Opinion ID: 2519630
Heading Depth: 2
Heading Rank: 1

Heading: VEBAH's Claims on Appeal

Text: VEBAH argues that the circuit court erred in dismissing its counterclaims based upon HRS § 431:15-319(b) because: (1) it improperly applied the principle of judicial comity; and (2) Article 15 did not apply to PGMA insofar as it was a mutual benefit society. Thus, in effect, VEBAH directly attacks the circuit court's determination in this case and collaterally attacks the court's determination in the Special Proceeding that Article 15 applied to PGMA. VEBAH also argues that the award of post-judgment interest was improper because: (1) HRS § 478-3 was inapplicable to the monetary award of $874,437.11; and (2) the award of interest amounted to an illegal and excessive penalty.

VEBAH argues that the circuit court erred in ruling that Article 15 applied to PGMA based on the principle of judicial comity. Comity is `not a rule of law, but one of practice, convenience, and expediency.' It does not of its own force compel a particular course of action. Rather, it is an expression of one state's entirely voluntarily decision to defer to the policy of another. Columbia Falls Aluminum Co. v. Hindin/Owne/Engelke, Inc., 224 Mont. 202, 728 P.2d 1342, 1345 (1986), reh'g denied, 224 Mont. 202, 728 P.2d 1342 (1987) (quoting Simmons v. State, 206 Mont. 264, 670 P.2d 1372, 1385 (1983) (citations omitted)). This court has explained that, [i]n the legal realm, comity is more commonly defined `as the principle that courts of one state or jurisdiction will give effect to the laws and judicial decisions of another state or jurisdiction out of deference and mutual respect.' Chun v. Board of Trustees of the Employees' Retirement Sys., 92 Hawai`i 432, 446, 992 P.2d 127, 141 (2000) (quoting Teague v. Bad River Band of the Lake Superior Tribe of Chippewa Indians, 229 Wis.2d 581, 599 N.W.2d 911, 917 n. 3 (Wis.Ct.App.1999)) (brackets omitted). In Chun, the plaintiffs argued that the circuit court violated the principle of comity when it refused to apply the percentage method of determining attorneys' fees in a class action lawsuit used by another circuit court in an unrelated proceeding. Chun, 92 Hawai`i at 446, 992 P.2d at 141. This court disagreed, noting that the plaintiffs fail[ed] to provide, and we have been unable to unearth, any support for their contention that the principle of comity necessarily applies to the decisions of trial courts within the same state regarding entirely different matters.  Id. at 446 n. 9, 992 P.2d at 141 n. 9 (emphasis in original). In the present case, the Special Proceeding and the Commissioner's suit against VEBAH were both circuit court proceedings within the same state, and neither had precedential value over the other. Thus, as in Chun, the principle of comity is inapplicable. Additionally, as VEBAH points out, the related doctrines of law of the case and collateral estoppel also do not apply because: (1) the Special Proceeding and the Commissioner's suit against VEBAH were separate cases; and (2) no final judgment had been entered in the Special Proceeding when the court in the Commissioner's suit applied the determination that Article 15 applied to VEBAH. Therefore, we agree with VEBAH's first point of error and hold that the circuit court erred in applying the determination from the Special Proceeding that Article 15 applied to PGMA based upon the principle of judicial comity. Consequently, we turn to VEBAH's second point of error, that is, whether Article 15 applies to mutual benefit societies.
VEBAH argues that provisions within the Insurance Code (HRS chapter 431) and the chapter governing mutual benefit societies (HRS chapter 432) indicate that Article 15 did not apply to PGMA, a mutual benefit society. The Commissioner, however, also cites to statutory authority specifically allowing the application of Article 15 to mutual benefit societies. We, therefore, address the apparent discrepancies within the Insurance Code, as well as discrepancies between the Code and HRS chapter 432. The starting point in statutory construction is to determine the legislative intent from the language of the statute itself.... And we must read statutory language in the context of the entire statute and construe it in a manner consistent with its purpose. When there is doubt, doubleness of meaning, or indistinctiveness or uncertainty of an expression used in a statute, an ambiguity exists. In construing an ambiguous statute, the meaning of the ambiguous words may be sought by examining the context, with which ambiguous words, phrases, and sentences may be compared, in order to ascertain their true meaning. Moreover, the courts may resort to extrinsic aids in determining legislative intent. One avenue is the use of legislative history as an interpretive tool. This court may also consider the reason and the spirit of the law, and the cause which induced the legislature to enact it to discover its true meaning. Laws in pari materia, or upon the same subject matter, shall be construed with reference to each other. What is clear in one statute may be called upon in aid to explain what is doubtful in another. ... A rational, sensible and practicable interpretation of a statute is preferred to one which is unreasonable or impracticable. The legislature is presumed not to intend an absurd result, and legislation will be construed to avoid, if possible, inconsistency, contradiction, and illogicality. Southern Foods Group, L.P. v. State, Dept. of Educ., 89 Hawai`i 443, 453-54, 974 P.2d 1033, 1043-44 (1999) (citations, internal quotation marks, brackets, and ellipsis points omitted). HRS § 431:1-101 (1993) defines the scope of the Insurance Code and states: No person shall transact a business of insurance in this State without complying with the applicable provisions of this code. Any person transacting a business of insurance under Chapter 432 [pertaining to mutual benefit societies] shall be subject to this code only to the extent provided in chapter 432. (Emphases added). HRS § 432:1-101 (1993) states in pertinent part: The provisions of this article shall apply to mutual benefit societies as defined herein. Except as expressly provided in this article, mutual benefit societies shall be exempt from the provisions of the insurance code. No law enacted after July 1, 1988, shall apply to mutual benefit societies unless such societies are expressly designated therein. (Emphases added). Based on the aforementioned statutes, VEBAH maintains that PGMA, as a mutual benefit society, is exempt from the provisions of the insurance code and that, therefore, Article 15 does not apply to PGMA. However, HRS § 431:15-102 (1993), defining the scope of Article 15, specifically states that [t]he proceedings authorized by [Article 15] may be applied to ... all fraternal benefit societies and beneficial societies subject to chapter 432, Benefit Societies. Thus, there is an apparent conflict between HRS §§ 431:1-101 and 431:15-102. We resolve the apparent conflict by examining HRS § 431:1-104 (1993), which directs that [p]rovisions of this code relating to a particular class of insurance or a particular type of insurer or to a particular matter prevail over provisions relating to insurance in general or insurers in general or to such matter in general. Because HRS § 431:1-101 governs the applicability of the Insurance Code in general and HRS § 431:15-102 relates specifically to the applicability of Article 15, we, thus, apply HRS § 431:15-102, a statute governing the supervision, rehabilitation, and liquidation of insurers, over HRS § 431:1-101. Consequently, we resolve the apparent conflict in favor of applying the Insurance Code to mutual benefit societies. However, as indicated supra, HRS § 432:1-101 appears to indicate that Article 15 is not applicable to mutual benefit societies. This court has noted that, [w]here there is a `plainly irreconcilable' conflict between a general and a specific statute concerning the same subject matter, the specific will be favored.... [W]here the statutes simply overlap in their application, effect will be given to both if possible, as repeal by implication is disfavored. Wong v. Takeuchi, 88 Hawai`i 46, 53, 961 P.2d 611, 618 (quoting State v. Vallesteros, 84 Hawai`i 295, 303, 933 P.2d 632, 640 (1997)), reconsideration denied, 88 Hawai`i 46, 961 P.2d 611 (1998). In the present case, both HRS § 432:1-101 and HRS § 431:15-102 concern the applicability of the Insurance Code to mutual benefit societies. As previously indicated, HRS § 432:1-101 governs the applicability of the Code generally, while HRS § 431:15-102 deals specifically with the application of Article 15. Thus, HRS § 431:15-102, the more specific statute, is favored over HRS § 432:1-101, the more general one. Additionally, [a] rational, sensible, and practicable interpretation of a statute is preferred to one which is unreasonable or impracticable. Southern Foods Group, 89 Hawai`i at 453-54, 974 P.2d at 1043-44 (brackets omitted). A rational interpretation of the foregoing statutes is that HRS § 431:15-102 creates an exception to the general rule established by HRS § 432:1-101 that mutual benefit societies are typically exempt from provisions of the Insurance Code. Accepting VEBAH's contention that Article 15 does not apply to mutual benefit societies ( e.g., PGMA) would necessarily require us to conclude that, by adopting HRS § 431:15-102, the legislature drafted language explicitly permitting Article 15 to be applied to mutual benefit societies while, at the same time, intending exactly the opposite result by adopting HRS § 432:1-101. Such an interpretation is neither rational nor sensible. Moreover, as noted supra, HRS § 431:15-102 expressly states that the provisions of Article 15 may be applied to mutual benefits societies. HRS § 431:15-101(c) (1993) instructs that the provisions of Article 15 shall be liberally construed to effect its purpose, which is the protection of the interests of insureds, claimants, creditors, and the public generally, with minimum interference with the normal prerogatives of the owners and managers of insurers, through: (1) Early detection of any potentially dangerous condition in an insurer, and prompt application of appropriate corrective measures; (2) Improved methods for rehabilitating insurers, involving the cooperation and management expertise of the insurance industry; (3) Enhanced efficiency and economy of liquidation, through clarification of the law, to minimize legal uncertainty and litigation; [and] (4) Equitable apportionment of any unavoidable loss[.] HRS § 431:15-101(d) (1993). The Commissioner's interpretation of HRS § 431:15-102 provides the insureds, claimants, and creditors of mutual benefit societies with the same protections as those of insurance companies and is consistent with the liberal construction required by HRS § 431:15-101(c). Based on the foregoing reasons, we hold that, when the Special Proceeding was initiated, Article 15 applied to mutual benefit societies and that the circuit court did not err in dismissing VEBAH's counterclaims based on its ruling that Article 15 applied to the liquidation of PGMA. [8]
VEBAH claims that the circuit court erroneously awarded interest because: (1) HRS § 431:15-323 allows for only an injunctive, turnover order[] type of relief, not damages; and (2) the court's award of post-judgment interest constituted an illegal and excessive penalty. Initially, VEBAH's first argument is premised upon its unsupported proposition that [i]t is incorrect and improper to attach an interest charge to an injunction. In the absence of express statutory authority governing the payment of interest in a specific type of claim, HRS § 478-3, governing the payment of interest in civil judgments generally, applies. Sussel, 74 Haw. at 618, 851 P.2d at 320. HRS § 478-3 provides that [i]nterest at the rate of ten per cent a year, and no more, shall be allowed on any judgment recovered before any court in the State, in any civil suit. The court's June 9, 1999 order, which is the basis for its December 27, 1999 final judgment, includes a judgment awarding the Commissioner $874,437.11. Nothing in the language of HRS § 478-3 precludes an award of interest upon this judgment, even if it resulted from an injunctive type of relief. Moreover, the reasoning for allowing post-judgment relief on a damages award applies with equal force to the type of relief proposed by VEBAH. As VEBAH itself notes: There is a well-established economic value for a delay in spending: it is called interest. If one foregoes the benefit of immediately spending a dollar, and simply delays spending that dollar until some future time, that delay is compensated by the payment of interest. In short, the interest on the deposited funds is, by definition, complete and total compensation for the lost opportunity of being able to spend the money sooner. Where a judgment results in an award of money, the prevailing party is ordinarily entitled to total compensation. Under these circumstances, HRS § 478-3 is applicable. Regarding its second claim that the award of interest amounted to an illegal and excessive penalty, VEBAH argues that, even if interest was appropriate, the statutory rate of ten per cent was unwarranted in the present case. However, VEBAH points to no evidence and cites no authority indicating that the circuit court abused its discretion by awarding post-judgment interest at the statutory rate of ten per cent. Therefore, we hold that the circuit court did not err in awarding post-judgment interest pursuant to HRS § 478-3.