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State Farm Fire and Casualty Co. v. Pacific Rent- All Inc.5/28/1999
etermination of the jury . . . ." McDonnell v. Pennington, 40 Haw. 265, 268, reh'g denied, 40 Haw. 311 (1953) (citation omitted); see also DiTullio v. Hawaiian Ins. & Guar. Co., 1 Haw. App. 149, 153, 616 P.2d 221, 225 (1980) (holding that extent of corporate chairman's authority constituted a genuine issue of material fact precluding summary judgment).
Based upon the record, we hold that the circuit court erred in granting summary judgment with respect to Hebert, HBIF, and State Farm Fire's claims contained within Counts One, Three, and Four. Further, insofar as the record is completely devoid of any support for a Conclusion that Marn had the authority to prosecute claims, to enter into negotiations, or to execute the Agreement on behalf of Hebert or HBIF, or on behalf of State Farm Fire with respect to its subrogation claims arising through Hebert and HBIF, we vacate the circuit court's judgment and remand the matter to the circuit court with instructions to enter partial summary judgment in favor of HBIF, Hebert, and State Farm Fire on the limited issue of authority.
2. Genuine Issues of Material Fact Remain Regarding State Farm Fire's Subrogation Rights.
The circuit court concluded that all of State Farm's subrogation claims, with the exception of those contained within Count Two, were extinguished by Marn's settlement. Insofar as Marn lacked the authority to settle claims on behalf of HBIF and Hebert, as discussed above, it therefore follows that State Farm Fire's subrogation claims with respect to HBIF and Hebert survived. State Farm Fire's subrogation claim arising out of its renter's insurance policy with respect to Marn, however, presents an altogether different question.
a. An Insured May Affect Its Insurer's Subrogation Rights.
As one might guess, "subrogation plays an important role in insurance law. . . . When subrogation runs its course, the legally responsible third party reimburses the insurer for having paid the debt which the party owed the insured." Robert H. Jerry, II, Understanding Insurance Law §§ 96 and 96 , at 600 (2nd ed. 1996). "Subrogation is used to refer to both a legal right and a legal action. The word itself comes from the Latin `subrogare,' which means `to put in the place of another or to substitute.'" 4 R. Long, The Law of Liability Insurance § 23.01, at 23-2 (1998); see also Taylor v. Government Employees Ins. Co., No. 21227, slip op. at 14 (Haw. May 5, 1999) (citing Shimabuku v. Montgomery Elevator Co., 79 Hawaii 352, 358, 903 P.2d 48, 54 (1995)). "In the insurance field, subrogation is needed in order to preserve the principle of indemnity." The Law of Liability Insurance, supra, § 23.01, at 23-3.
Basically, "two different kinds of subrogation exist. `Equitable subrogation' (sometimes called, curiously enough, `legal subrogation') is a principle of equity; it is effected by operation of law and arises out of a relationship that need not be contractually based.[ ] `Conventional subrogation' arises out of the contractual relationship of the parties. . . ." Understanding Insurance Law, supra, §§ 96 and 96 , at 602-04 (footnotes and brackets added); see also 3 Alan I. Widiss, Uninsured and Underinsured Motorist Insurance § 44.4, at 364 (2d ed. 1995 and Cum. Supp. 1998); The Law of Liability Insurance, supra, § 23.02, at 23-5. Accordingly, " n insurer which pays a claim against an insured for damages caused by the default or wrongdoing of a third party is entitled to be subrogated to the insured's rights against such third party, irrespective of the nature of the contract . . . even though the policy contains no stipulations to that effect." 8B John A. Appleman and Jean Appleman, Insurance Law and Pra
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