Simmons v. Puu, 23714.
| Decision Date | 23 July 2004 |
| Docket Number | No. 23714.,23714. |
| Citation | 105 Haw. 112,94 P.3d 667 |
| Parties | Curtis SIMMONS; Cheryl Simmons, Plaintiffs-Appellants, v. Wanda PUU; Gary Puu; Hertz Corporation, Defendants-Appellees, John Does 1-10; Jane Does 1-10; Doe Corporations 1-10; Doe Partnerships 1-10; Doe Governmental Entities 1-10; Roe Non-profit Corporations and/or Other Entities 1-10, Defendants. |
| Court | Hawaii Supreme Court |
Christopher F. Carroll, Wailuku, On the briefs, for the plaintiff-appellant Curtis Simmons.
Glenn I. Kimura, Hilo, and John S. Mukai, Honolulu, of Char, Hamilton Campbell & Thom, On the briefs, for the defendants-appellees The Hertz Corporation, Gary Puu.
The plaintiff-appellant Curtis Simmons [hereinafter, "Curtis"] appeals from the final judgment of the second circuit court, the Honorable Shackley F. Raffetto presiding, filed on August 2, 2000.1 Curtis's sole contention on appeal is that the circuit court erred in entering a January 18, 2000 order granting the motion of the defendants-appellees Gary Puu [hereinafter, "Gary"] and the Hertz Corporation [hereinafter, "Hertz"] [collectively hereinafter, "the Appellees"] for partial summary judgment regarding unfair claims settlement practices, filed on October 15, 1999. More specifically, Curtis argues (1) that, as a matter of public policy and as a logical extension of existing Hawai'i law, self-insurers can be liable in tort to third-party claimants2 for bad faith settlement practices and (2) that there was a genuine issue of material fact as to whether the Appellees had dealt with him in bad faith, inasmuch as Curtis alleges that Hertz:
(a) compelled [him] to institute ... Small Claims Court litigation to recover amounts acknowledged by [a] Hertz claims adjuster to be legitimately due for property damage; (b) failed to promptly settle [his] property damage claim, where liability was self-evident, in order to gain an advantage as to [his] personal injury claim; (c) refused to pay claims shown to be valid based on available information; (d) failed to provide a written reasonable explanation for its delay; (e) did not attempt in good faith to effectuate prompt, fair, and equitable settlements of claims where liability was self-evident; and (f) did not provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of the personal injury claim.
Curtis also maintains that, even assuming arguendo that Hertz acted in good faith reliance upon a legal defense in refusing to settle his personal injury claim, Hertz relied on no such defense in failing to process his property damage claim in good faith, such that the circuit court erred in granting summary judgment in favor of the Appellees. The Appellees respond that the circuit court did not err in granting summary judgment in their favor, inasmuch as: (1) Hertz is not an insurer and does not have a claims practice, such that Curtis is not a third-party beneficiary with standing to sue Hertz for the tort of bad faith settlement practices; (2) a claim of bad faith settlement practices fails in the present circumstances as a matter of law because (a) Hertz is not bound by an obligation to pay Curtis and, even assuming that Hertz "improperly" withheld insurance payments from Curtis, (b) reasonable reliance upon an unsettled question of law or legal defense to liability does not constitute bad faith; and (3) Curtis has no statutory bad faith claim for relief based upon Hawai'i Revised Statutes (HRS) §§ 480-2 (1993)3 and 480-13 (1993).4 For the reasons discussed infra in section III, we hold that there is no common law tort claim of bad faith settlement practices available to third-party claimants to bring suit against self-insurers. Accordingly, we affirm the final judgment of the circuit court, filed on August 2, 2000, as to all claims and parties.
The present matter arises out of an April 16, 1992 motor vehicle accident involving a vehicle operated by Curtis and occupied by the plaintiff Cheryl Simmons [hereinafter, "Cheryl"] [collectively hereinafter, "the Appellants"] and a vehicle operated by the defendant Wanda Puu [hereinafter, "Wanda"] on Pi'ilani Highway in Kihei, Maui. See supra note 1. Hertz owned, maintained, and self-insured the vehicle operated by Wanda, who was the lawful spouse of Gary, the manager of the Maui branch of Hertz "rent-a-car" at the time of the accident.
On May 7, 1992, the Appellants tendered a notice of claim for property damage and personal injuries to Acclamation Insurance Management Services [hereinafter, "AIMS"], an adjusting agency retained by Hertz. In late May 1992, a representative of AIMS orally responded to the Appellants' claim, stating that "Hertz may deny liability on the grounds that Wanda was not an authorized driver of the Hertz vehicle" and that "Hertz had not yet made a coverage decision with regard to the accident." Hertz's written policy governing the use of its cars by a manager's spouse reflected that Wanda's operation of the vehicle was not authorized, inasmuch as a manager's spouse was banned from using a Hertz car except (1) on vacation or days off when the manager was present or (2) occasionally for convenience (e.g., if a Hertz car was parked behind the family vehicle, thereby obstructing its movement), and neither of the foregoing exceptions applied to the circumstances of the accident.
On September 14, 1992, Curtis filed an action — Civil No. SCW92-245 — against Hertz in the small claims division of the district court of the second circuit. Curtis sought $1,985.80 in damages for rental car, towing, and storage expenses resulting from the accident. By letter dated October 2, 1992, Hertz, through its AIMS adjuster, requested that Curtis dismiss the small claims action because the presiding judge in the small claims court had advised Curtis that the action risked preclusion from pursuing his additional liability claims based on res judicata. By letter dated October 14, 1992, Curtis informed the AIMS adjuster that he would not dismiss his small claims action, although he ultimately did so as to Hertz and filed a second small claims action, Civil No. SCW92-377, against Wanda on December 24, 1992. Curtis again sought $1,985.80 for rental car, towing, and storage expenses, and the small claims court entered judgment in favor of Curtis on February 11, 1993. On April 16, 1993, Curtis filed an acknowledgment of the satisfaction of the judgment against Wanda.
On October 4, 1995, the Appellants filed a complaint in the circuit court of the second circuit against Wanda and the Appellees seeking recovery for personal injuries arising from the accident. The Appellants' original complaint alleged several theories of liability as to their personal injuries, none of which are relevant to the resolution of the present matter. See infra section III. On or about October 2, 1996, Hertz settled Cheryl's claim, and the circuit court entered a stipulation for dismissal with prejudice on October 24, 1996. See supra note 1. The circuit court entered a notice of dismissal as to Wanda on November 22, 1996 and a final order of dismissal on December 26, 1996. See supra note 1.
On March 24, 1997, the Appellees filed a motion for summary judgment [hereinafter, "MSJ I"] as to Curtis's personal injury claims. On May 19, 1997, the circuit court entered an order partially granting MSJ I on the issue of negligent entrustment and denying it without prejudice as to the remaining issues so that Curtis could conduct further discovery.
On October 10, 1997, the Appellees filed another motion for summary judgment [hereinafter, "MSJ II"], which challenged Curtis's marital relationship and respondeat superior theories of liability. On October 13, 1997, in his memorandum in opposition to MSJ II, Curtis asserted a claim of bad faith settlement practices against Hertz; prior to filing the memorandum, Curtis had not raised that issue.5 On October 17, 1997, the circuit court conducted a hearing on MSJ II. After the circuit court orally granted MSJ II, Curtis orally moved to amend the pleadings to include his claim of bad faith settlement practices, and the circuit court instructed Curtis to file a motion to amend the pleadings.
On October 28, 1997, Curtis filed a motion to amend pleadings, asserting "a claim of bad faith settlement practices against Hertz as self-insurer of a vehicle negligently driven by Wanda that caused Curtis's personal injuries." On December 9, 1997, the circuit court entered an order granting Curtis's motion to amend pleadings. On December 12, 1997, Curtis filed his second amended complaint, adding Count III, which alleged, inter alia, as follows:
On January 14, 1998, the circuit court entered an order granting the Appellees' MSJ II "on the issue of the liability of ... Gary ... and any related respondeat superior liability of ... Hertz ... for any of the actions of ... Gary...." The circuit court also ordered that "the argument as to any unfair settlement practice stated in ... Curtis['s] ... Memorandum Opposing [MSJ II] ... stricken without prejudice to [Curtis's] Second Amended Complaint."
On January 22, 1999, Curtis filed a motion for partial summary judgment [hereinafter, "MSJ III], specifically regarding, inter alia, the following ...
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...Circuit Court's decision. In doing so, the ICA noted that the Hawai'i Supreme Court had clearly stated in Simmons v. Puu, 105 Hawaiti 112, 94 P.3d 667 (2004) that the tort of bad faith, as adopted in and Best Place, Inc. v. Perm America Insurance Co., 82 Hawai'i 120, 920 P.2d 334 (1996), re......
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Case Notes
...faith arising from her assigned claim because there was no underlying contract of insurance, following Simmons v. Puu, 105 Hawaii 1112, 94 P.3d 667 (2004), that established that "the common law tort of bad faith settlement practices arises only from a contract of insurance." Note: To access......