Opinion ID: 2581156
Heading Depth: 2
Heading Rank: 3

Heading: The Assignment By Contract Was Invalid Because Del Monte Corp. Failed To Obtain Its Insurers' Consent Pursuant To the Terms Of the Insurance Policies.

Text: The pertinent language contained in the Bill of Sale that transferred Del Monte Corp.'s assets to Del Monte Fresh is as follows: 2. [Del Monte Corp.] hereby conveys, assigns, transfers and delivers to [PPI-Del Monte], all of its right, title and interest in and to all the Assets, subject to the related liabilities, as the same shall exist on the date hereof. The Assets shall include all of the properties and assets (real and personal, tangible and intangible) of [Del Monte Corp.] constituting a part of, used in, arising out of or pertaining or relating in any manner whatsoever to the business of the Del Monte Tropical Fruit Division located in Hawaii (the Hawaiian Business) of every nature, kind, character, description, absolute, contingent and otherwise, wherever located or situated, including, without limitation, . . . (B) any and all other assets of the Hawaiian Business, including, without limitation, . . . any . . . insurance policies of the Hawaiian Business, any causes of action, judgments, claims, and demands of whatever nature of the Hawaiian Business [.] (Emphasis added.) The pertinent language contained in the Assumption Agreement that transferred Del Monte Corp.'s liabilities to Del Monte Fresh is as follows: 1. [Del Monte Fresh] hereby undertakes, assumes and agrees to perform, pay or discharge when due, to the extent not heretofore performed, paid or discharged, and subject to the limitations contained in Paragraph 2 hereof: . . . (vi) all liabilities and obligations arising out of and relating to the operations of the Hawaiian Business, including, without limitation, any and all contingent liabilities related to the contamination of ground water or the use heptachlor[.] (Emphasis added.) Del Monte Fresh points out that it is not arguing that the insurance policies were assigned to it as a result of the above agreements. Del Monte Fresh instead asserts that Del Monte Corp.'s transfer of all assets and liabilities to it effectively assigned to Del Monte Fresh the right to claim and recover under Del Monte Corp.'s insurance policies in effect prior to the 1989 sale, notwithstanding the no assignment provisions in the policies. It has been said that insurance is a means of transferring the risk of loss from the insured to the insurance company. The insurance company is in the business of evaluating risks, assuming risks in return for periodic premiums, and spreading the costs of the risks. Elliott v. Donahue, 169 Wis.2d 310, 485 N.W.2d 403, 407 (1992) (footnote omitted). In return for the premiums paid by the insured, the insurance company assumes the contractual duties of indemnification and defense for claims described in the policy. Id. (emphasis added). In this regard, this court has stated that insurance policies are subject to the general rules of contract construction[.] . . . [E]very insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy. Dairy Rd. Partners, 92 Hawai`i at 411, 992 P.2d at 106 (brackets, quotation marks, and citations omitted). Accordingly, the duties to defend and indemnify arise under the terms of the insurance policy, and it is through an interpretation of the terms of the policy that such duties are deemed to be owed. See Hawaiian Ins. & Guar. Co., 67 Haw. at 290-91, 686 P.2d at 27 ([T]he objectively reasonable expectations of [policyholders] and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations. (Alterations in original, emphasis added, and citations and quotation marks omitted)). Therefore, under Hawai`i law, it cannot be said, as Del Monte Fresh asserts, that the duties to defend and indemnify are separable from the terms of the insurance policy itself, and are assignable as such notwithstanding the existence of a no assignment provision. [15] HRS § 431:10-228(a) provides that [a] policy may be assignable or not assignable, as provided by its terms. Furthermore, this court has observed that liability insurers have the same rights as individuals to limit their liability, and to impose whatever conditions they please on their obligation, provided they are not in contravention of statutory inhibitions or public policy. First Ins. Co. of Hawaii, Inc. v. State of Hawaii, 66 Haw. 413, 423, 665 P.2d 648, 655 (1983) (emphasis added) (citations and quotation marks omitted). The relevant insurance policies in the instant case contain a no assignment clause that requires the consent of the insurer to bind it to any assignment made by the named insured. It is undisputed that Del Monte Corp. is the only named insured covered by the policies. It is also undisputed that Del Monte Corp. did not obtain any of the insurers' consent prior to the 1989 assignment. Because the policies were assigned by Del Monte Corp. without the insurers' consent, we hold that Del Monte Fresh is not an insured under any of the Defendant-Appellant insurers' policies, and is therefore not owed duties to defend or indemnify by Defendant-Appellant insurers. [16]