Opinion ID: 2518592
Heading Depth: 3
Heading Rank: 1

Heading: Circuit court filings

Text: In her May 8, 2002 complaint, Zane averred, inter alia, as follows: 13. . . . Liberty Mutual inquired about the terms of the DaimlerChrysler settlement. On December 20, 2001 Liberty Mutual senior claim specialist[] Colin M. Chang . . . was informed that the DaimlerChrysler contribution was . . . $200,000. 14. Liberty Mutual thereupon gave its verbal approval of the [BI] liability settlement and thereafter confirmed . . . by letter dated December 20, 2001 that we . . . do not object to [Zane] resolving her [BI] liability claims against the liable parties. 15. Liberty Mutual also requested a copy of the DaimlerChrysler Release for its files on January 7, 2002. Zane advised Liberty Mutual that the formal settlement agreement was not yet finalized and thereafter forwarded a copy of the finalized and signed release. . . . . 26. Liberty Mutual consented to the liability settlement with DaimlerChrysler and may not now object to that settlement as a basis for denying [UIM] benefits. (Emphases added.) Zane prayed for [a] declaration of the rights and obligations of the parties under the Liberty Mutual policy and [a] declaration that Liberty Mutual must provide [UIM] coverage to Zane. [6] On May 20, 2002, Liberty Mutual removed the present matter to the United States District Court for the District of Hawai`i. On May 21, 2002, in the United States District Court, Liberty Mutual filed its answer to Zane's complaint and appended its own counterclaim. In its answer and its responsive pretrial statement, Liberty Mutual admitted the averments in Zane's complaint, set forth supra, with the exception of the boldface language. Liberty Mutual also conceded in its responsive pretrial statement that it consented to the liability settlement with DaimlerChrysler and may not now object to that settlement as a basis for denying [UIM] benefits. (Emphases added.) On June 28, 2002, in the United States District Court, Liberty Mutual filed an amended counterclaim against Zane in which it alleged in relevant part that DaimlerChrysler's self-insurance should completely offset Zane's claim for UIM benefits: [Liberty Mutual] is entitled to a credit for the total limits of any and all [BI] liability insurance and self-insurance available to satisfy [Zane]'s claims . . . and the total amount of such limits exceeds the amount of damages . . .; [and] . . . [Liberty Mutual] is entitled to a credit for the total amount of settlement proceeds paid for the benefit of [Zane] in connection with [her] claims. . . . [ [7] ] Liberty Mutual prayed for a declaratory judgment that [Zane] is not entitled to . . . []UIM . . . benefits from [Liberty Mutual]. The United States District Court remanded the case to the state circuit court on October 31, 2002. On May 16, 2003, both parties moved for summary judgment. In her motion, Zane characterized DaimlerChrysler's settlement amount as nuisance value and argued that, inasmuch as [n]either [she], Liberty Mutual nor State Farm were able to develop a viable product liability claim against DaimlerChrysler, DaimlerChrysler was not an actual responsible tortfeasor[] and its insurance or self-insurance did not constitute an  applicable [BI] liability . . . policy to be exhausted before payment of UIM benefits. (Emphasis in original.) (Internal quotation signals omitted.) (Quoting Taylor, 90 Hawai`i at 313, 978 P.2d at 751; Dizol, 176 F.Supp.2d at 1027, 1030, 1033; Mulholland v. State Farm Mut. Auto. Ins. Co., 171 Ill. App.3d 600, 122 Ill.Dec. 657, 527 N.E.2d 29, 35-36 (1988); Arenson v. Am. Reliance Ins. Co., 284 N.J.Super. 337, 665 A.2d 394, 397 (1994); Colonial Penn Ins. Co. v. Salti, 84 A.D.2d 350, 446 N.Y.S.2d 77, 80-81 (1982).) (Citing Tate v. Secura Ins., 587 N.E.2d 665 (Ind.1992).) In her May 27, 2003 memorandum in opposition to Liberty Mutual's motion for summary judgment, Zane contended that Liberty Mutual's consent to the settlement reflected not only its willingness to waive any subrogation rights against DaimlerChrysler, but also its understanding that DaimlerChrysler's settlement amount was merely nuisance value and that its self-insurance would not be available to offset Zane's UIM claim. Zane attached to her memorandum in opposition (1) affidavits by her attorneys Keith K.H. Young, Denise K.H. Kawatachi, and Bert S. Sakuda, and (2) the various exhibits that they purported to authenticate. Young averred that he had spoke[n] to Chang and fully advised Liberty Mutual of the facts of the settlement, circumstances requiring abandonment of the product liability claim for a nuisance value settlement of $200,000 approximating . . . defense costs, the reasons[ [8] ] that no viable product liability claim existed, and requested consent to the liability settlement without prejudicing Zane's right to payment of UIM benefits. [Chang] acknowledged understanding the situation and extended Liberty Mutual's consent to settlement of the liability claims as discussed without prejudicing Zane's right to payment of UIM benefits. . . . [I]t was understood that Liberty Mutual would continue processing Zane's request for UIM benefits (which had already been requested) on the merits given Liberty Mutual's consent to the liability settlement. (Emphases added.) Young further attested that, [u]p until the time Zane finalized the . . . settlement . . . on March 8, 2002, communications to and from Liberty Mutual were all premised on the understanding that Zane's UIM claim was being processed without any claim that Liberty Mutual did not owe UIM benefits because of the failure to exhaust DaimlerChrysler's policy limits. Had Liberty Mutual reneged on its consent and denied benefits . . . at any time . . ., he [sic] would not have proceeded with the liability settlement. The attached Exhibit 1 appears to be Chang's January 30, 2002 letter to Kawatachi, implying his awareness of the impending settlement. In Liberty Mutual's May 27, 2003 memorandum in opposition and its own cross-motion, it argued that: (1) by virtue of DaimlerChrysler's posture as a settling defendant, Liberty Mutual was entitled to the Taylor offset in the amount of DaimlerChrysler's unlimited BI self-insurance (a) regardless of Liberty Mutual's consent and (b) regardless of whether DaimlerChrysler's compromise reflected mere nuisance value; and (2) in any case, DaimlerChrysler's $200,000.00 settlement cannot be reasonably described as a `nuisance value.' (Citing, e.g., Taylor, 90 Hawai`i at 313-14, 978 P.2d at 751-52; Dizol, 176 F.Supp.2d at 1027-33.) Furthermore, in its May 30, 2003 reply to Zane's memorandum in opposition, Liberty Mutual challenged Zane's characterization of the communications between the parties. Liberty Mutual countered that Zane was aware that it planned to rely on the Taylor rule to offset her UIM claim, inasmuch as it did, in fact, communicate the Dizol . . . case to [Zane's] counsel's attention as early as January 8, 2002. Liberty Mutual continued: [Zane] can point to no affirmative representation or conduct by Liberty Mutual specifically indicating that such an offset or credit would not apply and any reliance by [Zane] upon the absence of such a representation or affirmative conduct would have been unreasonable. . . . . . . . . . . More importantly, . . . [d]uring a January 8, 2002 telephone conversation between . . . Chang and . . . Kawatachi . . . with regard to . . . Zane's UIM claim, [Chang] specifically told . . . Kawatachi that [the] offset discussed in . . . Dizol . . . may be applicable to [Zane]'s claim and . . . Kawatachi said . . . that she would look at . . . Dizol and get back to [him], but never did. . . . [Zane] did not finalize her settlement with DaimlerChrysler . . . until March 8, 2002. . . . (Some emphases added and some in original.) (Some capitalization omitted.) Liberty Mutual cited the attached declaration of Chang, which, indeed, propounded that he spoke with Kawatachi on January 8, 2002 and informed her that [the] offset discussed in . . . Dizol . . . may be applicable to . . . Z[ane]'s claim.