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Hawaiian Insurance & Guaranty Co. v. Financial Security Insurance Co.3/18/1991
Plaintiff-Appellee Hawaiian Insurance & Guaranty Co., Ltd. (HIG) commenced the instant action to obtain declaratory relief in connection with its rights and duties under an insurance policy issued to Gilwick, Inc. dba Datsun of Waipahu (Gilwick). HIG sought declaratory judgment that it was not obliged to defend nor indemnify Defendants-Appellants Gene K. Sheldon and Edna Jean Sheldon (collectively, the Sheldons) with respect to claims arising from a motor vehicle accident in which Denise Lehman was killed. The accident involved a 1983 Nissan Pulsar (Nissan), previously sold by Gilwick to the Sheldons. Following a jury-waived trial, the trial court determined that the HIG policy did not provide coverage for the claims asserted against the Sheldons. The court ruled that the Sheldons' automobile insurance policy, issued by Defendant Financial Security Insurance Company (FSIC) at the time the Nissan was purchased, provided coverage and thus FSIC was obliged to defend and indemnify the Sheldons. We affirm.
I. ISSUES
The ultimate question before us is whether the HIG policy insured the Sheldons against liability for damages arising out of the death of Denise Lehman. Our discussion centers on whether Hawaii's Motor Vehicle Registration and/or Motor Vehicle Accident Reparations (commonly referred to as the "no-fault law") statutes are determinative of "ownership" of an automobile for purposes of insurance coverage disputes. We have considered the other issues presented by the Lehmans and conclude that they lack merit.
II. FACTS
On December 28, 1983, the Sheldons executed a retail installment contract to purchase the Nissan from Gilwick, a commercial seller of new and used automobiles. At the time of the transaction, Gilwick was listed as the registered owner and First Hawaiian Bank FHB) was listed as the lien holder or legal owner on the Nissan's certificate of title. Pursuant to the terms of a security agreement between Gilwick and FHB, Gilwick was required to and did purchase comprehensive general liability insurance from HIG covering its fleet of automobiles. The HIG policy provided automobile liability coverage for each vehicle in the amount of $500,000 per occurrence.
As a general practice, Gilwick required its purchasers to obtain financing for the balance of the purchase price and no-fault and liability insurance coverage (no-fault policy/insurance) prior to delivering possession of the vehicle to the purchaser. In the present case, the Sheldons made a $1,000.00 down payment towards the purchase price of $8,332.00 by way of $880.00 cash and a $120.00 promissory note due on January 15, 1984. In compliance with Gilwick's requirements, the Sheldons obtained financing from Central Pacific Bank (CPB) and no-fault insurance from FSIC, which included liability coverage up to $25,000 per person per accident. The Sheldons thereafter received possession of the Nissan on December 28, 1983.
On January 16, 1984, Gene Sheldon while operating the Nissan was involved in a motor vehicle accident which resulted in the death of Denise Lehman. At the time of the accident, the vehicle's Certificate of Ownership still identified Gilwick as the "registered owner" and FHB as the "Legal Owner or Lien Holder" because Gilwick had not yet processed the documents reflecting the transfer of ownership from Gilwick and FHB to the Sheldons and CPB. The new certificates of ownership and registration were issued by the Department of Motor Vehicles on February 3, 1984.
On April 3, 1984, HIG filed this action against defendants FSIC, the Sheldons and the Lehmans. Following a bench trial, the court issued its findings of facts, conclusions of law and judgmen
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