Title: Granger v. Government Employees Insurance Company.

State: hawaii

Issuer: Hawaii Supreme Court

Document:

LAW LIBRARY

*FOR PUBLICATION in WEST’S HAWAT'T REPORTS and PACIFIC REPORTER*

 

000 ===

 

IN THE SUPREME COURT OF THE STATE OF HAWATT

 

MARGARET GRANGER, Plaintiff-Appellant,
GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant-Appellee,

and

No. 25457 =

APPEAL PROM THE FIRST CIRCUIT COURT
(Civ. No. 01-1-2454-08)

oats

 

August 8, 2006

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

OPINION OF THE COURT BY LEVINSON, J.

‘The plaintiff-appellant Margaret Granger appeals from
the October 31, 2002 judgment of the circuit court for the first
circuit, the Honorable Dexter D. Del Rosario presiding, in favor

of the defendant-appellee Government Employees Insurance Company

(GEICO) and against Granger.
On appeal, Granger argues that the circuit court erred

in granting summary judgment against her inasmuch as she was

 

entitled to declaratory judgment as a matter of law
(2) requiring GEICO to “either consent to the settlement . . . or

+ assume (Granger‘s) position in the underlying action by
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paying [her] the amount she would have received from the Chongs”;
and (2) rejecting GEICO’s proposal that the defendants Jane Chong
(Jane) and Jeanette Chong (Jeanette, apparently Jane’s mother)
(hereinafter, collectively, “the Chongs”} and their insurer, the
United States Automobile Association (USAA),' be required to
agree to a settlement such as that hypothesized in Taylor v.
GEICO, 90 Hawai" 302, 978 P.2d 740 (1999), whereby “the victim
releases the tortfeasor from all personal claims but preserves
the [underinsured motorist (JUIM[)] carriers right of
subrogation,” 90 Hawai'i at 312, 978 P.2d 750 (footnote omitted)
[hereinafter, “a Taylor release”).

For the reasons discussed infra in section III.B, we
hold that the circuit court erred in granting summary judgment in
GEICO’s favor. Accordingly, we vacate the circuit court's
October 31, 2002 judgment and remand for further proceedings
consistent with the following analysis.

1. BACKGROUND
In a May 13, 1997 traffic accident, Jane rear-ended
Granger and thereby caused injuries in excess of $100,000.00. At
that time, the Chongs were covered by $100,000.00 in liability
insurance through their policy with USAA. Granger had UIM
coverage through her policy with GEICO.? On November 19, 1999,

v USAR is not @ party to this case.

+ the policy apparently provided that GEICO

will pay damages an insured is legatly entitled to recover for

bodily injury caused by accident and arising out of the cnnership,

Raintenance, or use of an underinsured motor vehicle. However, we

Will not pay until the total of all eedily injury {(BI)) Iiabiisey
[continted...)

 

 

 
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Granger filed suit against the Chongs. Granger and the Chongs
apparently arrived at a proposal for a settlement whereby Granger
“would dismiss . . . all of her claims against the Chongs . .
in exchange for a payment of $90,000.00." In an April 5, 2001
letter, Granger (1) requested GEICO’s consent to the settlenent
and (2) advised GEICO that she “w[ould) be pursuing a{ UIM]
claim." On April 10, 2001, GEICO responded that it “clould Jnot
refuse consent or consent to waive [its] subrogation interest at
th(at] time.” Rather, GEICO requested additional information:
In order to determine shether we may grant any consent
Sse must evalsate our povential JIN subrogation. If

yy assets information on [Jane], please send us
= advise us if [her] parents had any...

  
 
 

 

9° Please

eto this lose

(Ylou may'not present a UIN claim until the BY case is
By Judgment or settlement

‘Once [we are] in possession of these various itens,

we] would then expect fo discuss any consent issues and

potential UIM claim (s)) with you.

On April 16, 2001, GEICO advised Granger that, “[fJollowing

 

 

review of [its] initial asset check information, (its) UIM
subrogation appears viable . . . and (GEICO) cannot consent to
any BI settlement that fully releases [Jane]'s parents from
[EICo"s) UIN subro[gation] interests at this time.” GEICO

further requested that Jeanette complete an assets disclosure

*(. -continved)
insurance available nas been exhausted by payment of judgnents or
settlenents.

(Emphases omitted.) The policy contained an exclusion whereby “(t)his
coverage does not epply to (61) to an insured if the insures... has made

 

settlement... without our prior written consent.” (Enphaser omitted.) A
Section entitied “trust agreement” read in rele

    

ne parts) "The insured will
ry which he may have against
He will do whatever ie

‘will do nothing after the less
-

  
 

xo Secure all rights of recovery an
‘sdice these rights.” (Formatting altere

    

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FOR PUBLICATION in WEST’S MAWAT' REPORTS and PACIFIC REPORTER?
affidavit, whereupon st “w(ould) . . . further review the matter
and advise [Granger] whether (it) must refuse consent or if [it]
may consent.” Alternatively, GEICO proposed that “USAA may . . .
elect to use a Taylor . . . release,” and cautioned Granger to
“send [GEICO her] proposed release to be sure [GEICO’s] UIM
subro[gation] rights are, in fact preserved.” (Emphasis added.)
on April 20, 2001, Granger wrote to GEICO, advising that the
Chongs had “indicated that the settlement w[ould] be withdrawn if
the release (Granger) provides is anything less than a full
release by [Granger].” Granger further asked GEICO to “forward
to (her) immediately . . . $90,000, which will cover the
settlement payment [she] would have received from [the]
Chongis}.”

on August 22, 2001, Granger filed a complaint in the
circuit court praying, inter alia, for declaratory judgment as
follows:

1... . (7]hat GEICO cannot refuse to consent te the

settlescnt Sf'the underlying action and thereby compel

Granger] to either pursue sais underlying action to

jusgnent or forfeit her rights to (UIK) coverage:

2... [T]hst GEICO must either consent to the

seteiencnt |! cor’, -. asaune Granger's) position in the

tonderlyang action by’paying (her) the amount she would have

Feceived fram the chongs «= . 3, (and)

(tyhat th(e Ckzeuit] court determine the
je of « Tavlor. . » release(.)

 

 

   

(Emphasis added.) GEICO answered Granger’s complaint on
September 14, 2001 and, on December 20, 2001, moved for summary
Judgment in its favor, In its motion, GEICO argued:

(xt was appropriate for [GEICO] to. . . refuse to consent
to the settienent . . . where the settienent as proposed
would nave prejudiced the subrogation right. (GEICO) would
have ‘Also, . . » [GEICO] is not required to assume
(Grangeri‘s posttin in ine underiying action «

 
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By April 16, 20021,1 GEICO had conducted an
initial asset check ang had preliminarily determined that
ite Ulu subrogation interest appeared viable against the
tertteasor and had requested information to further eveluate
ite Olt subrogation petential. Although GEICO did not
receive the information... , st did continue Sts oun
Erweatigation of the aasgte that might Be evaileble shosla
ie obtain e subrogation interest =

 

11 imine undertying case could be dismissed without
prejudice by way of @ settienent agreement releasing the
Chongs from ell claine except the yor to be determined
fanount, if any, of any (UIM] coverage paid to [Granger].

= isranger} is not being forces to trial by GEICO. “she
is veing forced te trial by (USAA]"s refusal [of a Taylor
ease)

 

   

 

 

Zo! require GEICO to pay the amount of al).
Exial and the risk

 

 

settlenent... . would put tne cost of
ofa + + judgment for less than that ancunt on
ExCo.

«tn addition, At de unlikely that (Granger?
would be'noeivated to expend the time and/or effort to aid
GEICO... Lf she already has receives full conpensstion

=. GEICO should not be required to... pursue the

tort action of a party that is making s claim against it,
The interests of (Granger) and GEICO are adversarial and in
Conflict with ene another...

(Capitalization altered.)
on February 6, 2002, Granger filed a menorandun in

opposition. She argued:

The position GEICO advocates . . . would grant the UI
insurer the unilateral power to force cases to go to trial.
In}he purposes of the Hawai("]: UIM law ould be
dubverted if each injured insured were forced to proceed to
trial against the tortfeascr for the sole purpose of

preserving the DIM inevrer's contingent right to
Subrogation.

 

 

 

Granger cited several cases from other jurisdictions, including

Lambert vy, State Farm Mut, Auto, Ins, Co., 576 So. 2d 160, 167
(Ala. 1991); Grinnell Mut, Reins. Co, v, Recker, 561 N.W.2d 63,

68-70 (Towa 1997); MacInnis v. Aetna Life & Cas. Co., 526 N.E.2d
1255, 1260 (Nass. 1988); Schmidt v, Clothier, 338 N.W.2d 256, 263

(Minn. 1963); McDonald v. Rep.-Franklin Ins. Co., 543 N.B.2d 456,
‘*FOR PUBLICATION in WEST'S HAWAI'I REPORTS and PACIFIC REPORTER*

460 (ohio 1989); Gibson v, state Farm Mut, Auto, Ins, Go, 704
N.B.2d 1, 6 (Ohio Ct. App. 1997); Hamilton v, Farmers Ing, Co. of
fiash,, 733 P.2d 213, 219 (Wash. 1987); and Yost vs Schroeder, 383
N.W.24 876, 881 (His, 1969), in support of her alternative
azgunent that GEICO shovld at least subrogate itself to Granger's
claims against the Chongs.

on February &, 2002, GEICO filed its reply menorandun.
Tt argued that the New Mexico Suprene Court, in March v. Mtn,
States Mut, Cas. Cou, 687 F.2d 1040 (NM, 1984), reasoned that
“she consent provision is not designed to control the insured’s
access to the courts, but rather to protect the insurer’s
subrogation rights." (Quoting Zavlor, 90 Hawai'i at 311, 978
P.2d at 749 (quoting March, 687 P.2d at 1044).)

on February 14, 2002, the circuit court conducted =
hearing on GEICO's motion for summary judgent. At the hearing,
GEICO conceded that Granger “correctly states the law in.
various other jurisdictions,” but urged the court to follow

Taylor as the applicable law in Hawai'i. Granger responded that

 

Taxes actually does not address this issue[.)
The focus of 1s we nas the consent £0
settlenent clause and the exhaustion clause. What the court
ee Sdealt with... was... whether the refusal to
Goisent'. . | in that case tag feasonsble or unreasonable.

(Emphases added.) She reiterated that “the only way GEICO can

 

have the right to pursue claims against . . . the Chongs{} is to
step into. . . Granger’s shoes.”

The circuit court granted GEICO"s motion and, after
denying Granger’s March 25, 2002 motion for reconsideration
and/or clarification and her June 13, 2002 motion for further
relief, entered its October 31, 2002 judgment in favor of GEICO

‘
‘FOR PUBLICATION in WEST'S HAWAI'I REPORTS and PACIFIC REPORTER?

and against Granger, further ruling that “{s]aid Judgment extends
to and is binding on (the Chongs)” and that “{t}here are no
remaining claims . . . or parties.”

on November 8, 2002, Granger filed a timely notice of

appeal to this court.

17, STANDARD OF REVIEW

ie review the circuit court's grant or denial of
summary Jusgnent de govg. Hawai Clelevi.l Fedt | Credit
Union. Keka, 94 Rewari 213, 221, 11 F307, 3 (2000)
The standard for granting « motion for summery Judgment se
setclea:

(Slusmary judgnent 12 appropriate if the pleadings,
Gepositicns, answers to interrogatories, snd
Sanissions on file, together with the affiaavite, if
any, show that there is no genuine issue a2 to any
Raterial fact and that the moving party 4s entitled to
Sudgnent a5 2 matter of sw. A fact ig material If
Proof of that fact would have the effect of
Establishing or refuting one of tha essential elenents
Sf a cause of action or defense asserted by the
Parties. The evidence must be viewed in the Light
Rost favorable to the nen-noving party. in cther

we must view all of the evidence and the
‘ances drawn therefres in the light most favorable
to the party opposing the motion

 

 

 

 

 

Id. (citations and internal quotation marks omitted)
Querubin v, Thomas, 107 Hawai'i 48, 56, 109 P.3d 689, 697 (2005)
(quoting Durette v, Aloha Plastic Recycling, Inc, 105 Hawai'i
490, 501, 100 P.3d 60, 71 (2004) (quoting Simmons v. Puy, 105
Hawas's 112, 117-18, 94 P.3d 667, 672-73 (2004) (quoting Kahale
Mu City & County of Honolulu, 104 Hawai'i 341, 344, 90 P.3d 233,
236 (2004) (quoting SCI Mamt, Corp, v, Sims, 101 Hawai'i 438,
445, 71 P.3d 389, 396 (2003) (quoting Coon v. City & County of
Honolulu, 98 Hawai'i 233, 244-45, 47 P.3d 348, 359-60
(2002)))1))
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TI, pIscussi0n

‘The Parties’ Arcuments

on appeal, Granger argues that, in accordance with

 

public policy and the intent of the legislature in enacting HRS
§ 431:10C-301(b) (4) (1993), GEICO should not be able to refuse a
settlement agreement and effectively leave her no other
alternative to the risk and expense of trial: “Under GEICO’s
view, if [it] elects not to consent to the release of the
[chongs], [Granger] must choose to either forego the UIM coverage
she paid for by settling with the tortfeasor over GEICO’s
ebjection, of take the case against the (Chongs] to trial.”
According to Granger, “the purposes of (HRS § 431:10C-301(b) (4)]
would be subverted if each injured insured were forced to proceed
to trial . . . for the sole purpose of preserving the UIM
insurers contingent right te subrogation. It defeats the whole
purpose for buying [UIM) coverage in the first place.”

In the alternative, Granger proposes that we adopt the
rule established in several other jurisdictions, whereby, if
GEICO withholds its consent, it must at least “step into [her]
shoes” as her subrogee “(bly paying her an amount equal to what

the Chongs have offered in settlement.” See Lambert, 576 So. 2d

 

> HRS § 431:10C-301, entitled “Required rotor vehicle policy
.ge," provides in relevant part:

 

 

(b) A motor vehicle insurance policy shail include

lai Coverage for lose resulting from (B1] or death suffered by any
person legally entities to recover damages fro owners oF
Cperatore of underinsured motor vehicles

Effective June 19, 1997 and July 20, 1998, the legislature amended this

fection in respects not germane to this appeal. Gee 1998 Haw. Sess. L. Act

255, $8 1é and 27 at 926625, 940; 1997 Hane Sess. Ly Act 251, 65 36 and 70 ot

534235, 553.

 

 
*FOR PUBLICATION in WEST'S HAWAI'I REPORTS and PACIFIC REPORTER?

at 167; Grinnell] Mut, Reins, Co., $61 N.W.2d at 70; Macinnis, 526
N.E.2d at 1260; Schmidt, 338 N.W.2d at 2637 McDonald, 543 N.E.2d
at 460; Gibson, 704 N.E.2d at 6; Hamilton, 733 P.2d at 219; Yoot,
383 N.W.2d at Bel.

In its answering brief, GEICO counters: (1) that its
refusal to consent to the settlement was “reasonable”; and (2)
that Granger’s alternative prayer for a “payoff” equal to the
proposed settlement would require us to overturn Tavlor in favor
of other states’ models that we and the legislature have -- at
least implicitly -- rejected:

[A)11 the cases cited by Granger predate (Javier)

‘Schmid s Macingists) es + and Gipson...
Were cited 3h Sauer’... althcugh’the other cazes

mentioned by Granger were not cites in Zavior, given, the
Sates of those decisions and the treatises cited in Tavior,
itis likely that this Court was well ovare of the nanner in
Which those few other Jurisdictions handled matters euch ae
this and rejected that approach - This Court would

fe(d] the use of 4 “Linited release” if it
‘Spproach advocated by Grange:

 

     

‘ Pavior was decided on May 5, 1999. There have
been three full sessions of the... legislature since thet
tine. [{] If the Legislature... ‘felt that the decision

War conehow inconsistent with ste legislative intent
ree ee]. st could have passed legisiation to change the
dpprdach taten[,] incluaing the adoption of the procedure
ow advocated by Granger. it has net done 80

 

 

(Formatting altered.) Moreover, GEICO argues, the consent-to~
settle provision in its policy would be enforceable in most
jurisdictions, including Hawai'i.

Furthermore, GEICO seems to urge that we should somehow
foxce the parties and USAA into a Tavlor release and that, if
anybody acted unreasonably, it was USAA and the Chongs by

“GEICO filed ite answering brief on March 19, 2003.

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POR PUBLICATION in WEST’ S HAWAI'I REPORTS and PACIFIC REPORTER*
refusing to agree to a limited settlement.’ (Quoting Taylor, 90
Hawas'i at 311-12, 978 P.2d at 749-750.)

Finally, GEICO contends that Granger’s position
requires it to assume a risk of the unknown, inasmuch as the true
monetary value of Granger’s injuries remains unadjudicated.
Moreover, GEICO argues, it should not be required to advocate
Granger's position in the tort context while at the same tine
defending against @ possible contractual dispute with Granger

concerning her UIN claim.

8. Analysis

1. GbICO"s refusal to consent, after investication,

fo prot 7 ranoer's
subrogee, was reasonable,

In Taylor, the plaintiffs were injured by an
underinsured motorist. 90 Hawai'i at 304, 978 P.2d at 742.
Notwithstanding a provision in GEICO’s* policy thet “[UI™)
coverage does not apply . . . if the insured . . . has made a
settlement . . . without our prior written consent," the
plaintiffs “executed a joint tortfeasor release and indemnity
agreenent,” against GEICO’s wishes, whereby the underinsured

torte

 

sor would pay the plaintiffs an amount less than “the
bodily injury policy limits of the (tortfeasor’s) carrier.” 90
Hawas‘i at 304-05, 978 P.2d at 742-43 (emphases omitted).

We held that consent-to-settle provisions do not, “per

se, contravene the intent of HRS § 431:10C-301(b) (4)," see supra

 

GEICO’s Fequest for this court to smpose o Zavler release, upon
‘the Chonge and USRA ~~ "a non-party -- is injusticisble for want of personal
jurisdiction.

 

GEICO was sige the ple!

 

otiffe! inevrer in Taylor.
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note 3.7 90 Hawai'i at 307-09, 978 P.2d at 745-47. Moreover, we
‘agree{d] with GEICO that the protection of the UIM carrier's
subrogation rights would be @ reasonable basis for a refusal to
consent to settlement. . . . The preservation of a UIM carrier's
subrogation rights is consistent with the interests of this
state's public policy." 90 Hawai" at 310, 978 P.2d at 748.
Nonetheless, we held that, because GEICO justified its
withholding of consent to the settlement “solely upon an invalid
exhaustion clause” and not a “desire to preserve its subrogation
rights,” Taylor’s failure to obtain consent “was... not...
a legitimate basis for denying the [appellants’] application for
OIM benefits”:

[T]he legitimate invocation of 2 consent-to-settle provision

“requires the insurer to denonstrate prejudice fron the

Ansured"s failure to obtain the insurer's consents ss.

“Sig the carrier denies the claim .
Inte its merits.".”.',° the carrier may

Hts... (The investigation
factors such de “the anoint of assets held by
the tortfeasor, the likelihood of recovery via subrogation,

and the expenses and risks of 1itigating the insured’s cause

of action.”
90 Hawai's at 309-12, 314, 978 P.2d at 747-49, 752 (emphasis in
original) (quoting Greenvall v, Maine Mut, Fire Ins, Co., 715
A.2d 949, 954 (Me, 1998); Allstate Ins, Co, v, Beavers, 611 So.

2d 348, 351 (Ala. 1992); Gibson, 704 N.E.2d at 6) (some citations

   

 
 

omitted).

The legislative history of ARS § 431:10C-301(b) (4), which took
effect on dune 13, 1966, pee 1988 Hou. Sess. L. Act 306, $61 and 4 at 75-77,
does not aid this court's analysis of the present appeal except to confirm
that the purpose of adding HRS § 431:10C~301(b) (4) Mas “to provide protection

for persons who are injured by [UIM]s." Sen. Conf. Comm, Rep. No. 215,
in'1906 Senate Journal, at 615) Hae. Cont, Comm. Rop, Ne. 126-08, in 198
House Journal, st £26; se. Stand. Conn. Rep. NO. 1190-68, in 1908 House
Joornal, at 124

 

 

 

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POR PUBLICATION in WEST'S HAWAI'I REPORTS and PACIFIC REPORTER*
on the other hand, in the present matter, GEICO
undisputedly investigated factors that would render subrogation
more or less favorable to GEICO. Even Granger's complaint
acknowledged that “GEICO. . . demanded that [she] obtain
information regarding the personal assets of the Chongs” and that
GEICO later concluded that “the Chongs ha[d] personal assets.”
Consequently, we believe that GEICO's refusing to
consent in order to protect its subrogation rights, in light of
onable pursuant to this court's dictun

in Taylor. Nevertheless, it was unnecessary in Taylor for us to

ite investigation, was re

 

discuss what further steps would be required of a UIM insurer
that did withhold consent reasonably.

2. t
se must tender

Granger.

We agree with Granger that GEICO, having withheld its
consent, must put itself in the position of Granger's subrogee by
paying her $90,000.00, the amount of the Chongs' offer.

At least eighteen jurisdictions have adopted the rule
that, after the UIM insurer has a reasonable opportunity to
consider the implications of a pending settlement, it must either
allow the settlement to proceed or tender to its insured a
payment equal to the tortfeasors’ settlement offer (up to the

Limits of the insured’s UIM coverage). See, e.g., Lambert, 576

So. 2d at 166 n.4, 167-68; Grinnel] Mut. Reins, Co., 561 N.W.2d
at 70; Nationwide Mut, Ins. Co. v. State Farm Auto, Ins. Co., 973

S.W.2d 56, 58 (Ky. 1996); MacInnis, $26 N.E.2d at 1260-61;
Schmidt, 338 N.W.2d at 263; Hamilton, 733 P.2d at 220; Yoat, 383

 

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‘*FOR PUBLICATION in WEST’S HAWAI'I REPORTS and PACIFIC REPORTER*
N.W.2d at 982, 883 6 n.8; Irvin E. Schermer & William J.
Schermer, 3 Automobile Liability Insurance § 42:17 (4th ed. 2004
& Supp. 2006); Alan I. Widiss & Jeffrey E. Thomas, 3 Uninsured
and Underinsured Motorist Insurance $ 43.6 (3d ed. 2008) ("[T]he
insurer bears the risk that a subsequent recovery will be less
than the amount paid to the insured.”) (emphasis added). The
Alabama Supreme Court, in Lambert, described the procedure to be

followed when a victim who is covered by UIM insurance is injured

 

by an underinsured motorist

If the tort-feasor’s liability insurance carrier and the
Ineurea enter into negotiations that ultimately lead Co.
proposed compronise or settlenent ... , and if the
Betelenent would Felease the tort~feasor’ from all 1iabiiity,
then the insures, before agreeing te the settlement, should
immediately notify the (OIK) insurance carrier of the. «

 

 

 

iryne insured should also inform the carrier as
to whether the insured will seek [UIM) benefits in addition
to the benefits payable under the settlenent proposal, £0
that the carrier can determine whether it will refuse te
consent to the settienent, will waive its right of
Subrogation against the tore-fearor, oF will deny any
obligation to pay (UIM] benefits. - [T]he carrier
Should innediately begin investigating the claim, ("|
Conclude such investigation within a reasonable time, and
Spotify ite insured of the action st proposes =
‘The insured should not settle with che
tort-flagor without first allowing the [UIM) insurance
Carrier a reascnable tine within which to snvestigate the
Sngurea’s claim and to notify its insured of its proposed
action.

 

 

ifthe Ulm) insurance carrier wants to protect
ite oubrocation rishts, It aust. within « reasonable tine,
ana, in any event before the tortfeasor is releases by the
Sarrier's insured,

516 So. 2d at 167 (emphases added). The Minnesota Supreme Court

   

 

© The insurer's cbligation to consent or be subrogated “is not
triggered {f"the ineured nas faileg to satisfy ite contractual
Obligation to provide information te the underineurer to assist the
Uncerineurer in determining densges.” pitts v. rust of Kngeppel, 698 N.W.20
561, 776 (wie, 2005)

 

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‘POR PUBLICATION in WEST'S HAWAI'I REPORTS and PACIFIC REPORTER*
more thoroughly fleshed out the cost/benefit analysis that the

insurer performs:

If the underineurer were to determine after assesenent that
Fecovery of underinsurance benefits vas. uniikely
(e.g., where the liability limits axe exhausted or nearly so
and the tertfeasor is judgnent~proct), it could simply let
the “grace period” expire and permit the settlenent and
release.

TE, "of the other hand, dasages were substantially more
than the Lisbility limite and the tortfeasor had substantial
assets, the underinsurer could aubseituee its payment to the
Sneored in an amount equal to the tentative settienent.

 

 

Schmidt, 338 N.W.2d at 263. Of course, having thus preserved its
subrogation rights, the insurer could then pursue its oun action

against the tort

 

At least twelve states have statutorily codified this

 

procedure and the duration of the insurer’s grace period. Ark.
Code Ann. § 23-89-209(d) (1) and (3) (2004 6 Supp. 2005) (allowing
the UIM insurer a thirty-day grace period); Fla. Stat. Ann.

§ 627.727(6) (b) (West 2005 & Supp. 2006) (same); 215 11. Comp.
Stat. Ann. § $/1432-2(6) (West 2000 & Supp. 2006) (same); Ind.
Code Ann. § 27-7-5-6(b) (LexisNexis 1999 & Supp. 2008) (same);
Kan, Stat. Ann. § 40-284(f) (2000 & Supp. 2005) (sixty days); Ky
Rev, Stat. Ann. § 304.39-320(4) (LexisNexis 2001 6 Supp. 2005)
(thirty days); Md. Code Ann., Ins. § 19-511(c) (LexisNexis 2006)
(same); N.C. Gen. Stat. § 20-279.21(b) (4) (2005) (same); N.D-
cent. Code § 26.1-40-15.5.2 (2002 & Supp. 2005) (same); Okla.
Stat. Ann. tit. 36, § 3636.F.2 (West Supp. 2006) (sixty days);
Tenn. Code Ann. § $6-7-1206(k) (2000 & Supp. 2005) (thirty days);
W. Va. Code Ann. § 33-6-31e(c) (LexisNexis 2003 & Supp. 2006)

 

(sixty days). Our research reveals no contrary authority.

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*POR PUBLICATION in WEST'S HAWAI'I REPORTS and PACIFIC REPORTER*
In the present matter, no party disputes that the
Chongs offered Granger $90,000.00 for 2 full release, nor that
Granger notified GEICO of the Chongs’ offer. GEICO should have
been left to the task of estimating whether (1) “buying” itself
the right to sue for $90,000.00 and then incurring the time and
expense of Litigation will net @ more favorable outcome than (2)
permitting the compromise and then reimbursing Granger for her
compensable danages that exceed $100,000.00, see Zavior, 90
Hawai'i at 313, 978 P.2d at 751 (quoting Longworth v, Van Houten,
538 A.2d 414, 423 (N.J. Super. Ct. App. Div. 1988) (“{T]f the
victin does accept less than the tortfeasor’s policy limits, his
(or her) recovery against his [or her] UIM carrier must
nevertheless be based on a deduction of the full policy
Limits.")). If GEICO, in good faith, prefers to prolong the
lawsuit against the Chongs for its own benefit, it may do so.

See discussion supra in section III.B,1. Nonethell

 

we cannot
allow GEICO to conscript Granger as its “vicarious plaintiff” for
the purpose of recovering, at substantial cost, funds that she
already paid GEICO to bear the risk of providing in the event of
See Pitts v, Trust of Knueppel, 698

 

an underinsured injury.

 

‘Ae noted gupta in section 1, GEICO posed the question in its
Decenber 20, 2001 aataon for summary judgnent whether Granger "would be
hotivated to expend the time and/or effort to aid GEICO” in ite subrogation
Eeticn were GEICO to tender $30,000.00 to her. However, according to the
Guprese langosge of GEICO’s UIM'pelicy, which GEICO attached to its motion,
Grenger 12 subject toa duty to "so whatevs

fend... do nothing efter the loss to prejudice these Tienes.”
{Emphasis added.) ‘We Believe thet this “cooperation clause” would impose upon
Granger such specific duties 25 submitting to interviews by GEICO, giving
GEIce information with which to reconstruct the pertinent events, “(a)t!
Sepositions and ether. proceedings suchas © - trials] +. . [and
Giiving truthful testimony and following the Girection of counsel.” Sea
Sietzey Wi Steepel, Stempel on Insurance Contracts §9.02(A] 4 8.19 (340d.

(eontinved...)

 

 

nding

 

15
‘FOR PUBLICATION in WEST’S HAWAI'I REPORTS and PACIFIC REPORTER*
N.W.2d 761, 773 (Wis. 2005) ("(T]he transfer of risk is the only
reason that insureds pay premiums to insurers"); Yost, 383

N.W.24 at 682.

IV. CONCLUSION
We hold that the circuit court erred in granting
summary judgment in GEICO’s favor and, accordingly, vacate the
circuit court’s October 31, 2002 judgment and remand for further
proceedings consistent with this opinion. On remand, the circuit
court shall grant Granger the declaratory relief she seeks in
paragraphs 1 and 2 of her prayer, see supra section I; that is,
having received notice of its possible subrogation interest and
having concluded its investigation into the Chongs’ assets and
insurance coverage, GEICO must, within a reasonable time
following the circuit court’s ruling on remand, either
(2) consent to the proposed settlement among the Chongs, Granger,
and USAA, gr (2) pay Granger the proposed settlement amount of
$90,000.00 and thereby assume the position of Granger's subrogee
with respect to the Chongs.

on the brief

Roy K.S. Chang and Harvey Peete Oey once

M. Denetrakopoulos

(of Shim and chang) for
Plaintiet=appeliant Anan N

 

 

 

€ Bedisn Bh
7 -continved
2006) (Hizine typiesl cooperation clause i# short and generic, seplicitiy
Empoving's duty. . Gerived fon conan senge."1feSescions’ omitted)

1é
*FOR PUBLICATION in WEST'S HAWAT'T REPORTS and PACIFIC REPORTER*

Carleton B. Reid
(of Miyagi, Nohr & Myhre)
for defendant-appellee
Government Employees
Insurance Company

Michael F. 0’Connor
(of Oliver, Lau, Lawhn
Ogawa & Nakamura) for
defendant s-appellees
Jane Chong and Jeannette
chong

Terrance M, Revere and
Jacqueline E. Thurston
(of Motocka Yamamoto &
Revere) for United
Services Automobile
Association