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Finley v. Home Insurance Co.6/4/1998
Opinion OF THE COURT BY KIRIMITSU, J.
I. INTRODUCTION
Plaintiffs-Appellants/Cross-Appellees James and Vanida Finley (the Finleys) appeal the (1) August 26, 1996 Order Granting in Part and Denying in Part Defendant Hawaii Insurance Guaranty Association's Motion to Enforce Settlement Agreement and Motion for Partial Summary Judgment as to Counts V, VI, and VII of Plaintiffs' Complaint, and (2) July 2, 1997 Amended Judgment.
Defendant-Appellee/Cross-Appellant Hawaii Insurance Guaranty Association (HIGA) cross-appeals the (1) December 19, 1996 Order Granting Defendant Hawaii Insurance Guaranty Association's Motion for Taxation of Costs and Attorney's Fees, and (2) July 2, 1997 Amended Judgment. For the reasons set forth below, we vacate and remand for proceedings consistent with this opinion.
II. BACKGROUND
On August 6, 1993, the Finleys brought an action against, inter alia, Aaron Properties, Inc. and Aaron Properties Partners of Hilo (collectively, AP) for claims related to wrongful termination (the wrongful termination action). AP independently retained the legal services of Mark D. Bernstein (Bernstein).
AP was an "additional insured" under a Commercial General Liability Policy issued by Home Insurance Company (Home). Thus AP, through Bernstein, tendered defense of the wrongful termination action to Home. On or about May 12, 1995, Home advised AP that it would not defend or indemnify AP because Home concluded that "there is no potential for insurance coverage under the policy."
AP was also an "additional insured" under Pentagram Corporation's Worker's Compensation and Employer's Liability Policy issued by the now insolvent Hawaiian Insurance Guaranty (HIG). Pursuant to statute, HIGA assumed the handling of certain claims against HIG. Accordingly, on or about April 2, 1994, AP, through Bernstein, tendered the defense of the wrongful termination action to HIGA. The HIGA policy apparently excluded coverage for some of the claims alleged in the complaint. As such, HIGA accepted the tender under a reservation of rights. HIGA subsequently retained the legal services of Alexander MacLaren (MacLaren) and Michael Tom (Tom) to represent AP.
Although MacLaren and Tom represented AP in the wrongful termination action, AP continued to independently retain the services of Bernstein.
The wrongful termination action was ultimately settled, and a Judgment and Order was filed on March 25, 1996. The Judgment was entered in favor of the Finleys and against each of the defendants for a total of $2,261,272.93 plus post-judgment interest.
Subsequently, the Finleys, AP, and HIGA negotiated settlement of the judgment. The record indicates that on or about February 26, 1996, HIGA offered $100,000 for a complete release of all claims against AP and HIGA. The Finleys apparently agreed with the $100,000 offer but indicated that the settlement did not release any claims for unreimbursed attorneys' fees which AP may have against HIGA. HIGA responded that the settlement agreement need not "reference any claims for unreimbursed attorneys' fees which is not at issue with defense counsel retained by HIGA in [the wrongful termination action]." However, the record does not conclusively indicate whether a written final settlement agreement was entered into for $100,000 prior to August 19, 1996.
The record does indicate, however, that a written Assignment of Claims and Mutual Release of Claims Not Assigned (the Assignment) was entered into between the Finleys and AP on or about March 14, 1996. The Assignment provides for, among other things, the assignment by AP to the Finleys of
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