Opinion ID: 2518592
Heading Depth: 2
Heading Rank: 1

Heading: The Taylor Line

Text: Despite the parties' agreement with the general rule of Taylor and its progeny, we recite the relevant analysis of those cases by way of orientation. In Taylor, the plaintiff Rosalina Taylor, who held a UIM insurance policy through the defendant Government Employees Insurance Company (GEICO), was injured in a collision with a vehicle driven by Mary McKaig, who was insured . . . by State Farm Mutual Automobile Insurance Company (State Farm). 90 Hawai`i at 304, 978 P.2d at 742. In accordance with a consent-to-settle clause in GEICO's UIM policy ( i.e., [UIM] coverage does not apply . . . if the insured . . . has made a settlement . . . without our prior written consent (emphasis omitted)), Taylor informed GEICO that State Farm had offered to settle [her] claim and requested GEICO's permission to settle. Id. GEICO responded that it w[ould] not grant concurrence with regard to . . . [Taylor's] settlement as [she] ha[d] not obtained the [BI] policy limits of [State Farm]. Id. (emphasis and internal quotation signals omitted). Nevertheless, Taylor settled with and released McKaig and State Farm for an amount less than the BI limits of McKaig's policy, after which GEICO refused to pay UIM benefits and Taylor sued for declaratory relief. Id. at 305, 978 P.2d at 743. The circuit court granted GEICO's motion for summary judgment, and Taylor appealed. Id. Our analysis centered on the validity of GEICO's consent clause and the reasonableness of GEICO's refusal to give consent. We declined to disapprove consent-to-settle clauses in UIM policies across the board, but held that a UIM carrier's grounds for denying UIM benefits under a consent-to-settle provision in a UIM policy must be reasonable, in good faith, and within the bounds of the intent underlying HRS § 431:10C-301(b)(4) [(requiring motor vehicle insurance policies to include UIM coverage)]. Id. at 309, 311-12, 978 P.2d at 747, 749-50; accord id. at 315, 978 P.2d at 753 (Nakayama, J., concurring). GEICO's asserted reason for denialessentially that Taylor sought to settle for less than State Farm's BI limitwas unreasonable inasmuch as it denied Taylor the perfectly reasonable choice of saving months, if not years, of delay, trial preparation expense, and all the ensuing wear and tear by simply accepting the offer and, as a condition of proceeding with h[er] UIM claim, foregoing the difference between the tortfeasor's policy limit and the tortfeasor's insurer's offer. See id. at 313-14, 978 P.2d at 751-52 (majority opinion); cited in Granger v. Gov't Employees Ins. Co., 111 Hawai`i 160, 168, 140 P.3d 393, 401 (2006) (where plaintiff had compromised with tortfeasors for $90,000.00 of their $100,000.00 limit, reaffirming that [i]f the victim 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 (emphasis and internal quotation signals omitted) (some bracketed material added and some in original)). Consequently, because [t]he UIM carrier will not be responsible for covering [the difference or gap between the settlement amount and the tortfeasor's liability policy limits] as a component of its obligation to compensate its insured for injury and damage exceeding the tortfeasor's policy limits . . ., there is no legitimate reason for the UIM carrier to refuse to consent to a settlement on that basis. Taylor, 90 Hawai`i at 314, 978 P.2d at 752. In Dizol, the decedent Kevin Dizol was a passenger in a van the driver of which had been drinking at a bar before the subject accident. 176 F.Supp.2d at 1009. The driver was covered by a $35,000.00 BI policy. Id. at 1010. Dizol's estate sued the bar and the deceased driver's estate, and settled (1) with the bar for less than its BI limit and (2) with the driver's estate for its policy limit. See id. Dizol's projected loss of earnings was greater than the total of the payments actually received, by a difference of $17,177.00, but less than the sum of the defendants' BI policy limits. See id. Dizol held a UIM policy for $70,000.00, but his estate had settled without the consent of his UIM insurer. Id. The UIM insurer brought a declaratory action against Dizol's estate, seeking a set off against the estate's UIM benefits of . . . the full amount of [BI] coverage available to . . . [the bar]. See id. at 1012. The UIM insurer subsequently moved for summary judgment, which the United States District Court for the District of Hawai`i granted in relevant part. See id. at 1030-31, 1032 & n. 33, 1033. While the UIM insurer was unaware of and had not consented to the tort settlement, the court extended the Taylor rule to the facts of Dizol. The court concluded that under Hawai[']i law, amounts forgone in below[-]policy[-]limits settlements with joint tortfeasors without the UIM carrier's consent are properly used to offset the carrier's liability. Id. at 1033 (emphasis added).