Tokuhisa v. Cutter Management Co.

• Decision Date: 21 December 2009
• Docket Number: No. 28641.,28641.
• Citation: 122 Haw. 181,223 P.3d 246
• Parties: Kristie TOKUHISA, Court-Appointed Class Representative, individually and on behalf of all others similarly situated, Plaintiff-Appellant, and Cynthia Altman and Kelly Muller, individually and on behalf of all others similarly situated, Plaintiffs, v. CUTTER MANAGEMENT CO.; Cutter Motor Cars, Inc.; Cutter Dodge, Chrysler, Plymouth, Jeep of Pearl City, Inc. dba Cutter Dodge Chrysler Plymouth Jeep of Pearl City; Red Swan Incorporated, Defendants-Appellees, and Doe Defendants 1-50, Defendants, and Cutter Management Co.; Cutter Motor Cars, Inc.; Cutter Dodge, Chrysler, Plymouth, Jeep of Pearl City, Inc. dba Cutter Dodge Chrysler Plymouth Jeep of Pearl City, Third-Party Plaintiffs/Counterclaim Defendants-Appellees, v. Safe-Guard Products International, Inc., Third-Party Defendant/Counterclaim Plaintiff. Civil No. 02-1-0691 Kristie Tokuhisa, Court-Appointed Class Representative, individually and on behalf of all others similarly situated, Plaintiff-Appellant, and Walter Calizo, Rochelle Molina, Ferila Perez, Francisco Ancheta, Kelly Ancheta, Khamtan Tanhchaleun, and Chou Tanhchaleun, individually and on behalf of all others similarly situated, Plaintiffs, v. Cutter Management Co.; Cutter Dodge, Inc.; Rainbow Chevrolet, Inc.; Cutter Ford, Inc.; Cutter Imports, Inc.; Cutter Motor Cars, Inc.; Cutter of Waipahu, Inc.; Cutter Pontiac, Buick, GMC of Waipahu, Inc.; Red Swan Incorporated; Safe-Guard Products International, Inc., Defendants-Appellees, and Doe Defendants 1-50, Defendants, and Cutter Management Co.; Cutter Dodge, Inc.; Rainbow Chevrolet, Inc.; Cutter Ford, Inc.; Cutter Imports, Inc.; Cutter Motor Cars, Inc.; Cutter of Waipahu, Inc.; Cutter Pontiac, Buick, GMC of Waipahu, Inc., Cross-Claim Plaintiffs-Appellees, v. Safe-Guard Products International, Inc., Cross-Claim Defendants-Appellees, and Doe Defendants 1-50, Cross-Claim Defendants, and Safe-Guard Products International, Inc., Cross-Claim Plaintiff-Appellee, v. Cutter Management Co.; Cutter Dodge, Inc.; Rainbow Chevrolet, Inc.; Cutter Ford, Inc.; Cutter Imports, Inc.; Cutter Motor Cars, Inc.; Cutter of Waipahu, Inc.; Cutter Pontiac, Buick, GMC of Waipahu, Inc., Cross-Claim Defendants-Appellees. Civil No. 02-1-2915
• Court: Hawaii Court of Appeals

223 P.3d 246

122 Haw. 181

Kristie TOKUHISA, Court-Appointed Class Representative, individually and on behalf of all others similarly situated, Plaintiff-Appellant, and Cynthia Altman and Kelly Muller, individually and on behalf of all others similarly situated, Plaintiffs, v. CUTTER MANAGEMENT CO.; Cutter Motor Cars, Inc.; Cutter Dodge, Chrysler, Plymouth, Jeep of Pearl City, Inc. dba Cutter Dodge Chrysler Plymouth Jeep of Pearl City; Red Swan Incorporated, Defendants-Appellees, and Doe Defendants 1-50, Defendants, and Cutter Management Co.; Cutter Motor Cars, Inc.; Cutter Dodge, Chrysler, Plymouth, Jeep of Pearl City, Inc. dba Cutter Dodge Chrysler Plymouth Jeep of Pearl City, Third-Party Plaintiffs/Counterclaim Defendants-Appellees, v. Safe-Guard Products International, Inc., Third-Party Defendant/Counterclaim Plaintiff. Civil No. 02-1-0691

Kristie Tokuhisa, Court-Appointed Class Representative, individually and on behalf of all others similarly situated, Plaintiff-Appellant, and Walter Calizo, Rochelle Molina, Ferila Perez, Francisco Ancheta, Kelly Ancheta, Khamtan Tanhchaleun, and Chou Tanhchaleun, individually and on behalf of all others similarly situated, Plaintiffs, v. Cutter Management Co.; Cutter Dodge, Inc.; Rainbow Chevrolet, Inc.; Cutter Ford, Inc.; Cutter Imports, Inc.; Cutter Motor Cars, Inc.; Cutter of Waipahu, Inc.; Cutter Pontiac, Buick, GMC of Waipahu, Inc.; Red Swan Incorporated; Safe-Guard Products International, Inc., Defendants-Appellees, and Doe Defendants 1-50, Defendants, and Cutter Management Co.; Cutter Dodge, Inc.; Rainbow Chevrolet, Inc.; Cutter Ford, Inc.; Cutter Imports, Inc.; Cutter Motor Cars, Inc.; Cutter of Waipahu, Inc.; Cutter Pontiac, Buick, GMC of Waipahu, Inc., Cross-Claim Plaintiffs-Appellees, v. Safe-Guard Products International, Inc., Cross-Claim Defendants-Appellees, and Doe Defendants 1-50, Cross-Claim Defendants, and Safe-Guard Products International, Inc., Cross-Claim Plaintiff-Appellee, v. Cutter Management Co.; Cutter Dodge, Inc.; Rainbow Chevrolet, Inc.; Cutter Ford, Inc.; Cutter Imports, Inc.; Cutter Motor Cars, Inc.; Cutter of Waipahu, Inc.; Cutter Pontiac, Buick, GMC of Waipahu, Inc., Cross-Claim Defendants-Appellees. Civil No. 02-1-2915

No. 28641.

Intermediate Court of Appeals of Hawai`i.

December 21, 2009.;

Paul Alston (Bruce H. Wakuzawa and Peter S. Knapman (Alston Hunt Floyd & Ing), Honolulu, and George Van Buren and Robert Campbell (Van Buren Campbell & Shimizu) with him on the briefs), Honolulu, for Tokuhisa.

Lisa Woods Munger (Joachim P. Cox and Robert K. Fricke (Goodsill Anderson Quinn & Stifel) with her on the brief), Honolulu, for Cutter.

Lane Hornfeck (Terence J. O'Toole and Wil K. Yamamoto (Starn O'Toole Marcus & Fisher) with him on the brief), Honolulu, for Safe-Guard.

William J. Deeley, Dennis W. King, and Glenn S. Horio (Deeley, King & Pang), on the brief, Honolulu, for Red Swan.

FOLEY and FUJISE, JJ.; and WATANABE, Presiding J., Dissenting and Concurring.

Opinion of the Court by FOLEY, J.

Plaintiff-Appellant Kristie Tokuhisa (Tokuhisa), Court-Appointed Class Representative, individually and on behalf of all others similarly situated, appeals from the Final Judgment filed on June 21, 2007 in the Circuit Court of the First Circuit (circuit court).¹

This appeal arises from two consolidated class action lawsuits: Civil No. 02-1-0691² and Civil No. 02-1-2915.³ The lawsuits concerned, in part, the sale of Vehicle Theft Registration systems (the VTR)⁴ by Defendants-Appellees Cutter Management Co.; Cutter Motor Cars, Inc.; Cutter Dodge, Chrysler, Plymouth, Jeep of Pearl City, Inc. dba Cutter Dodge Chrysler Plymouth Jeep of Pearl City; Cutter Dodge Inc.; Rainbow Chevrolet, Inc.; Cutter Ford, Inc.; Cutter Imports, Inc.; Cutter of Waipahu, Inc.; Cutter Pontiac, Buick, GMC of Waipahu, Inc. (collectively, Cutter); Red Swan, Incorporated (Red Swan); and Safe-Guard Products International, Inc. (Safe-Guard) (collectively, Defendants) to buyers of automobiles (the Class).

The complaints underlying these lawsuits alleged, inter alia, that various Cutter dealerships had marketed and sold the VTR by promising or deceptively appearing to promise to pay a specified amount of money to purchasers upon the theft of the automobile. In relevant part, the complaints asserted that such actions on the part of the dealerships constituted "the unlawful marketing and sale of insurance without a proper certificate of authority and the unlawful marketing of insurance without a proper license," pursuant to Hawaii Revised Statutes (HRS) Chapter 431, and that Defendants' attempts to receive money or their receipt of money from the Class as a result of marketing, selling, and/or transacting the insurance, "inter alia," constituted an Unfair and Deceptive Trade Practice (UDAP), pursuant to HRS Chapter 480.

On September 12, 2003, Cutter filed a motion for partial summary judgment (Motion for Partial SJ), arguing, in sum, that the VTR did not constitute insurance. The circuit court filed an order granting the Motion for Partial SJ (Order Granting Motion for Partial SJ) on December 3, 2003.

The Altman Plaintiffs and Calizo Plaintiffs⁵ (collectively, Plaintiffs) filed a Motion for Leave to File an Amended Complaint (Motion to Amend Complaint) on January 6, 2004, to clarify that the UDAP claim included more than the illegal-insurance allegation and also pertained to the "sale and marketing of the VTR" policy. On February 20, 2004, the circuit court denied the motion.

On appeal, Tokuhisa argues that the circuit court

(1) committed reversible error by granting Cutter's Motion for Partial SJ because

(a) there are genuine issues of material fact as to whether Cutter committed a UDAP in marketing and selling insurance without a license under the guise of a warranty for the VTR, an "illusory" theft deterrent/recovery device, and

(b) the determination of whether the VTR constitutes insurance involved, at a minimum, a genuine issue of material fact and did not dispose of Plaintiffs' VTR claims; and

(2) committed reversible error and abused its discretion by

(a) denying the Motion to Amend Complaint because the circuit court read Plaintiffs' complaints narrowly, and

(b) certifying an arbitrarily narrow sub-class of VTR consumers who used credit sales contracts and "alleged" that the VTR is insurance.

Tokuhisa requests that we remand this case to the circuit court with instructions to

(1) vacate the judgment as to the VTR claims; (2) reverse the [Order Granting Motion for Partial SJ]; (3) allow litigation on the VTR claims in accordance with the issues actually litigated in connection with [Cutter's Motion for Partial SJ], either through allowing amendment of Plaintiffs' [c]omplaints or by finding that the parties have consented to try those issues pursuant to [Hawai'i Rules of Civil Procedure (HRCP)] Rule 15(b); and (4) vacate the Class Certification Order and instruct the Circuit Court to certify a class for further litigation based on the VTR subclass definition in the settlement agreement.

I.

On March 17, 2002, the Altman Plaintiffs filed an amended class action complaint against some Cutter entities and Red Swan⁶ (Altman's Complaint). Altman's Complaint provided in relevant part:

20. Cutter marketed and sold a "VTR" package to Plaintiffs and the Class in which [Cutter and/or Red Swan] promised or deceptively appeared to promise to pay a specified amount to purchasers upon a contingency, e.g. the theft of the automobile.

21. The marketing and sale of the "VTR" package constitutes the unlawful marketing and sale of insurance without a proper certificate of authority and the unlawful marketing of insurance without a proper license. See [HRS] § 431:1-201 (defining "insurance" in relevant part as "a contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies"); [HRS] § 431:8-201 (prohibiting any "insurer" from conducting insurance business in Hawai`i without a certificate of authority issued by the state); [HRS] § 431:9-201 (prohibiting any agent from marketing insurance in Hawai`i without a license[)].

22. [Cutter and Red Swan] deceptively and surreptitiously marketed the insurance as a "warranty" not as "insurance."

23. The policy sold by [Cutter and Red Swan] did not state who, if anyone, would have to make payment and that full payment would only be made if:

a. comprehensive insurance was in force;

b. the theft resulted in a total loss;

c. the comprehensive insurer paid at least $2,500.00; and

d. the insured purchased a comparable vehicle within 120 days.

24. Cutter's and/or [Red Swan's] above described unlawful attempts to obtain money from and receipt of money from the Class as a result of marketing and selling insurance, inter alia, constitutes [a UDAP].

On July 18, 2002, Red Swan filed an answer to Altman's Complaint, and on July 26, 2002, Cutter filed its answer to the complaint.

On December 13, 2002, the Calizo Plaintiffs filed a Complaint against some of the Cutter entities, Red Swan, and Safe-Guard⁷ (Calizo's Complaint). Calizo's Complaint provided in relevant part:

39. Under the terms of the VTR policy, [Cutter], Red Swan, and/or Safe-Guard promised to pay a specified amount to purchasers upon a contingency, e.g. the theft of the automobile under certain terms and conditions.

40. [Calizo] Plaintiffs purchased the VTR policy, and [Cutter], Red Swan, and/or [Safe-Guard] received money from [Calizo] Plaintiffs from the sale of the VTR policy.

41. The marketing and sale of the VTR policy constitute the unlawful marketing and sale of insurance without a proper certificate of authority and the unlawful marketing of insurance without a proper license. See [HRS] § 431:1-201 (defining "insurance" in relevant part as "a contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies"); [HRS] § 431:1-209 (defining "general casualty insurance" in relevant part as ...