State Farm Mut. Auto. Ins. Co. v. Robinol

• Decision Date: 18 November 1988
• Docket Number: Civ. No. 88-00146-VAC.
• Citation: 699 F. Supp. 819
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Plaintiff, v. Edward ROBINOL and Victoria Robinol, individually and in their capacities as guardians ad litem of Eydie Robinol and Cheryl Ilarraza, Defendants.
• Court: U.S. District Court — District of Hawaii

699 F. Supp. 819

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Plaintiff, v. Edward ROBINOL and Victoria Robinol, individually and in their capacities as guardians ad litem of Eydie Robinol and Cheryl Ilarraza, Defendants.

Civ. No. 88-00146-VAC.

United States District Court, D. Hawaii.

November 18, 1988.

Goodsill Anderson Quinn & Stifel, William McCorriston, Richard Miller, Honolulu, Hawaii, for plaintiff.

Cronin Fried Sekiya Kekina & Fairbanks, Keith K.H. Young, Honolulu, Hawaii, for defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

EZRA, District Judge.

This is an action seeking declaratory relief pursuant to 28 U.S.C. § 2201. Jurisdiction is founded in this Court under diversity of citizenship: 28 U.S.C. § 1332. Plaintiff State Farm Mutual Automobile Insurance Company ("State Farm") asserts that it has no duty to pay underinsured motorist ("UIM") benefits to defendant Eydie Robinol ("Robinol") under two policies of automobile liability insurance written by State Farm.¹

I. FACTS

On March 23, 1986, Robinol was injured in a two-car accident while driving defendant Ilarraza's Tercel automobile. The accident was caused by the negligence of the other driver (not a party to this lawsuit) whose insurance policy carried $35,000 limits for bodily injury. Robinol's damages admittedly exceeded that coverage.

Following the accident, Robinol made a claim under the Tercel policy for UIM benefits contending that, effective January 1, 1986, Hawaii Rev.Stat. § 431-448(b) required all insurance carriers to "offer to each policyholder or applicant for a motor vehicle liability policy optional" UIM coverage.² State Farm responded to this law by offering UIM coverage to all new applicants for insurance on or after January 1, 1986. As to those customers with policies already in force on January 1, 1986, however, State Farm offered UIM coverage at the first renewal date on or after January 1, 1986.³

The Tercel policy was last renewed prior to the accident on October 26, 1985 and was due for semi-annual renewal on April 26, 1986, about one month after the accident. State Farm denied the claim contending it did not have an obligation under Hawaii Rev.Stat. § 431-448(b) to offer UIM coverage until the first renewal date after January 1, 1986.

II. MOTION FOR PARTIAL SUMMARY JUDGMENT

State Farm files this Motion for Partial Summary Judgment pursuant to Fed.R.Civ. P. 56(c) contending that, as a matter of law, Hawaii Rev.Stat. § 431-448(b) was not intended to have retrospective application and, therefore, State Farm was not required to offer UIM coverage to current policyholders (those policies effective prior to January 1, 1986) until the first renewal date on or after January 1, 1986.

III. SUMMARY JUDGMENT

Summary judgment is appropriate when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R. Civ.P. 56(c). The moving party has the initial burden of demonstrating the absence of any material fact. Richards v. Neilsen Freight Lines, 810 F.2d 898 (9th Cir.1987); T.W. Elec. Service v. Pacific Elec. Contractors, 809 F.2d 626 (9th Cir.1987). Once the moving party carries this burden, in order to withstand a motion for summary judgment, the non-moving party must show that there are "genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (emphasis added).

IV. DISCUSSION

The requirement of Hawaii Rev.Stat. § 431-448(b) to offer UIM coverage was added to the existing uninsured motorist statute. In relevant part, it reads:

(b) Each insurer shall offer to each policyholder or applicant for a motor vehicle liability policy optional additional insurance coverage for loss resulting from bodily injury or death suffered by any person legally entitled to recover damages from owners or operators of underinsured motor vehicles.

Id. There is no dispute that the negligent driver's auto was "underinsured" as defined by subsection (c) of that statute.

State Farm takes the position that the statute did not require it to offer UIM as additional coverage on an already existing policy until that policy came up for renewal. There is no question that UIM was not offered on the Tercel policy until the April, 1986 renewal date, one month after the accident. The legal question to be answered here is whether the statute required State Farm to offer UIM as of January 1, 1986 on policies of auto insurance already in effect prior to that date and not yet up for renewal, or, put in another way, did the legislation in question, Hawaii Rev.Stat. § 431-448(b), have retroactive effect on policies in force on its effective date?

Defendants raise several issues of fact they allege should preclude summary judgment pursuant to Anderson, supra:

1. Did the law require State Farm to offer UIM coverage on the Tercel policy prior to the date of the accident (March 23, 1986)?

2. Did State Farm intend to provide coverage in this situation?

3. Did State Farm have any policies or procedures to provide coverage in this situation?

4. Did State Farm have any internal provisions which would provide coverage in this situation?⁴

The defendants' first issue is the legal question to be answered herein. It is not an issue of fact as contemplated by Fed.R. Civ.P. 56(c) or Anderson, supra. As for issues two, three and four, State Farm has stipulated that the answer is "NO" in each case.⁵

Defendants further claim that this motion is not "ripe" in that additional discovery is needed to find out more about the internal policies and procedures of State Farm before these questions can be answered. Again, State Farm concedes that it did not offer UIM coverage before the accident, that it did not intend to offer such coverage to the defendants before the accident, and that it had no policies or procedures which would have allowed the offering of coverage before the accident. Additional discovery will not change these "matters of fact" into material "issues of fact".

Finally, defendants assert that further discovery is needed to determine how State Farm treated the mandatory increase in bodily injury limits pursuant to Hawaii Rev.Stat. § 294-10 which also became effective January 1, 1986.⁶ Defendants argue that if State Farm increased limits of existing policies without waiting for the renewal date because of this statute, it would therefore be obligated to offer UIM coverage on those policies without waiting for the renewal date. Hawaii Rev.Stat. § 294-10 requires that "... an insurance policy covering a motor vehicle shall provide ..." the increased limits.

No matter how State Farm treated "current" policyholders because of the requirements of Hawaii Rev.Stat. § 294-10, the basis for such treatment would be different than under Hawaii Rev.Stat. § 431-448(b) because of the distinction between the "shall provide" language of the bodily injury limits increase provision as opposed to the "shall offer" language of the UIM statute. One provides mandatory coverage while the other provides for a mandatory "offering" of optional coverage. This Court finds that State Farm's actions or intentions regarding the bodily injury limit increase requirement of Hawaii Rev.Stat. § 294-10, whatever they may have been, do not create a material issue of fact in this case.

Finding no material issues of fact which could "reasonably be resolved in favor of either party" (Anderson v. Liberty Lobby, 477 U.S. at 250, 106 S.Ct. at 2511), this Court can proceed to the question of whether State Farm is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).

This appears to be a case of first impression in Hawaii. Essentially, the defendants' argument is that UIM coverage should be implied as a matter of law into the Tercel policy as of January 1, 1986 no matter when the policy was issued or renewed. This is based on the defendant's argument that all courts should favor, whenever possible, the plight of the driver who is injured by the negligence of a third party. However, defendants provide no authority for the proposition that, when a statute requires an insurer to "offer" optional coverage, it necessarily follows that such an "offer" requires modification of the existing contracts of insurance between the parties.

The UIM portion of Hawaii Rev.Stat. § 431-448 does not specify "when" the offer of UIM coverage must be made. However, it is an amendment to the uninsured motorist coverage statute⁷ which requires that no policy "shall be delivered, issued for delivery, or renewed" without such coverage. Subsection (b) was then added to require the offer of UIM coverage without significant modification of any other part of the statute.⁸ Because they are part of the same statute, it is appropriate to infer the legislature intended the same "delivered, issued for delivery, or renewed" language to apply to the UIM requirement. It seems incongruous to suggest that a more stringent time limit would be intended for an "offer" of "optional" UIM coverage than for a mandatory inclusion of uninsured motorist coverage.

Further, by its terms, Hawaii Rev.Stat. § 431-448(b) is not retroactive: i.e., it does not require UIM coverage to relate back to the effective date of policies existing on January 1, 1986. Under Hawaii law, a statute has no retroactive operation "unless otherwise expressed or obviously intended". Hawaii Rev.Stat. § 1-3; In re Christian, 65 Hawaii 394, 398, 652 P.2d 1137 (1982). Here, there is no indication of such expression or intent. Retroactive operation should not be found unless there is "a clear legislative expression that such operation is intended." Clark v. Cassidy, 64 Hawaii 74, 77, 636 P.2d 1344 (1981).

This view is supported by cases from other jurisdictions. They provide...