Taylor v. Government Employees Ins. Co.

• Decision Date: 05 May 1999
• Docket Number: No. 21227.,21227.
• Citation: 978 P.2d 740,90 Haw. 302
• Parties: Rosalina V. TAYLOR and Emilio I. Taylor, Plaintiffs-Appellants, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant-Appellee.
• Court: Hawaii Supreme Court

978 P.2d 740

90 Haw. 302

90 Hawai`i 302

Rosalina V. TAYLOR and Emilio I. Taylor, Plaintiffs-Appellants, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant-Appellee.

No. 21227.

Supreme Court of Hawai`i.

May 5, 1999.

Thomas D. Collins, III, on the briefs, Honolulu, for the plaintiffs-appellants Rosalina V. and Emilio I. Taylor.

Kathy M. Sarria and Carleton B. Reid (of Reid, Richards & Miyagi), on the briefs, Honolulu, for the defendant-appellee Government Employees Insurance Company.

MOON, C.J., KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ.

Opinion of the Court by LEVINSON, J.

The plaintiffs-appellants Rosalina V. Taylor (Rosalina) and Emilio I. Taylor (collectively, the Taylors) appeal from the first circuit court's judgment and order denying their motion for summary judgment and granting the cross-motion of the defendant-appellee Government Employees Insurance Company (GEICO) for summary judgment. On appeal, the Taylors contend that (1) the consent-to-settle clause in their underinsured motorist (UIM) policy is void as against public policy and (2) GEICO's refusal to consent to a settlement in an amount only $2000.00 less than the tortfeasor's liability coverage limits was unreasonable. Because, on the present record, GEICO's refusal to consent to the settlement was unreasonable, we vacate the judgment appealed from and remand this matter to the circuit court for the entry of an order granting the Taylors' motion for summary judgment.

I. BACKGROUND

At all times relevant to the present matter, the Taylors were insured by an automobile insurance policy, issued by GEICO, which included UIM coverage. On September 26, 1993, Rosalina was injured in a collision with a vehicle driven by Mary McKaig, who was insured at that time by State Farm Mutual Automobile Insurance Company (State Farm).¹ As a result of the injuries that she sustained in the accident, Rosalina incurred medical expenses totaling $15,196.56. Also as a result of the accident, Rosalina was given a medical discharge from the United States Navy following thirteen years and nine months of continuous service. The Taylors' economist estimated that the concomitant loss of future earnings and benefits resulted in an economic loss to Rosalina of $584,116.00.

On January 17, 1996, the Taylors filed a civil action against McKaig. On May 1, 1996, the Taylors' attorney informed GEICO by letter that State Farm had offered to settle the Taylors' claim. The letter stated in relevant part:

An offer has been made to settle this case for $33,000.00 subject to the approval of my client and your company as UIM carrier. The policy limits are $35,000.00.

. . . I also need any provisions that GEICO intends to rely on to claim UIM coverage would not apply until the BI limits are exhausted.

Finally, many insurance policies require written permission to settle the bodily injury claim as a condition of making a UIM claim. Accordingly, please provide written permission by your own letter or by signing below and faxing this letter back to my office.

GEICO's claims examiner responded by letter dated May 7, 1996, stating in relevant part:

Please be advised that we will not grant concurrence with regard to the UIM claim and your underlying BI settlement as you have not obtained the bodily injury policy limits of the BI carrier. As you are aware, under the terms of the UIM coverage, you must obtain all collectible bodily injury coverage before you may present a UIM claim.

(Emphasis added.)

The relevant UIM provisions of GEICO's auto insurance policy are as follows:

We will pay damages an insured is legally entitled to recover for bodily injury caused by accident and arising out of the ownership, maintenance or use of an underinsured motor vehicle. However, we will not pay until the total of all bodily injury liability insurance available has been exhausted by payment of judgments or settlements.

. . . .

EXCLUSIONS

1. This coverage does not apply to bodily injury to an insured if the insured or his legal representative has made a settlement or has been awarded a judgment of his claim without our prior written consent . . . .

ARBITRATION

If any insured making claim under this policy and we do not agree that he is legally entitled to recover damages under this coverage from the owner or operator of an underinsured motor vehicle because of bodily injury to the insured, or do not agree as to the amount payable, either party may request arbitration.

(Emphases in original.) "Underinsured motor vehicle" is defined by the policy as

a motor vehicle with respect to the ownership, maintenance or use of which the sum of the limits of liability under all bodily injury liability insurance coverage applicable at the time of loss to which coverage afforded by such policy or policies applies is less than the liability for damages imposed by law.

(Emphasis added.)

On May 31, 1996, although GEICO refused to approve the proposed settlement, the Taylors executed a joint tortfeasor release and indemnity agreement that released McKaig and her insurers from liability for the September 26 accident in exchange for the $33,000.00. When GEICO subsequently refused the Taylors' demand for UIM benefits based upon the above-quoted policy provisions, the Taylors filed a complaint for declaratory relief in the circuit court, seeking (1) a declaration that they were entitled to UIM benefits under the policy and (2) an order compelling arbitration in order to determine the amount of UIM benefits due.

On April 7, 1997, the Taylors filed a motion for summary judgment alleging that GEICO (1) had been provided notice of the proposed settlement, (2) had unreasonably refused to consent to it, and, therefore, (3) had waived its right to rely upon the consent-to-settle clause and to be subrogated to the rights of its insured. On April 8, 1997, GEICO filed a cross-motion for summary judgment, contending that (1) the policy provisions in question were enforceable and (2) inasmuch as they had failed to exhaust McKaig's liability policy, the Taylors were precluded from recovering UIM benefits under the GEICO policy. On May 1, 1997, the circuit court entered an order denying the Taylors' motion for summary judgment and granting GEICO's cross-motion. On December 10, 1997, judgment was entered in favor of GEICO and against the Taylors. This timely appeal followed.

II. STANDARDS OF REVIEW

A. Motion For Summary Judgment

We review a circuit court's award of summary judgment de novo under the same standard applied by the circuit court. Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 104, 839 P.2d 10, 22, reconsideration denied, 74 Haw. 650, 843 P.2d 144 (1992) (citation omitted). As we have often articulated:

summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

Id. (citations and internal quotation marks omitted); see Hawai`i Rules of Civil Procedure (HRCP) Rule 56(c) (1990). "A fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties." Hulsman v. Hemmeter Dev. Corp., 65 Haw. 58, 61, 647 P.2d 713, 716 (1982) (citations omitted).

Konno v. County of Hawai`i, 85 Hawai`i 61, 70, 937 P.2d 397, 406 (1997) (quoting Dunlea v. Dappen, 83 Hawai`i 28, 36, 924 P.2d 196, 204 (1996)) (brackets in original). "The evidence must be viewed in the light most favorable to the non-moving party." State ex rel. Bronster v. Yoshina, 84 Hawai`i 179, 186, 932 P.2d 316, 323 (1997) (citing Maguire v. Hilton Hotels Corp., 79 Hawai`i 110, 112, 899 P.2d 393, 395 (1995)). In other words, "we must view all of the evidence and the inferences drawn therefrom in the light most favorable to the party opposing the motion." Maguire, 79 Hawai`i at 112, 899 P.2d at 395 (citation omitted).

State Farm Mut. Auto. Ins. Co. v. Murata, 88 Hawai`i 284, 287-88, 965 P.2d 1284, 1287-88 (1998) (quoting Estate of Doe v. Paul Revere Ins. Group, 86 Hawai`i 262, 269-70, 948 P.2d 1103, 1110-11 (1997)) (brackets in original).

B. Interpretation Of A Statute

"The interpretation of a statute . . . is a question of law reviewable de novo." State v. Arceo, 84 Hawai`i 1, 10, 928 P.2d 843, 852 (1996) (quoting State v. Camara, 81 Hawai`i 324, 329, 916 P.2d 1225, 1230 (1996) (citations omitted)). See also State v. Toyomura, 80 Hawai`i 8, 18, 904 P.2d 893, 903 (1995); State v. Higa, 79 Hawai`i 1, 3, 897 P.2d 928, 930, reconsideration denied, 79 Hawai`i 341, 902 P.2d 976 (1995); State v. Nakata, 76 Hawai`i 360, 365, 878 P.2d 699, 704, reconsideration denied, 76 Hawai`i 453, 879 P.2d 558 (1994), cert. denied, 513 U.S. 1147, 115 S.Ct. 1095, 130 L.Ed.2d 1063 (1995).

Gray v. Administrative Director of the Court, 84 Hawai`i 138, 144, 931 P.2d 580, 586 (1997) (some brackets added and some in original). See also State v. Soto, 84 Hawai`i 229, 236, 933 P.2d 66, 73 (1997). Furthermore, our statutory construction is guided by established rules:

When construing a statute, our foremost obligation is to ascertain and give effect to the intention of the legislature, which is to be obtained primarily from the language contained in the statute itself. And we must read statutory language in the context of the entire statute and construe it in a manner consistent with its purpose.

When there is doubt, doubleness of meaning, or indistinctiveness or uncertainty of an expression used in a statute, an ambiguity exists. . . .

In construing an ambiguous statute, "the meaning of the ambiguous words may be sought by examining the context, with which the ambiguous words, phrases, and sentences may be compared, in order to ascertain their true meaning." HRS § 1-15(1) (1993). Moreover, the courts may resort to extrinsic aids in determining legislative intent. One

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