Tri-S Corp. v. Western World Ins. Co.
| Decision Date | 18 May 2006 |
| Docket Number | No. 26202.,26202. |
| Citation | 135 P.3d 82 |
| Parties | TRI-S CORPORATION and Karl Milton Taft, Plaintiffs-Appellees, and Charles L. Rapoza, Sr., Individually and as Special Administrator of the Estate of Charles L. Rapoza, Jr., Deceased; Charla Pua Lindsey, as Next Friend of Chae-Lynn Kealapua Lindsey; Theresa Holicek; and Casey Souza, Plaintiffs In Intervention-Appellees, v. WESTERN WORLD INSURANCE COMPANY; John Does 1-10; Doe Partnerships 1-10; Doe Corporations 1-10; and Doe Entities 1-10, Defendants-Appellants. Western World Insurance Company, Third-Party Plaintiff-Cross-Appellee, v. The Travelers Insurance Company; John Does 1-10; Jane Does 1-10; Doe Corporations 1-10; Doe Partnerships 1-10; Roe Non-profit Corporations 1-10; and Roe Governmental Agencies 1-10, Third-Party Defendant-Cross-Appellant. |
| Court | Hawaii Supreme Court |
John H. Price, Honolulu, and Amanda J. Weston, on the briefs, for defendant-appellant/third-party plaintiff-cross-appellee Western World Insurance Company.
Jeffrey H.K. Sia and Steven L. Goto, Honolulu, (of Ayabe, Chong, Nishimoto, Sia & Nakamura), on the briefs, for third-party defendant-cross-appellant The Travelers Insurance Company.
Raymond K. Hasegawa, Hilo, Bert S. Sakuda, Honolulu, and Paul K. Hamano, on the briefs, for plaintiffs-appellees TRI-S Corporation and Karl Milton Taft.
George W. Ashford, Kailua, (of Ashford & Associates), on the briefs, for plaintiffs in intervention-appellees Charles L. Rapoza, Sr., individually and as special administrator of the Estate of Charles L. Rapoza, Jr., Deceased; Charla Pua Lindsey, as Next Friend of Chae-Lynn Kealapua Lindsey; Theresa Holicek; and Casey Souza.
The instant declaratory judgment action concerns an insurance coverage dispute arising out of a wrongful death action brought following the 1994 work-related death of Charles L. Rapoza, Jr. (Rapoza). Defendant-Appellant/Third Party Plaintiff-Cross Appellee Western World Insurance Co. (WWI) appeals from the October 10, 2003 final judgment of the Circuit Court of the Third Circuit1 in favor of Plaintiffs-Appellees Tri-S Corporation (Tri-S) and Karl Milton Taft [hereinafter individually, Taft, and collectively with Tri-S, TSC-Taft] and Plaintiffs in Intervention-Appellees Charles L. Rapoza, Sr., et al. [hereinafter, Rapoza Estate,2 and collectively with TSC-Taft, Plaintiffs]. Defendant/Third-Party Defendant-Cross Appellant The Travelers Insurance Co. (Travelers) cross-appeals from the same judgment.
On appeal, WWI argues that the circuit court erred in: (1) granting summary judgment on May 12, 1998 in favor of Plaintiffs and against WWI when there were genuine issues of material fact, including (a) whether Taft had been sued as a co-employee of Rapoza or executive officer of Tri-S, and (b) whether Taft had a reasonable expectation of coverage under Tri-S's comprehensive general loss (CGL) insurance policy issued by WWI; (2) concluding that Taft was an "insured" as defined in the CGL policy; (3) concluding that no exclusion to coverage applied; (4) concluding that "occurrence" as defined in the CGL policy included "wilful and wanton misconduct"; (5) concluding that WWI breached its duty to defend Taft in the underlying wrongful death action and thus was obligated to reimburse TSC-Taft for its share of $124,644.07 in attorney's fees and costs expended by TSC-Taft in defending that suit and prosecuting the instant declaratory judgment action; (6) concluding that WWI had not rebutted the presumption that Taft was covered under the CGL policy and thus WWI had a duty to indemnify Taft for special and general damages for which he might be held liable in the underlying action; (7) denying WWI's motion for reconsideration on July 13, 1998 on the grounds that WWI had failed to present any new evidence that could not have been presented in the original motion; and (8) calculating and awarding prejudgment interest accruing from September 6, 2000 even though there was no showing of unreasonable delay by WWI and Travelers in moving to judgment. Accordingly, WWI prays that the judgment below be vacated and remanded with directions to enter judgment in favor of WWI.
TSC-Taft responds that the circuit court did not err with respect to any of the points presented by WWI and thus the judgment below should be affirmed. The Rapoza Estate, in a separate answering brief, essentially seconds the defense of the circuit court judgment mounted by TSC-Taft. Finally, Travelers also takes issue with WWI's appeal, although only to the extent WWI raises "any suggestion, inference, or implication ... that Travelers somehow provides ... coverage for Taft with respect to the claims asserted against him[.]"
In its cross-appeal, Travelers contends that the circuit court erred in: (1)(a) concluding in its May 12, 1998 summary judgment order that Taft was sued as a co-employee of Rapoza, and (b) applying that conclusion to Travelers when Travelers was not a party to the lawsuit in 1998 and did not have an opportunity to be heard on the issue; (2) concluding that Taft had a reasonable expectation of coverage under Tri-S's worker's compensation and employer's liability insurance policy issued by Travelers; (3) granting WWI's motion for leave to file a third-party complaint for indemnification and contribution against Travelers; (4) granting TSC-Taft's motion to certify Doe Corporation (i.e., the motion to add Travelers as a direct defendant); (5) granting summary judgment on May 7, 2001 in favor of Plaintiffs and WWI and against Travelers when there were genuine issues of material fact, including how much of Tri-S's stock Taft held at the time of Rapoza's death; (6) concluding that (a) Article 19, Section 2 of Tri-S's bylaws requires that the corporation indemnify Taft as a director and officer for all liability in connection with the death of Rapoza, and (b) Taft properly tendered the defense of his indemnity claim to Travelers; (7) concluding that Travelers breached a duty to defend and indemnify Taft for fees, costs, and damages in connection with the wrongful death action and thus was obligated to reimburse TSC-Taft for its share of $124,644.07 attorney's fees and costs expended by TSC-Taft in defending that suit and prosecuting the instant declaratory judgment action; and (8) calculating and awarding prejudgment interest accruing from September 6, 2000 even though there was no showing of unreasonable delay by Travelers in moving to judgment. Therefore, like WWI, Travelers asks this court to vacate the judgment below and remand for entry of judgment in its favor.
TSC-Taft again counters that the judgment below was correct and should be affirmed. The Rapoza Estate joins in the answering brief of TSC-Taft on cross-appeal. WWI did not file an answering brief to Travelers' opening brief on cross-appeal.
Based on the following, we affirm the circuit court's final judgment in favor of Plaintiffs and against WWI, but vacate the judgment against Travelers and remand for entry of judgment in favor of Travelers and against Plaintiffs and WWI.
The instant appeal, No. 26202, relates to an appeal decided by memorandum opinion of this court on January 2, 2004 in Rapoza v. Willocks Constr. Corp. [hereinafter, Willocks], No. 22052, 103 Hawai`i 399, 83 P.3d 114, 2004 WL 27460 (Jan. 2, 2004). This court's previous opinion dealt with the wrongful death action resulting from Rapoza's electrocution, while the present case deals with the insurance coverage dispute connected thereto. Accordingly, this opinion briefly sets forth facts taken from the opinion in No. 22052 in addition to the background of the instant appeal.
On November 16, 1994, Rapoza, a construction worker employed by Tri-S, was killed as a result of electrical discharge from high voltage power lines located in close proximity to his work site in North Kona, Hawai`i. Willocks, 2004 WL 27460, at *1 (). On February 12 and November 15, 1996, the Rapoza Estate filed wrongful death actions (the suits were subsequently consolidated) sounding in negligence against various parties including Taft, the owner-president of Tri-S. Id. at *3. Tri-S itself, however, was not named as a defendant, presumably because it was immune from suit due to the worker's compensation exclusivity provision of Hawai`i Revised Statutes (HRS) § 386-5 (1993).3 Id. The suit alleged that Taft had a duty to provide a safe workplace for Rapoza and wilfully and wantonly breached that duty by failing to implement certain safety standards. Id. at *4. Therefore, the Rapoza Estate alleged, Taft was liable in tort for Rapoza's death as a co-employee under the exception to worker's compensation exclusivity found in HRS § 386-8 (1993).4 Id.
Specifically, the Rapoza Estate made, inter alia, the following allegations against Taft:
31. At all material times, Defendant Karl Taft was employed as president and manager of Tri-S, and was a fellow employee of [Rapoza].
32. At all material times, Tri-S had a duty to provide a safe work site to its employee, [Rapoza]....
33. At all material times, Taft's duties at Tri-S included (1) responsibility for its compliance with [Hawai`i safety laws and construction standards]; (2) ensuring that Tri-S employees have a safe work site; and (3) planning, scheduling, coordinating, and supervising the employment activities of his fellow employees at Tri-S, including... [Rapoza].
....
37. At all material times, Taft knew that serious bodily injury or death to [Rapoza] was the highly probable result of contact by, or close proximity of, Tri-S's drill rig with the high voltage line which caused [Rapoza's] death, unless [proper safety precautions] were taken.
38....
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