The Hawaii Intermediate Court of Appeals (ICA) vacated the circuit court's granting of summary judgment to the insurer after determining there was no duty to defend. National Interstate Ins. Co., Inc. v. Cornelio, 2017 Haw. Ct. App. LEXIS 128 (Haw. Ct. App. March 31, 2017).
Tiare Franco was killed when a truck driven by Savio Reinhardt went over a cliff. The truck was insured by National Interstate Insurance Company (NIIC) under a policy issued to William Cornelio. The truck was owned by Cornelio's ex-wife, Reinette Kama. Reinhardt was Kama's boyfriend.
"Insured" was defined in the policy as follows: "1. You are an insured for any covered auto. 2. Anyone else is an insured while using a covered auto you own, hire or borrow with a reasonable belief that such insured is entitled to do so . . ." Reinhardt typically used the car more than Kama.
In her deposition, Kama testified that she allowed Reinhardt to use the truck on the night of the accident to run some errands. He phoned about midnight, stating he was going to stop at his family land to check on another car and then would be right back. She responded, "Whatever," and went back to sleep. The accident occurred later the evening.
The family of Franco (Franco Parties) filed suit against Reinhardt for negligence, gross negligence, and/or recklessness. NIIC assigned a lawyer to defend Reinhardt. Ten months later, NIIC filed an action for declaratory judgment that it had no duty to defend Reinhardt in the wrongful death case. The Franco parties were allowed to intervene.
NIIC moved for summary judgment, arguing that its policy restricted coverage to "permitted drivers who had a 'reasonable belief' they were entitled to use the insured vehicle." NIIC asserted that at the time of the accident, Reinhardt could not have had a reasonable belief that he was entitled to use the truck because Kama had authorized only limited use that evening. The circuit court granted NIIC's motion.
The ICA reversed. In seeking summary judgment on its duty to defend, NIIC had the burden of proving that there was no genuine issue of material fact with respect to whether a possibility of coverage existed. In other words, NIIC had the burden of proving that there was no genuine issue of material fact as to whether it was entitled to operate the truck when the accident occurred.
Reinhardt was the primary user of the truck. Viewed in the light most favorable to the Franco Parties, this evidence supported the inference that prior to the accident, Reinhardt generally had Kama's implied permission to use the truck for his own personal purposes. The Franco Parties presented evidence that Kama and Reinhardt were in a romantic relationship. Prior to the accident, Kama had given Reinhardt implied permission to routinely use the truck for his own personal needs. On the night of the accident, Kama gave Reinhardt permission to use the truck for particular purposes, and then subsequently responded "Whatever" when Reinhardt said he would make further use of the car before returning the truck. Therefore, the Franco parties presented sufficient evidence to raise genuine issues of material fact regarding whether Reinhardt reasonably believed he was entitled to operate the truck at the time of the fatal accident.
The circuit court's decision was vacated and the matter remanded for further proceedings.
Thanks to Damon Key blogging colleague Mark Murakami, www.hawaiioceanlaw.com, for flagging this case.