Opinion ID: 2518592
Heading Depth: 2
Heading Rank: 4

Heading: Proceedings On Direct Appeal

Text: On direct appeal, Liberty Mutual noted Chang's May 30, 2003 declaration, see supra section I.C.1, and argued that the circuit court erroneously equat[ed] Liberty Mutual's . . . consent to the liability settlement . . . with the substantively different proposition that [it] waived its rights to invoke the Taylor rule: In order to sustain such an estoppel, [Zane] bears the burden of showing that (1) Liberty Mutual engaged in an affirmative representation or conduct, (2) [Zane] detrimentally relied upon that affirmative representation or conduct, and (3) such reliance was reasonable.[ [12] ] . . . [Zane] can point to no affirmative representation or conduct by Liberty Mutual specifically indicating that such an offset or credit would not apply and, since Liberty Mutual communicated its intent to assert this offset/credit before the finalization of [Zane]'s DaimlerChrysler settlement, any reliance by [Zane] upon the absence of such a representation or affirmative conduct would have been unreasonable. . . . . . . . Liberty Mutual heeded Taylor and consented to [Zane]'s underlying settlement and should not be penalized for doing what Taylor told it to do. . . . (Emphases in original.) (Internal quotation signals and some capitalization omitted.) (Citing County of Kaua`i v. Scottsdale Ins. Co., 90 Hawai`i 400, 403 n. 1, 978 P.2d 838, 841 n. 1 (1999).) In its reply brief, Liberty Mutual emphasized that a representation by a party that may give rise to a waiver or an estoppel `must be clearly made to appear' and `leave no opportunity for a reasonable inference to the contrary.' (Emphasis omitted.) (Quoting Anderson v. Anderson, 59 Haw. 575, 587, 585 P.2d 938, 945 (1978); Hewahewa v. Lalakea, 35 Haw. 213, 220 (1939).) In her answering brief, Zane cited Young's May 27, 2003 affidavit and reiterated her position that Liberty Mutual's consent to her settlement with DaimlerChrysler waived its entitlement to invoke the Taylor rule. In Zane I, the ICA first addressed the estoppel question. The ICA concurred with Liberty Mutual that, on the present record, its conduct did not give rise to estoppel as a matter of law: [T]here are genuine issues of material fact regarding (1) whether Zane relied on Liberty Mutual's consent; (2) if Zane relied on Liberty Mutual's consent, whether Zane reasonably understood said consent to mean that Liberty Mutual would not assert its right to a credit/offset; and (3) if Zane relied on Liberty Mutual's consent, whether Zane's reliance was reasonable, given that Liberty Mutual claims it notified Zane of its intention to assert its right to a credit/offset prior to the finalization of Zane's settlement with DaimlerChrysler. Slip op. at 17. Specifically, with respect to the reasonableness of any reliance by Zane, the ICA noted that, [i]n her Complaint, Zane claimed that `[a]lthough Liberty Mutual was itself involved in the [BI] liability suit, Zane nonetheless went through the formality of requesting written permission to settle the liability claims in order to preserve [UIM] benefits. ' Id. at 19 (emphasis in Zane I ) (some brackets added and some in original). The ICA seems to have implied that this statement, as well as the [a]dmitted [f]act[] that Liberty Mutual consented to the liability settlement with DaimlerChrysler and may not now object to that settlement as a basis for denying [UIM] benefits, see supra section I.C.1, is subject to multiple interpretations. See slip op. at 19-20. Moreover, the ICA recognized an unresolved genuine issue of material fact concerning the existence and content of alleged communications between Chang and Kawatachi. See id. at 20-21. Accordingly, the ICA held that the circuit court erred by . . . holding that Liberty Mutual was estopped from asserting its right to a credit/offset. Id. at 21 (emphasis omitted). Nonetheless, the ICA deemed the circuit court's error to be harmless inasmuch as Liberty Mutual was not entitled to an offset for the `gap' referred to in Taylor and Dizol . . . because DaimlerChrysler was not an actual tortfeasor. See id. The ICA acknowledged that this court wrote in Taylor . . ., 90 Hawai`i [at] 314, 978 P.2d [at] 752 . . ., that [b]y settling for less than policy limits, the UIM insured agrees to forego compensation for the difference between the settlement amount and the tortfeasor's liability policy limits. This means that the UIM carrier will not be responsible for covering that `gap' as a component of its obligation to compensate its insured for injury and damage exceeding the tortfeasor's policy limits. Id. Additionally, the United States District Court . . . explained in Dizol . . . that a UIM carrier has a statutory right to be contractually liable to indemnify its insured only for the amount in excess of the tortfeasor's liability coverage. . . . 176 F.Supp.2d at 1031. . . . Slip op. at 14, 21-22. However, the ICA agreed with Zane that DaimlerChrysler was not a tortfeasor: Black's Law Dictionary 1497 (7th ed.1999) defines `tortfeasor' as `[o]ne who commits a tort; a wrongdoer.' In the instant case, Judge McConnell did not find DaimlerChrysler to be liable to Zane or, in other words, a tortfeasor. Id. at 22 (brackets in original). The ICA essentially accepted at face value Zane's characterization of DaimlerChrysler's settlement amount as nuisance value and concluded that, as a matter of law, DaimlerChrysler was not a tortfeasor because of the undisputed facts that: (1) Discovery and case preparation did not support a viable product liability claim against DaimlerChrysler. (2) Because no viable basis for liability existed, the product liability claim against DaimlerChrysler could not be successfully resolved. (3) The best that Judge McConnell could achieve was a mediated settlement for a nuisance value payment of $200,000 by DaimlerChrysler (4) Young recommended to Zane that she accept the mediated settlement because there was no viable product liability claim against DaimlerChrysler and no reasonable prospect of recovering more from DaimlerChrysler at trial. (5) Young spoke to Chang and fully advised Liberty Mutual of the facts of the settlement and the circumstances requiring abandonment of the product liability claim for a nuisance value settlement of $200,000 . . ., and Young requested consent to the liability settlement without prejudicing Zane's right to payment of UIM benefits. Furthermore, there is nothing in the record on appeal indicating that DaimlerChrysler was liable to Zane for the accident. Id. at 24-25. In short, the ICA adopted Zane's position that the maximum applicable coverage beneath which an insured is not entitled to UIM benefits does not include the BI coverage of a party who has settled with the insured but is not an actual tortfeasor, viewing actual tortfeasor to mean a defendant who has undergone the `equivalent [of] an adjudication of liability through litigation or arbitration.' See id. at 22, 23 & n. 5, 24 (quoting Vassiliu, 813 A.2d at 553; Arenson, 665 A.2d at 396-97; Allstate Ins. Co. v. Dejbod, 63 Wash.App. 278, 818 P.2d 608, 611-12 (1991)). Finally, the ICA held that Liberty Mutual was entitled to a $200,000.00 offset representing DaimlerChrysler's actual settlement proceeds, contrary to the circuit court's conclusion. [13] See id. at 27. On that basis, the ICA vacated and remanded the circuit court's April 25, 2005 judgment for further proceedings. See id. On January 23, 2007, Liberty Mutual timely filed the present application for a writ of certiorari. On February 6, 2007, Zane filed her timely response. On April 16, 2007, we handed down an opinion in this matter ( Zane II ). On April 25, 2007, Zane moved for reconsideration, after which we vacated Zane II, ordered that it remain unpublished, and replaced it with this amended opinion.