Opinion ID: 1388811
Heading Depth: 2
Heading Rank: 2

Heading: Public Policy, Pedestrians As Covered Persons, The Olson Analysis, And Immediate Proximity To The Vehicle

Text: As the foregoing analysis demonstrates, Bockhorn was obviously a covered person under the FICH auto policy during the period of time when she was a passenger in the insured vehicle, because she was unquestionably a person occupying the covered auto. It is therefore equally obvious that, had Bockhorn been struck and killed by the uninsured Honda Accord while a passenger in the insured vehicle, the declaratory judgment action giving rise to the present appeal would never have been filed, because FICH would have readily acceded to Dawes's claim for UM benefits. Accordingly, the fact that Bockhorn was not occupying ( i.e., in, upon, getting in, on, out or off') the insured vehicle at the moment of the accident gives rise to the present question on appeal. Such would not be the case, however, if it had been Shimp, and not Bockhorn, who had been struck and killed by the uninsured Accord as the group trekked to the Kona Airport to obtain alternative transportation and repair assistance following the breakdown of the insured vehicle. Under such hypothetical circumstances, there would be no geographical limits placed on Shimp's coverage, which would in no way be tied to occupancy of the insured vehicle, the same being designed to protect Shimp's person and not the vehicle he had been driving. See Harvey, supra . This is because the FICH auto policy purports to create two distinct classes of covered persons: (1) the named insured and his or her family members, such as Shimp; and (2) any other person occupying the covered auto. The two class paradigm of covered persons typically reflected in UM policies, including the FICH auto policy, is described in the scholarly treatises as follows: ... [Uninsured] motorist coverage ... creates two classes of persons who can recover: on the one hand, the named insured, and while resident of the same household, the spouse of any such named insured, and relatives of either; and on the other, those who use, with the consent, express or implied of the named insured, the vehicle to which the policy applies and those who are guests in such vehicle.... And second group persons are only covered when an accident takes place while they are occupying, operating or using the insured vehicle. This is to be contrasted with the fact that first group persons are not required to be associated with the insured auto in order for coverage to attach.... Coverage for the first of the classes listed above, but not for the second, extends to an injury suffered while a pedestrian. 12A Couch § 45:635, at 130-32 (footnotes omitted and emphasis added). Appleman characterizes the dichotomy in this way: ... [A] line of distinction frequently is drawn between persons of the first class and of the second class. Injury received as a pedestrian generally is limited to the former, at least unless some connection with the insured vehicle is shown. Thus even though such persons are travelling together, a different result may follow where injury is received by each. While a pedestrian's right to recover against his insurer may depend upon the legal liability of the uninsured motorist to him, not every departure from a vehicle necessarily divorces one from his status as a covered passenger. One may be considered still to be occupying the vehicle if in reasonable relationship to it at the time of injury.... Generally, the court will take a liberal look at any situation, conferring coverage if it seems desirable where one is not in proximity to the vehicle, while denying a defense to the insurer where the individual was closer, physically, to the automobile.... 8C Appleman § 5092.35, at 381-82, 386-87 (footnotes omitted and emphasis added). Recognizing the necessity of some connection with the insured vehicle in order for injured class two persons to be entitled to UM benefits, some courts have resorted to the fiction that use of the insured vehicle is synonymous with its occupancy [9] and have devised complex and elaborate formulae for determining when such use has been established. For example, the Washington Court of Appeals has proffered the following test: ... [W]hether a person can be considered as using a motor vehicle and thus an insured under an uninsured motorist endorsement depends on the factual context of each case provided, however, that at least the following four criteria are met as of the time of the injury: (1) there must be a causal relation or connection between the injury and the use of the insured vehicle; (2) the person asserting coverage must be in a reasonably close geographic proximity to the insured vehicle, although the person need not be actually touching it; (3) the person must be vehicle oriented rather than highway or sidewalk oriented at the time; and (4) the person must also be engaged in a transaction essential to the use of the vehicle at the time. Rau v. Liberty Mut. Ins. Co., 21 Wash.App. 326, 334, 585 P.2d 157, 162 (1978) (citations omitted). Efforts such as that in Rau to establish some connection with the insured vehicle, 8C Appleman § 5092.35 at 381, in order to extend the benefits of UM coverage to class two persons, fail, however, to avoid the anomaly that when class one and class two persons are travelling together, a different result may follow where injury is received by each. Id. See, e.g., Kaysen v. Federal Ins. Co., 268 N.W.2d 920 (Minn.1978) (officer-director of corporate named insured struck and killed by uninsured motorist after alighting from company auto; UM coverage extended to him by operation of law but did not extend to officer's wife, a passenger in same company auto, killed in same accident). It is apparent to us that application of the Rau test would result in the same anomaly had Shimp and Bockhorn both been struck and killed by the uninsured Honda Accord in the present case. For the reasons discussed below, we believe as a matter of law that there was a causal relation or connection between [Bockhorn's death] and the use of the insured vehicle, Rau, 21 Wash.App. at 334, 585 P.2d at 162. [10] Nevertheless, in our view, a determination as to whether Bockhorn was vehicle oriented rather than highway or sidewalk oriented at the time of her death, id., and whether she was engaged in a transaction essential to the use of the [insured] vehicle at the time, id., would be nothing more than a conclusory and self-serving exercise in semantic game playing. Moreover, we do not believe, on the record before us, that any reasonable trier of fact could find that Bockhorn was in a reasonably close geographic proximity to the insured vehicle, id., at the time of the accident; accordingly, it is apparent as a matter of law that she was not. Thus, in the hypothetical circumstances posed in the previous paragraph, Shimp, as a covered family member, would be entitled to UM benefits but Bockhorn would not, although both had been occupants of the insured vehicle and both were identically situated with respect to the uninsured Honda Accord. In light of the remedial purpose of HRS §§ 431:10-213 and 431:10C-301(b)(3) to promote protection ... for persons who are injured by uninsured motorists who cannot pay for personal injuries caused by motor vehicle accidents and to effect a means of recovery when the innocent victim shows... that there is legal liability on the person alleged to be responsible and that the claim cannot be collected because of the financial irresponsibility of that person, [11] such a result is absurd. [12] This court has recognized that departure from a literal construction of a statute `is justified when such construction would produce an absurd ... result and the literal construction in the particular action is clearly inconsistent with the purposes and policies of the act.' Richardson v. City and County of Honolulu, 76 Hawai`i 46, 60, 868 P.2d 1193, 1207, reconsideration denied, 76 Hawai`i 247, 871 P.2d 795 (Sup.1994) (quoting Franks v. City and County of Honolulu, 74 Haw. 328, 341, 843 P.2d 668, 674 (1993) (internal quotation marks deleted)). See also Richardson, 76 Hawai`i at 68-69, 868 P.2d at 1215-16 (Klein, J., dissenting). Moreover, we believe that to construe the FICH auto policy's promise to pay damages which a covered person is legally entitled to recover from the ... operator of an uninsured motor vehicle because of bodily injury ... [caused] by an accident ... aris[ing] out of the ... use of the uninsured motor vehicle (emphasis in original) as contemplating such a result would not be in accord with the reasonable expectations of a layperson. See Sturla, Inc., 67 Haw. at 209, 684 P.2d at 964. Indeed, we believe that a layperson would be shocked to learn that such a result could be reached by way of legal intellectual gymnastics. We return to the longstanding propositions, cited in Section III.A. of this opinion, that liability insurers may not limit their liability in contravention of statutory inhibitions or public policy, First Ins. Co. of Hawai`i, Inc., 66 Haw. at 423, 665 P.2d at 655, and that [w]hen the terms of an insurance contract are in conflict with statutory language, the statute must take precedence over the terms of the contract. Sol, 76 Hawai`i at 307, 875 P.2d at 924; Methven-Abreu, 73 Haw. at 395-96, 834 P.2d at 285; Olson, 69 Haw. at 563-64, 751 P.2d at 669; Walton, 55 Haw. at 328, 518 P.2d at 1400-01; Columbia Casualty Co., 50 Haw. at 214-15, 437 P.2d at 102. In this connection, we note that the UM coverage set forth in Part C-1 of the FICH auto policy contains five provisions that this court has voided in the past as being in contravention of statutory inhibitions or public policy. First, in DeMello v. First Ins. Co. of Hawai`i, Ltd., 55 Haw. 519, 523 P.2d 304 (1974), we struck down, as contrary to the protective purpose of the Hawai`i UM statutes and the public policies implicit therein, that portion of the FICH auto policy's definition of an uninsured motor vehicle requiring that a hit and run vehicle actually hit ( i.e., make physical contact with) either a covered person, the vehicle that a covered person is occupying, or the covered auto ( i.e., the insured motor vehicle). Second, in Kau v. State Farm Mut. Auto. Ins. Co., 58 Haw. 49, 564 P.2d 443 (1977), and again in Methven-Abreu, supra, we voided, as violative of our UM statutes and contrary to public policy, the owned vehicle exclusion in the FICH auto policy [13] attempting to preclude an insured from recovering UM benefits on the basis that the insured's injuries were sustained while occupying a vehicle not specifically declared under the policy. Third, to the extent that the FICH auto policy's attempt to reduce its UM benefits by all sums [paid] or payable because of the bodily injury under [workers' compensation laws, disability benefits law,] or similar law extends to no-fault benefits payable under any auto policy sustained by a covered person, we voided the provision in Sol, supra . [14] Cf. Caberto v. National Union Fire Ins. Co., 77 Hawai`i 39, 41, 43-44, 881 P.2d 526, 528, 530-531 (Haw.1994) (having exempted UM coverage from no-fault reimbursement in Sol, this court held that (1) underinsured motorist (UIM) coverage is likewise exempt from no-fault reimbursement, and (2) provision of insurance policy requiring reimbursement of no-fault benefits from UIM proceeds is void). Fourth, in Walton, supra, we voided the other insurance clause of the FICH auto policy, [15] which seeks to limit the recovery of UM benefits by a covered person to less than actual damages or the limit of liability stated in the policy. Fifth, and most important for present purposes, in Olson, supra, we voided, as conflicting with the Hawai`i UM statutes, that portion of the FICH auto policy's insuring agreement regarding UM coverage that requires that covered persons other than the named insured and family members be occupying [a] covered auto ( i.e., be occupying an insured vehicle) at the time of injury. Such, apparently, is the deference that FICH accords the law of this state when it comes to issuing auto policies consonant therewith. Given that the plain language of the FICH auto policy, as interpreted according to [its] plain, ordinary and accepted sense in common speech, see First Ins. Co. of Hawai`i, Inc., 66 Haw. at 424, 665 P.2d at 655, includes passengers within the definition of covered persons, and bearing in mind that class two covered persons such as Bockhorn, see 12A Couch § 45:635, at 130-31, need not be occupants of an insured vehicle, see Olson, supra, but must have some connection with the insured vehicle in order to be entitled to UM benefits, see 8C Appleman § 5092.35, at 381, we now reach the heart of Dawes's appeal: was Bockhorn a covered person under the FICH auto policy at the time of the accident or was she not? If the answer to the question is yes, then Dawes is entitled to UM benefits as a matter of law; if the answer is no, then Dawes is not entitled to UM benefits as a matter of law. For us to resolve the issue, we must revisit this court's analysis in Olson. In Olson, an insurer issued an auto policy containing UM coverage, identical in all material respects to the FICH auto policy, to International Life Support, Inc. (ILS), an emergency ambulance service. The crew of one of ILS's ambulances consisted of Olson, an emergency medical technician trained in basic life support care, and Jones, a mobile intensive care technician qualified to administer more advanced life support procedures. ILS was the named insured under the auto policy covering the ambulance, and Olson and Jones, not being family members of ILS, fell into the policy's category of insureds designated anyone else occupying a covered auto. On the evening in question, the ambulance crew responded to an automobile accident call. The crew encountered a motorcycle laying partially in the roadway. A man with a flashlight was attempting to direct traffic, the police not having yet arrived at the accident scene. Jones instructed Olson to set flares on the roadway. Olson exited the ambulance and obtained a flare from the rear of the vehicle; he then walked to the center of the road to place the flare. While in the roadway attempting to light the flare, Olson was struck and injured by an uninsured motor vehicle driven by an uninsured motorist. As a result of Olson's personal injury, the insurer commenced a declaratory judgment action in the United States District Court for the District of Hawai`i. Although the outcome of the proceeding at the district court level is unclear, the matter was appealed to the United States Court of Appeals for the Ninth Circuit. Pursuant to Hawai`i Rules of Appellate Procedure 13, the Ninth Circuit certified three questions to this court; for present purposes, the relevant question inquired whether the statutory predecessors to HRS §§ 431:10-213, [16] 431:10C-103(13), [17] and 431:10C-301 permitted UM coverage to be restricted to persons occupying an insured vehicle. Not surprisingly, the insurer urged, inter alia, that the policy provision controlled and that Olson was not entitled to recover UM benefits because he was not occupying the ambulance when the accident occurred. This court answered the Ninth Circuit's certified question in the negative, reasoning as follows: We begin our analysis of the problem by recognizing that both the no-fault and uninsured motorist statutes have as their purpose the protection of users of motor vehicles from bodily injury, sickness, or disease, including death, resulting from motor vehicle accidents. See HRS §§ 431-448, [18] 294-1, [19] 294-2(1). [20] Furthermore, we recognize that the legislature intended the phrase operation, maintenance or use in HRS Chapter 294 to be a term of art which when used throughout the chapter means accidents resulting from activities prescribed in the immediate proximity of the vehicle. HRS § 294-2(12); [21] Conf. Comm.Rep. No 28, in 1974 House Journal, at 864, 866. To recognize [the insurer's] position would require us to acknowledge that the policy provision can be paramount over the statutory provision when a conflict exists. We have in the past voided such a policy provision where it conflicted with the statute. Therefore, we hold that the ... policy restriction is in conflict with the statute and is void. . . . . For the reasons stated, on the facts of this case, Olson has uninsured motorist coverage within the ILS insurance policy and HRS § 431-448. Olson, 69 Haw. at 563-65, 751 P.2d at 669 (citations omitted and emphasis added). Although we agree with this court's holding in Olson that auto policy language purporting to restrict UM coverage for non-named insureds and non-family members to other persons occupying a covered auto is void, we nevertheless believe that the Olson analysis is both inaccurate and unduly restrictive for two reasons. First, contrary to this court's statement in Olson, the purpose underlying the Hawai`i UM statutes is not limited to the protection of users of motor vehicles. On its face, HRS § 431-448 (now HRS § 431:10C-301(b)) mandated that auto policies extend UM coverage for the protection of all insured persons ... who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury ..., including death, resulting therefrom[.] Cf. Palisbo, supra ; Morgan, supra . As noted above, the relevant legislative history is in accord. See supra note 6. Accordingly, the Hawai`i UM statutes mandate that coverage extend to injury received as a pedestrian  where some connection with the insured vehicle is shown. 8C Appleman § 5092.35, at 381 (emphasis added). Second, and of particular significance, we believe that the Olson court simply misread Hse.Stand.Comm.Rep. No. 28, in 1974 House Journal, at 864, 866, when it concluded that the phrase operation, maintenance or use, now appearing in HRS § 431:10C-103(13), see supra note 17 and accompanying text, was a term of art which when used throughout the [Motor Vehicle Insurance] chapter means accidents resulting from activities prescribed `in the immediate proximity of the [insured] vehicle.' Set out in full, the legislative history on which the Olson court relied was the following: (5) Definition: Operation, maintenance, or use[.] In view of the [insurance] industry's objection to the definition of this phrase in the Act, your Committee has redefined it with particular reference to the inclusion or exclusion of loading or unloading a vehicle. The Act included, as no-fault damage, all losses incurred during loading and unloading an insured vehicle. The industry recommended the exclusion of all such losses, requiring instead that a victim must be occupying, entering, or alighting from a vehicle at the time of loss to be covered. The industry, in testimony, cited the costly danger of having claims made for injuries sustained during loading operations which, in fact, were far removed from the parked, but insured, vehicle. Your Committee has, therefore, sought to limit this threat, and simultaneously to provide coverage for losses commonly associated with the use or maintenance of a vehicle. By using a territorial criteria [sic] for this measure, we believe we have attained a moderate and moderating resolution. By requiring that an injury during loading, to be covered, must occur in the immediate proximity of the vehicle we have included under no-fault coverage such common one person accidents as the following: (a) The mother-driver who turns an ankle while lifting an infant from a back seat of her parked car. (b) The driver injured while hoisting a spare tire out of a modern, but impossible, trunk, preparatory to changing a flat. Hse.Stand.Comm.Rep. No 28, in 1974 House Journal, at 866 (emphasis added). Two things are apparent from the foregoing legislative history: (1) in crafting the definition of operation, maintenance or use with respect to a motor vehicle, the legislature was responding to concerns expressed by the insurance industry regarding loading and unloading a vehicle when injuries sustained during loading operations ... were far removed from the parked, but insured, vehicle; and (2) the insurance industry's concerns were limited to the context of no-fault insurance coverage. Therefore, it is doubtful whether the phrase in the immediate proximity of the vehicle has any application to UM coverage at all; in any event, by the plain language of HRS § 431:10C-103(13), it is clearly limited to the context of conduct in the course of loading or unloading the vehicle[.] [22] The non-applicability of the immediate proximity of the vehicle to the issue of Dawes's right to UM benefits highlights the irrelevance, under Hawai`i law, of such formulations as the Rau test in determining the right of persons other than named insureds and their family members, who have been passengers in an insured vehicle but are injured by uninsured motorists while pedestrians, to UM coverage. As we have noted, the critical element with respect to such claimants is a sufficient connection with the insured vehicle. 8C Appleman § 5092.35, at 381. Accordingly, we believe that the chain of events test, as articulated by the Oklahoma Supreme Court, is the most appropriate for deciding whether claimants in Dawes's position are entitled to UM benefits. See Safeco Ins. Co. of America v. Sanders, 803 P.2d 688, 691 (Okla.1990). Specifically, Dawes is entitled to UM benefits if Bockhorn's occupancy of Shimp's insured vehicle started the chain of events which resulted in [Bockhorn's injury[.] Id. [23] The Safeco chain of events test is amenable to the formulation of a new rule, which we now adopt as the law of this state: For purposes of entitlement to UM benefits, (1) if a person was a passenger in an insured vehicle being operated by a named insured or a named insured's family member, (2) during the chain of events resulting in injury to the person caused by an accident involving an uninsured motor vehicle, (3) then the person is a covered person at the time of his or her injury to the same extent as the named insured or the named insured's family members would be entitled to receive UM benefits under the applicable UM policy. [24] As established in section III.A. of this opinion, it is uncontroverted that: (1) Bockhorn was a passenger in the insured vehicle; (2) the insured vehicle was being operated by Shimp, a family member of the named insured; (3) the insured vehicle broke down; (4) as a result of the breakdown, the occupants of the insured vehicle, including Bockhorn, exited and proceeded on foot to the Kona airport in order to obtain alternative transportation and repair assistance; and (5) en route to the group's destination, Bockhorn sustained fatal injuries as a result of the operation of an uninsured vehicle by an uninsured motorist. Accordingly, we hold as a matter of law that Bockhorn was a covered person within the meaning of the UM provisions of the FICH auto policy and that Dawes is entitled to UM benefits thereunder. It therefore follows that the circuit court erred in granting summary judgment in FICH's favor.