Case Title: Enoka v. AIG Hawaii Insurance Company, Inc. S.Ct. Order of Correction, filed 02/28/2006 [pdf].

Citation: 109 Haw. 537

Docket Number: 

State: hawaii

Court: Hawaii Supreme Court

Date: 2006-02-23T00:00:00Z

Document:
LAWLBRARY

*** FOR PUBLICATION ***

 

IN THE SUPREME COURT OF THE STATE OF HAWAI'I

 

= o00

 

 

ANGIE M. ENOKA, Plaintiff-Appellant/Cross-Appellee,

INC., a Hawai'i

AIG HAWAI'I INSURANCE COMPANY,
corporation, Defendant -Appellee/Cross-Appellant,

and

JOHN DOBS 1-10, DOE PARTNERSHIPS, CORPORATIONS,
‘AND/OR OTHER ENTITIES 1-10, efendants.

 

No, 25292

APPEAL FROM THE PIRST CIRCUIT COURT
(crv, No. 00-21-3685)

85:8 ki ez a3ysi9g
oss

 

FEBRUARY 23, 2006

MOON, C.d., LEVINSON, NAKAYAMA, ACOBA, AND DUFFY, JJ.

OPINION OF THE COURT BY MOON, C.J.

The instant appeal and cross-appeal arise out of an
apparent one-car accident in which plaintiff-appellant/cross-

appellee Angie M. Enoka either fell from, or was thrown out of,
the bed of pick-up truck owned by Kenneth J. Carvalho and being
operated at the tine by Elizabeth A. Ubay. Subsequent to the
accident, Enoka filed a claim for no-fault benefite with several
appellant AIG

 

insurers, including defendant -appellee/cro:
AIG had iseued a personal

Hawai'i Insurance Company (AIG).

 
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automobile policy to Bnoka's parents, with whom Snoka resided in
the sane household. However, AIG denied the claim on the basis
that the applicable statute of limitations had run on Enoka’s
claim for no-fault benefits. Enoka thereafter filed the instant
laweuit, asserting, inter alia: (1) breach of contract;

(2) breach of the implied covenant of good faith and fair
Gealing; and (3) intentional infliction of enotional distress
(r1ED) .

Enoka appeals from the Circuit Court of the First
Circuit's! Auguet 19, 2002 final judgment entered in favor of
AIG. On appeal, Enoka argues that the trial court erred in
granting AIG’s motion for summary judgment on all of Enoka’s
claims, AIG cross-appeals, challenging the trial court’s denial
of its motion for attorneys’ fees and costs. In its cross-
appeal, AIG asserts that the trial court erred by taking into
consideration equitable grounds unrelated to the reasonableness
of the amount of the attorneys’ fees sought.

For the reasons discussed below, we affirm the trial

 

court's order granting final judgment in favor of AIG and the

 

trial court’s order denying AIG's motion for attorneys’ fees and

costs. Because we agree with Enoka that the trial court may

 

decide the issue of Enoka’s request for attorneys’ fees and costs

incurred with respect to the instant appeals, we remand thie case

 

2 the Honorable Victoria 8. Marks presided over the underlying
proceedings

 
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SSS

to the trial court for further proceedings consistent with thie

opinion.

 

 

Factual Backeround

on April 19, 1997, Enoka, who was sitting in the bed of
a pick-up truck owned by Carvalho and driven by Ubay, fell or was
thrown from the vehicle while it was in motion and sustained
bodily injuries, At the tine of the accident, Enoka lived with
her parents and brother. Enoka’s parents owned three
autonobiles, all of which were insured under a single policy with
AIG (the AIG policy). Both Enoka’s and her brother’s automobiles
were insured under separate policies with Government Employees
Insurance Company (GEICO). Each GEICO policy provided $30,000 in
no-fault benefits.

The pick-up truck was insured by State Farm Insurance
company (State Farm) through a personal automobile policy issued
to Carvalho. Ubay, the operator of the pick-up truck, was the
owner of an automobile that was not involved in the subject
accident, which was insured by Allstate Insurance Company
(aiietate). Following the accident, Enoka submitted no-fault and
bodily injury lability claime to State Farm and Allstate. Bnoka
also filed claime for underinsured motorist (UIM) coverage under
her and her brother’s policies with GEICO.

Enoka allegedly received insurance benefits from

several of these carriers. By June 25, 1997, Enoka had exhausted

 
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no-fault benefits from state Farm, In Septenber 1998, Enoka
secured a tort settlement for general danages paid by state Farm
and Allstate. In March 2000, Enoka reached a settlement with
GEICO for UIM benefits.

on dune 12, 2000, more than three years after the

ed a claim for no-fault benefits under the AIG

  

accident, Bnoka

policy. On July S, 2000, AIG sent Enoka a “Denial of Claim" form
(denial form), denying Enoka’s claim for no-fault benefits. The

denial form explained:

Statute of Limitation on No-Fault benefits hae
f to fiiawas't Revived statutes (JHRS() $1
HSiioe-s15 "Seatute of Limitatsona,” you may not make 2
Claim for No-Fauit benefits beyond tvo-years after the motor
Schitue accident, trom the last payment of No-Fault benefit
Sf" (two yeare] fom the claimants (gic) eighteencs birthday.
‘e’medical payment wae on 6-25-97 therefore, the
yan cn 6/26/38.0)

  

 

   

B. Procedural History
2. Complaint and Answer

on Decenber 13, 2000, Enoka filed a complaint against
AIG, asserting claims for, inter alia, breach of contract, breach
of the implied covenant of good faith and fair dealing, and ITED.
Enoka clained that AIG was contractually obligated to provide her
with the no-fault policy limits of her parents’ policy, totaling
$100,000 less any no-fault payments paid by other insurers.

AIG failed to timely answer Snoka’s complaint.

Consequently, Enoka obtained an entry of default against AIG on

 

+ the denial form, as originally prepared, incorrectly states that the
statute of Linitations ran on °¢/26/28-" (Bmphasis added.) Although not
Expisines, the desial form in the record shows the "e" in "9s" as stricken and
feplaced with « handwritten *

 

 

 

 
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February 27, 2001. On April 18, 2001, AIG answered Enoka’s
complaint, acka filed a motion to strike AIG's untimely answer
on May 9, 2001, AIG moved to set aside the entry of default on
May 16, 2001. on May 21, 2001, the parties stipulated to set
aside the entry of default against AIG.
2. ATG's Motion for Summary Judgment

on March 4, 2002, AIG moved for sunmary judgment on all

counte in Encka’s complaint.’ Therein, ATG argued, inter alia,

that ite motion for summary judgment should be granted inasmuch

 

(1) Bnoka’s claim for no-fault benefits was barred by
Hawaii's applicable statute of limitations, as cited in its
Genial form; (2) Bnoka failed to timely notify AIG of her no-

fault claim for benefits; and (3) certain exclusions in the AIG

 

policy barred Enoka’s claim for no-fault benefits and that,
therefore, Enoka was not contractually entitled to no-fault
coverage under the AIG policy.

on March 22, 2002, Enoka filed her memorandum in
opposition to AIG's motion for summary judgment, Therein, Enoka

countered AIG's arguments, contending, inter alia, that

 

(a) are
acted in bad faith by proffering only one reason, i.e., the

statute of limitations, when it denied Enoka‘s claim for no-fault

 

> axG originally filed its motion for summary judgment on October 4,
2001. Following recelpt of Bnoka’s menorandum in opposition, filed on
Zettduer 26, 2002, ALG withdrew its original notion on January 2, 2002,
Ristreneiy having'vealizes 1t had attached an incorrect veraion Of the policy
GREATS" ici enola's parents to the original motion. Upon re-filing its motion
E8SSCanery judgment on March 4, 2002, the correct version of the policy vas
ateachea.
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benefits in its denial form; (2) by acting in bad faith, AIG is
estopped from asserting other reasens based on the language of
the AIG policy to bar Enoka‘s claims in the instant action; and
(3) even if AIG is not guilty of bad faith, it nevertheless
waived ite right to rely on its policy exclusions or is estopped
from doing so because it had not relied on those policy
exclusions when it originally denied Enoka’s claim for no-fault
benefits on July 5, 2000 and when it filed its answer to Enoka’s
complaint.

on May 26, 2002, the trial court granted AIG's motion
for sunmary judgment on all counts alleged in Enoka’s complaint
the written order entered by the trial court stated

‘The Court finds that Exclusion A of Subpart # of the subject
moter vehicle insurance policy [the AIG policy'] applies to
The undieputed fects surrounding Plaiatift’s. (encka's) claim
for no-fault benefits. As 4 result, the Court concludes
Ehae "Defendant (RIG) had no duty co’ pay the claimed benefits
ith the result that each of [inoka’s] ‘causes of action
Faller Including that based on an alleged violation of the
Implied covenant of good faith and fair dealing,

known as *bad faith.* ‘The doctrines of valver and estoppel
So net apply where, as here, so coverage existed in the

first place by virtue of the operation of Exclusion A.

 

 

 

 

  

 

 

+ part & of the AIG polley, entitled “wo-Tault coverag

provides in
relevant part:

excLusrons
‘ie Go not provide No-Fault Coverage for beaily injury:

A. To any family member who is a named insured under
Gnother no-éaule policy, except while eceupying your
covered auto

&.” To you or any family member while occupying or while «
rd by an insured motor vehicle other

 

(sold emphases in original.)

 
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AIG's Motion for Attorneys’ Pees and Costs

 

Having prevailed on its motion for summary judgnent,
AIG moved for an award of attorneys’ fees and costs pursuant to
HRS §§ 607-14 and 607-5, quoted infra, on May 29, 2002. AIG
sought attorneys’ fees in the anount of $20,621.60 and costs in
the amount of $310.39. On July 15, 2002, the trial court held a
hearing on AIG's motion. At the commencement of the hearing, the
trial court advised the parties that it was inclined to partially
grant AIG's motion and award $13,106.11 as reasonable attorneys’

fees, as well ae $250.60 in costs. During the hearing, Bnok

 

counsel argued that no fees should be awarded, urging that “the

hand of equity should step in," Specifically, Enok

 

8 counsel
re-argued his earlier rejected waiver and estoppel arguments,

contending that it would be unfair to award AIG any attorne;

 

fees and costs because the ground relied upon by the trial court
in granting AIG's motion for sunmary judgment (i.e., Bxclusion A)
was not the one originally cited by AIG when it issued its denial
form (ices, statute of limitatione). The trial court agreed and,
‘at the conclusion of the hearing, ruled that it would not award

any attorneys’ fees and costs to AIG. The trial court

 

written
Genial was entered on July 30, 2002.

on August 19, 2002, final judgment was entered in favor
of AIG. Enoka timely appealed on August 28, 2002, and AIG crose-

appealed on September 11, 2002.

 
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TI. STANDARDS OF REVIEW
AL ion. mal

‘This court reviews a circuit court's grant or denial of

sunmary judgment de novo. Price v. AIG Hawai'i Ins, Co., 107
Hawai'i 106, 120, 112 P.3d 1, 5, reconsideration denied, 107
Hawai'i 106, 121 P.26 1 (2005) (citation omitted). The standard

 

for granting a motion for eummary judgment is well settled:

Islumary judgment ie appropriate if the plesdinss
depositiont, anevere to interrogatories, and admiseions on
HES Logother' ith che afficavits, if any, show that there
fe no gesvine ieeve az to any material fact and that the
soving party ie entitled to judgeent a5 a matter of law. A
Fact ie material if proof of that fact would have the effect
Ef tstabliening of refuting one of the essential elements of
S cause of action or defense asserted by the parties. The
Evidence must be viewed in the light mort favorable to the
Soncsoving party. In other words, we must view all of the
Evlacnce and the inferences drawn therefrom in the Light
Set favorable to the party opposing the motion

 

 

Td. (citation omitted) (brackets in original).
5. Statutory Interpretation

Statutory interpretation is reviewed de nove by this
court. Blaixy. Ing, 95 Hawai'i 247, 253, 21 P.3d 452, 458
(2001) (citations omitted). “when construing a statute, our
foremost obligation is to ascertain and give effect to the
intention of the legislature, which is to be obtained primarily
from the language contained in the statute itself." Taylors
v. State, 105 Hawai'i 104, 108, 94 P.34 659, 663 (2004)
(citations omitted). Moreover, *[i]t is a cardinal rule of
statutory interpretation that, where the terms of a statute are
plain, unambiguous and explicit, we are not at liberty to look

beyond that language for a different meaning. Instead, our sole

 
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duty is to give effect to the statute’s plain and obvious
meaning.” T-Mobile Inc. v. © of Hawai'i planni
Comm'n, 106 Hawai'i 343, 352-53, 104 P.3d 930, 939-40 (2005)
(citation omitted)
c. Motion for Attorneys’ Fees and Costs

his court reviews the trial court’s grant or denial of
attorneys’ fees and costs under the abuse of discretion standard.
price, 107 Hawai" at 210, 12 P.3d at 5 (citations omitted)

‘the trial court abuses ite discretion if it bases ite ruling
Chan erroneous view of the law er on a clearly erroneous

secant of she evidence. Stated differently, an abuse of
Seetion occurs where the trial court has clearly exceeded
the bounde of reson or disregarded rules or principles of
SEs Se practice to the substantial detriment of a party
1itigene

 

    

Id. (citations omitted)
TIT, piscussy

on appeal, Encka argues that: (1) the AIG policy
provides coverage for her claim for no-fault benefits; (2) ATG
acted in bad faith when it wrongfully denied Enoka’s claim for
no-fault benefits; (3) AIG waived or is estopped from raising
policy exclusions as defenses to Enoka’s breach of contract and
breach of the implied covenant of good faith and fair dealing
clains; and (4) AIG intentionally inflicted emotions] distress on
her, However, we firet address AIG's contention that the
applicable statute of limitations bars Enoka’s claim for no-fault

benefits:
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A, Statute of Limitations

At the time of Encka’s April 19, 1997 accident, the
applicable statute of limitations was codified at HRS § 431:10C-
315(a) (1992), which provided:

(a) No suit shall be brought on any contract providing no-
fhule Benefite or any contract providing optional additional
coverage more than, the later of:

a
wish the Claim ie based;
@ are after th - 2

 

entry of 2 final order in arbitration;

 

(4) Pwo yeare after the entry of a final judonent in, or
Glenieal with prejudice of, @ tort action arieing out of a
notor vehicle accident, where a cause of action for ineurer
Dad faith arises out of the tor: action.

 

 

(Snphases added.) Enoka filed her claim for no-fault benefits
with AIG on June 12, 2000, ore than three years after the date
of the subject motor vehicle accident. Relying on the
Intermediate Court of Appeals’ (ICA) decision in Higa v. Lino, 62
Hawai'i 535, 537, 923 P.2d 952, 954 (App. 1996) (stating that,

for purposes of HRS § 431:10C-325(b) (2), uninsured motorist

 

[(UN)] benefits constitute “optional additional benefits”), Enoka
contends that the two-year statute of limitations conmenced in
March 2000, when she received her last UIM benefite from GEICO.*
AIG, on the other hand, argued that subsection (a) (2) *must be

read to me

 

juve the limitations period from the last date that
the defendant insurer paid a no-fault or optional additional

benefit, not the last date that any insurer made such a payment,”

 

* tn Honbo v, Mawaiian ine. f Guar. Co., 06 Hawai'i 373, 376, 949 7.24
213, 216 (app. 1987), the ch extended the reasoning and holding of Higa to
Conciude that, for the purpose of HRS § 294-36(a) (predecessor to MRE
S'agistec s15(a)), UIM benefite constitute “optional additional benefits."

 

 

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Oo

(emphasis in original), and Higa did not definitively address the
issue at bar.

tn Higa, Miles Higa (the plaintiff) was a passenger in
a car operated by Fred Lino, Id, at 536, 923 P.2d at 953. While
traveling down @ highway, Lin's car collided into the rear of an
abandoned car, resulting in injuries to the plaintiff. Id. Lino
thereafter renoved the plaintiff from his car and placed the
plaintiff on the shoulder of the highway to ewait an ambulance.
a. However, another car, operated by Jinmy Bolosan, somehow
caused a second accident that further injured the plaintiff. id.
the multiple car accident occurred on Septenber 8, 1985. Ide

the plaintiff had received no-fault benefits under
Lino’s automobile insurance policy, and these no-fault benefits
were exhausted on December 10, 1987, Id, The plaintiff also
received no-fault benefite from Bolosan’s automobile insurance
policy, and, according to the plaintiff, he was still receiving
these benefits as of February 26, 1991. Id, In the meantime, on
october 11, 1990, Allstate Insurance Company (Allstate) tendered
a $75,000 check to the plaintiff as “final settlement of any and
all claims for bodily injury under (UM) coverage" arising from
the accident.* 1d, at 536-37, 923 P.2d at 953-54.

on February 2, 1990, the plaintiff filed @ complaint,
naming Lino and Bolosan as defendants. id. at 537, 923 P.2d at

| Allstate's insureds were identified as “Masao and M.P. Higa."
kowever, che uch opinion notes that the Tecord is silent as to the

However sghip between Alletate's inaureds and Miles Wiga, the plaintiff. id.
ie gsr nz, 923 Pe2d at 954 1.2,

 

 

 

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954. However, on January 25, 1991, the plaintiff anended his
complaint, by removing Bolosan as a co-defendant. Thereafter,
Lino moved for sunmary judgnent, arguing that the plaintiff's
claim was barred by the statute of limitations under Hawaii's no-
fault laws.’ Id, The applicable statute of Limitations provided
that:

() No suit arising out of a rotor vehicle accident shall be
Brought in tore more than!

{) Io years after the date of the moter vehicle accident
upon which the claim is based

() "tuo veare after the date of the last payment of no-fault

 

  

rising fron the

motor Vehicle accident; whichever is the last to occur-

 

Id. (quoting HRS § 294-36(b) (1985)) (emphases added). The trial
court granted Lino’s motion for sunmary judgrent, and the
plaintiff appealed. id.

The dispositive issue on appeal was whether UM benefits

 

conetituted “optional additional benefits." Disagreeing with the
trial court, the ICA concluded that “optional additional

benefit:

 

includes UM benefits, Accordingly, the ICA held that,
because the plaintiff “received a payment of [UM] benefits, or
optional additional benefits, on October 11, 1990, and because
HRS § 294-26(b) only bare tort actions brought more than two

years after the date of the last payment of optional additional

° Ae the tine of the September 6, 1985 accident, the applicable statute
of Limitations wae found in WRS § 294-36 (b) (2985), which wan recodified to
es § 421:10c-315(8) in 1987. Although recodified in 1987, the language of
section 254-36(b) hae remained unchanged. Higa, ®2 Hewat" at 37 a n.5, 923
Piza at 954 2.5.

 

 

 

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benefits,” the plaintiff's January 25, 1991 first amended
complaint was timely filed. Id. at 539, $22 P.2d at 956.

However, the plaintiff also argued that his first
amended complaint was timely if measured from Bolosan’s last no-
fault payment. Id, at 538 n.6, 923 P.2d at 955.6. The
plaintiff contended that “the timeliness of the amended complaint
can be measured from Bolosan’s no-fault payment if the injuries
he received when Bolosan’s car collided with [Lino’s] car are
attributed to [Lino’s] negligence." id, The ICA first noted
that it need not consider this argument in Light of ite holding,
stated infra. Id, The ICA then noted that,

Af we did consider this argument, ve believe that the no-
fault benefits referred to in HRS § 294-36 (b) [MRS

§ s31,10¢-215(b)] are limited to no-fault Denetite arising
Enly irom the tino accident, and not from the later Dolosan
Sccleent, “therefore, the timeliness of [the plainciff’s)
Snended complaint should not be measured from Bolosan’s 1
povfault payment.

 

 

 

Id.

‘The ICA's decision in Higa, however, is not dispositive
of the issue in the present case. Although the plaintiff in Hica
ultimately brought suit only against the first driver, Lino, Higa
involved two separate motor vehicle accidents, the Lino accident
and the Bolosan accident, which may have led the ICA to conclude
in dicta that the timeliness of the plaintiff's amended complaint
should not be measured from Bolosan’s last no-fault payment.

Nevertheless, plain reading of HRS § 431:10C-

315(a) (1) and (2) dictates that a plaintiff may bring suit on

vany contract providing no-fault benefits,” provided that the

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euit is brought no later than two years from either (1) "the date
of the motor vehicle upon which the claim is based" or (2) “the
last paynent of no-fault or optional additional benefit.”
Significantly, section 431:10C-315(a) (2) does not condition the
last payment of no-fault or optional additional benefits to be
from a defendant insurer. Therefore, based on the plain language
of section 431:10C-215(a) (2), we hold that Enoka’s claim for no-
fault benefits is not barred, inasmuch as the last payment of no-
fault or optional additional benefits was made not more than two
years before Enoka filed her complaint against AIG. In other
words, because the UIM benefits from GEICO was paid sometine in
March 2000 and Encka’s conplaint was filed on Decenber 13, 2000,

the complaint was timely.

B. Enoka‘s Contention that the AIG policy Provides
Coverase for her Claim for No-Fault Benefits

Enoka contends that the trial court erred in ruling
that Exclusion A, see supra note 4, of the AIG policy bars
Enoka's breach of contract claim. Enoka argues -- allegedly for
the first time on appeal -- that the AIG policy tis reasonably
subject to differing interpretations" and is, therefore,
ambiguous.

In general, “failure to raise or properly reserve
issues at the trial level would be deemed waived." Coll v.
McCarthy, 72 Haw. 20, 26, 804 F.2d 881, 886 (1991) (citations
omitted), AIG maintains that Enoka never raised her ambiguity

argument” at the trial level. In opposition to AIG’s motion,

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es

Enoka argued that “Exclusion A vas inapplicable because it was
limited to *No-Fault Coverage for bodily injury’ and [Enoka) did
not make a claim for bodily injury, but rather one for Personal
injury Protection (PIP) benefits."* In response, Encka alleges
that she adequately raised her ambiguity argument at the trial
devel, which was that “the two exclusions on which AIG relied in
support of ite motion for sunmary judgment applied only to the
statutory minimum no-fault benefits, and not to optional
additional no-fault benefits.”

on appeal, Encka contends that

[e}he [AT0] policy's failure to incorporate the
sexclusions” ‘subpart of Part 2, while it expressly
Jncorperetes the sunpart "ineuring Agreement (Coverages and
denefice Provides) ,"() coupled with ite failure to mention
Exclusion A or any other clusion of Part 8, while s©
Zipressiy mentions Exclusion of Part B, (in the section
SREussite Option 1!) renders the policy’ ambiguous.

     

 

+ although confusing, St appears that Bnoka ie indicating that she did
not make = tort’ thaim that would erigger the bodily injury 1iebiliey coverage,
Roe SSkher that her claim wae for nedical and/or wage loss benefits, currently
Pefered toes Personal Injury Protection or PIP benefits,

+ The subpart “Ineuring Agreement (Coverages and
found in Part E- No-Fault Coverage

 

ite Provided)” is

3 tn the section entitled “OPTION 1 - ADDITIONAL NO-PAULT COVERAGE,”
the Ar@ policy provides in relevant part:

ie will provide the ingurance described under this option
only if Opriow 2 ie indicated on the Declarations and the
Sppropriate premium is paid.

Si "provislone and definitions applicable to coverages
Benefitg provided under Fare B of this policy apply unl
Rodified by this coverage,

We 'will pey Additional No-Pault Coverage benefits as stated
Uh the Declarations to or for a covered person who sustains
bodily injury resulting from an aute accident,

 

ne

 

 

 

 

yee she Accitional No-Fault Coverage work loss benefits do
ot apply to any covered person except you or a family
enber

2. He will not pay Additional No-Pault Coverage to any

Derson sustaining bodily injury caused by an auto
Dene by that person and not insured for Additional
(continued...)

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eee

Option 2 of the (AIG) policy is reasonably subject to
aittering interpretations regarding the applicability of
Exclusion A of bart £0 optional additional no-fault
coverage

Enoka appears to argue that, because Exclusion A is not mentioned
in the section discussing Option 1, is@s, additional no-fault
coverage, Exclusion A does not bar her claim for no-fault
benefits and, thus, does not bar her breach of contract claim.

We believe Enoki

 

argument on appeal is substantially similar to
the argument made at the trial level, ive., that Exclusion A does

not bar her claim for no-fault benefit

 

+ Accordingly, we hold

that Bnoka‘e argument with respect to the applicability of

 

Exclusion A wae sufficiently preserved for thie appeal and, thus,

is not waived. See Lau v, Valu-Bilt Homes, utd., 59 Haw, 263,

 

208, 562 P.2d 195, 199 (1978) (noting that, where the issue wa
before the trial court from the inception of the 1itigation and
where it is not a case where the trial court did not have any
opportunity to pass on the issue, the issue is preserved for
appeal). Consequently, we next address whether Exclusion A bars
Enoka’s claim for no-fault benefits.

ordinarily,

insurers have the sane rights as individuals to limit their
lability and to impose whatever conditions they please on
thelr cbligation, provided they are not in contravention of
Etatutory inhibitions or public policy. As such, insurance
policies are subject to the general rules of contract

 

(.. seontinuea)
o-Fault Coverage
3. Exclusion £, under Part B does not apply to Additional

Ho-Paule Coverage
(Gold emphases in original.)

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oo

construction; the terme of the policy should be interpreted
SERSEEISG co eheir plain, ordinary, and accepted sense in
SSSobn Beech unless it appears from the policy that a
Gfiterent seaning is intended. Moreover, every insurance
oiettace ehall be construed according to the entirety of ite
ferns end conditions as set forth in the policy:

Hevertheless, adherence to the plain language and 2iteral
seee eee of the insurance contract provisions is not without
MeTeE sen. he have acknowledged that[,] Because insurance
Jeligies exe Contacte of adhesion and 4re premised on
Btandara forme prepared by the insurer's attorneys, we have
sanders scribed’ ce the principle that they must be construed
TGS Ety ia Favor of the insured and any ambiguities must
eeielved against the insurer. Put ancther vay, the rule
HE thar policies ave to be construed in accord with the
Feasonable expectations of a layperson.

pairy Rd. Partners v. Island Ing, Co., 92 Hawai'i 398, 411-12,
992 P.2d 93, 106-07 (2000) (internal quotation marks, brackets,

 

 

 

and citations omitted).

Ae previously noted, Part B, entitled *No-Fault
coverage,” of the AIG policy, describes circumstances under which
AIG will not provide no-fault coverage. Exclusion A provides:

We do nok provide No-Pault Coverage for bedily injury:

A. To sny family member
fnother no-fauls policy, except while

 

Supying YOU

(pold emphases in original.) (Underlined emphasis added.) Here

 

it ie undisputed that Enoka was a “named insured under another
no-fault policy," namely, her own personal automobile policy with
Gerco, which provided $30,000 in no-fault benefits. Further, it

ie undisputed that Enoka is a “family member under the AIG

2 the AIO policy defines “family menber” as *a person related to you
by blood, Rartiage or adgption who Js 2 resident of your household.” in turn,
Be ercafera to the named ineured show in the Declarations and the naned
TYRLatS Spouse, if the apouse Lives in the same household as the naned
jnsured'® spouts case, the Declarations show that Enoka’s parents, Willian
ingured: -. Gncka, are the named insureds on the AIG policy. Thus, inasmich as
Ae ve tae daughter of William and Monica Enoka, and she resides in the same
Froka ifavas nersperente, Bnoka ia a "family member‘ and a "covered person’
household atc soley, Neither party contests the foregoing construction,

 

 

 

 

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policy and that she was not occupying any of her parents’
“covered auto[s)"™ at the time of the accident. Thus, according
to the plain language of Exclusion A, AIG is not obligated to
provide no-fault benefits to Enoka under the circumstances of
this case
However, Enka, as previously stated, apparently

believes that, inasmuch as Exclusion A is not included or even
mentioned in option 1, she is entitled to additional no-fault
coverage benefits. As previously noted, Option 1 provides in

xelevant part:

he will provide the ineurance described under this option
Saly if GpTiow 2 is indicated on the Declarations and the
Sppropriate premium is paid.

Ail sfovisions_and definitions applicable to coverages and
benetite provides under fart £ of this policy apsly unless
sodified by this coverage.

Ne will pay Additional No-Fault Coverage benefits ea

35 the Declarations to cr for 2 covered pergon who sustains
bodily injury resulting from an auto accident

 

 

 

 

(Bold emphases in original.) (Underlined emphases added.) option

 

2 then sets forth the following three coverage modifications:

 

1. the Additional No-Pault Coverage work lose benefite do
not apply to any covered person except you or s family
member.

2. We'will not pay Additional so-rault Coverage to any

Person sustaining bodily injury caused by an auto
Swed by that person and not insured for Aaditional,
No-Pault Coverage.

5. Beelusion Funder Fart E does not apply to Additional
No-Paule Coverage

(Bold emphases in original.)

covered autor is defined in the AIG policy in pertinent part as
slalny vehicle shown in the Declarations.-" ere, the pick-up truck omed by
carvalho and driven by Ubay is not shown in the Declarations and, thus, is fot
S Ncovered auto.”

 

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in thie cage, Option 1 is listed on the Declarations

 

page of the policy, and AIG does not dispute that the appropriate
premium was paid by Enoka’s parente. Option 1 clearly provides
that ‘all provisions and definitions applicable to coverages and
benefits provided under Part £ . . . apply unless moditied by
thie coverage.” (Emphasis added.) Exclusion A is a “provision{]
. applicable to coverages and benefits provided under
Part 5.” Although Exclusion A precludes no-fault coverage for
bodily injury to any family menber who is a named insured under
another no-fault policy, it does not preclude such coverage to
such family menber when occupying a covered auto. Thus, the
additional coverage provision in option 1 applies, unless it has
been modified by the specific provisions in option i. As stated
above, Option 1 indicates three coverage modifications.
Significantly, Exclusion A is not modified, whereas Exclusion E
ig modified in that option 1 clearly states that additional no-
fault coverage does not apply to the circumstances described in
Exclusion 5. Clearly, the absence of any reference to Exclusion
A indicates that additional no-fault benefits are available under
the circumstances described in Exclusion A. However, inasmuch as
RIG is not obligated to provide Encka no-fault benefits pursuant
to the plain language of Exclusion A, it follows that ATG is
Likewise not obligated to provide Bnoka additional no-fault

coverage under option 1. Accordingly, we hold that the trial

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court did not err in ruling that Exclusion A of the AIG policy
bars Enoka’s breach of contract claim.
c. a ch of the Im snant of

Faith and Fair Dealing, i.e., Bad Faith

1. Whether Enoka May Assert a Claim for AzG’s

Alleged Bad Faith Where There Is No Coverage

Liability on the Underlying Policy

Enoka next contends that the trial court erred in
concluding that, inasmich as AIG had no duty to pay no-fault
benefits to Enoka pursuant to Exclusion A, Enoka is precluded
from bringing a claim against AIG for its alleged breach of the
implied covenant of good faith and fair dealing, i.e., “bad
faith." Enoka argues that AIG's "duty to act in good faith and
deal fairly with Encka is separate and distinct from its
contractual duties that arise under the [AIG] policy." In other
words, Enoka maintains that, ‘even assuming arguendo that there
is no coverage for Enoka’s claim for benefite under the [AIG]
policy, AIG's conduct . . . ie totally independent of any
coverage issue.”

In response, AIG contends that Enoka “overlooks the
fact that the applicability of Exclusion A te her claim means no
insurance contract existed in the first instance obligating arc
to pay no-fault benefits." In the absence of a contractual duty
to pay no-fault benefits, AIG argues there is no implied covenant
of good faith and fair dealing to breach and, thus, no action for

bad faith may lie.

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a

In Best Place, Inc. v. Penn Am. Ins, Co., 82 Hawai'i
120, 920 P.2d 334 (1996), this court held that

there is 2 legal duty, implied in a first- and third-party
[nsurance contract, [°] that the insurer must act in good

{leh in dealing with ite insured, and a breach of that duty
Ef good saith gives rise to an independent tort cause of

SécTon. ‘The beach of the exprese covenant to pay claim
fowever, ie not the gine gua hon for an action for breac
the inplied covenant of good faith and fair dealing. The
[pica covenant ie breached, whether the carrier pays the
Cinle or not, hen ite conduct damages the very protection
Sr'accurity whien the insured sought to gain by buying

 

   

 

Id. at 132, 920 P.2d at 346 (internal quotation marks and

citations omitted). Moreover,

1s tort of bad is not @ tortious breach of contract,
but rather
ihe breach of a duty Insesec 35-2. sence

[elationshib eetabliahed by conEract. Therefore! the tort
EplaRedtith silews am inured to recover even if the
Gnsurer performs the express covenant to pay claims,

Jd, at 131, 920 P.2d at 345 (internal quotation marks and

citation omitted) (emphases added). This court, however, did not

2) sy sfiree-party clain’ refers to an insurance agreenent where the
ingurer agrees to pay elaine submitted to it by the ingured for losses
fftered by the innuved.* Bagi Place, #2 Maas at 224 a4, 520 7-28 at s38
bids, In general,

fivae-party bad faith claine arise out of the insurer’s bad
fslth hansling of a first-party claim... . Thus, first~
Eitty ineurer bed faith claims typically arise out of an
Phauver'e unreasonable refueal to pay money directly to the
jnsured for claims mage on the incurance policy itself
Waters (v. United serve, Auto Aug’n, 41 cal. App. 4th 1063
SESE}, “quoting that ‘iene Gravamen of a first party [bed
faith! laveuit Je a breach of the implied covenant of good
{Sith ang fair dealing by refusing, without proper cause, to

 

Eonpensate the insured for a loss covered by the policy.)
Sf"By unreasonably delaying payments due under the policy")
wonbo vs Hawaiian Ine, & Guar, Co., 66 Havai's 373, 297-78, 949 P.2d 213, 237-

 

38 (agp. 3997).

on the other hand, “a ‘third-party claim’ is one where the insurer
contracts to defend the sngured against clains made by third parties against
ceetraeted’ and to pey any resulting Liability, up to the specified dollar
See ee eee Place, ¢2 Hawai'i at a24 n-¢, 920 P.zd at 338.n.6. In this

‘a firae-party claim

 

 
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directly discuss in Best Place whether the tort of bad faith is

 

recognized when the insurer has no contractual duty to pay
benefits to the insured based on the clear and unambiguous
language of the insurance policy, specifically, as in the instant
cage, an exclusion in the insurance policy.

in Int’) Bhd. of Elec, workers Local 1357 I (Loca
1357)1 v. Am, Int‘] Adjustment Co., 955 F. Supp. 1218 (D. Haw.
1997), aff'd mem., 142 F.3d 443 (9th Cir. 1998), an insured labor
union and two employees [hereinafter, collectively, the insured)
brought a state court action against its commercial general
liability insurers (the insurers) to recover for the insurers’
refusal to defend and indemnify them against a former employee's.
claim for retaliatory discharge, employment discrimination,
assault and battery, and infliction of emotional distress. Id.
at 1220. The insured’s complaint against the insurers alleged,
inter alia, negligence, breach of contract, and breach of the
implied covenant of good faith and fair dealing. id. at 1220.
The insurers removed the action to the Hawai'i federal district
court. Id. The insurers, thereafter, moved for summary judgment
on all claims raised in the insured’s complaint. Id, at 1221.
Therein, the insurere argued that, based on an exclusion
contained in the insurance policy, the insurers had no duty to
defend or indemnify the insured for the claims raised by the

forner employee. Id, The insurers, therefore, asserted that

 

“because each of (the insured’s] claims are based upon the

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es

failure to provide coverage, all claims mist necessarily fail."
is.

‘The Hawai'i federal district court first held that the
former employee's claims against the insured did not trigger a
duty to defend “because from the face of the complaint, they
clearly fell within the scope of the policy’s exclusion." Id. at
1223. Consequently, the Hawai'i federal district court granted
the insurers’ motion for summary judgment on the insured’s breach
of contract claim. The insured, however, “naintainled] that [the
insurers’] alleged failure to properly investigate [its] request
for coverage and [the former enployee’s] claims constitute(d] a
separate tort of bad faith.” id, The Hawai'i federal district
court granted the inourers’ motion for summary judgment on the

ingured’s breach of the implied covenant of good faith and fair

 

dealing claim, based on ite interpretation of Beat Place and

ing. Co., 77 Hawai"S 358, 884 P.2d 1134 (2994), Id. at 1224.
‘The Hawai'i federal district court stated:

in the Hawai‘s Supreme Court cited with
approval cases recognizing that an insurer may be Iieble for
Eliure co properly investigate a claim. Id. at 132, 920
Faa'at See’ however, the court did not directly address
Shetner such a tort my iie where the insurer is not liable
On the underlying policy

prior to the decigion in The Best Place, the Hawai'i
Suprene court stated, *[i]t 8 well established that an
sorer fas no duty to investigate where the claim is
Toded by the clear and unenbiguous language in the
{neurance polley-" bf Director ‘ot aot
Gert v. United Pac. Ins. Ce., 77 Hawai'i 358, 361,
POSTS dee, Clearly, prior to The pest Place
Gecieion, [the ineured] coulé not recover for the tort of a
Sad faith failure to investigate where they could not
prevail on the claim that [the insurers] were liable on the
Eieerlying policies, ig, (citing O'Malley v. United States

  

 

 

 

 

 

 

 

 

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Quay. co., 602 P. Supp. 56 (8.0. Mins.), atta,
H)6 P30 494 (sth Cir. 1985). [*) The Best Place doee net’
Gverrule this reasoning, Indeed, in The Best Place, the
Bavaii Supreme Court cautions

[cloncact baved on an interpretation of the

insurance contract that 1s reasonable does not

constitute bad faith. in addition, an erroneous

Gectaion not to pay a claim for benefice due under

S'policy doce not by itsel® justify an avara of

Compensatory damages. Rather, the decision not to

pey a claim must be in “bad faith"

62 Hawai'i at 133, 920 P-24 at 347 (internal

Eitions omtied). thie paragraph silustraves that the
Court gid not intend for the tort of bad faith to be
Exiggered In every situation where there ia dispute over
Elverage of to eclipes the remedy for breach of contract.
This court therefore concludes that the Havall Guprese
Elure die not inten to overrule Board of Directors, and

 

 

 

 

 

 

  

Sealing will aot lie in the instant action
Id. (beld emphases added)
Several months later, the ICA decided Honbo v. Hawaiian

u oui 86 Hawai'i 373, 949 P.2d 213 (App. 1997).

 

 

Therein, the inaured was involved in two automobile accidents.
Id, at 374, 949 P.2d at 214. Consequently, the insured filed a

claim for no-fault benefits with his insurer for injuries arising

 

“im Board of Directors, thie court cited to O'Malley with approval
in omaliey, the United seates District Court for the Southern Diserict of
Mlesiseipp! held that an ineured cannot recover for the tort of 2 bad faith
Tallure fo investigate and pay losses incurrea by the insured where the
insured aid not prevail on ite claim that the insurers were liable on the
Underlying policies. Board of Directors, 77 Nawal at 361, #04 P.2d at 1137
(citing OMsiley, 662 F. Supp. at 59)- The Board of Directors court further
seated:

 

‘The court in O*Mabley refused to allow s separate action
there the property dasage losses incurred by the plaintiffs
were already deemed to have been excluded from their
Teeurance policy in a bifurcated trial. 1d, at 59-60; gee
aise Schoonover v. West american Ine. Co., 665 F. Supp. Sit,
fle (6D. Mies. 2987) (although etyied a tort, an action
Ebr bad-faith breach of contract is createa by contract and
Fequires proof of a breach of contract."); szumigala vy.
Netienwige Mutual Ing Co., 653 F-24274, 280. (sen Clr

i308) (where insurer hae reasonably arguable basis for
Genying a claim, ies conduct cannot constitute bad faith).

2d, (some citations omitted) .

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ee

out of both accidents. Id, The insurer notified the insured
that he had exhausted his no-fault benefits for both accidents
1d, The insured, thereafter, sued each driver involved in the
two accidents in a single negligence lawsuit. id, The parties
reached a settlement agreement, and a stipulation for dismissal
with prejudice was filed. 1g, The insured and his wife
Ihereinafter, collectively, the plaintiffs] issued a demand
letter to the insurer for underinsured motorist (UIM) coverage
for the two accidents. Id, After receiving no response from the
insurer, the plaintiffs filed a lawsuit against the insurer,
seeking (1) UIM benefite (UIM claim) and (2) damages for the
ingurer’s alleged bad faith handling of their UIM claim (bad
faith claim).

‘The ICA held that the plaintiffs’ lawsuit on their UIM
claim was barred by the applicable two-year statute of
Limitations, Id. at 376, 949 P.2d at 216, In determining what
statute of limitations applies to the plaintiffs’ bad faith
claim, the ICA noted the following in a footnote:

Some jurisdictions have . .. [held] that where a
plaintiff seeks tort remedies on'a claim for breach of the
Povenant of good faith and fair dealing,

[eyhere ave at least two separate requirenents to

establish treach of the implied covenant: (1) benefits

Sue under the policy must have been withheld) and

(2) the reason gor withholding the benefite must have

‘been unreasonable or without proper cause.
rove v, Fire Ing. Byeh., 221 Cal. app. 3d 1136, 272 Cal
Hie aee tes tisee) rf we were to apply such reasoning
Ththis case, (the plaintiffs’) bad faith claim would be
precluded on the ground that there were no due benefite
Thich were withheld. Gee California state Auto. Ansa.
fnter-Ins, fureas v.superior Court, 184 Cal. App. 36 1426,
ip caliper. 409, 412 (1906) (noting no award for bad
Fults can be wade without first establishing that coverage
Gulste). Nowever, se explained by the Hawai'i Supreme Court

   

 

  

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Am Best Place, a claim for the tort of bad faith does not
corn on whether the claim for benefits was due or not,
instead it turne on the conduct of the insurance company in
handling the claim. est Place, #2 Havai'i at 132-33, 920
pid at 246-47,” Thus, we decline to adopt this line of
Feasoning

 

   

Id. at 381.12, 949 P.2d at 221 n.12 (bold emphases added). The
ICA subsequently held that ERS § 294-36(s) (predecessor to HRS

§ 43

  

oc-315(a)) applies to first-party insurer bad faith
claims, and, in that case, the plaintiffs’ bad faith claim was
time barred. Id, at 362, 949 P.2d at 222.

Although Local 1257 broadly held that an independent
claim for breach of the covenant of good faith and fair dealing
will not Lie where there is no coverage liability on the
underlying policy, its holding was premised on the reasoning that
an insurer has no duty to investigate a claim that is excluded by
the clear and unanbiguoue language in the insurance policy.

‘hue, it would follow that an insured could not recover for the

tort of a bad faith failure to investigate where the insured

 

could not establish liability on the part of the insurer on the
underlying policy. Here, on the other hand, Enoka is essentially
aeserting that AIG acted in bad faith when it denied her claim

for no-fault benefits on an invalid bas:

 

In other words,
Enoka’s bad faith claim ie premised upon AIG's alleged
mishandling of her claim, which is distinguiehable from a bad
faith failure to investigate her claim. As this court stated in
Best Place, the insurer may conmit bad faith, “whether the

carrier pays the claim or not.” 62 Hawai'i at 132, 920 P.2d at

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a
346 (emphasis added); see alec Francis v. lee Enterprises, inc.,
89 Hawai‘i 234, 971 P.2d 707 (1999) (noting that, in B ce,
s[wle further explained that an action for the tort of ‘bad
faith! will Lie. . . when an insurance ca reasonal
handles or denies paynent of acclaim’) (emphases added). Surely
an insurer must act in good faith in dealing with its insured and
in handling the insured’s claim, even when the policy clearly and
unanbiguously excludes coverage. Inasmuch as Enoka has alleged
that AIG handled the denial of her claim for no-fault benefits in
bad faith, we conclude that she is not precluded from bringing
her bad faith claim even where there is no coverage liability on
the underlying policy. Accordingly, we hold that the trial court
erred in determining that, because Enoka’s breach of contract
claim failed, her bad faith claim must fail.
2, Whether AIG Acted in Bad Faith

Enoka contends that AIG acted in bad faith when:
(2) AIG denied her claim for no-fault benefits based on the
allegedly invalid reason that the applicable statute of
Limitations, HRS § 431:10C-315(a), had elapsed; and (2) AIG
allegedly violated HRS § 431:10C-304(3) (B), quoted infra, which,
according to Enoka, required AIG to notify Enoka of all the
reasons” for denying her no-fault benefits claim in ite denial
form. AIG contends that, even assuming arguendo that its

interpretation of sections 431:10C-315(a) and 431:10C-304 (3) (B)

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was erroneous, such misinterpretation did not rise to the level

of bad faith.
In Best Place, this court articulated the applicable
standard for a first-party bad faith claim as follows:

(tlhe insured need not show a conscious axarencss of
wrongdoing or unjustifiable conduct, nor an evil motive or
Intent to harm the insured. An unreasonable delay in
payment of benefits will warrant recovery for compensatory
Ganeges under the Gruenberg test (referring to Gruenbera ¥,
Actna_Ine Co. 108 Cal. aptr- 460 (Cal. 3973)]. However”
conduct based on an interpretation of the insurance contract
that is reasonable does not constitute bad felthe ts
addition, an erroneous decision not to pay a cleim for
benefits’ due under a policy does not by itecl? justify an
ward of compensatory damages. Rather, the decision not to
pay a claim must be in "bad faith.

Ad, at 133, 920 P.2d at 347 (citations omitted); pee California

Shopnera.inc, v, Reval Globe Ine. Co., 221 cal. Rptr. 171 (cal.

App. 1985) (noting that “bad faith implies unfair dealing rather

 

 

 

 

than mistaken judgment”) (brackets, internal quotation marke, and

citations omitted). Moreover, where an insurer denies the

 

payment of no-fault benefits based on “an open question of law,"

there is "obviously no bad faith on the part of [the insurer] in

litigating that issue.” Colonial Penn. Ins, Co. v. First Ine
“0 wai’ 71 Haw. 42, 43-44, 780 P.2d 1212, 1124
(1989); see also Gov't Employees Ins, Co. v. Dizol, 176 F. Supp.

2d 1005, 1035 (D. Haw. 2002) (pointing out that there is no bad
faith when an insurer denies the payment of benefits based on an
unsettled question of law).

We, therefore, examine whether AIG's denial of

benefits, which Enoka maintains was the result of AIG's erroneous

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Oo

interpretations of (1) HRS § 431:10C-315(a) and (2) HRS
§ 432:10¢-304(3) (B), was based on an open question of law.

S s20c-315 al

 

First, Enoka contends that AIG violated section
431:100-315 (a) by erroneously denying Enoka’s claim for no-fault
benefits on the basis that the two-year statute of limitations
had already lapsed, As previously stated, at the time of Enoka’s
april 19, 1997 accident, the applicable statute of limitations
was codified at HRS § 432:20C-315(a).

‘The question whether the March 2000 UIM benefits from
Ico, @ ncn-party insurer, would trigger the two-year statute of
limitations under HRS § 431:10C-315(a) for Enoka’s claim against
AIG, the only defendant insurer in the instant lawsuit, was --
until today -- an open question of law. See supra section ITT.A
(holding that, pureuant to a plain reading of HRS § 431:10C-
315(a) (2) and (2), Enoka’e claim for no-fault benefite was not
barred by the statute of 1imtations). Consequently, there is no
bad faith on the part of AIG for having denied Enoka’e claim for

no-fault benefits on the basie of the statute of limitations.

see Colonial Penn., 71 Haw. at 43-44, 780 P.2d at 1114; gee also
gov ees Co., 176 F. Supp. 2d at 1035.
b.  HRS_§ 432;20¢-304 (3) (B)

Second, Enoka contends that AIG acted in bad faith by

  

allegedly violating ERS § 431:10C-204(3] (B). Specifically, Enoka

aeserts that AIG violated section 431:10C-304 (3) (B) by not

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providing Bnoka “all of the reasons" why it denied her claim for
no-fault benefits in its denial form. At the time of Enoka’s
April 19, 1997 accident, section 431:10C-304(3) (B) provided in

pertinent part:

2 & UI]E the insurer elects to deny a claim for
benefite in whole or in part, che ingurer shall within
thirty days notify the claimant in writing of the
Genial and the reasons for the denial...

 

 

(Bmphasis added.) Enoka cites to cases from other jurisdictions
that lend some support for her contention that “the” means ‘all.

not cite to any Hawai'i case law for the

 

Enoka, however, do

 

same proposition, and this court hae not yet construed the phré

tthe reasons” as used in section 431:10C-304(3) (B). Thue, it is

 

unsettled, under Hawai'i law, whether “the reasons” means “all.

reasons,” as Enoka contend:

 

% consequently, inasmuch as AIG's

 

denial was based upon an open question of law, there ia no bad
faith on the part of AIG for not having stated all the reasons
for ite denial of Bnoka’s claim for no-fault benefits. see

Colonial Penn., 71 Haw, at 43-44, 780 P.2d at 1114;

Gov't Emplovees Ins. Co., 176 F. Supp. 2d at 1035.
Accordingly, we hold that AIG did not act in bad faith

also

 

when it denied Enoka‘s claim for no-fault benefite.

 

% the erial court noted, sas Z read [section 431120¢~30413) (8)),
nothing that requires every reason to be set forth.”

 

chere:

 

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a

D. ka's Waiver anc el Contentions

Enoka contends that the trial court erred in concluding
that AIG did not waive its right to rely upon, or was not
estopped from relying upon, the exclusions in the AIG policy as
defenses to Bnoka’s clains for breach of contract and breach of
the implied covenant of good faith and fair dealing. Enoka
argues that AIG was required to notify her of its reliance on
Exclusion A when it denied her claim or, at the very latest, when
AIG answered her complaint. Because AIG did not do so until the
filing of its motion for susmary judgment, Enoka maintains that
AIG waived its right to rely upon Exclusion A, or is estopped
from raising it, as a defense. Moreover, Enoka argues that she
sraised a genuine issue of material fact of whether she
detrimentally relied to her prejudice on ATG’s notification that
it had one and only one basis for denying her claim."

AIG contends that the doctrines of waiver and estoppel
nay not be used to extend insurance coverage beyond the terms of
an insurance contract. AIG argues that, even assuming arguendo

that the waiver doctrine is applicable, implied waiver may only

 

be employed to prohibit an ineurer, who had previously denied
coverage on a specific ground, from subsequently asserting «
“technical ground," i.e., a ground that does not involve a
coverage issue. Further, AIG maintains that this court need not
reach the issue of whether estoppel applies as long as there is

no contractual duty to pay no-fault benefits in the first

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instance. However, should this court hold otherwise, AIG argues
that Enoka has not shown detrimental reliance or prejudice to the
level of “sanifest injustice" to invoke equitable estoppel.

Preliminarily, we note that Enoka refers to the
doctrines of waiver and estoppel interchangeably throughout her
opening brief. As we observed in Beet Place,

iln the context of snourance law, and especially with
regard. to Limitation provisions in insurance policies, the
ferns "waiver" and "estoppel" have often Been used without
Esreful distinction, ana thereby sbused and confused. This
Ssctrinal contusion, epitomized’ by the frequently echoed
phrase “waiver by ectoppel,” is £0 deeply rooted sone courts
Fave suggested that the term waiver, as applied in Tilinoie
to insurance cases, is simply another term for estoppel

Notwithstanding the contusion already engendered by
any of thewe cares, seis elementary thet waiver and
estoppel are two separate ané distinct doctrines. The fact
that these doctrines are closely akin and often may coexist
does not seen they -

Waiver encom oF implied
voluneary and intentional relinguiahment of a known and
Sxisting right. waiver ia essentially unilateral in
Character, focusing coly upon the acts and conduct of the
Snsurer. Prejudice... or detrimental veliance is
required as

Equitable estoppel, on the other hand, generally is
based upon an insurance carrier's conduct and/or
Fipresenestions which misied an Snaured to hie lor her]
detrinent

   

 

 

 

  

 

Id, at 139, 920 P.2d at 353 (brackets, ellipses points, and
emphasis in original) (citation omitted). Bearing the foregoing

in mind, we attempt to extricate Enoka

 

waiver and estoppel
arguments and address each argument separately.
2. waiver
Enoka claims that, under Hawai'i law, ‘an insurer may
waive the terms of its policy based on its conduct during the
defense of its insured - even though ‘no coverage existed in the

first instance.‘ Enoka contends that there is a distinction

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ee

between @ lack of coverage in the first instance (requiring no
disclaimer) and a lack of coverage based upon an exclusion
(requiring timely disclaimer). specifically, Enoka argues that,
where “an insurer fails to timely raise a policy exclusion as a
defense, e.g., in its denial letter or in its answer to the
insured’s complaint, it waives that exclusion as a defense to the
ingured’s lawsuit.7*

AIG contends that a significant majority of
juriedictions holds against using the waiver doctrine to create
coverage where none exists. AIG claims that the waiver doctrine
vavises, if at all, where coverage is denied for so-called

technical reasons that concern at most an insured’s post-loss

 

conduct == such as failure to cooperate -- and not reasons going
to the existence of coverage.”

the majority of jurisdictions hold that the doctrine of
waiver may not be used to broaden the coverage of an insurance

policy so as to protect the insured against rieke not included

therein or expressly excluded therefrom. Potesta v. United

States Pid. & Gu ., 504 8.8.24 135, 146 (W. Va. 1998); see
also Brown Mach. Works & Supply Co. v. Ins. Co. of N. Am., 659

s0.2d 51, 53 (Ala. 1995) (observing that “the general rule in

Alabama is that coverage under an insurance policy cannot be

 

Mn her opening brief, Bnoka states that AIG waived its policy
exclusions and, thus, cennot use then ae defenses to her claims for (2) breach
Uekeface end (2) bad faith. However, snoka faile to provide any argunent
GE Show Are's alleged waiver precludes AIG from using its policy exclusions
3 Sactense to sooks's bad faith claim. Thus, our discussion of Enoka’s
‘icle"Stgunent ie Linitea to only her breach of contract claim.

      

 

 

 

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enlarged by waiver"); Turner Liguidatine co. y. St. Paul surpli
Lines Ins. Co., 638 N.E.2d 174 (Chic App. 1994) (noting that the

general rule provides that waiver cannot extend coverage of an
insurance policy); Creveling v, Gov't Euplovees Ins. Co., 828
A.2d 229, 243 (Md. App. 2003) (stating the general rule that
cwaiver cannot operate to expand or establish insurance
coverage”); Estate of Hall v. HAPO Fed. Credit Union, 869 P.2d
316, 128 (Wash. App. 1994) (noting the majority rule that “under
no conditions can the coverage or restrictions on the coverage be
extended by the doctrine of waiver") (citations omitted) ;

ica Mut, Ins, Co, v. Klein & Son, Inc., 460 N.W.2d 763, 767
(Wis. App. 1990) (noting that “the courts of most juriedictions
agree that [waiver is] not available to broaden the coverage of a
policy so as to protect the insured against risks not included
therein or expressly excluded therefrom”); Annot., Comment Note:
Doctrine of Estoppel or Waiver as Available to Bring Within
Soverage of Insurance Policy Risks not Covered by its Terme or
Expressly Excluded Therefrom, 1 A.u.R.3d 1139 (2965 & supp.
2005). But see Tate v, Charles Aguillard Ine. & Real Estate,

Inc., 508 $0.24 1371, 1375 (La. 1987) (holding that ‘waiver may
apply to any provision of an insurance contract under which the
ineurer knowingly and voluntarily electe to relinguish [ite]
right, power or privilege to avoid liability, even though the

effect may bring within coverage risks originally excluded or not

o34-
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ese

covered"). The rationale for the general rule has been

summarized as follows:

in)he [insurancel company should not be required by waiver
dna estoppel to pay a loge for which it charged no premium,
Sha the principle ae been announced in scores of cases
Envolving almost every conceivable type of policy or
coverage provision thereot

‘Annot., Comment Note, supra at 1144; see also Potesta, 504 S.B.2¢
at 147 (noting that additional reasons why waiver should not
extend coverage of an insurance policy are “that a court cannot
create a new contract for the parties . . . and that a risk
should not be imposed upon an insurer which it might have
denied”) (quoting Turner Liguidating Co., 638 N.E.2d at 179))
Although cognizant of the general rule, some
Jurisdictions note that the rule may be subject to exceptions."”
one exception, which is relevant to the instant case, is that

simplied waiver’ may be invoked to prevent an insurer, who had

© one leading treatise -- 168 Appleman, naw

§ 9090 at 35 (Supp. 1999) (hereinafter, Applesanl ~~ has criticized the
sonehta “tule. “Rhecoraing to Applenan, “the doctrine [that] implied waiver or
Setopper io not available to bring within the coverage of an inturance policy
Side’ thet are nov covered by ite terns or that are expressly excluded
Theretron hae been Feferred to ae a majority rule that is eroding.” Id.
(internal quctation marke omitted). Appleman, however, appears to be
Grlticiting the general rule withoit any exceations se’ provided by other
Sitisdiceions. in addition, one court has seatea that Applenan’s “perceived
2sgeion‘of che majority rule ia simply a misapplication cf estoppel and waiver
$5°eieuarions in which through misrepresentation, inadvertence, accident oF
soetike the cerns of @ contract of insurance are not fully or correctly set
forth in the policy.” Utica MIS, Ing, Co., 460 H.W.2d at 768

 

 

 

 

 

 

tn Bast Place, this court defined “implied waiver” as resulting from

euch conduct ae warrante an inference of intentional relinguishnent of
iaeun Fights and it ie not essential to its application that prejudice results
[othe party in whose favor the waiver operates.” Jd. at 139, 920 P.2d at 353
(brackets, internal quotation marks, and citation omitted). in this ‘casi
nots does not appear to argue that AIG expressly waived ite right to assert
eee, Sitiusions ae a defense to Bnoka’e cloime, but rather that AIG
Egplisdly waived ite right to assert policy exclusions, Thus, we limit our
alecussicn to implied waiver in the present case

 

 

 

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previously declined coverage on specific grounds, from later
asserting a “technical* or “forfeiture” ground for declining
coverage, but it may net be used to prevent the insurer's later
Genial based on the non-existence of coverage. Potesta, 504
S.E.24 at 149-50; see algo Creveling, 828 A.2d at 244; Utica Mut.
Ing. Co., 460 N.w.2d at 76

(1981) (recognizing that “{clonditions going to the coverage or

 

168 Appleman, supra, § 9083 at 518

scope of @ policy as distinguished from those furnishing a ground
for forfeiture may not be waived by implication from conduct or
action"); but see Century Fire Sprinklers, Inc. v. CNA/Transp.
Ing. Co,, 23 S.W.3d 674 (Mc. App. 2000) (holding that an
insurance policy exclusion is an affirmative defense which must
be pled or it may be waived). In determining whether the

doctrine of implied waiver applies, the decisive i

 

jue is whether
a proffered defense pertains to coverage or whether it arises
from a technical or forfeiture ground. reveling, 626 A.2d at
244. The Creveling court noted that,

where the provision r to the scope of the risks to be

Covered (either by inclusion or exclusien) the dollar

Smoune of coverage, it is to be dealt with ae a “coverage

matter, otherwise, and particularly if ie operates to

Furnish s ground for che forfeiture of coversge or for the
of Miability.

tare" classe.

 

 

   

 

Creveling, 828 A.2d at 244 (quoting Wright v. Newnan, 598 F.
Supp. 1178, 1199 (W.D. Mo, 1984)). The Creveling court further

provided that “forfeiture clauses often include provisions such
as filing a timely notice of claim and submitting proofs of loss,
and are invoked to avoid liability for existing coverage." Id.

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a

at 244-45 (citations omitted) (emphases added); see also Potesta,
504 §.2.2d at 150 n.16 (defining “technical ground” to indicate
sa ground that does not involve a coverage issue, such as the
insured’s failure to timely submit the insurer a proof of loss
form") «

‘The foregoing principles comport with this court's
decision in Hest Place, wherein the subject policy required the
insured to submit a proof of less within sixty days of the
clained loss, which the inaured failed to do. Id, at 123, 920
P.2d at 337. Although the insurer could have denied the
ingured’s claim at that point, it elected not to do so. Id, at
140, 920 P.2d at 254, Instead, the insurer “chose to implicitly

waive that [sixty-day] provision

 

evidenced by its letter,
Which sought more information with respect to documents tending
to establieh the legitimacy of (the insured’s] claim.” Id.
consequently, this court held that the insurer’s post-deadline
request for additional information constituted an implied waiver
of any defense based on the aixty-day time limitation and that
the inourer was precluded from introducing evidence of the
Angured’s breach of duty with regard to the proof of loss. id.)
see also Nestesg Fed. Credit Union v. Cumis Ine. Soc'y, Inc., 87
F. supp. 24 144, 148 (N.D.N.Y. 2000) (holding that, because the
defense of failure to file a timely complaint existed at the time

of the insurer’s disclaimer letter, and because it was not raised

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in the disclainer letter, the insurer waived the forfeiture
defense) .

In the instant case, Exclusion A, upon which AIG relied
in ite motion for summary judgment, relates to the scope of no-
fault benefits to be provided under the AIG policy ané,
therefore, clearly involves a coverage issue, as opposed to a
technical or forfeiture ground. Consequently, based on the
foregoing discussion, we hold that AIG did not waive ite right to
rely on Exclusion A as a basis to deny coverage for no-fault
benefite in its motion for summary judgment.

2. Estoppel

Enoka contends that an insurer may be estopped from
denying coverage even when “no coverage existed in the firet
inetance.* In addition, Bnoka claims that an ‘insurer's bad
faith can estop it from raising coverage defenses. she further
argues that she detrimentally relied on AIG's omiseion of any
reference to Exclusion A in its denial form. Finally, Enoka
contends that she was prejudiced by incurring the financial cost
of pursuing the instant lawsuit.

AIG argues that, because AIG never caused Enoka to
believe that she had coverage in the first instance, she did not
suffer any detrimental reliance as a result of AIG's subsequent
use of Exclusion A as a defense against Enoka’s claims. AIG
specifically contends that “it never took inconsistent positions

on the question of [Bnoka’s] entitlement to benefits and, on the

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contrary, always insisted (Enoka] was not entitled to the no-
fault benefits she sought." AIG further argues that the fact
that Enoka incurred financial cost in pursuing the instant
lawuit is not sufficient to show the required elenent of
prejudice to establish estoppel.

the najority of juriedictions hold that the doctrine of
estoppel may not be used to broaden the coverage of an insurance
policy so as to protect the insured against risks not included
therein or expressly excluded therefrom. Potesta, $04 5.2.24 at
146 (collecting cases). The Potesta court, however, recognized
three exceptions, based on estoppel principles, that may be used
to broaden the coverage of an insurance policy. Id, at 147-48
(noting that “{aln insurer should not be able to avoid liability
under all circumstances in which it . . . induces another into
changing his position based upon reliance on the insurer's
conduct when the insured is prejudiced by such reliance”).
Although noting that the following exceptions are not exhaustive,
the court in Botesta identified three “commonly recognized
exceptions" as follows:

(2) cae... . exceptiont) to the general rule operates to)
phevene an’ insurer from asserting @ previously unmentioned

fe based defense, where the insurer, or ite agent,
Dhicrepresencation at the policy's inception thet
ated in the insured being prohibited from procuring the
coverage s/he desired(;]

 

 

{2} A secone ‘exception applies when an ingurer has
hrtctnted the insured without @ reservation of rights (+)

ja} A thir . . . exception applies when the insurer has

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acted in bad faith. (%)
Id. at 148-49 (numbering added), Inasmuch as the first two

to the case at bar, we discuss them

 

exceptions are not relevai

only briefly. Moreover, some of these excepticna have already

been recognized in our case law. See e.g., AIG Havai's Ing. co
vs Smith, 78 Hawai'i 174, 691 P.24 261 (1995) (holding that the
ingurer was estopped from denying coverage under the insured’s
policy where it was plainly evident that a ground for non-
coverage existed but the insurer chose instead to assume
unconditional control over the insured’s defense without securing
a reservation of rights); Lecker v. Gen. Am. Life Ins. co, 55
Haw. 624, 525 P.2d 1124 (1974) (holding that the insurer, having
misinformed the insured of the limitations affecting coverage for
death benefits, through use of a book-certificate at the policy's
inception, is estopped from asserting a policy exclusion not
shown or otherwise indicated in the booklet-certificate as a
basis for non-payment of death benefits).

In Best Place, this court noted that:

(The generat rule is that an insurer which genies Liability

on a specified ground may not thereafter shite the basie for

Ste diecisiner to anothef ground know to it at the tine of

its original repudiation...
The vast majority of jurisdictions recognize, however,
chat
where tl fiers ree
ice asa rere a 2
= This rule of
estoppel nas its limitations and exceptions, which are as
clearly established as the rule iteelt, one of which is that
he rule cs ar thal pt was

misled to hie (or her) injury.

“Aw discussed gupta, AIG did not act in bad faith.

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a

 

mile ie is true that an ingurer's specification of
one of several available grounds for disclaimer may be taken
Se'che Insured ao an indication that the other grounds have
Deen sveriooked, ae @ basic macter of faimess we see 70
Reason why this circumstance should operate to bar the later
Estertion of the cther grounds for disclaimer where the
Tneured cannot claim to have suffered any degree of
prejudice, The overwhelming majority of Anerican
Seeiediceione refuse to inpose this sort of estoppel in the
2Bkonce of prejudice, and it ia clear that the rule as
formated continves to be valid.

Id. at 140, 920 P.2d at 354 (internal quotation marks and
citation omitted) (emphases added). In Smith, we stated

that the party invoking equitable estoppel mist show that
he or she hae detrinentally relied on the representation or
“oduct ‘of the person sought to be estopped, and that such
SeseSe nan senscnable,, Such requirement, however, nay be
Blapensed with in order to prevent manifest injustice

 

Id, at 179, 891 P.2d at 266 (internal quotation marks and
citations omitted) (emphasis in original). Moreover, we have
previously recognized that

[elstoppe! is particularly appropriate where the insurer,
Either Girectay of through an agent, - .. admits coverage
Shacr a policy of insurance, yet later Genter coverage,

 

er ohece the insurer maintains che p08: nae i
Fs poll Teshould not spi the
{hnurer-has not changed ine position recardins whether it

ue ies insured therefore
chy of he indurer’s representa nie
‘fectinent

 

state F: aw 2 y , 8h
wawas'i 235, 243, 915 P.2d 1936, 1344 (1996) (emphasia added) .
However, as this court recognized in Smith, the doctrine of
estoppel may also apply in order to prevent "manifest injustice.
see Smith, 78 Haw. 174 at 179-60, 691 P.2d at 266-67 (holding
that insurer's actions in conducting the insured’s defense, where

the insurer, inter alia, potentially exposed the insured to

oa1-
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criminal Liability, constituted manifest injustice to the
insured’s interest and, thus, estoppel was appropriate)

In the present case, Enoka fails to point to any
actions taken by AIG on which she detrimentally relied other than
AIG's omission of any reference to Exclusion A in its denial form
in which AIG proffered statute of limitations as the basis for
denying her claim for no-fault benefits. The record, however,
dencnstrates that AIG maintained its position of no coverage for
no-fault benefits to Enoka throughout the course of its
correspondence with her. AIG never changed its position
regarding coverage and never made any representations to the
contrary. Moreover, Enoka has failed to make the requisite
showing of manifest injustice in order to dispense with the
foregoing requirements of estoppel. As previously stated, Enoka
contends that she was prejudiced by incurring the financial cost
of pursuing the instant lawsuit. However, *[t]he mere trouble
and expense of bringing suit does not amount to the prejudice
required to invoke the estoppel doctrine." Depriest v. state
Earn & Fixe Cag, Co., 779 8.W.24 347, 350 (Mo. App. 1989); see
algo Shahan v. Shahan, 968 5.W.24 529 (Mo. 1999) (en banc)
topped from raising

 

Accordingly, we hold that AIG is not

Exclusion A in the present case to bar Enoka’s breach of contract

claim,

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See
E. Enoka's TIED Clain

Enoka’s final contention on appeal is that the trial
court erred when it granted summary judgment in favor of AIG on
her ITED claim. Enoka argues that her

claim for [1180] is not based on the mere fact of AIG's

Senin of her clais for benefits. Rather, it is based on

the face that the sole basis for AIQ's denial wae the

Seacute of limitations, which AIG either knew or should have

Known had not expired shen Enoka nade her claim for
benefits.

 

 

Bnoka contends that summary judgnent with respect to her ITED
clains should not have been granted because she raised genuine
issues of material fact as to whether AIG‘s conduct was
unreasonable or outrageous, to wit:

nuG's conduct of failing to notify Encka of all of ite
Teavens for denying her claim; failing to provide her a
Feasoneble explanstion of the policy provisions on which it
Eared ite Geniali denying Enoka’e claim for benefits solely
Ghia ground that ArG knew or should have knowin} was not
Natids filing an Anewer that continued to assert only the
Yavalie etatute of Limitations defense; obtaining Enoka’e
Hipuistion to set aside the entry of default against AIG
Shite still arserting only the invalid statute of
YInttations defense, and delaying disclosure of ite tour
editions! policy srounde for denying her claim until e
fiiee a motion for summary judgment, even though it was well
aware of these policy defenges when it initially denied
Bnoka's claimt.d

 

 

 

 

 

Azo contends that, under Exancis v. lee Enterprises,

Inc., 89 Hawas's 234, 971 P.24 707 (1999), an II

 

claim can
arise from a breach of contract in only two exceptional
situations, neither of which are present in this case. AIG
states that the two exceptions recognized in Francie are: (1)
where there has been a bodily injury (as in a medical malpractice

case); or (2) where serious emotional disturbance is particularly

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foreseeable (as in an action for breach of promise to marry) .

AIG further contends that, apart from Francie,

the undisputed record shows the complete absence of the
necessary clenents for an ITED claim vhich requires
Sinreasonablem condice defined in Rags y- steatter” Hote
coultd., 76 Haw. 54, 679° P20 1057, 1608 awe T5900, 0
be ap act that "ie without Just caune of excuse and’ beyond
ai1"bounde ‘of decency," ibid, whieh ie tovsays "the sce
Conplained of must be ‘outrageous’ = =. s*  Tbig

In response, Bnoka reiterates that her IIED claim “does not arise

    

 

 

out of AIG's breach cf the insurance contract. Her clain is
based on AIG's conduct in denying her claim based solely on an
unreasonable basis."

Under Hawai'i law, the elements of ITED are

19 the harm was intentional
foutragecus, and (3) that
the act caused (4) extreme emotional distress ro another”

Hac v. Univ. of Hawai'i, 102 Hawai’

(2003). The term “outrageous” has been construed to mean

   

92, 106-07, 73 P.34 46, 60-61

 

“without just cause or excuse and beyond all bounds of decency.
Lee v. Aiu, 85 Hawai'i 19, 34 n.12, 936 P.2d 655, 670 n.12 (1997)
(internal quotation marke and citations omitted). Moreover,
Yextreme emotional distress’ constitutes, inter alia, mental
suffering, mental anguish, nervous shock, and other “highly
unpleasant mental reactions.” Hac, 102 Hawai'i at 106, 73 P.3d
at 60 (footnote and citation omitted).

Under the circumstances of thie case, we believe ATG's
conduct does not rise to the level of “outragecusness" a9
construed in our case law. Baged on our previous discussion, we

do not believe that the manner in which AIG denied Enoka’s claim

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for no-fault benefits was in bad faith and, thus, AIG's conduct
was reasonable. Moreover, there is nothing in the record to
indicate that Snoka suffered any extreme emotional distress as a
result of AIG’s conduct. Accordingly, inasmuch as Enoka fails to
show that a genuine issue of material fact exists with respect to
her IIED claim, we hold that the trial court did not err in
granting summary judgment in favor of AIG on Enoka’s IIED claim.
F. AIG's Cross-Appeal

1. AIG’s Request For Attorneys’ Fe

 

on cross-appeal, ATG contends that the trial court
erred in denying ite motion for attorneys’ fees and coste by
taking inte consideration equitable grounds unrelated to the
reasonableness of the amount of the attorneys’ fees sought. AIG
argues that it was entitled to attorneys’ fees under HRS § 607-14
(supp. 2004) because, under Finley ¥. Home Ine, Co, 90 Hawai"s
25, 975 P.24 1145 (1996), section 607-14 “mandates an entitlement
to some level of attorneys’ fees that the [trial] court
determines to be reasonable in amount,” and, thus, the trial
court has no discretion concerning whether or not to award
reasonable attorneys’ fees, HRS § 607-14, entitled “Attorney's
fees in actions in the nature of assumpsit, etc.,* states in
relevant part:

Im all the courte, in all actions in the nature of assumpeit
and in all actions on a promissory note or cther contract. in
writing that provides for an attorney's fee, there shall be
faxed ae attcrneve’ fees, co be paid by the losing parcy and
fo be included in the sum for which execution may issue, g
fee that the court determines £0 be ressonable; provided
that the attorney representing the prevailing party #hall

 

 

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submit to the court an affidavit stating the anount of tine

The attorney spent on the action and the anount of tine the

attorney is likely to spend to obtain a final written

Suageent, or, if the fee is not based on an hourly rate, the

amount of the agreed upon fee. Zhe court shall then tax

ormeve’ fecn, which che court’
} provided that

Ehis amount shall not exceed Ewenty-five percent of the

Sudgeent
(gmphases added.)

AIG contends that it met all the requirements of
section 607-14 inasmuch as “the instant proceeding is essentially
in the nature of an assumpsit action [and] AIG was the prevailing
party[.]" AIG argues that ‘all of [Enoka’s) claims arose fron
Defendant AIG's alleged breach of its insurance contract to
provide no-fault benefits, Absent the existence of this alleged
preach, not one of [Bnoka’s) remaining claims could survive. All
flow inherently and inextricably from the alleged breach of
contract.”

Enoka contends that HRS § 431:10C-211(d) (1993), not

 

HRS § 607-14, governs AIG’s request for attorneys’ fees inasmuch

as there is an “irreconcilable conflict” between the two statutes

 

‘and, thus, the more epecific statute is applicable. HRS
§ 431:10C-212(d) provides in relevant part:

An_insurar or self-insurer may be allowed an avard of

able z Based upen actual tine

 

Expended, and ali reasonable conte of ovit for ite defense
= son make is against the ingurer or self-
Snnurer, within the discretion Of the court upon judicial
proceeding or the comiseloner upon administrative
proceeding

Eeivelous

(emphases added.)

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ee

gnoka argues that her claim for no-fault benefits,
although denied, was not fraudulent or frivolous and, thus, AIG
would not be entitled to attorneys’ fees under section 431:10C-
211(é). Although Enoka agrees with AIG that section 607-14
mandates an award of attorneys’ fees to the prevailing party in
assumpsit claims, she alleges that the trial court correctly
considered the equities of the situation in determining not to
award any attorneys’ fees to AIG.

Both HRS §§ 607-14 and 431:10C-211(4) apply to the
award of attorney's fees. HRS § 607-14 applies generally to
actions in the nature of aseumpeit and actions on promissory
notes or other contracts in writing, and HRS § 431:10C-211(d)
applies specifically to clains under motor vehicle insurance

contracts. See algo discussion infra, section IIT.F.2. Thus

  

we have previously stated,

Iwle . . «confront the task of interpreting (a!
general etatute[) that may appear to be in conflict with (a)
Specific statutel] relating to the sane eubject

matter. . [ujawe in pari materia, or upon the
Subject fatter, shail be construed with reference to each
Scher, mat ie clear in one #tatute may be called in aid to

 

 

Geplain what is doubtful in another, (ilhere there is
fe concern san rma

fpecific sil) be favored, However, where the statutes
Eigply overlap in their application, effect will be given to
Both if possible, as repesl by implication is disfavored,

 

Honolulu, 76 Hawai'i 46, 54-55,
68 P.2d 1193, 1201-02 (1994) (emphasis added) (internal
quotation marks and citations omitted) (some brackets in

original)

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Based on a plain reading of HRS § 431:10C-211(d), an
ineurer or self-insurer is not entitled to an award of fees if an
ineured’s claim is not fraudulent or frivolous. However, under
HRS § 607-14, if the prevailing party meete all the requirenents
set forth therein, the statute mandates an award of reasonable
attorneys’ fees. See Finley, 90 Hawai'i at 38, 975 P.2d at 1258.
Here, AIG states that, *[fJor purposes of this appeal only, [it]
does not contend [Encka) presented frivolous or fraudulent claims
in her (clomplaint.* Consequently, to allow an award of
attorneys’ fees to AIG under HRS § 607-14 would conflict with the
more specific provisions of HRS § 431:10¢-211(d), which precludes
an award of fees to AIG in the instant case inaemich as Enoka’s
claims were not fraudulent or frivolous.

Moreover, it is important to note that HRS § 432:10C-
222 (a) (Supp. 2008) confers upon an insured the right to seek
attorneys’ fees regardless of whether the insured prevailed on
hie or her claims, except when the claim is unreasonable,
fraudulent, excessive, or frivolous. Specifically, HRS
§ 431:100-211 (a) provides:

Anerson gaking a claim for personal injury protection
Eenefitel") say be allowed an averd of 2 reasonable sum for
sRLOIMEY-4 £08, and Teatonable costa of suit in en action
Broughe by or against. ‘or pars
slain tor benctita under che policy. he

iroceedine determines thatthe clsin sae unressonabie
‘fraudulent, excensive or frivolous. “Reasonable attorney's
fees, based upon actual tine expended, shall be treated

 

 

+ 1m 1997, the legielecure substituted the term “personal snjury

protection benefits” for sno-fault nenefite[.)" Jaga v, 710 tng, ca, 104
Rawat 375, 970 n-3, 90 P.3d 267, 270 n.3 (App. 200d)

 

 

 

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separately from the claim and be paid directly by the
insurer to the attorney.

(enphases added.) Consequently, when construing HRS §§ 607-14
and 431:10C-211 with reference to each other, there is clearly an
irreconcilable conflict between them. In this case, the conflict
arises because AIG, as the prevailing party, could be awarded
fees under section 607-14, but, at the sane time, is not entitled
to fees under section 431:10C-211(4) because Enoka’s claim was
not fraudulent or frivolous. Moreover, allowing AIG to recover
fees under section 607-14 would lead to the absurdity of a fee

award to both the prevailing party and the non-prevailing party

 

in the same case, if Enoka were awarded her attorney's fees under

section 431:20C-211(

 

Accordingly, because allowing AIG to seek attorney's
feee under HRS § 607-14 in the instant case would contravene the
attorney's fee award scheme set forth in HRS § 431:10C-211, we

hold that the trial court did not abuse its discretion in denying

AIG's motion for attorneys’ fees and costs.

 

 Bnoka’s Request for Remand for an Assessment of Her
Request for Fees and Costs Incurred in the Instant
Appeal and Cross-Appeal
In her answering brief filed in response to AIG's
cross-appeal, Enoka requests this court to remand this case to
the trial court “for action on her request for attorneys’ fees
and costs incurred cn her appeal and on AIG's cross-appeal."

Enoka claims that she is entitled to an award of attorneys’ fees

and costs pursuant to HRS § 431:10C-2i1(a), inasmuch as section

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431:10C-211(a) applies to Enoka’s request for attorneys’ fees and

costs incurred on appeal, regardless of whether she prevailed on
her claims. In response, AIG states that it “does not oppose

(Bnoka’s] request for a remand of her future fee request should

 

[this court] determine that the circuit court has jurisdiction
over the matter.”

Under the plain language of HRS § 431:10C-211(a),
reasonable attorneys’ fees “nay be allowed” to a person “making a

claim for personal injury protection benefite[,]* or, as

previously described, no-fault benefits. Iaea, 104 Hawai'i at

  

379, 90 P.3d at 271 (quoting HRS § 431:10C-211(a)). Moreover,

under section 43

  

2100-211 (a), “a claimant who does not prevail on
a claim for no-fault benefits may, but is not required to, be
awarded attorney's fees and costs by the Commissioner or the
circuit court.” id, at 380, 90 P.3d at 272, Section 431:20¢-
211 (a) also applies "to all attorney’s fees whether for trial or
appeal." Kawaihae v. Hawaiian Ing, Cos., 1 Haw. App. 355, 363,

619 P.2d 1086, 1052 (1980) (deciding under HRS § 291

  

30(a) (now
HRS § 431:10C-221(a)). Under section 431:10C-213(a), “the trial
court has discretion to award attorney's fees and costs to a
claimant." Wong v. Hawaiian Ine. Com., 64 Haw. 189, 192, 637
P.ad 1144, 1146 (1981) (citation omitted). Thus, on remand, the
trial court may decide the issue of Enoka‘s request for

attorneys’ fees and costs incurred with respect to the instant

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appeale in the exercise of the trial court’s discretion pursuant
to HRS § 431:10¢-212(a).
IV. CONCLUSION

Based on the foregoing, we: (1) affirm the trial
court's August 19, 2002 final judgment in favor of AIG;
(2) affix the trial court’s July 30, 2002 order denying AIG’ s
motion for attorneys’ fees and costs; and (3) remand this case to
the trial court to determine the issue of Bnoka’s request for
attorneys’ fees and costs incurred with respect to the instant
appeals in the exercise of the trial court's discretion, pursuant

to HRS § 431:10C-211(a).

on the briefs Gre

Melvin ¥. Agena, for Marre men —
plaintifi-appeliant/

Eross-appeliee

ingie M. Bnoka Nuss on avy ane

Jonathan H. steiner and Bore
Ri gohn Seibert. (of

Nécorrieton Miller Mukai Cone «ty
Mackinnon), for defendant

appellee/cross- appellant
AIG Hawai'i Ins. Co.

 

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