, the June 19, 2002 judgment is affirmed.
Larry D. Mikelson (Father), father of Plaintiff, entered into an automobile insurance plan (the Policy) in California with Defendant. The Policy was effective from October 23, 1998 to April 23, 1999. Listed as "operators" under the Policy were Father, Ian A. Mikelson, and Plaintiff. It is not disputed that Father is identified as a named insured under the Policy. Three vehicles are listed in the Policy as being "garaged" in Redondo Beach, California.
On January 17, 1999, Plaintiff was riding a motorcycle on Kamehameha Highway. He was carrying a passenger on the motorcycle and had no license or permit to operate the vehicle at the time of the accident. As Plaintiff was approaching the intersection of Waimea Beach Park, a motor vehicle operated by a Ms. Larissa Madison (Madison) made a left turn into the Park, in front of Plaintiff. This caused Plaintiff to collide with Madison's vehicle and Plaintiff fell onto the roadway, suffering injuries. The motorcycle was not insured under any policy Plaintiff had with Defendant. As a result of the accident, Plaintiff required surgery on his right knee. Within less than thirty days, Plaintiff incurred more than $17,500 in medical and ambulance expenses.
At the time of the accident, Plaintiff was a full-time student at the University of Hawai`i — West Oahu (West Oahu), and lived in the City and County of Honolulu. Plaintiff's first semester at West Oahu commenced in January 1999. The majority of Plaintiff's personal belongings remained at Father's home in California. The only personal belongings Plaintiff brought with him to Hawai`i were clothing and his surfboard. Plaintiff possessed a California driver's license at the time of the accident. The permanent address listed on the license was his Father's address in Redondo Beach, California. Plaintiff lived in California during his recovery from his surgery, but he intended to return to Hawai`i in order to continue his education in the fall semester of 1999.
Plaintiff was not employed before or at the time of the accident and, as a result, relied completely on Father for financial support. This support included payment of Plaintiff's educational and travel expenses. Plaintiff was named as a dependent on Father's Internal Revenue Service income tax returns for the years 1998 and 1999.
On April 20, 1999, Plaintiff filed a civil suit against Madison for the injuries he sustained. Plaintiff obtained $20,000 pursuant to a settlement, release, and indemnity agreement that was executed on June 6, 1999. This $20,000 amount was the limit of liability under all applicable liability bonds or policies covering Madison. The $20,000 was not sufficient to cover Plaintiff's medical expenses.
As a result, Father attempted to obtain benefits under Defendant's Policy. The Policy provides for underinsured motorist coverage for a "covered person" under the "UNINSURED MOTORISTS COVERAGE" section of the Policy. The amount of Bodily Injury Uninsured Motorists Coverage under the Policy is $300,000. A "covered person" is defined as a named insured or a family member of a named insured. A "family member" is defined as a person related to a named insured "by blood, marriage or adoption who is a resident of [the named insured's] household." An "underinsured motor vehicle" is defined as a motor vehicle that is insured, but as to which the amount of such insurance "is less than the limit of liability for Bodily Injury Uninsured Motorists Coverage" that is applicable to a covered auto. A "covered auto" is defined in relevant part as any vehicle shown in the Declarations. There is neither a choice of law provision within the Policy2 nor a clause defining "resident of [the named insured's] household."
According to the "GENERAL PROVISIONS" section of the Policy, the "[P]olicy applies only to accidents and losses which occur: (1) [d]uring the policy period as shown in the Declarations; and (2) [w]ithin the policy territory." The "policy territory" encompasses "[t]he United States of America, its territories or possessions[.]"
The underinsured motorist coverage provision states, in relevant part, that "Bodily Injury Uninsured Motorists Coverage shall not apply until the limits of liability under all applicable liability bonds or policies have been exhausted by payment of judgments or settlements, and proof of such is submitted to us." According to the court's findings of fact, Plaintiff "exhausted" the limits of liability and has submitted reasonable proof to Defendant showing as much.
The Policy also contains the following contested exclusions:
I. UNINSURED MOTORISTS COVERAGE
. . . .
With respect to damages for bodily injury caused by an underinsured motor vehicle, Bodily Injury Uninsured Motorists Coverage shall not apply until the limits of liability under all applicable liability bonds or policies have been exhausted by payment of judgments or settlements, and proof of such is submitted to us.
. . . .
EXCLUSIONS
A. We do not provide Uninsured Motorists Coverage for property damage or bodily injury sustained by any person:
1. While occupying, or when struck by, any motor vehicle owned by you or any family member which is not insured for this coverage under this policy. This includes a trailer of any type used with that vehicle. As used in this exclusion, "motor vehicle" means any self-propelled vehicle.
. . . .
4. While operating any self-propelled vehicle with less than 4 wheels which is not insured for this coverage under this policy. As used in this exclusion, operating means only the actual physical operation by the driver of a vehicle. This does not include a passenger of that vehicle
. . . .
7. Using a vehicle without a reasonable belief that the person is entitled to do so.
. . . .
C. We do not provide Uninsured or Underinsured Motorists Coverage for punitive or exemplary damages.
(Emphases added.)
On February 4, 1999, Defendant's representative sent a letter to [Father] denying coverage for Plaintiff's injuries because "the motorcycle does not qualify as a `covered auto'" in the Policy. On April 2, 1999, Defendant's Claims Manager confirmed the denial of coverage through a subsequent letter.
On May 7, 1999, Plaintiff filed a complaint for declaratory relief against Defendant seeking compensatory damages under the Policy for Plaintiff's injuries (Civ. No. 99-1856-05). On July 26, 1999, Plaintiff filed a motion for summary judgment which was denied on October 19, 1999.
On February 6, 2001, Defendant filed a motion requesting the court to apply California law rather than Hawai`i law to the case. On April 12, 2001, a bench trial was held to determine the sole issue of whether Plaintiff was entitled to receive underinsured motorist benefits from Defendant. On April 30, 2001, the court issued a written order declaring it would apply Hawai`i law.
On July 16, 2001, the court issued its findings of fact (findings) and conclusions of law (conclusions), and order. The court concluded, inter alia, that: (1) Plaintiff was a "resident" of Father's household at the time of the accident because (a) the Policy is ambiguous in its definition of the term "resident" and (b) "actual residence under a common roof with the named insured is not an absolute requirement to be considered a `resident' of the household"; and (2) inasmuch as "the Policy purports to create two distinct classes of `covered persons': (a) the named insured and his or her family members; and (b) any other person "occupying" the "covered auto[,]" Plaintiff "was not required to be occupying or operating a `covered auto'" in order to "collect uninsured benefits."
The court also determined that three of the Policy's exclusions were inapplicable. First, the court concluded that the "less than four wheels exclusion" was inapplicable because (1) such exclusion was "void as against public policy" to the extent that the exclusion "attempts to limit [Plaintiff's] entitlement to [underinsured motorist] coverage" and is inconsistent with Dines v. Pac. Ins. Co., Ltd., 78 Hawai`i 325, 893 P.2d 176 (1995); and (2) the "exclusion of only [uninsured motorist] coverage, but not [underinsured motorist] coverage in [Defendant's] less than four wheels exclusion . . . is either (a) a clear indication that [the exclusion] applies to...
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