OAHU TRANSIT SERVICES v. NORTHFIELD INS.
| Decision Date | 31 May 2005 |
| Docket Number | No. 25704.,25704. |
| Citation | 107 Haw. 231,112 P.3d 717 |
| Parties | OAHU TRANSIT SERVICES, INC., Plaintiff-Appellant/Appellee, v. NORTHFIELD INSURANCE COMPANY, Defendant-Appellee/Appellee, and Aloha State Cab, Inc., John Does 1-5, John Doe Corporations 1-5, John Doe Partnerships 1-5, Roe Non-Profit Corporations 1-5 and Roe Governmental Agencies 1-5, Defendants. Northfield Insurance Company, Third-Party Plaintiff-Appellee/Appellee, v. City and County of Honolulu, Third-Party Defendant-Appellee/Appellant. |
| Court | Hawaii Supreme Court |
Wesley H.H. Ching and Sheree Kon-Herrera (of Fukunaga Matayoshi Hershey & Ching, LLP), Honolulu, on the briefs, for plaintiff-appellant/appellee Oahu Transit Services, Inc.
Kevin P.H. Sumida (of Matsui Chung Sumida & Tsuchiyama), Honolulu, on the briefs, for third-party defendant-appellee/appellant City and County of Honolulu.
Gregory K. Markham, Keith K. Kato, and Jeffrey S. Masatsugu (of Chee & Markham), Honolulu, on the briefs, for defendant-appellee/appellee Northfield Insurance Company.
Plaintiff-appellant Oahu Transit Services, Inc. (OTS) and third-party defendant-appellant City and County of Honolulu [hereinafter, "the City"] appeal from the Circuit Court of the First Circuit's March 18, 2003 first amended judgment.1 As points of error, OTS and the City contend that the circuit court erred in issuing its March 28, 2002 order granting summary judgment in favor of defendant-appellee/third-party plaintiff-appellee Northfield Insurance Company (Northfield) and denying summary judgment in favor of OTS and the City.
The main issue on appeal is whether an automobile exclusion clause in a Commercial General Liability (CGL) insurance policy (providing that no coverage exists for "`[b]odily injury' or `property damage' arising out of the ownership, maintenance, use or entrustment to others of any . . . `auto' . . . owned or operated by or rented or loaned to any insured") applies so as to bar coverage in the instant case. We hold that the circuit court correctly concluded that this exclusion applies and that Northfield is not required to defend or indemnify OTS or the City.
OTS operates transit services, including paratransit services, for the City. In addition to operating "TheBus" and "TheHandi-Van," OTS contracted with private corporations to provide supplemental services. One such private corporation was Aloha State Cab, Inc. (Aloha State).
On May 27, 2000, Aloha State was assigned the job of transporting Roy Muramoto to a dialysis appointment. While in transit to the appointment, Muramoto's wheelchair tipped over and Muramoto was pinned in the corner of the van. The driver stopped the van and went to assist Muramoto; Muramoto was strapped into his wheelchair by a belt connected to the chair, and — according to the driver — Muramoto asked the driver to disconnect the belt because Muramoto was pinned in the corner and uncomfortable. The driver complied, but when the belt was released, Muramoto collapsed to the floor. Muramoto suffered a spinal cord injury and paralysis of his diaphragm as a result. The record suggests that most, if not all, of Muramoto's injuries occurred when Muramoto collapsed to the floor: the driver had indicated that, when Muramoto was pinned in the corner prior to releasing the belt, Muramoto did not appear to be in distress.
At the time of the accident, Aloha State had a CGL policy with Northfield. This same CGL policy also listed OTS as an additional insured party. However, although OTS was listed as an additional insured, the CGL policy covered OTS "only with respect to liability arising out of [Aloha State's] operations or premises owned by or rented to [Aloha State]."2
The CGL policy provided that Northfield "will pay those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies."3 The policy also contained the following exclusion, which is the focus of the instant case:
(This exclusion will hereinafter be referred to as "the CGL automobile exclusion.")
On August 30, 2001, Muramoto filed his Second Amended Complaint against the City, OTS, and Aloha State. Muramoto's Second Amended Complaint brought claims for relief based on negligence; respondeat superior; agency; breach of duty owed by common carrier; the Americans with Disabilities Act; breach of duty to comply with federal and state law; negligent selection, supervision, and training; breach of express or implied warranty; and ratification.
OTS tendered its defense of Muramoto's suit to Northfield pursuant to the terms of Aloha State's CGL policy. Northfield denied coverage, stating that the CGL automobile exclusion applied (such that neither Aloha State nor OTS was entitled to coverage).
On October 5, 2001, OTS filed a declaratory judgment action against Northfield, seeking a declaration that the CGL policyprovided OTS with coverage for Muramoto's suit. On November 15, 2001, Northfield filed a counterclaim against OTS, a cross-claim against Aloha State, and a third-party complaint against the City, each of which sought a judicial declaration that Northfield was not obligated to defend or indemnify based on the CGL policy. The City then filed a counterclaim against Northfield. OTS filed a motion for summary judgment on December 28, 2001, arguing that Northfield had a duty to defend and indemnify OTS with respect to Muramoto's lawsuit; the City joined this motion on February 15, 2002. Northfield filed a counter-motion for summary judgment on January 31, 2002.
On March 28, 2002, the circuit court granted Northfield's motion for summary judgment and denied OTS's motion (which had been joined by the City) for summary judgment. The circuit court entered final judgment in favor of Northfield, and OTS and the City filed timely notices of appeal.5
We review the circuit court's grant or denial of summary judgment de novo. Hawai`i Community Federal Credit Union v. Keka, 94 Hawai`i 213, 221, 11 P.3d 1, 9 (2000). The standard for granting a motion for summary judgment is settled:
Coon v. City & County of Honolulu, 98 Hawai`i 233, 244-45, 47 P.3d 348, 359-60 (2002) (alteration in original).
As an initial matter, both OTS and the City are subject to the CGL policy's restrictions, including the CGL automobile exclusion.
Both Aloha State and OTS were listed as insured parties, and the exclusion applied to any automobile "owned or operated by or rented or loaned to any insured" (emphasis added). OTS is a named insured, such that the exclusion applies to OTS even if OTS itself did not own or operate the automobile.6 Similarly, the City is subject to the CGL automobile exclusion as well. In its contract with the City, Aloha State agreed to indemnify the City against any claims brought against the City arising from Aloha State's negligence. The CGL policy insured Aloha State against this type of contractual liability, but only to the extent that Aloha State "becomes legally obligated to pay ... damages because of `bodily injury or `property damage' to which this insurance applies." In other words, if Aloha State was entitled to coverage for a particular occurrence of bodily injury or property damage, Aloha State would be entitled to coverage for its contractual obligation to indemnify a third party for liability arising from that occurrence as well. If the CGL policy did not apply to Aloha State (i.e., if one of the exclusions in the CGL policy barred coverage for Aloha State), then the indemnitee (the City) would not be entitled to coverage either. Additionally, the CGL policy specifically excluded coverage for any damages arising from the sole negligence of the indemnitee. Consequently, if we conclude that the automobile exclusion applies to Aloha State, the exclusion also bars the City from recovering from Northfield.
In sum, if the CGL automobile exclusion in the instant case applies at all, it applies equally to Aloha State, OTS, and the City.
The circuit court correctly granted summary judgment in favor of Northfield because all of Muramoto's injuries arose from the use or operation of an automobile. Subsection 1, infra, discusses the phrase "arising from the use or operation of an automobile" and concludes that this unambiguous phrase should be accorded the same interpretation in the context of a CGL policy exclusion and in the context of an automobile insurance coverage clause. Subsection 2, infra, applies this principle to the facts of the instant case and concludes that OTS and the City are not entitled to coverage because Muramoto's injuries arose...
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