Wiegand v. Allstate Ins. Companies

• Decision Date: 23 August 1985
• Docket Number: Nos. 10051,10054 and 9807,s. 10051
• Citation: 706 P.2d 16,68 Haw. 117
• Court: Hawaii Supreme Court
• Parties: In the Matter of the Appointment of an Arbitrator for the Dispute Between Gary WIEGAND, Petitioner-Appellant, and ALLSTATE INSURANCE COMPANIES, Respondent-Appellee. In the Matter of the Appointment of an Arbitrator for the Dispute Between Alicia MORRIS, Petitioner-Appellant, and The HAWAIIAN INSURANCE & GUARANTY COMPANY, LIMITED, Respondent-Appellee. Willie L. ROBINSON and Charline Robinson, individually, and Lloyd Y. Asato, as Special Administrator of the Estate of Willie R. Robinson, Deceased, Petitioners-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent-Appellee.

Page 16

706 P.2d 16

68 Haw. 117

In the Matter of the Appointment of an Arbitrator for the

Dispute Between Gary WIEGAND, Petitioner-Appellant,

and

ALLSTATE INSURANCE COMPANIES, Respondent-Appellee.

In the Matter of the Appointment of an Arbitrator for the

Dispute Between Alicia MORRIS, Petitioner-Appellant,

and

The HAWAIIAN INSURANCE & GUARANTY COMPANY, LIMITED,

Respondent-Appellee.

Willie L. ROBINSON and Charline Robinson, individually, and

Lloyd Y. Asato, as Special Administrator of the

Estate of Willie R. Robinson, Deceased,

Petitioners-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent-Appellee.

Nos. 10051, 10054 and 9807.

Supreme Court of Hawai'i.

Aug. 23, 1985.

Syllabus by the Court

1. Statute of limitations for "suits" under no-fault law applicable to proceedings in arbitration of disputes under no-fault contract. HRS § 294-36(a).

2. Where claimant sought to compel arbitration of disputed no-fault claim more than two years after the date of the last no-fault payment, the statute of limitations under the Hawaii No-Fault Law had already run, and the trial court did not err in refusing to appoint an arbitrator and compel arbitration.

Roy J. Bell, III, and Glenn Grayson, Honolulu (Jan M. Weinberg and Winfred K.T. Pong, Honolulu, with them on brief; Weinberg & Bell, Honolulu, of counsel), for petitioner-appellant Gary Wiegand, for petitioner-appellant Alicia Morris.

Sean Kim, Honolulu (Gill, Park, Park & Kim, Honolulu, of counsel), for petitioner-appellant Willie R. Robinson.

Walter Davis, Honolulu (Ashley K. Fenton, Honolulu, with him on brief; Davis, Reid & Richards, Honolulu, of counsel), for respondent-appellee The Hawaiian Ins. & Guar. Co., Ltd.

Lyle Y. Harada (James Kawashima, Honolulu, with her on brief; Kobayashi, Watanabe, Sugita & Kawashima, Honolulu, of counsel), for respondent-appellee State Farm Mut. Auto. Ins. Co.

Anthony Y.K. Kim and Brian Takahashi, Honolulu, on brief; Hamilton, Gibson, Nickelsen, Rush & Moore, Honolulu, of counsel, for respondent-appellee Allstate Ins. Co.

Before LUM, C.J., and NAKAMURA, PADGETT, HAYASHI and WAKATSUKI, JJ.

WAKATSUKI, Justice.

The three cases were consolidated for purposes of oral argument. The respective insurance company in each case denied payment of certain no-fault benefits claimed by the appellants. The appellants then demanded arbitration by petitioning the circuit court to appoint arbitrators. In each case, a demand for arbitration was made more than two years after the last no-fault payment was made, but before six years from the date of the last payment of no- fault benefits. The circuit court denied the petitions on grounds that the two-year statute of limitation provision in the Hawaii Revised Statutes (HRS) § 294-36(a) ¹ is applicable to demands for arbitration to settle the disputed claims for no-fault benefits. We affirm.

I.

In case no. 9807, Robinson v. State Farm, Willie Robinson sustained fatal injuries as a passenger in a motor vehicle accident on October 1, 1977. The last no-fault payment made by State Farm for this accident was on August 30, 1978. In June, 1983, Robinson's estate applied for survivor and lost income benefits, which were denied by State Farm. A month later, appellants filed for appointment of an arbitrator.

In case no. 10051, In re Wiegand, Appellant Wiegand's daughter was killed on September 6, 1979 when struck by a motor vehicle driven by an insured under a no-fault automobile insurance policy issued by Allstate. Allstate paid all medical and funeral costs, the last payment having been made on April 24, 1980. Wiegand, on February 17, 1984, made a demand on Allstate for future earnings to be paid to his deceased daughter's estate. The demand was refused, and in March, petition was made for the appointment of an arbitrator.

In the Morris case, no. 10054, Morris was injured in a motor vehicle collision on May 17, 1978. Several medical payments were made by the insurer, Hawaiian Insurance and Guaranty (HIG), the last of which was made on August 21, 1980. In January, 1984, Morris submitted further medical bills to HIG, which refused to pay them. On March 9, 1984, Morris petitioned the circuit court for appointment of an arbitrator.

All three cases involve a demand for arbitration made more than two years after the last no-fault payment was made, but less than six years from that date.

II.

Appellants contend that the arbitration clause in the no-fault policy is contractual in nature and therefore, the six year statute of limitations period provided in HRS § 657-1 is applicable and not the two-year statute of limitations period provided in HRS § 294-36. Appellants argue that the word "suit" should be narrowly construed to mean only judicial proceedings, and that arbitration is not a judicial proceeding, therefore, the word "suit" in HRS § 294-36 should not be construed to include arbitration. We disagree.

Under HRS § 294-32 ², whenever a claimant or insurer requests an arbitration to settle a dispute, either party submits a written request for arbitration and appointment of an arbitrator with the clerk of the circuit court in the circuit where the accident occurred. The administrative judge shall then appoint an arbitrator. HRS § 294-32 further provides that an appeal may be taken from any judgment to the circuit court. Clearly, under HRS § 294-32 the arbitration process to settle disputed claims must be initiated in a judicial proceeding and an appeal of an arbitrator's judgment may be taken to the circuit court in a judicial proceeding. Appellants' contention that this arbitration process outlined in our no-fault law is not a "judicial proceeding" within the meaning of the word "suit" as used in HRS § 294-36 defies a logical, reasonable and rational construction of the word "suit."

III.

Where the language of the statute is ambiguous, the court's primary objective is to ascertain and give effect to legislative intention. Puchert v. Agsalud, 67 Hawaii 26, ---, 677 P.2d 449, 456 (1984).

Appellants would limit the definition of the word "suit" to judicial proceedings. Appellees would construe "suit" to include arbitration proceedings as well as judicial proceedings. Both have found support in cases from other jurisdictions interpreting other statutes or contracts. Compare, e.g., Har-Mar, Inc. v. Thorsen & Thorshov, Inc., 300 Minn. 149, 218 N.W.2d 751 (1974), and Son Shipping Co. v. DeFosse & Tanghe, 199 F.2d 687 (2d Cir.1952), with Madawick Contracting Co. v. Travelers Insurance Co., 202 Misc. 411, 114 N.Y.S.2d 300 (N.Y.Sup.1952), and Old Dutch Farms, Inc. v. Milk Drivers & Dairy Employees Union, 222 F.Supp. 125 (E.D.N.Y.1963).

The word "suit" in HRS § 294-36 may be susceptible to more than one interpretation. Therefore, we will look to the intent of the legislation in construing "suit."

A.

A primary objective of the Hawaii No-Fault Law is to "expedite the settling of all claims." House Joint Stand.Comm.Rep. No. 187, reprinted in 1973 House Journal at 836. See also, Sen.Conf.Comm.Rep. No. 4, reprinted in 1973 Senate Journal at 635; House Conf.Comm.Rep. No. 13, reprinted in 1973 House Journal at 1219. See generally, Legislative Auditor, A Study of Hawaii's Motor Vehicle Insurance Program (1972) (hereinafter, Auditor's Report ).

Prompt settlement of claims would provide reparations for injuries sustained in motor vehicle accidents when most needed. Auditor's Report at 35-47; O'Connell, The Injury Industry and the Remedy of No-Fault Insurance 15-27 (1971) (hereinafter, O'Connell ). The lack of necessity of determining who is at fault in a motor vehicle accident with its concomitant delay also should mean that more of the premium dollar will be spent on direct benefits to the injured. Thus, the theory is that the cost of automobile insurance would be lowered. Auditor's Report at 31-47; O'Connell 106-121.

The no-fault law has been analogized to the workers' compensation law. Joshua v. MTL, 65 Hawaii 623, 631, 656 P.2d 736, 741 (1982). As with the workers' compensation law, the no-fault law represents a socially enforced bargain where both parties give up some rights in exchange for other benefits. See Hun v. Center Properties, 63 Hawaii 273, 276, 626 P.2d 182, 185 (1981). The injured party relinquishes the right to sue for large amounts of general damages, and is saddled with a shorter limitations period in exchange for certainty and promptness of reparations for injuries. The insurer, on the other hand, is mandated to pay all no-fault benefits promptly regardless of who is at fault. In return, the insurer should be able to more promptly close each case file and should be better able to predict the cost of each case.

We agree with the Michigan appellate court that the relatively short limitations period "seems consonant with the Legislative purpose in the No-Fault Act in encouraging claimants to bring their claims to court within a reasonable time and the reciprocal obligations of insurers to adjust and pay claims seasonably." Pendergast v. American Fidelity Fire Ins. Co., 118 Mich.App. 838, 841, 325 N.W.2d 602, 604 (1982). A longer statute of limitations would undermine one of the objectives of the no-fault law and would give the insurer a disincentive to promptly pay a disputed loss. Salvado v. Prudential Property and Cas. Ins. Co., 287 Pa.Super. 304, 313, 430 A.2d 297, 302 (Price, J., concurring and dissenting) (1981).

The prompt settlement of claims is an objective of the no-fault law which isn't altered by the availability of an arbitration proceeding in lieu of a judicial proceeding. Arbitration is no better at resolving stale claims than ordinary court proceedings. While evidentiary and procedural rules are more flexible in an arbitration proceeding, arbitration is no better at refreshing faded memories or at locating witnesses. Given the objectives of the no-fault law, we are convinced that the word "suit" in HRS § 294-36 was intended to be inclusive of the...