Mendes v. Hawaii Insurance Guaranty Ass'n

950 P.2d 1214, 87 Haw. 14, 1998 Haw. LEXIS 7
CourtHawaii Supreme Court
DecidedFebruary 11, 1998
DocketNo. 19932
StatusPublished
Cited by14 cases

This text of 950 P.2d 1214 (Mendes v. Hawaii Insurance Guaranty Ass'n) 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
Mendes v. Hawaii Insurance Guaranty Ass'n, 950 P.2d 1214, 87 Haw. 14, 1998 Haw. LEXIS 7 (haw 1998).

Opinion

NAKAYAMA, Justice.

Plaintiff-appellant Mary A. Mendes1 appeals from the circuit court’s dismissal of her complaint against Defendant-appellee Hawaii Insurance Guaranty Association (HIGA). Because the circuit court erred in granting HIGA’s motion to dismiss with respect to count I of Mendes’s complaint, we vacate the resulting judgment in part and remand for further proceedings. We affirm all other aspects of the circuit court’s judgment.

I. BACKGROUND

On August 21, 1990, Mendes was injured in an automobile accident. On December 18, 1992, Mendes settled with the responsible driver’s insurance companies and received $70,000 in general damages. At the time of her accident, Mendes had an automobile insurance policy in effect with the Hawaii Insurance Group (HIG). Coverage was provided under this policy by the Hawaii Underwriters Insurance Company (HUI). Mendes’s policy with HIG/HUI provided for $105,000 in underinsured motorist (UIM) benefits.

On December 22, 1992, Mendes informed HIG/HUI that she intended to seek underin-sured motorist benefits under her policy because the damages incurred as a result of her injuries were in excess of the settlement amount. On January 20, 1993, HUI was declared insolvent. Pursuant to Chapter 431, Article 16 of the Hawai'i Revised Statutes (HRS), HIGA assumed the obligations of HIG/HUI with respect to Mendes’s claim. Mendes and HIGA engaged in settlement negotiations, but were unable to reach an agreement on Mendes’s UIM claim. On December 6, 1995, Mendes filed a three-count complaint against HIGA.

Count I of Mendes’s complaint sought un-derinsured motorist benefits from HIGA, on the grounds that it was responsible for claims brought against the defunct HIG/ HUI. Count II of the complaint charged that HIGA was liable for a breach of its duty of good faith and fair dealing and was liable in tort to Mendes. Count III of the complaint alleged tortious breach of contract against HIGA for its handling of Mendes’s claim.

On April 1, 1996, HIGA filed a motion to dismiss or, in the alternative, for summary judgment on Mendes’s complaint. HIGA’s motion characterized Count I of the complaint as a breach of contract claim and argued that HIGA was entitled to judgment in its favor because it did not have a contractual relationship with Mendes. HIGA further argued that counts II and III were barred by the statutory immunity contained in HRS § 431:16-116 (1993).2 HIGA’s motion also requested that Mendes’s UIM claim, if deemed to be a covered claim, be submitted .to arbitration, based on the HIG/ HUI policy.

On April 26, 1996, Mendes filed a motion for leave to file amended complaint. Mendes sought to amend her complaint to add two additional counts. These counts would have alleged severe emotional distress because of HIGA’s “extreme and outrageous conduct” and negligent infliction of emotional distress by HIGA.

By order filed May 17, 1996, the circuit court granted HIGA’s motion to dismiss, denied Mendes’s motion to amend complaint, and entered final judgment against Mendes on her claims. The court concluded that:

1. The complaint, filed on December 6, 1995, does not state claims which may be prosecuted against HIGA.
2. Plaintiff Mary Mendes does not have a contractual relationship with defendant HIGA, and therefore cannot pursue claims for breach of contract, “bad faith,” or tor-tious breach of contract.
[17]*173. Plaintiff Mary Mendes is barred by HRS Section 431:16-116 from pursuing claims against HIGA for “bad faith” and tortious breach of contract.

In denying Mendes’s motion to amend complaint, the court ruled that “[t]he two additional claims which plaintiff seeks to add by way of an amended complaint would be barred by [HRS § ] 431:16-116. The amendment, therefore, would be futile.”

Mendes timely appealed. On appeal, Mendes argues that: (1) a contractual relationship exists between herself and HIGA because the statute delegates HIG/HUI’s duties to HIGA; (2) HIGA is not immunized from liability for tortious conduct; and (3) the trial court abused its discretion in denying her motion to amend the complaint.

II. DISCUSSION

A. Standard of Revieiv

“Pursuant to the right/wrong standard, a conclusion of law is not binding upon the appellate court and is freely reviewable for its correctness.” State v. Soto, 84 Hawai'i 229, 236, 933 P.2d 66, 73 (1997). “Though pleadings should be construed liberally and not technically and a motion to dismiss for failure to state a claim should rarely be granted, a complaint may be dismissed if it appears beyond a doubt that the plaintiff can prove no set of facts entitling the plaintiff to relief.” Bertelmann v. Taas Assocs., 69 Haw. 95, 98, 735 P.2d 930, 933 (1987) (citation omitted).

This case requires us to interpret HRS Chapter 431,. Article 16. We review statutes de novo. Shimabuku v. Montgomery Elevator Co., 79 Hawai'i 352, 357, 903 P.2d 48, 52 (1995). “The starting point in statutory construction is to determine the legislative intent from the language of the statute itself.” State v. Kaakimaka, 84 Hawai'i 280, 289, 933 P.2d 617, 626, reconsideration denied, 84 Hawai'i 496, 936 P.2d 191 (1997). “[0]ur foremost obligation [when in terpreting a statute] is to ascertain and give effect to the intention of the legislature, which is obtained primarily from the language contained in the statute itself.” State v. Aluli, 78 Hawai'i 317, 320, 893 P.2d 168, 171 (1995) (citation omitted). We read statutory language in the context of the entire statute “and construe it in a manner consistent with its purpose.” Mathewson v. Aloha Airlines, Inc., 82 Hawai'i 57, 71, 919 P.2d 969, 983 (1996) (citation and internal quotation marks omitted).

B. Count I ■ States a Claim Based on HIGA’s Statutory Obligation to Pay Covered Claims

HIGA is a non-profit, unincorporated legal entity created by HRS Chapter 431, Article 16. HIGA’s purpose is “to provide a mechanism for the payment of covered claims under insurance policies to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer.” HRS § 431:16-102 (1993).

Pursuant to HRS § 431:16-108 (1993), HIGA shall:

(1) Be obligated to the extent of the covered claims[3] existing prior to the determination of insolvency, which the insolvent insurer would have been legally obligated to pay but for its insolvency!.]

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Mendes v. HAWAII INS. GUAR. ASS'N.
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Bluebook (online)
950 P.2d 1214, 87 Haw. 14, 1998 Haw. LEXIS 7, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mendes-v-hawaii-insurance-guaranty-assn-haw-1998.