LAW LIBRARY
NOT FOR PUBLICATION IN WEST’S HAWAI°I REPORTS AND PACIFIC REPORTER
NO. 29348
IN THE INTERMEDIATE COURT OF APPEALS
oF THE STATE oF HAWAI‘I
33=9 wv s-Avw:)mz
PHILIP A. BROWN, Plaintiff-Appellee,
v.
PROGRESSlVE DIRECT INSURANCE COMPANY, Defendant-Appellant
APPEAL FROM THE CIRCUIT COURT OF THE FlFTH CIRCUIT
(CIVIL NO. O7~l~OO49)
MEMORANDUM OPINlON
C J., Foley and Leonard, JJ.)
(By: Nakamura,
Defendant-Appellant Progressive Direct Insurance
appeals from the Final Judgment entered on
(circuit
Company (PDIC)
July 22, 2008 in the Circuit Court of the Fifth Circuit
court).1 The circuit court entered judgment in favor of
(Brown) and against PDIC (l)
2007 Order
Plaintiff-Appellee Philip A. Brown
for declaratory relief pursuant to the June 22,
[Brown's] Motion for Summar Jud ment and (2)
Y 9
[PDIC's] Cross~Motion for
pursuant
Granting
to the June 22,
Summary Judgment.
On appeal, PDIC raises the following points of error:
The circuit court erred in granting Brown‘s Motion
(1)
for Summary Judgment and denying PDIC's Cross-Motion for Summary
2007 Order Denying
Judgment because
relitigation of the issues raised by PDIC in the
(a)
Nebraska Declaratory Relief Action? was precluded by the full
faith and credit clause of the United States Constitution and the
doctrine of res judicata;
1 The Honorable Kathleen N.A. Watanabe presided.
2 PDIC is licensed in Nebraska as Progressive Halcyon Insurance
Company. For continuity, we will refer to each of the Nebraska and HawaiH
companies as PDIC.
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(b) relitigation of the issues raised by PDIC in the
Nebraska Declaratory Relief Action was precluded by the principle
of interstate comity;
(c) Nebraska Law, not Hawafi law, governed PDIC's
obligations under the insurance policy; and
(d) whether Nebraska law or Hawafi law governed,
Brown was not entitled to stack Uninsured Motorist (UM) limits.
(2) The circuit court erred in concluding that the
Nebraska court did not have subject matter jurisdiction.
I. BACKGROUND
On or about December 25, 2005, Brown was a passenger in
a vehicle that was involved in an automobile accident on Kauai,
and Brown suffered injuries as a result of the accident. The
driver of the vehicle in which Brown was a passenger was
uninsured. The driver of the second vehicle involved in the
accident fled the scene and was unidentified.
At the time of the accident, Brown was insured by two
motor vehicle policies, and each policy provided UM coverage with
a liability limit of $25,000 per person/$50,000 per accident,
Brown applied for and paid the premiums on these policies as a
resident of Nebraska. PDIC issued these policies to Brown in
Nebraska, and the amount of premiums Brown paid on the policies
was based on a Nebraska "garaging zip code "
Both policies had an "other insurance" provision, which
limited the "total amount that may be recovered as damages for
bodily injury arising out of one accident . . . [to] the highest
limit of the available uninsured or underinsured motorist
coverage in any one policy." (Emphasis in original.)
Brown submitted claims and a settlement demand to PDIC
for the maximum amount of UM benefits under both policies
($25,000 each -- for a total of $50,000 in UM benefits). PDIC,
relying on the "other insurance" provisions of the policies,
agreed to pay only "the pro-rata limits of $l2,500 to settle
[Brown's UM] claim." Brown contested the "other insurance"
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provision of the policies as invalid under Hawafi law, which
permits the stacking of UM benefits under multiple policies.
PDIC responded that Nebraska law, which did not permit stacking,
governed the insurance policies.
On or about March 9, 2007, PDIC sent two checks to
Brown totaling $25,000, the maximum UM benefits permitted under
the "other insurance" provision and Nebraska law.
A. Nebraska Declaratory Relief Action
On March l4, 2007, PDIC filed a complaint for
declaratory judgment against Brown in Nebraska district court.
In the complaint, PDIC prayed
that the Court construe Nebraska law and the two policies
issued by [PDIC] and enter a declaratory judgment declaring
that [PDIC] has paid [Brown] all benefits owed to him under
both policies arising out of the injuries [Brown] sustained
as a result of the December 25, 2005, collision.
On March l5, 2007, PDIC served Brown by sending
certified mail, return receipt reguested, a copy of the complaint
and summons to Brown at a Nebraska address. On March l7, 2007,
the complaint and summons was received at the Nebraska address
and signed for by a Bonnie L. Brown. PDIC filed a "return of
Summons" showing proof of service and the signed receipt with the
Nebraska district court on March l9, 2007,
On March 20, 2007, Brown contacted Terry Diggins
(Diggins), a casualty specialist with PDIC, regarding the
Nebraska Declaratory Relief Action.
Brown failed to answer the complaint or request an
extension of time to answer within the time permitted under
Nebraska law. On April l9, 2007, PDIC moved for default judgment
against Brownr On April 30, 2007, the Nebraska district court
filed an order granting PDIC’s motion for default judgment
(Nebraska Default Judgment), finding that
(l) Nebraska law governs the present dispute between the
parties; (2) [PDIC] has performed all of its duties and
obligations under the policies it issued to [Brown] as well
as all of its obligations and duties under Nebraska law; and
(3) [Brown] is not entitled to any further compensation from
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[PDIC] for any injuries he sustained during a December 25,
2005, single-vehicle accident in the State of Hawaii.
B. HawaiH.Declaratory Action
On March 27, 2007, Brown filed a Complaint-for
Declaratory Relief against PDIC in HawaiUM Brown's complaint
prayed that
this court declare that the full [UM] motorist coverage of
$25,000 under each policy, for a total of $50,000 of [UM]
coverage under [Brown's] insurance policies issued by [PDIC]
applies to the subject claims arising out of the subject
collision.
On May 16, 2007, Brown moved for summary judgment and
requested that the circuit court "declare, as a matter of law,
that [Brown's UM] coverages under his two motor vehicle insurance
policies apply separately and fully to the motor vehicle
collision that occurred on or about December 25, 2005 in the
County of Kauai, State of Hawaii."
On May 18, 2007, PDIC filed a cross-motion for summary
judgment and argued that
the claim asserted by [Brown] herein, i.e., that he is
entitled to "stack" [UM] insurance policy limits under two
insurance policies issued in Nebraska, has already been
litigated in a declaratory relief action in Nebraska, which
resulted in the entry of a default judgment against [Brown].
Res judicata bars relitigation of [Brown's] claim, and the
Full Faith and Credit Clause of the [United States]
Constitution requires that this court accord the Nebraska
judgment the same preclusive effect that it would have in
Nebraska's courts.
The circuit court granted Brown's motion for
declaratory relief, denied PDIC's cross~motion, and reduced these
rulings to a Final Judgment on July 22, 2008. PDIC timely
appealed.
II. STANDARDS OF REVIEW
A. Summary Judgment
The Hawafi Supreme Court has stated that an appellate
court
reviews the circuit court's grant of summary judgment de
novo. Price v. AIG HawaiI Ins. Co., 107 Hawaid.106, 110,
111 P.3d 1, 5 (2005). Summary judgment is appropriate “if
the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
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show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a
matter of law." [Hawafi Rules of Civil Procedure] Rule
56(c).
Gillan v. Gov't Emplovees Ins. Co., 119 Hawafi 109, 114, 194
P.3d l07l, 1076 (2008).
B. Res Judicata
Res judicata, or claim preclusion, is a doctrine that
limits "a litigant to one opportunity to litigate aspects of the
case to prevent inconsistent results and multiplicity of suits
and to promote finality and judicial economy." Bremer v. Weeks,
104 HawaiU_43, 53, 85 P.3d 150, 160 (2004) (footnote omitted).
Res judicata “prohibits a party from relitigating a previously
adjudicated cause of action." lQ; (internal quotation marks and
citation omitted). In addition,
the judgment of a court of competent jurisdiction is a bar
to a new action in any court between the same parties or
their privies concerning the same subject matter, and
precludes the relitigation, not only of the issues which
were actually litigated in the first action, but also of all
grounds of claim and defense which might have been properly
litigated in the first action but were not litigated or
decided.
Id. (brackets and emphasis in original omitted) (quoting Foytik
V. Chandler, 88 HaWafi 307, 3l4, 966 P.2d 6l9, 626 (l998)).
Finally,
[t]he party asserting claim preclusion has the burden of
establishing that (1) there was a final judgment on the
merits, (2) both parties are the same or in privity with the
parties in the original suit, and (3) the claim decided in
the original suit is identical with the one presented in the
action in question.
Brem@r, 104 HawaFi at 54, 35 P.3d at i6i.
III. DIscUssIoN
A. THE FULL FAITH AND CREDIT CLAUSE OF THE UNITED
STATES CONSTITUTION AND THE DOCTRINE OF RES
JUDICATA BAR RELITIGATION OF BROWN'S ENTITLEMNT
TO BTILL IIENEH?ITS IDNDEE{fBOTHI INSlHUANCHZ POIJKZIES.
PDIC argues that the April 30, 2007 Nebraska Default
Judgment against Brown bars the HawaFi declaratory action, which
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Brown instituted on March 27, 2007 and which ended in a Final
Judgment on July 22, 2008. We agree.
In the Nebraska Default Judgment, the Nebraska court
found that
(1) Nebraska law governs the present dispute between the
parties; (2) [PDIC] has performed all of its duties and
obligations under the policies it issued to [Brown] as well
as all of its obligations and duties under Nebraska law; and
(3) [Brown] is not entitled to any further compensation from
[PDIC] for any injuries he sustained during a December 25,
2005, single~vehicle accident in the State of Hawaii.
The Hawafi Final Judgment confirmed (1) the Order
Granting Brown's Motion for Summmary Judgment, which found:
(2) There is no genuine issue of material fact and {Brown]
has shown that he is entitled to judgment as a matter
of law.
and (2) the Order Denying PDIC's Cross-Motion for Summary
Judgment, which found:
(1) This Court has jurisdiction of the parties and the
subject matter of this action.
(2) The District Court of Lancaster County, State of
Nebraska, lacked competent jurisdiction to decide the
issues in this case which arose out of a motor vehicle
accident that occurred in Hawaii and to which Hawaii
law applies.
(3) [PDIC] has not shown that it is entitled to judgment
as a matter of law.
The full faith and credit clause of the United States
Constitution3 and the doctrine of res judicata dictate that the
VNebraska judgment bars the Hawafi judgment as a matter of law.
In Durfee v. Duke, 375 U.S. 106, 109, 84 S. Ct. 242,
244 (1963), the United States Supreme Court explained:
The constitutional command of full faith and credit,
as implemented by Congress, requires that "judicial
proceedings * * * shall have the same full faith and credit
in every court within the United States * * * as they have
by law or usage in the courts of such State * * * from which
they are taken." [28 U.S.C, § 1738.] Full faith and credit
3 Article IV, Section 1, of the United States Constitution providesz
"Full Faith and Credit shall be given in each State to the public Acts,
Records, and judicial Proceedings of every other State. And the Congress may
by general Laws prescribe the Manner in which such Acts, Records and
Proceedings shall be proved, and the Effect thereof."
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thus generally requires every State to give to a judgment at
least the res judicata effect which the judgment would be
accorded in the State which rendered it. "By the
Constitutional provision for full faith and credit, the
local doctrines of res judicata, speaking generally, become
a part of national jurisprudence, and therefore federal
questions cognizable here." Riley v. New York Trust Co.,
315 U.S. 343, 349, 625 S. Ct. 608, 612 (l942).
B. THE NEBRASKA DISTRICT COURT HAD JURISDICTION OVER
THE PARTIES AND THE SUBJECT MATTER.
The Nebraska district court had personal jurisdiction
over Brown and subject matter jurisdiction over PDIC's claim for
declaratory relief.
1. Personal jurisdiction under Nebraska law
Under Nebraska law, courts exercise personal
jurisdiction over parties through proper service of process.
Stewart v. Hechtman, 581 N.W.2d 416, 4l9~20 (Neb. l998)
(discussing personal service as prerequisite to personal
jurisdiction); Holmstedt v. York County Jail Supervisor (Name
Unknown}, 739 N W.2d 449, 459 (Neb. Ct. App. 2007), rev'd on
other grounds, 745 N.W.2d 317 (Neb. 2008) ("Valid service of
process is a prerequisite to the court's exercise of personal
jurisdiction.") (citing to Omni Capital Int'l v. Rudolf Wolff &
QQ;, 484 U.S. 97, lO5, lO8 S, Ct. 404, 410 (l987)).
Nebraska Revised Statutes (Neb. Rev. Stat.) § 25-505.01
permits service of process by certified mails
(1) Unless otherwise limited by statute or by the court, a
plaintiff may elect to have service made by any of the
following methods:
(c) Certified mail service which shall be made by
(i) within ten days of issuance, sending the
summons to the defendant by certified mail with
a return receipt requested showing to whom and
where delivered and the date of delivery, and
(ii) filing with the court proof of service with
the signed receipt attached[.]
PDIC argues that it properly served Brown under Neb. Rev. Stat.
§ 25~505.01(1)(c). On March 14, 2007, PDIC filed its complaint
for declaratory judgment against Brown in Nebraska district
NGTIWN{PUBLH§ATHNVIN\NESTSIL¥WAFIREPORTSAND]HUFR:REPORTER
court, One day later, PDIC mailed by certified mail with return-
receipt requested (showing to whom and where delivered and date
of delivery) a copy of the Summons and Complaint and Praecipe to
Brown at his Nebraska address. A Bonnie L. Brown signed the
return receipt on March 17, 2007, and PD1C filed this signed
receipt and proof of service with the Nebraska district court on
march i9, 2007.
In the Nebraska Default Judgment, the district court
deemed this service of process proper: "Considering the evidence
adduced by [PDIC], this Court finds that there was due and proper
service of the Summons upon [Brown] as described by the Statutes
of Nebraska."
At the hearing on the motions for summary judgment,
Brown argued:
Additionally, [Brown] was not served, nor could he
have been served in the manner proposed by [PDIC]. [Brown]
has not returned to Nebraska since prior to the collision.
And he was in Hawaii. He has been a temporary resident of
Hawaii since December of 2005. And there was no effort to
make personal service on Mr. Brown either in Nebraska or in
Hawaii.
And it is my understanding that -- it is correct that
service was made by mail to his last known address and it
was signed for by someone other than [Brown]. So when it
was sent by certified mail, it was not designated to be
delivered to the addressee only. So, clearly, [Brown] was
not served with the Nebraska action,
We construe Brown's argument to mean that effective service under
Neb. Rev. Stat. § 25-505.01(1)(c) requires that the addressee
receive and sign for the notice.
PDIC responds that Nebraska courts read Neb. Rev. Stat.
§ 25-505 01(1)(c) more liberally.
In West Town Homeowners Ass'n, Inc. v. Schneider, 380
N.W 2d 265, 267 (Neb. 1986), the defendant by special appearance
objected on grounds of unlawful service4 to the lower court's
assertion of personal jurisdiction. The lower court denied the
fl
Defendant actually objected to jurisdiction on five grounds,
summarized as invalid service and lack of supporting documents. 380 N.W.2d at
267. -
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special appearance and defendant appealed the denial. ld; The
facts indicate that a person believed to be the defendant‘s wife
received the summons sent by certified mail and addressed to the
defendant. ;dL The Nebraska Supreme Court nonetheless affirmed
the lower court's denial of defendant‘s special appearance:
From such review it appears that the requirements of
§ 25-505.01(3) were met in that the summons was sent to
defendant by certified mail, the return receipt shows to
whom, where, and when it was delivered, and proof of service
was filed with the original summons and signed receipt
attached. lt is presumed that the ruling of the county
court denying the special appearance was correct.
lQ; at 26S. \
The Nebraska case undercuts Brown's argument that
service on him by certified mail was invalid because he was not
present at his last known address and did not receive the
summons. PDIC substantially complied with Neb. Rev. Stat. § 25-
505.01(1)(c). Even if there were a defect, Brown had actual
notice of the Nebraska declaratory action. In Diggins'
affidavit attached to PD1C's Motion for Default Judgment in the
Nebraska Declaratory Relief Action, Diggins stated that "[o]n or
about March 20, 2007, I received a phone call from [Brown]
regarding the [Nebraska Declaratory Relief Action]. 1 provided
him with some information regarding the general nature of the
claim and then advised him to confer with his attorney for
further explanation and analysis." There was effective service
of process under Nebraska law.
2.y Subject matter jurisdiction under Nebraska law
Under Nebraska law, subject matter jurisdiction is the
"court's power to hear and determine a case in the general class
or category to which the proceedings in question belong and to
deal with the general subject involved in the action before the
court and the particular question which it assumes to determine."
McClellan v. Bd. of Egualization of Douglas Countv, 748 N.W.2d
66, 70 (Neb. 2008) (footnote omitted). PDIC filed its complaint
for declaratory judgment with the Nebraska district court. The
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Nebraska district court has the power to hear and determine
actions for declaratory judgment. Neb. Rev. Stat. § 25-21,149
(authorizing "[c]ourts of record within their respective
jurisdictions" to hear declaratory judgments); see al§Q Nebraska
Constitution, art. V, § 9 ("The district courts shall have both
chancery and common law jurisdiction, and such other jurisdiction
as the Legislature may provide[.]“).
Brown argues that "[w]hen there is a choice of law
question, it follows that the state whose law applies has subject
matter jurisdiction over the case." In support of his argument,
Brown cites to Peters v. Peters, 63 Haw. 653, 634 P.2d 586
(1981). A vehicle driven by Mr. Peters and in which Mrs. Peters
was a passenger was involved in an accident on the island of
Maui, and Mrs. Peters was injured in the accident. ld; at 655,
634 P.2d at 588. Although Mr. and Mrs. Peters were residents of
New York, Mrs. Peters filed suit against Mr. Peters in Hawafi to
collect insurance proceeds. ld; The issue before the HawaiU_
Supreme Court was whether to apply Hawai‘i's inter-spousal tort
immunity rule or New York law, which permitted suits between
spouses. ;d; at 655-56, 634 P.2d at 588. Citing policy reasons,
the Peters court applied Hawafi's inter-spousal tort immunity
rule. lQ; at 664-67, 634 P.2d at 593-95.
Peters does not stand for the proposition Brown argues.
while Peters involves a choice of law issue, it does not address
subject matter jurisdiction. The two are distinct. §§§ Iowa ex
rel. Miller v. Baxter Chrvsler Plymouth, 1nc., 456 N.W.2d 371,
378 (Iowa 1990) (noting that "subject matter jurisdiction should
not be confused with . . . whether a state‘s choice of law rules
permit application of its laws to a transaction which occurred in
whole or in part outside of its borders.").
The Nebraska district court had subject matter
jurisdiction.
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C. THE NEBRASKA DEFAULT. JUDGMENT WAS A FINAL JUDGD'.IENT
ON THE MERITS.
The Nebraska Default Judgment constituted a final
judgment for res judicata purposes. In Matsushima v. Reqo, 67
Haw. 556, 559, 696 P.2d 843, 845 (l985), the Hawafi Supreme
Court noted that default judgments are valid judgments for res
judicata purposes for all claims within the scope of relief for
which a party prays. See Fuller v. Pac. Med. Collections, lnc.,
78 HawaiH_213, 219, 891 P.2d 300, 306 (App. 1995) (citations
omitted) ("[A] default judgment is a final judgment to which
collateral estoppel applies . . . unless the default judgment is
void."); accord Mabile v. Drivers Mgmt., Inc., 660 N.W.2d 537,
543 (Neb. Ct. App. 2003) ("Summary judgments, judgments on
directed verdict, judgments after trial, default judgments, and
consent judgments are all generally considered to be on the
merits for purposes of res judicata.").
Brown argues that the Nebraska Default Judgment was
merely an order. Although the Nebraska Default Judgment is
titled "Order," it grants default judgment against Brown: "For
the reasons set forth herein, the Court finds that default
judgment should be, and hereby is, GRANTED." For purposes of res
judicata, the Nebraska Default Judgment is a final judgment on
the merits,
D. THE NEBRASK.A AND HAWAI‘I DECLARATORY ACTIONS
INVOLVED THE SAME PAR’I'IES AND THE SAME CLAIM.
The Nebraska and Hawari declaratory actions involved
Brown and PDIC and both resolved Brown's maximum entitlement to
benefits under his two insurance policies with PDIC.
E. NO EXCEPTIONS TO THE APPLICATION OF RES JUDICATA
UNDER HAWAI‘I LAW ARE PRESEN'I'.
Brown argues that under HawaFi law, courts will not
give res judicata effect to judgments obtained by fraud. Brown
further argues that PDIC committed fraud on the Nebraska district
court by refusing to
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inform the Nebraska court that Brown's claims were made in
Hawari, that his claims were being handled in Hawafi by a
Hawafi adjuster at [PDIC's] Hawafi claims office, that
Brown was represented by counsel for these claims, [and]
that Brown's counsel of record for these claims was located
in Hawai`i [.]
PD1C did not mislead the Nebraska district court. We
simply cannot say that PD1C's silence amounted to fraud on the
court, precluding the grant of res judicata to the Nebraska
Default Judgment. McBryde Sugar Co. v. Robinson, 54 Haw. 174,
178, 504 P.2d 1330, 1334 (1973) (noting that a final judgment
"without fraud" has preclusive effect).
IV. CONCLUSION
The Final Judgment entered on July 22, 2008 in the
Circuit Court of the Fifth Circuit is reversed.
DATED: Honolulu, Hawafi, May 5, 2010.
On the briefs:
Richard B. Miller ,
patricia r<@hau wall j,/ Z,é
. G%»@uh4L_
David R. Harada-Stone
(Tom Petrus & Miller, LLLC) Chief Judge
for Defendant-Appellant.
Susan L. Marshall
for Plaintiff-Appellee. /ip
Associate Judge
-‘! t f l
A sociate J dge
l2