Finley v. Home Insurance Company12/30/1998
We granted certiorari to review the opinion of the Intermediate Court of Appeals (ICA), which held that defendant-appellee/cross-appellant Hawaii Insurance Guaranty Association (HIGA), having retained counsel to defend the underlying action under a reservation of rights, was potentially additionally responsible for reimbursement of attorneys' fees for counsel personally retained by the insured. For the reasons which follow, we hold that the circuit court correctly determined that HIGA was not liable for the insured's additional attorneys' fees. We therefore affirm the circuit court's grant of summary judgment in favor of HIGA, reverse the opinion of the ICA, and order that the ICA's opinion in this case be depublished.
I. BACKGROUND
On August 6, 1993, plaintiffs-appellants/cross-appellees James and Vanida Finley (the Finleys) filed a complaint against, inter alia, Aaron Properties, Inc. and Aaron Properties Partners of Hilo (collectively Aaron Defendants) for claims related to wrongful termination. The Aaron Defendants retained Mark Bernstein to defend them in the action.
The Aaron Defendants were named additional insureds under a worker's compensation policy issued by the now insolvent Hawaiian Insurance & Guaranty Co., Ltd (HIG). Pursuant to HRS ยง 431:16-108 (1993), HIGA assumed the handling of claims under policies issued by HIG. On or about April 2, 1994, the Aaron Defendants tendered the defense of the wrongful termination action to HIGA. HIGA accepted the tender under a reservation of rights.
HIGA subsequently retained Alexander MacLaren and Michael Tom to represent the Aaron Defendants. On August 17, 1994, MacLaren and Tom appeared as co-counsel with Bernstein. The Aaron Defendants continued to pay for Bernstein's services. However, HIGA reimbursed the Aaron Defendants for an amount attributable to the services rendered by Bernstein between April 2 and August 17, 1994. Moreover, on one occasion when MacLaren and Tom were unable to appear for a deposition, HIGA reimbursed Bernstein for his solo appearance at this deposition.
The parties entered into a stipulated settlement of the underlying action. On March 25, 1996, a judgment and order was entered by the circuit court in favor of the Finleys and against the Aaron Defendants in the amount of $2,261,272.93, plus post-judgment interest. On or about March 14, 1996, a written assignment of claims and mutual release of claims was entered into between the Aaron Defendants and the Finleys. This assignment provided, inter alia, for the assignment to the Finleys of all claims for unreimbursed attorneys' fees, costs, and expert witness fees owed by the Aaron Defendants. Subsequently, the Finleys, the Aaron Defendants, and HIGA negotiated a settlement of the judgment, by which HIGA agreed to pay the sum of $100,000 to the Finleys. This settlement released HIGA from any further liability for the judgment, although HIGA allegedly agreed that it did not release any potential liability for unreimbursed attorneys' fees owed by the Aaron Defendants to Bernstein.
On April 12, 1996, the Finleys filed the instant action against HIGA for (1) breach of settlement agreement for failing to pay $100,000 (Count V), (2) reimbursement of attorneys' fees incurred by the Aaron Defendants (Count VI), and (3) bad faith (Count VII). On May 24, 1996, the Finleys filed a motion for partial summary judgment against HIGA on counts V, VI and VII. On June 17, 1996, HIGA filed a motion for partial summary judgment on counts V, VI and VII. A hearing on both motions was conducted on June 27, 1996. After the hearing, the circuit court granted summary judgment in favor of HIGA on counts VI and VII. The court's order
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