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Keywords

statutewillgood faithbad faith
contracttortliabilitystatuteappealwillgood faithbad faithrespondent

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Willis v. Swain, 129 Hawai‘i 478, 304 P.3d 619

Facts

Petitioner Shilo Willis was a passenger in an uninsured vehicle that was involved in an accident. She had a certificate policy issued through the JUP but sought additional coverage after the accident. The insurer, First Insurance Company of Hawai‘i, Ltd., denied her claim for coverage, leading to a series of legal actions, including a previous Supreme Court ruling that required the insurer to pay assigned claims under the JUP. The case ultimately revolved around whether the insurer acted in bad faith in denying coverage.

On February 10, 1999, Petitioner was a passenger in an uninsured vehicle that rear-ended another vehicle. The uninsured vehicle was owned and operated by Craig Swain. At the time of the accident, Petitioner, a public assistance recipient, owned her own vehicle, and had a certificate policy issued by the State of Hawai‘i Department of Human Services (DHS) through its JUP.

Issue

Whether the insurer owed a duty of good faith to the assignee insured under the assigned claims procedure of the Hawai‘i Joint Underwriting Plan, and whether the insurer's denial of coverage was made in good faith.

Whether the ICA correctly decided that [Respondent] did not owe a duty of good faith in the absence of a contractual relationship when HRS § 431:10C–403 specifically and clearly states that an assignee insurance company has the same obligations as though it had sold the policy.

Rule

Under the assigned claims procedure of the State of Hawai‘i Insurance Joint Underwriting Program (JUP), the insurer assigned to a claim owes the same rights and obligations to the person whose claim is assigned to it as it would owe to an insured under a motor vehicle insurance policy.

under the assigned claims procedure of the State of Hawai‘i Insurance Joint Underwriting Program (JUP), see Hawai‘i Revised Statutes (HRS) § 431:10C–408 (Supp.1998), the insurer assigned to a claim owes the same rights and obligations to the person whose claim is assigned to it as the insurer would owe to an insured to whom the insurer had issued a motor vehicle mandatory public liability and property insurance policy, HRS § 431:10C–403 (Supp.1998);

Analysis

The court analyzed the statutory obligations imposed on insurers under the JUP, concluding that the duty of good faith and fair dealing applies to insurers handling assigned claims. The court found that the previous rulings did not adequately address the implications of the JUP statutes, which equate the relationship between an insurer and an assigned claimant to that of an insurer and an insured. This established a legal basis for the claim of bad faith.

The reasoning articulated in Best Place supports Petitioner's contention that she can pursue a bad faith tort claim in connection with her assigned claim. To begin, the legislature incorporated specific language in the JUP statutes concerning the rights and obligations of insurers under the JUP.

Conclusion

The Supreme Court vacated the lower court's judgments and remanded the case for further proceedings consistent with its opinion, emphasizing the need to determine whether the insurer acted in bad faith.

Therefore, we vacate the December 11, 2008 Final Judgment of the Circuit Court of the First Circuit (the court) and the March 9, 2012 judgment of the Intermediate Court of Appeals (ICA) filed pursuant to its February 3, 2012 published opinion in Willis v. Swain, 126 Hawai‘i 312, 270 P.3d 1042 (App.2012) (Willis III), affirming the court, because both reflect holdings to the contrary.

Who won?

The prevailing party was the Petitioner, Shilo Willis, as the Supreme Court ruled in her favor by recognizing her right to pursue a bad faith claim against the insurer.

The Supreme Court, Acoba, J., held that: 1 assignee insurer had duty to act in good faith in dealings with assignee insured, and 2 genuine issue of material fact existed regarding whether denial of coverage was in good faith.

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