Court Opinion

ID: 9374311
Source: CourtListenerOpinion
Date Created: 2023-02-22 19:02:56.903447+00
Date Added: 2024-06-11T17:16:46.365461
License: Public Domain

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                                                              Electronically Filed
                                                              Supreme Court
                                                              SCWC-XX-XXXXXXX
                                                              22-FEB-2023
                                                              08:16 AM
                                                              Dkt. 11 OP

           IN THE SUPREME COURT OF THE STATE OF HAWAII

                                ---o0o---

                           PFLUEGER, INC.,
                   Respondent/Plaintiff-Appellant,

                                    vs.

   AIU HOLDINGS, INC., NATIONAL UNION FIRE INSURANCE COMPANY OF
                    PITTSBURGH, PENNSYLVANIA,
                Respondents/Defendants-Appellees,

                                    and

   NOGUCHI & ASSOCIATES, INC., Petitioner/Defendant-Appellee.

                            SCWC-XX-XXXXXXX

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
              (CAAP-XX-XXXXXXX; CIV. NO. 09-1-1326)

                           FEBRUARY 22, 2023

    NAKAYAMA, ACTING C.J., McKENNA, WILSON, AND EDDINS, JJ.,
  AND CIRCUIT JUDGE KIM, IN PLACE OF RECKTENWALD, C.J., RECUSED

                OPINION OF THE COURT BY NAKAYAMA, J.

          This is an insurance broker malpractice case spanning

approximately fourteen years.       Respondent/Plaintiff-Appellant

Pflueger, Inc. brought negligence and negligent malpractice

claims against its insurance broker, Petitioner/Defendant-
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Appellee Noguchi & Associates, Inc. (Noguchi).          In the first

chain of proceedings (Pflueger I), partial summary judgment was

granted in favor of Pflueger and a jury found in favor of

Pflueger.    After the ICA remanded to the circuit court to

include previously excluded testimony, the circuit court in the

instant appeal granted summary judgment in favor of Noguchi,

finding Noguchi’s evidence negated the causation element of

Pflueger’s claim and Pflueger offered no evidence to the

contrary.   The ICA then disagreed, holding summary judgment for

Noguchi was improper in a Summary Disposition Order, with a

majority and concurring opinion.

            Currently at issue is what Noguchi must demonstrate on

summary judgment to negate the causation element of the

negligence and negligent malpractice claims against it.            Noguchi

contends it need only show that Pflueger’s insurer, National

Union Fire Insurance Company of Pittsburgh, Pennsylvania

(National Union), would have denied coverage even if Pflueger’s

grand jury subpoena matter were timely tendered in order to

negate the causation element on summary judgment.           By accepting

this argument, both the circuit court and the ICA majority

erred.   We clarify that to negate the causation element on

summary judgment, Noguchi instead would need to demonstrate that

even if the grand jury subpoena matter were timely tendered to

National Union, National Union would not have been legally
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obligated to advance Pflueger’s defense costs.            Accordingly, we

vacate the ICA’s October 5, 2022 Judgment on Appeal, and remand

to the circuit court for proceedings consistent with this

opinion.

                              I.    BACKGROUND

A.    Factual Background

            Pflueger is an automotive retailer.           Noguchi procured

for Pflueger a Directors and Officers liability insurance policy

from National Union for policy periods covering September 27,

2007 to September 27, 2008, and September 27, 2008 to September

27, 2009.     The policy required that National Union “advance

defense costs” for Pflueger against covered claims.1

            On May 22, 2008, Pflueger and other entities were

served with subpoenas related to a grand jury investigation.2

Shortly thereafter, Pflueger’s Chief Financial Officer Randall

Kurata met with Noguchi’s agents, Glenn Maruyama and Mike Bryan,

1     The 2007-08 Policy provided Directors, Officers and Private Company
Liability Coverage as follows:

            This policy shall pay the Loss of [Pflueger] arising from
            a: (i) Claim first made against [Pflueger] . . . during the
            Policy Period . . . and reported to [National Union]
            pursuant to the terms of this policy for any Wrongful Act
            . . . . [National Union] shall, in accordance with Clause 4
            of this Coverage Section, advance Defense Costs of such
            Claim prior to its final disposition.

The 2008-09 policy is worded exactly the same as above.

2     In the ensuing months, further subpoenas were also served on Pflueger
and other entities.

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allegedly to discuss the grand jury subpoenas.           At the meeting,

Noguchi’s agents advised Pflueger that there was no claim under

the insurance policies that National Union issued to Pflueger.3

Noguchi did not forward a claim or the subpoenas to National

Union or to National Union’s “authorized representative” AIU

Holdings, Inc.     Pflueger hired multiple law firms to represent

its interests in connection with the grand jury proceeding,

incurring substantial legal fees.

           In February 2009, Pflueger’s attorney submitted a

demand letter tendering Pflueger’s defense to National Union.

On April 29, 2009, AIU claim analyst Dennis Van Dina responded

to Pflueger’s attorney in two letters, one for each insurance

policy, stating Pflueger’s claim was not covered because the

claim was untimely.4       The letters then stated that even if timely

3     The parties dispute what was conveyed during the meeting. Before the
circuit court in the first chain of proceedings (Pflueger I), Pflueger
contended it notified Noguchi that it received federal grand jury subpoenas:
Kurata showed Noguchi’s agents a copy of all the subpoenas which were served
on Kurata on May 22, 2008. Kurata then asked if there was coverage for the
subpoenas, and Noguchi’s agent replied there was no claim unless an
indictment was handed down. In contrast, Noguchi contended Kurata never
showed subpoenas or any documents, rather the meeting was about the IRS
requesting information. One of Noguchi’s agents testified he asked if
anything like an indictment, subpoena, or anything more formal was handed
down, and Kurata responded in the negative. The parties also disputed the
basis for and the precise substance of the advice Noguchi’s agents gave.

4    The letters stated:

           (1) Policy no. 052-68-49 has a Policy Period September 27,
           2007 to September 27, 2008. Coverage B states that the
           Policy provides coverage for Claims first made against the
           Company or an Individual Insured during the Policy Period
           or Discovery Period (if applicable). The Grand Jury
           Subpoena was issued on May 22, 2008. Thus, the matter will
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reported, the materials submitted did not constitute a claim.5

The letters stated "the language of the Policy requires that an

indictment, information or similar document is necessary for a

Claim as defined."      After Pflueger’s counsel responded, Van Dina

reiterated AIU’s position on May 13, 2009.

B.    Pflueger I: Relevant Background6

      1.    Circuit Court Proceedings

            On June 10, 2009, Pflueger filed a complaint alleging

claims of declaratory relief, negligence, negligent

            be deemed to have been made on May 22, 2008. Clause 7
            requires that a Claim must be both made and reported during
            the Policy Period or Discovery Period (if applicable)
            . . . . However, this matter was submitted to National
            Union on February 17, 2009; outside the applicable
            reporting periods found with Clause 7 Notice/Claim
            Reporting Provisions, and as amended by Endorsement #2.
            Therefore, coverage is precluded.

            (2) "Policy no. 052-68-49 [sic] has a Policy Period
            September 27, 2008 to September 27, 2009. Coverage B
            states that the Policy provides coverage for Claims first
            made against the Company or an Individual Insured during
            the Policy Period or Discovery Period (if applicable). The
            Grand Jury Subpoena was issued on May 22, 2008. Thus, the
            matter will be deemed to have been made on May 22, 2008;
            outside the Policy Period. Clause 7 requires that a Claim
            must be both made and reported during the Policy Period or
            Discovery Period (if applicable) . . . . However, this
            Claim was made outside the Policy. Therefore, coverage is
            precluded.

The second letter states the incorrect policy number.   The correct policy
number is 01-277-00-32.

5     Van Dina noted “assuming this matter was both made and reported as per
the requirements of the Policy, the materials submitted to National Union
would not constitute a Claim.”

6     The first chain of proceedings is referred to as Pflueger I, and the
second chain of proceedings is referred to as Pflueger II. Only the
background pertinent to the instant issue will be briefly summarized.
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misrepresentation, and breach of the duty of good faith and fair

dealing against AIU/National Union and Noguchi.          Pflueger

brought negligence and negligent misrepresentation claims

against Noguchi, alleging that Noguchi failed to tender the

grand jury matter to AIU and National Union, and as a proximate

result of Noguchi’s negligence, Pflueger was denied coverage for

legal fees and costs associated with responding to the grand

jury subpoenas and for liability that Pflueger may incur as a

result of the claims made against it in the grand jury

proceedings.   Pflueger also alleged that Noguchi made untrue

representations that the grand jury matter was not covered under

the policies, and that Pflueger reasonably relied on these

representations in declining for a time to tender the grand jury

matter directly to AIU and National Union; as a proximate

result, AIU and National Union deemed Pflueger’s eventual tender

of the grand jury matter untimely and denied coverage.

            Two AIU employees were deposed in 2011 and 2012:

Senior Complex Claims Director Tiffany Ngeo and claims analyst

Van Dina.

            Ngeo was asked whether it was AIU’s “position that

there was no coverage afforded for the grand jury subpoenas,

regardless of when they were reported to . . . AIU . . . .”

Ngeo responded, “Well, we have two defenses.          One of them for

each of the policy [sic], is that it was either not made or
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reported within the policy.      And the other defense is that the

grand jury subpoenas were not a claim per the policy.”            Ngeo was

also asked, “Is it fair to say that [AIU's] position is that,

first, there's no coverage for the grand jury subpoenas –- grand

jury subpoenas under the policy; and second, even if there was

coverage, they were not reported timely[?]”          Ngeo responded,

“[T]he grand jury subpoenas do not meet the definition of a

claim under either policy.”

          Van Dina was asked, “Even if it had been made timely,

it's not a covered claim; is that right?”         Van Dina responded,

“Right.   Well, no.   I'm sorry.     Let me rephrase that.       Not that

–- it may not even constitute the definition of a claim.”             Van

Dina was later asked, “Assuming this claim had been reported to

where you found it to be timely, would there still have be [sic]

coverage under the policy?”      Van Dina responded, “I do not

believe, based on what I reviewed today, that –- that a claim

would have been made at that time.        So I would say that coverage

would not be available.”      Van Dina was asked again,

“[R]egardless of whether the claim was reported in May of 2008

allegedly when the insured received or was served with the

subpoena or in February of 2009 when it came across your desk,

your position with respect to coverage would not change?”             Van

Dina answered, “No.”     Van Dina confirmed he believed the

subpoenas were not claims under the policy.
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            Pflueger finalized a confidential settlement agreement

with AIU and National Union between January - March 2013.             The

claims against Noguchi remained.

            On May 15, 2013, Pflueger sought a partial summary

judgment ruling that the IRS investigation and grand jury

subpoenas constituted a covered claim under the insurance

policies.    On July 10, 2013, the circuit court granted in part

and denied in part Pflueger’s motion for partial summary

judgment.    The circuit court granted the motion:

            to the extent the Court finds that the Grand Jury
            Subpoenas, dated May 22, 2008 and directed at Pflueger,
            Inc. constitute a 'claim' as that term is defined under
            Insurance Policy No. 052-68-49 and Insurance Policy No. 01-
            277-00-32 issued by National Union . . . to Pflueger, Inc.,
            as the named insured.

On July 22, 2013 a jury trial commenced.

            During trial, the circuit court excluded Van Dina's

and Ngeo’s testimonies on hearsay grounds.          Pflueger, Inc. v.

Noguchi & Assocs., Inc., 136 Hawaiʻi 372, 362 P.3d 805, No. CAAP-

XX-XXXXXXX, 2015 WL 7723045 at *2-3 (App. Nov. 23, 2015) (Mem.

Op.).   The jury returned a special verdict form indicating that

it found Noguchi liable for negligence and negligent

misrepresentation.     The jury found that Pflueger was thirty

percent negligent, Noguchi was seventy percent negligent, and

the amount of Pflueger’s damages was $837,079.31.            The circuit

court entered an Amended Final Judgment on July 11, 2014.

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      2.    Appellate Proceedings

            Noguchi appealed, and on January 7, 2016, the ICA

entered a Judgment on Appeal vacating the circuit court’s

July 11, 2014 Amended Final Judgment, pursuant to the ICA’s

November 23, 2015 Memorandum Opinion, which held that the

circuit court’s decision to exclude Van Dina’s and Ngeo’s

testimonies was error because their testimonies were essential

to Noguchi’s defense.       Pflueger, Inc. v. Noguchi & Assocs.,

Inc., 136 Hawaiʻi 372, 362 P.3d 805, No. CAAP-XX-XXXXXXX, 2015 WL

7723045 at *5 (App. Nov. 23, 2015) (Mem. Op.).            This court

denied Pflueger’s application for writ of certiorari.              Pflueger

Inc. v. Noguchi & Associates, Inc., No. SCWC-XX-XXXXXXX, 2016 WL

830982 (Haw. Mar. 2, 2016).

C.    Pflueger II

      1.    Circuit Court Proceedings on Remand

            On April 11, 2016, Noguchi moved for summary judgment

on causation grounds, arguing that the testimony of witnesses

“fails to put forth any evidence which might support a finding

of proximate cause against Noguchi.”          In opposition, Pflueger

noted the circuit court already ruled that the subpoenas were a

claim under Pflueger’s insurance policies.           Pflueger argued the

testimony of five witnesses demonstrates that Noguchi was a

substantial factor in bringing about Pflueger’s harm.

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          The circuit court granted Noguchi’s motion for summary

judgment on September 16, 2016.       The circuit court held that in

light of Van Dina’s and Ngeo’s testimonies that AIU would have

denied the claim regardless of timeliness, the burden shifted to

Pflueger to demonstrate Noguchi’s negligence was a legal cause

of Pflueger’s injuries, which Pflueger did not do.

          Pflueger filed a motion for reconsideration on

September 26, 2016, arguing that the causation issue had been

repeatedly decided in Pflueger’s favor in prior rulings, making

the “law of the case” doctrine apply in favor of Pflueger.

Noguchi argued Pflueger’s law of the case argument was

inapplicable, not controlling, and improper as it could have

been made previously.     The circuit court denied the motion for

reconsideration and issued a Final Judgment on March 14, 2017.

    2.    ICA Proceedings

          On March 24, 2017, Pflueger filed a notice of appeal.

Pflueger argued (1) the circuit court erred in granting

Noguchi’s motion for summary judgment because questions of

material fact existed, and (2) the circuit court abused its

discretion in denying Pflueger’s motion for reconsideration.

          In response, Noguchi maintained the burden shifted to

Pflueger to demonstrate a genuine issue of material fact, which

Pflueger did not do, making the grant of summary judgment for

Noguchi proper.    Noguchi contended the records before the court
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were not sufficient to support a finding of causation.            Noguchi

also argued that Pflueger’s causation argument should be

rejected because Pflueger did not make the argument before the

circuit court.

            In its reply brief, Pflueger argued, among other

things, that the bases of its arguments remained the same before

the ICA as before the circuit court.

            On August 31, 2022, the ICA issued a Summary

Disposition Order, with a majority and concurring opinion,

determining the circuit court erred in granting Noguchi’s motion

for summary judgment.     Pflueger, Inc. v. Noguchi & Assocs.,

Inc., 151 Hawaiʻi 430, 516 P.3d 984, No. CAAP-XX-XXXXXXX, 2022 WL

3928540 (App. Aug. 31, 2022) (SDO).        The ICA vacated the circuit

court’s March 14, 2017 Final Judgment and remanded.

            The ICA majority accepted Noguchi’s premise that what

AIU “would have done” had a timely tender been made was

material.   The majority agreed that “this testimony [of Van Dina

and Ngeo] undermined the causation element,” but found that “it

was not subject to only one inference and, thus, did not

completely dispose of the causation element.”          Therefore, the

majority determined Noguchi did not meet its “burden of

establishing that there was no genuine issue as to whether its

conduct caused Pflueger's losses,” making the issue one for the

fact finder.     The majority also noted that even if Noguchi had
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met its burden, Pflueger submitted opposing evidence that raised

genuine issues of material fact.

          In a concurrence, Judge Hiraoka agreed that Noguchi

did not satisfy its burden as a summary judgment movant, but did

not agree that what AIU “‘would have done’ had Noguchi timely

tendered Pflueger’s subpoena” is material.         The concurrence

explained that had Noguchi timely tendered the subpoena:

          National Union would have had three options: “(1) advance
          Pflueger's defense costs to respond to the subpoena; (2)
          decline to advance defense costs; or (3) advance defense
          costs under a reservation of rights. National Union's
          denial of a tender would not end the story; Pflueger could
          have filed a declaratory relief action, with or without a
          claim for bad faith. If National Union agreed to advance
          defense costs under a reservation of rights, National Union
          could itself have filed a declaratory relief action, with
          or without a claim for reimbursement of defense costs
          advanced.

          If a court were to rule that National Union was not
          obligated to advance Pflueger's defense costs, Noguchi's
          failure to tender the subpoena to National Union could not
          have been the legal cause of any damage to Pflueger; even
          if Noguchi had tendered, National Union would not have been
          obligated to advance defense costs. On the other hand, if
          a court were to rule that National Union would have been
          obligated to advance defense costs, Pflueger would satisfy
          the legal cause element of its negligence claim against
          Noguchi.

          Thus, the concurrence determined that whether National

Union would have actually been obligated to advance Pflueger’s

defense costs if Noguchi timely tendered the subpoena was

material, not what National Union would have done in response to

a timely tender of the subpoena.         Therefore, to sustain its

burden as the summary judgment movant, Noguchi had to show that

even if Pflueger’s subpoena had been timely tendered, National

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Union would not have been obligated to advance defense costs.

“Only then could Noguchi’s failure to tender the subpoena to

National Union not have been a legal cause of damage to

Pflueger.”     Consequently, the concurrence concluded that Noguchi

did not meet its burden and the circuit court erred by granting

summary judgment.

D.    Application for Writ of Certiorari

            On November 30, 2022, Noguchi timely filed an

application for writ of certiorari, asking this court to vacate

the ICA judgment and reinstate the circuit court’s grant of

summary judgment in favor of Noguchi.          Noguchi raises three

questions:

            (1)   Whether the ICA grievously erred in holding Noguchi
                  did not meet its initial burden on summary judgment,
                  violating law of the case and ignoring requirements
                  for causation in cases involving insurance agent
                  malpractice.

            (2)   Whether the ICA grievously erred in finding that a
                  question of fact existed as to what AIU would have
                  done with a timely tender in spite of the fact that
                  nothing contradicted its representatives’ unambiguous
                  testimony that they would have denied it.

            (3)   Whether the ICA grievously erred in reversing a grant
                  of summary judgment based on arguments and evidence
                  that were not presented to the trial court (or even
                  in Pflueger’s brief on appeal).

                          II.   STANDARD OF REVIEW

A.    Summary Judgment
                  On appeal, the grant or denial of summary judgment is
            reviewed de novo. Furthermore,

            [S]ummary judgment is appropriate if the pleadings,
            depositions, answers to interrogatories, and admissions on
            file, together with the affidavits, if any, show that there
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            is no genuine issue as to any material fact and that the
            moving party is entitled to judgment as a matter of law. A
            fact is material if proof of that fact would have the
            effect of establishing or refuting one of the essential
            elements of a cause of action or defense asserted by the
            parties. The evidence must be viewed in the light most
            favorable to the non-moving party. In other words, we must
            view all of the evidence and inferences drawn therefrom in
            the light most favorable to the party opposing the motion.

First Ins. Co. of Haw. v. A & B Props., Inc., 126 Hawaiʻi 406,

413, 271 P.3d 1165, 1172 (2012) (citations omitted).

            The burdens of the moving and non-moving parties on

summary judgment are as follows:

            The burden is on the party moving for summary judgment
            (moving party) to show the absence of any genuine issue as
            to all material facts, which, under applicable principles
            of substantive law, entitles the moving party to judgment
            as a matter of law. This burden has two components.
            First, the moving party has the burden of producing support
            for its claim that: (1) no genuine issue of material fact
            exists with respect to the essential elements of the claim
            or defense which the motion seeks to establish or which the
            motion questions; and (2) based on the undisputed facts, it
            is entitled to summary judgment as a matter of law. Only
            when the moving party satisfies its initial burden of
            production does the burden shift to the non-moving party to
            respond to the motion for summary judgment and demonstrate
            specific facts, as opposed to general allegations, that
            present a genuine issue worthy of trial. Second, the
            moving party bears the ultimate burden of persuasion. This
            burden always remains with the moving party and requires
            the moving party to convince the court that no genuine
            issue of material fact exists and that the moving part is
            entitled to summary judgment as a matter of law.

French v. Hawaiʻi Pizza Hut, Inc., 105 Hawaiʻi 462, 470, 99

P.3d 1046, 1054 (2004) (quoting GECC Fin. Corp. v. Jaffarian, 79

Hawaiʻi 516, 521, 904 P.2d 530, 535 (App. 1995)) (emphasis

omitted).

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                             III.   DISCUSSION

            On summary judgment, Noguchi cannot negate the

causation element by demonstrating that National Union would

have denied coverage even if Pflueger’s grand jury subpoena

matter were timely tendered.        We believe Judge Hiraoka’s

concurrence provides a cogent analysis and a path forward in

analyzing this matter.

            This court has explained:

            [W]here the non-movant bears the burden of proof at trial,
            a movant may demonstrate that there is no genuine issue of
            material fact by either: (1) presenting evidence negating
            an element of the non-movant's claim, or (2) demonstrating
            that the non-movant will be unable to carry his or her
            burden of proof at trial.

Ralston v. Yim, 129 Hawaiʻi 46, 57, 292 P.3d 1276, 1287 (2013).

            Noguchi attempted to demonstrate that the causation

element of Pflueger’s claims was negated by the testimony of Van

Dina and Ngeo, which purportedly shows that no causal connection

existed between Noguchi’s negligence and Pflueger’s injury

because National Union would have denied coverage regardless of

the claim’s timeliness.7,     8

7     Noguchi indirectly or impliedly made this second argument before the
circuit court, and made the argument more clearly before the ICA.

8     Noguchi also argued before the circuit court that Pflueger would not be
able to carry its burden of proof at trial due to lack of evidence,
specifically that “Pflueger has presented no evidence that Noguchi’s conduct
was a contributing factor in AIUH’s decision to deny coverage to Pflueger.”
Noguchi appears to have dropped this argument before the ICA and on
certiorari. As such, this court will not address it.

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            Noguchi misunderstands what it must demonstrate to

negate the causation element of Pflueger’s claims.           To prove

causation, Pflueger must prove a case within a case, namely that

National Union would be obligated to advance Pflueger’s defense

costs if Pflueger’s grand jury subpoena matter were timely

tendered to National Union.      Pflueger needs to demonstrate that

Noguchi was a substantial factor in causing Pflueger’s harm in

order to establish causation.       See Mitchell v. Branch, 45 Haw.

128, 132, 363 P.2d 969, 973 (1961); see also Knodle v. Waikiki

Gateway Hotel, 69 Haw. 376, 390, 742 P.2d 377, 386 (1987).

Noguchi can only be a substantial factor in causing Pflueger’s

harm if National Union were obligated to advance Pflueger’s

defense costs if the grand jury subpoena matter were timely

tendered.    If National Union was not obligated to advance

Pflueger’s defense costs, Pflueger could not have been harmed by

Noguchi’s failure to tender the grand jury subpoena matter or

Noguchi’s role in the untimely tender.         Therefore, Noguchi

cannot be a legal cause of Pflueger’s harm if National Union

were not legally obligated to advance Pflueger’s defense costs.

See Thomas v. Kidani, 126 Hawaiʻi 125, 129, 267 P.3d 1230, 1234

(2011) (“The causation element of legal malpractice is often

thought of as requiring a plaintiff to litigate a ‘trial within

a trial.’    That is, a plaintiff must show ‘both the attorney’s

negligence and also what the outcome of the mishandled
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litigation would have been if it had been properly tried.’”)

(citation omitted); see also Gibbons v. Ludlow, 304 P.3d 239,

244-45 (Colo. 2013) (noting the “case within a case” framework

for analyzing legal malpractice is apt for analyzing broker

malpractice, and applying the standard that “plaintiff must

prove causation by showing that the claim underlying the

malpractice action would have been successful ‘but for’ the

attorney’s negligence” to the broker context).

          Because Pflueger must demonstrate that National Union

would be obligated to advance defense costs if the grand jury

subpoena matter were timely tendered to establish causation,

Noguchi must demonstrate that National Union would not be

obligated to advance Pflueger’s defense costs if the grand jury

subpoena matter were timely tendered in order to negate

causation.   See Hawaiʻi Pizza Hut, Inc., 105 Hawaiʻi at 470-471,

99 P.3d at 1054-55 (rejecting Pizza Hut’s argument that

plaintiff did not meet her burden of establishing she was

disabled by not being able to lift twenty-five pounds because

she did not produce evidence the average person could lift more

than twenty-five pounds and concluding it was Pizza Hut’s burden

as the summary judgment movant to produce admissible evidence

that the average person in the population cannot lift more than

twenty-five pounds).     Only then would Noguchi have demonstrated

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that its role in the untimely tender was not a legal cause of

Pflueger’s harm.

           Instead, Noguchi offered the testimonies of Ngeo and

Van Dina, which both suggested that National Union would not

have considered the subpoenas to be a covered claim if timely

tendered, in an attempt to negate the causation element of

Pflueger’s claims.    However, this testimony does not negate

causation.   As Judge Hiraoka’s concurrence noted, if National

Union denied coverage after the timely tender of Pflueger’s

grand jury subpoena matter, Pflueger could then file a

declaratory relief action, with or without a claim for bad

faith.   See Hawaiʻi Revised Statutes § 632-1 (2016) (providing

that courts may grant declaratory relief where an actual

controversy exists between parties); Best Place, Inc. v. Penn

Am. Ins. Co., 82 Hawaiʻi 120, 132, 920 P.2d 334, 346 (1996)

(holding that “there is a legal duty, implied in a first- and

third-party insurance contract, that the insurer must act in

good faith in dealing with its insured, and a breach of that

duty of good faith gives rise to an independent tort cause of

action.”); see also Steven Plitt, et al., Couch on Insurance §

202:4 (3d ed. Nov. 2022) (“[I]f the insurer refuses to defend an

action against the insured based on a claim actually within the

coverage of the policy, on the ground that it is outside policy

coverage, such a refusal . . . constitutes an unjustified
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refusal and renders the insurer liable for breach of its

contract.    The failure to provide a defense when the insurer is

obligated to do so is sufficient to sustain a cause of action in

tort in addition to one for breach of contract.”).            National

Union’s disclaimer of coverage is not determinative of

Pflueger’s legal rights or legally cognizable harm – only a

court’s ruling on the matter is.9

            Therefore, the circuit court’s grant of summary

judgment in favor of Noguchi on the grounds that Van Dina’s and

Ngeo’s testimonies negated the causation element was incorrect.

The ICA majority’s acceptance of Noguchi’s causation argument

was similarly incorrect.

            In light of our foregoing analysis, Noguchi’s

remaining arguments on certiorari do not need to be addressed.

                             IV.   CONCLUSION

            As the summary judgment movant, Noguchi cannot refute

the causation element by demonstrating National Union would have

denied coverage if Pflueger’s grand jury subpoena matter were

9     Indeed, Noguchi’s argument leads to an absurd result. The insurer
would determine whether the insured had a legally cognizable harm sufficient
for causation, and would effectively insulate insurance brokers from
liability by stating more than one ground for the denial of coverage (which
insurers may be incentivized to do). See generally, Steven Plitt, et al.,
Couch on Insurance § 198:52-55 (3d ed. Nov. 2022) (discussing waiver and
estoppel of an insurer’s defenses based on the insurer’s disclaimer of
coverage); see also Van Dina’s testimony stating: “generally you try and be
as thorough as you can. Not to say that you throw in the kitchen sink, but –
but you try and – really anything that’s going to be applicable is
applicable.”

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timely tendered to National Union.        Rather, Noguchi had to

demonstrate that even if Pflueger’s grand jury subpoena matter

were timely tendered, National Union would not have been legally

obligated to advance Pflueger’s defense costs.          Because the

circuit court and the ICA majority incorrectly analyzed

Noguchi’s burden regarding the causation element, we vacate the

ICA’s October 5, 2022 Judgment on Appeal, and remand to the

circuit court for proceedings consistent with this opinion.

Christopher Shea Goodwin                 /s/ Paula A. Nakayama
for petitioner
Noguchi & Associates, Inc.               /s/ Sabrina S. McKenna

                                         /s/ Michael D. Wilson
Lyle S. Hosoda,
Kourtney H. Wong and                     /s/ Todd W. Eddins
Spencer J. Lau for
respondent Pflueger, Inc.                /s/ Robert D.S. Kim

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