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

Heading: Zane's asserted basis for reconsideration

Text: In her motion for reconsideration, Zane attempts to recast her position on appeal as being that DaimlerChrysler was not an owner or operator of an underinsured motor vehicle. Citing (for the first time ever) State Farm Mut. Auto. Ins. Co. v. Motley, 909 So.2d 806, 809, 818-21 (Ala.2005), Zane argues that, inasmuch as (1) she implicated DaimlerChrysler as a defendant upon a theory of products liability, and (2) DaimlerChrysler was not an owner or operator of a motor vehicle, DaimlerChrysler's funds have nothing to do with motor vehicle insurance, whereas HRS §§ 431:10C-103 and -301(b)(4) (Supp.1998) [17] expressly and exclusively refer[] to motor vehicle [BI] insurance and motor vehicle self-insurance. Zane adds that, pursuant to Kang v. State Farm Mut. Auto. Ins. Co., 72 Haw. 251, 815 P.2d 1020 (1991), Thomas's vehicle, in which Zane rode, was not an underinsured motor vehicle, inasmuch as Zane was covered by Thomas's BI policy and cannot simultaneously recover from his UIM insurance. In essencefrom Zane's newly resurrected perspective, DaimlerChrysler was not an owner or operator of any vehicle, let alone an underinsured one, and its BI insurance is not applicable within the meaning of HRS § 431:10C-103. We believe this argument to be belated and, accordingly, waived for purposes of this appeal. There is no reason why Zane could not have asserted this theory as an alternative to the position that she actually raisedthat a UIM insured cannot forfeit the BI coverage of a settling defendant that is not a tortfeasor. Indeed, she is free to raise it on remand. 4. The fact that an alleged tortfeasor has settled for nuisance value does not, absent more, erase an insurer's right to offset its insured's UIM claim by an amount equal to the tortfeasor's forgone BI coverage. Having clarified the narrow scope of Zane's argument, we now proceed to answer the sole question she has preserved for our review: does the fact that a defendant has settled with the plaintiff for an amount that the parties agree represents only the costs of litigation and not a liquidation or compromised representation of liability, absent more, remove that defendant's BI coverage from the universe of insurance applicable as a Taylor offset? We answer the question in the negative. In the event that the circuit court, on remand, rejects Zane's estoppel theory, we now provide guidance on the applicability of the Taylor rule under circumstances in which a settling defendant pays arguably negligible [18] consideration for its release. We conclude that the record did not enable the ICA to conclude as a matter of law that DaimlerChrysler was not a tortfeasor for Taylor offset purposes.
The inescapable implication of Taylor is that, in the context of a motor vehicle tort, it is the plaintiff's prerogative to settle with an alleged tortfeasor and thereby waive any UIM coverage of the gap between the compromise and the tortfeasor's BI limit. We believe that the choice of whether or not to settle with any particular defendant, with its consequent benefits and detriments, remains with the plaintiff even when discovery is fruitless. We disagree with Zane's implication that adjudication, arbitration, or admission of fault is a precondition of a Taylor offset. We agree with Liberty Mutual that, where a UIM insured has settled with an alleged tortfeasor, the UIM insurer is not barred from discounting its financial responsibility for its insured's damages merely because the insured asserts that the defendant was not liable, regardless of (1) the defendant's negligible settlement amount and/or (2) the UIM insurer's consent to the mere act of settling (holding aside the estoppel controversy). Zane's attempt to distinguish DaimlerChrysler from the alleged tortfeasors in Taylor, Dizol, and, by implication, Granger, is unpersuasive. In none of those cases was a single settling defendant actually adjudged to be factually liable, yet both this court and the Dizol court deemed the settling defendants to be joint tortfeasors for UIM purposes. [19] Many, if not most, settlement agreements contemplate that the settling defendant will be absolved of further liability to the plaintiff and the plaintiff's potential subrogee insurer. Nevertheless, we believe that a plaintiff/UIM insured who names a defendant and retains the defendant in the suit all the way to settlement assumes both the potential benefit of a defendant's ample insurance and the risk that the defendant's BI limit may far exceed the feasible settlement value; a defendant's settlement alone does not extinguish its tortfeasor status for purposes of offsetting a UIM claim. Cf., e.g., Doe Parents No. 1 v. State, Dep't of Educ., 100 Hawai`i 34, 41, 55, 56 & n. 30, 87 n. 50, 58 P.3d 545, 552, 566, 567 & n. 30, 598 n. 50 (2002) (where trial court dismissed plaintiffs' claims against one of two codefendants before trial because the claims had earlier been discharged in bankruptcy, the dismissed party could not be a joint tortfeasor).
The ICA erroneously relied on foreign authority that is dissonant with the Taylor line. The Washington Court of Appeals's holding, in Dejbod, that [t]he fact that a liability carrier voluntarily settles . . . does not, without more, establish . . . that [its] insured's [BI] policy is `applicable' to the claimant, 818 P.2d at 612, is simply incompatible with Taylor and Granger, in which we contemplated the offset of settling defendants' entire BI limits despite the lack of any adjudication of fault. Cf. supra sections I.A and III.C.4.a. In Vassiliu, the widow of the decedent UIM insured had sued (1) the driver of the other motor vehicle in the subject accident and (2) DaimlerChrysler, which was the manufacturer and seller of her husband's car. 813 A.2d at 549. The parties agreed that the plaintiff's burden against DaimlerChrysler revealed itself to be insurmountable, and DaimlerChrysler settled for $215,000.00 without concession of liability on its part. Id. at 550. The plaintiff sought a declaratory judgment against the decedent's UIM insurers for the full extent of the governing UIM policies. See id. at 550-51. The defendant insurers argued that they were not obliged to cover any of the decedent's injuries inasmuch as the $215,000.00 payment from DaimlerChrysler exceeded the total UIM limits of $200,000.00. Id. at 551. The New Jersey Superior Court's Law Division disagreed, and the Appellate Division affirmed. Id. at 551, 552-53, 556. Construing a New Jersey statute similar to HRS § 431:10C-103's definition of an underinsured motor vehicle, see supra note 1, [20] the Appellate Division reasoned, in the portion of its opinion quoted by the ICA, slip op. at 23, that []when the statute . . . speaks of `available' insurance coverage, it plainly refers to that of persons who are actual responsible tortfeasors and not that of those who may have been `involved' in the accident without being liable under the law. To rule otherwise would lead to the result that [UIM] coverage would be eliminated whenever entirely blameless persons involved in an accident happen to be heavily insured. [] 813 A.2d at 553 (emphasis added) (quoting Gold v. Aetna Life & Cas. Ins. Co., 233 N.J.Super. 271, 558 A.2d 854, 857 (1989)). The ICA overlooked a critical distinction from the present matter. After the settlement in Vassiliu, the remaining driver and the plaintiff proceeded to a bench trial. Id. at 550 & n. 2. The judge adjudicated liability with respect to the driver, allocating 100% of the fault to her; [h]e found no evidence of fault on the part of [DaimlerChrysler]. See id. at 550. Finally, Zane completely misapprehends Mulholland. That case concerned a UIM insurer's exhaustion clause, which provided that `there is no coverage until the limits of liability of all [BI] . . . insurance policies . . . that apply . . . have been used up by payment of judgments or settlements.' 122 Ill.Dec. 657, 527 N.E.2d at 35 (emphases omitted). An Illinois trial court had construed the term apply narrowly, i.e., such that an insured need not exhaust the coverage of tortfeasors against which `a reasonably viable cause of action' did not exist. Id. at 35-37. The Illinois Appellate Court disavowed, at least in dictum, the lower court's analysis to which Zane alluded in the June 4, 2003 hearing. The appellate court balked at the practical difficulty of pretry[ing] the case and rul[ing] on the . . . reasonabl[e] viab[ility] of a claim, but affirmed on unrelated grounds, to wit, that the exhaustion clause . . . is against public policy and therefore unenforceable, accord Taylor, 90 Hawai`i at 312, 313 & n. 10, 978 P.2d at 750, 751 & n. 10. See 527 N.E.2d at 37, 40-41.
In addition to Taylor, Dizol, and Granger, Gump illustrates that we have applied the term joint tortfeasor to erstwhile defendants whose fault was never adjudicated. In that case, the plaintiff slipped on a french fry outside [a] McDonald's restaurant but inside the premises of Wal-Mart and sustained injuries. The restaurant [wa]s located inside the . . . Wal-Mart. 93 Hawai`i at 419, 5 P.3d at 409. The plaintiff released McDonald's pursuant to settlement, but proceeded to trial against Wal-Mart. Id. After [t]he jury . . . apportioned liability 95% to Wal-Mart and 5% to the plaintiff and awarded damages, Wal-Mart moved for a new trial in which McDonald's [w]ould be included on the special verdict form. Id. The trial court denied the motion and Wal-Mart appealed. Id. On certiorari to the ICA, we ultimately upheld the trial court's omission of McDonald's from the special verdict form inasmuch as Wal-Mart had not cross-claimed against McDonald's, but we agreed that McDonald's was a joint tortfeasor, on no other basis than its having been named as a defendant. See id. at 422-23, 5 P.3d at 412-13.
An actual adjudication of fault is not a prerequisite to a party's qualification as a tortfeasor for purposes of the Taylor rule. Having elected not to proceed to an adjudication of DaimlerChrysler's fault, Zane bore the consequences of recovering any settlement amount, however meager, from DaimlerChrysler. Moreover, a UIM insurer's consent to settlement, absent more, does not constitute a waiver of the Taylor gap. Still, the record on appeal reflects a genuine issue of material fact with respect to whether Liberty Mutual communicated to Zane that it did not consider DaimlerChrysler's self-insurance exceeding $200,000.00 to be a Taylor gap. Inasmuch as the estoppel question was not ripe for summary judgment, we remand to the circuit court. On remand, the parties may, if they wish, file new motions for summary judgment on whatever supportable grounds they choose to assert.