Arbitration Between Kalawaia v. AIG Hawai'i Insurance Co.

977 P.2d 175, 90 Haw. 167, 1999 Haw. LEXIS 154
CourtHawaii Supreme Court
DecidedMay 20, 1999
Docket21811
StatusPublished
Cited by27 cases

This text of 977 P.2d 175 (Arbitration Between Kalawaia v. AIG Hawai'i Insurance Co.) is published on Counsel Stack Legal Research, covering Hawaii Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arbitration Between Kalawaia v. AIG Hawai'i Insurance Co., 977 P.2d 175, 90 Haw. 167, 1999 Haw. LEXIS 154 (haw 1999).

Opinion

Opinion of the Court by

NAKAYAMA, J.

Claimant-appellant Clayton Kalawaia appeals from an order of the circuit court, confirming an arbitration award in his favor, but denying him prejudgment interest. Initially, this case presents a heretofore unresolved issue concerning appellate jurisdiction. We hold, on the facts of this case, that we have appellate jurisdiction to entertain Ka-lawaia’s appeal. On the merits of the appeal, the circuit court ruled that it was authorized to make an award of prejudgment interest, but that such an award was not justified herein. We hold that, where the entire dispute has been submitted to arbitration, the circuit court is not authorized to increase the arbitration award by ordering the payment of interest commencing prior to the date of the arbitration award. Therefore, we affirm the circuit court’s order, but on different grounds.

I. BACKGROUND

On October 27, 1990, Kalawaia was involved in an automobile accident and incurred physical injuries. On October 29, 1991, Kalawaia was involved in a second automobile accident, suffering additional injuries. At the time of both accidents, Kalawaia was an insured under an automobile policy issued by respondent-appellee AIG Hawai'i Insurance Company. Kalawaia had uninsured motorist (UM) and underinsured motorist (UIM) coverage in effect at the time of both accidents. The UIM/UM coverage limits were $105,000 for each accident. 1

*169 In April 1993, an independent medical examination was conducted of Kalawaia at the behest of AIG. Jordan Popper, M.D., diagnosed Kalawaia as suffering from “thoracic outlet disorder” as a result of the accidents. Kalawaia underwent surgery on two occasions pursuant to Dr. Popper’s diagnosis. In February 1995, Kalawaia reached a settlement with the driver involved in the 1990 accident for the bodily injury limit under that driver’s insurance policy. Thereafter, Ka-lawaia made a demand on AIG for settlement of his UM/UIM claims, in the aggregate amount of $550,000 for a settlement of claims relating to both accidents.

In January 1996, AIG made a global settlement offer of $100,000 for all claims. On or about February 1, 1996, Kalawaia demanded arbitration pursuant to his insurance contract with AIG. 2 In February and March 1996, Kalawaia requested an advance payment from AIG in the amount of $20,000, to be credited against an arbitration award. AIG refused Kalawaia’s request.

The arbitration hearing was initially scheduled for May 15, 1997. For various reasons, the arbitration was postponed and rescheduled for December 9 and 10, 1997. On December 2, 1997, AIG sent Kalawaia a letter stating, in part, that “AIG, in good faith, again offers to resolve the 1990 accident for $50,000 and the 1991 accident for $50,000 for a global settlement of $100,000.” During a telephone conference with the arbitrators, Kalawaia attempted to accept $50,000 for the 1990 accident without accepting the settlement offer for the 1991 accident. AIG’s attorney did not object, but AIG later refused to agree to the partial settlement and asserted that the only viable offer was $100,000 for all claims and that it would not separate the offers.

Because one of the arbitrators, Morgan Timberlake, believed that the dispute regarding what occurred at the telephone conference made him a potential witness in the case, he resigned as an arbitrator. Due to the delay in selecting a new arbitrator, the arbitration hearing was not held until April 1, 1998.

After the arbitration hearing, the arbitrators issued an order on June 1, 1998. This order awarded Kalawaia $104,026 for the 1990 accident and $85,285 for the 1991 accident. The order stated in relevant part that, in coming to agreement on the damages to be awarded, “[t]he task was to say the least formidable based upon the complexity of the injuries sustained and the medical care received[.]” 3

On June 16, 1998, Kalawaia filed a motion in the circuit court of the first circuit to confirm the arbitration award and for an award of prejudgment interest on the award. He requested prejudgment interest from the dates of his first settlement demands in 1995. 4 AIG opposed Kalawaia’s motion for prejudgment interest on the grounds that (1) the circuit court is not empowered to award *170 prejudgment interest in private arbitration proceedings and (2) even if the court were so empowered, such an award was not justified under the facts of this case.

A hearing was held on July 9, 1998. At the hearing, the circuit court stated that:

Without reaching the question of whether or not HRS [§ ] 636-16 authorizes the Court to award prejudgment interest in these types of cases, the Court suggests that counsel read Gadd v. Kelley, 66 Haw. 431, [667 P.2d 251 (1983) ]. It has broad language in it which the Court believes would allow it to award prejudgment interest in arbitration situations.
However, reviewing the submissions in this case and the comments of counsel, the Court cannot state that the conduct by AIG in this case was so dilatorious or in bad faith so as to warrant an award of prejudgment interest in this case.
Therefore, the motion to confirm arbitration award is granted in part, denied in part. The award is confirmed. The request for prejudgment interest is denied, but denied on the facts of this case and not on the law.

On July 22, 1998, an order entitled “order granting in part and denying in part Claimant Clayton Kalawaia’s motion to confirm arbitration award and for prejudgment interest” was filed. This order stated that

the Court, having considered the arguments of counsel, the memorandum in support, affidavits and records and files herein, and good cause appearing therefore, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Claimant’s motion to confirm arbitration award is granted and Claimant’s motion for prejudgment interest is denied.

On August 10, 1998, a document entitled “judgment pursuant to UIM/UM arbitration award” was filed. This provided that:

Pursuant to HRS § 658-12 and the Order Granting in Part and Denying in Part Claimant Clayton Kalawaia’s Motion to Confirm Arbitration Award and For Prejudgment Interest Concerning the October 27, 1990 Accident (Underinsured Motorist Claim) and the October 29, 1991 Accident (Uninsured Motorist Claim) Filed on June 16, 1998, filed herein on July 22, 1998, judgment in favor of Claimant Clayton Ka-lawaia and against Respondent AIG Hawaii Insurance Co. is hereby entered as follows:
October 27,1990(UIM)- $ 69,026.61 5
October 29,1991(UM)- $ 85,285.59
Total Judgment pursuant to Arbitration Award $154,312.20

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Bluebook (online)
977 P.2d 175, 90 Haw. 167, 1999 Haw. LEXIS 154, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arbitration-between-kalawaia-v-aig-hawaii-insurance-co-haw-1999.