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Electronically Filed
Supreme Court
SCWC-XX-XXXXXXX
22-FEB-2023
08:16 AM
Dkt. 11 OP
IN THE SUPREME COURT OF THE STATE OF HAWAII
---o0o---
PFLUEGER, INC.,
Respondent/Plaintiff-Appellant,
vs.
AIU HOLDINGS, INC., NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PENNSYLVANIA,
Respondents/Defendants-Appellees,
and
NOGUCHI & ASSOCIATES, INC., Petitioner/Defendant-Appellee.
SCWC-XX-XXXXXXX
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-XX-XXXXXXX; CIV. NO. 09-1-1326)
FEBRUARY 22, 2023
NAKAYAMA, ACTING C.J., McKENNA, WILSON, AND EDDINS, JJ.,
AND CIRCUIT JUDGE KIM, IN PLACE OF RECKTENWALD, C.J., RECUSED
OPINION OF THE COURT BY NAKAYAMA, J.
This is an insurance broker malpractice case spanning
approximately fourteen years. Respondent/Plaintiff-Appellant
Pflueger, Inc. brought negligence and negligent malpractice
claims against its insurance broker, Petitioner/Defendant-
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Appellee Noguchi & Associates, Inc. (Noguchi). In the first
chain of proceedings (Pflueger I), partial summary judgment was
granted in favor of Pflueger and a jury found in favor of
Pflueger. After the ICA remanded to the circuit court to
include previously excluded testimony, the circuit court in the
instant appeal granted summary judgment in favor of Noguchi,
finding Noguchi’s evidence negated the causation element of
Pflueger’s claim and Pflueger offered no evidence to the
contrary. The ICA then disagreed, holding summary judgment for
Noguchi was improper in a Summary Disposition Order, with a
majority and concurring opinion.
Currently at issue is what Noguchi must demonstrate on
summary judgment to negate the causation element of the
negligence and negligent malpractice claims against it. Noguchi
contends it need only show that Pflueger’s insurer, National
Union Fire Insurance Company of Pittsburgh, Pennsylvania
(National Union), would have denied coverage even if Pflueger’s
grand jury subpoena matter were timely tendered in order to
negate the causation element on summary judgment. By accepting
this argument, both the circuit court and the ICA majority
erred. We clarify that to negate the causation element on
summary judgment, Noguchi instead would need to demonstrate that
even if the grand jury subpoena matter were timely tendered to
National Union, National Union would not have been legally
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obligated to advance Pflueger’s defense costs. Accordingly, we
vacate the ICA’s October 5, 2022 Judgment on Appeal, and remand
to the circuit court for proceedings consistent with this
opinion.
I. BACKGROUND
A. Factual Background
Pflueger is an automotive retailer. Noguchi procured
for Pflueger a Directors and Officers liability insurance policy
from National Union for policy periods covering September 27,
2007 to September 27, 2008, and September 27, 2008 to September
27, 2009. The policy required that National Union “advance
defense costs” for Pflueger against covered claims.1
On May 22, 2008, Pflueger and other entities were
served with subpoenas related to a grand jury investigation.2
Shortly thereafter, Pflueger’s Chief Financial Officer Randall
Kurata met with Noguchi’s agents, Glenn Maruyama and Mike Bryan,
1 The 2007-08 Policy provided Directors, Officers and Private Company
Liability Coverage as follows:
This policy shall pay the Loss of [Pflueger] arising from
a: (i) Claim first made against [Pflueger] . . . during the
Policy Period . . . and reported to [National Union]
pursuant to the terms of this policy for any Wrongful Act
. . . . [National Union] shall, in accordance with Clause 4
of this Coverage Section, advance Defense Costs of such
Claim prior to its final disposition.
The 2008-09 policy is worded exactly the same as above.
2 In the ensuing months, further subpoenas were also served on Pflueger
and other entities.
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allegedly to discuss the grand jury subpoenas. At the meeting,
Noguchi’s agents advised Pflueger that there was no claim under
the insurance policies that National Union issued to Pflueger.3
Noguchi did not forward a claim or the subpoenas to National
Union or to National Union’s “authorized representative” AIU
Holdings, Inc. Pflueger hired multiple law firms to represent
its interests in connection with the grand jury proceeding,
incurring substantial legal fees.
In February 2009, Pflueger’s attorney submitted a
demand letter tendering Pflueger’s defense to National Union.
On April 29, 2009, AIU claim analyst Dennis Van Dina responded
to Pflueger’s attorney in two letters, one for each insurance
policy, stating Pflueger’s claim was not covered because the
claim was untimely.4 The letters then stated that even if timely
3 The parties dispute what was conveyed during the meeting. Before the
circuit court in the first chain of proceedings (Pflueger I), Pflueger
contended it notified Noguchi that it received federal grand jury subpoenas:
Kurata showed Noguchi’s agents a copy of all the subpoenas which were served
on Kurata on May 22, 2008. Kurata then asked if there was coverage for the
subpoenas, and Noguchi’s agent replied there was no claim unless an
indictment was handed down. In contrast, Noguchi contended Kurata never
showed subpoenas or any documents, rather the meeting was about the IRS
requesting information. One of Noguchi’s agents testified he asked if
anything like an indictment, subpoena, or anything more formal was handed
down, and Kurata responded in the negative. The parties also disputed the
basis for and the precise substance of the advice Noguchi’s agents gave.
4 The letters stated:
(1) Policy no. 052-68-49 has a Policy Period September 27,
2007 to September 27, 2008. Coverage B states that the
Policy provides coverage for Claims first made against the
Company or an Individual Insured during the Policy Period
or Discovery Period (if applicable). The Grand Jury
Subpoena was issued on May 22, 2008. Thus, the matter will
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reported, the materials submitted did not constitute a claim.5
The letters stated "the language of the Policy requires that an
indictment, information or similar document is necessary for a
Claim as defined." After Pflueger’s counsel responded, Van Dina
reiterated AIU’s position on May 13, 2009.
B. Pflueger I: Relevant Background6
1. Circuit Court Proceedings
On June 10, 2009, Pflueger filed a complaint alleging
claims of declaratory relief, negligence, negligent
be deemed to have been made on May 22, 2008. Clause 7
requires that a Claim must be both made and reported during
the Policy Period or Discovery Period (if applicable)
. . . . However, this matter was submitted to National
Union on February 17, 2009; outside the applicable
reporting periods found with Clause 7 Notice/Claim
Reporting Provisions, and as amended by Endorsement #2.
Therefore, coverage is precluded.
(2) "Policy no. 052-68-49 [sic] has a Policy Period
September 27, 2008 to September 27, 2009. Coverage B
states that the Policy provides coverage for Claims first
made against the Company or an Individual Insured during
the Policy Period or Discovery Period (if applicable). The
Grand Jury Subpoena was issued on May 22, 2008. Thus, the
matter will be deemed to have been made on May 22, 2008;
outside the Policy Period. Clause 7 requires that a Claim
must be both made and reported during the Policy Period or
Discovery Period (if applicable) . . . . However, this
Claim was made outside the Policy. Therefore, coverage is
precluded.
The second letter states the incorrect policy number. The correct policy
number is 01-277-00-32.
5 Van Dina noted “assuming this matter was both made and reported as per
the requirements of the Policy, the materials submitted to National Union
would not constitute a Claim.”
6 The first chain of proceedings is referred to as Pflueger I, and the
second chain of proceedings is referred to as Pflueger II. Only the
background pertinent to the instant issue will be briefly summarized.
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misrepresentation, and breach of the duty of good faith and fair
dealing against AIU/National Union and Noguchi. Pflueger
brought negligence and negligent misrepresentation claims
against Noguchi, alleging that Noguchi failed to tender the
grand jury matter to AIU and National Union, and as a proximate
result of Noguchi’s negligence, Pflueger was denied coverage for
legal fees and costs associated with responding to the grand
jury subpoenas and for liability that Pflueger may incur as a
result of the claims made against it in the grand jury
proceedings. Pflueger also alleged that Noguchi made untrue
representations that the grand jury matter was not covered under
the policies, and that Pflueger reasonably relied on these
representations in declining for a time to tender the grand jury
matter directly to AIU and National Union; as a proximate
result, AIU and National Union deemed Pflueger’s eventual tender
of the grand jury matter untimely and denied coverage.
Two AIU employees were deposed in 2011 and 2012:
Senior Complex Claims Director Tiffany Ngeo and claims analyst
Van Dina.
Ngeo was asked whether it was AIU’s “position that
there was no coverage afforded for the grand jury subpoenas,
regardless of when they were reported to . . . AIU . . . .”
Ngeo responded, “Well, we have two defenses. One of them for
each of the policy [sic], is that it was either not made or
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reported within the policy. And the other defense is that the
grand jury subpoenas were not a claim per the policy.” Ngeo was
also asked, “Is it fair to say that [AIU's] position is that,
first, there's no coverage for the grand jury subpoenas –- grand
jury subpoenas under the policy; and second, even if there was
coverage, they were not reported timely[?]” Ngeo responded,
“[T]he grand jury subpoenas do not meet the definition of a
claim under either policy.”
Van Dina was asked, “Even if it had been made timely,
it's not a covered claim; is that right?” Van Dina responded,
“Right. Well, no. I'm sorry. Let me rephrase that. Not that
–- it may not even constitute the definition of a claim.” Van
Dina was later asked, “Assuming this claim had been reported to
where you found it to be timely, would there still have be [sic]
coverage under the policy?” Van Dina responded, “I do not
believe, based on what I reviewed today, that –- that a claim
would have been made at that time. So I would say that coverage
would not be available.” Van Dina was asked again,
“[R]egardless of whether the claim was reported in May of 2008
allegedly when the insured received or was served with the
subpoena or in February of 2009 when it came across your desk,
your position with respect to coverage would not change?” Van
Dina answered, “No.” Van Dina confirmed he believed the
subpoenas were not claims under the policy.
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Pflueger finalized a confidential settlement agreement
with AIU and National Union between January - March 2013. The
claims against Noguchi remained.
On May 15, 2013, Pflueger sought a partial summary
judgment ruling that the IRS investigation and grand jury
subpoenas constituted a covered claim under the insurance
policies. On July 10, 2013, the circuit court granted in part
and denied in part Pflueger’s motion for partial summary
judgment. The circuit court granted the motion:
to the extent the Court finds that the Grand Jury
Subpoenas, dated May 22, 2008 and directed at Pflueger,
Inc. constitute a 'claim' as that term is defined under
Insurance Policy No. 052-68-49 and Insurance Policy No. 01-
277-00-32 issued by National Union . . . to Pflueger, Inc.,
as the named insured.
On July 22, 2013 a jury trial commenced.
During trial, the circuit court excluded Van Dina's
and Ngeo’s testimonies on hearsay grounds. Pflueger, Inc. v.
Noguchi & Assocs., Inc., 136 Hawaiʻi 372, 362 P.3d 805, No. CAAP-
XX-XXXXXXX, 2015 WL 7723045 at *2-3 (App. Nov. 23, 2015) (Mem.
Op.). The jury returned a special verdict form indicating that
it found Noguchi liable for negligence and negligent
misrepresentation. The jury found that Pflueger was thirty
percent negligent, Noguchi was seventy percent negligent, and
the amount of Pflueger’s damages was $837,079.31. The circuit
court entered an Amended Final Judgment on July 11, 2014.
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2. Appellate Proceedings
Noguchi appealed, and on January 7, 2016, the ICA
entered a Judgment on Appeal vacating the circuit court’s
July 11, 2014 Amended Final Judgment, pursuant to the ICA’s
November 23, 2015 Memorandum Opinion, which held that the
circuit court’s decision to exclude Van Dina’s and Ngeo’s
testimonies was error because their testimonies were essential
to Noguchi’s defense. Pflueger, Inc. v. Noguchi & Assocs.,
Inc., 136 Hawaiʻi 372, 362 P.3d 805, No. CAAP-XX-XXXXXXX, 2015 WL
7723045 at *5 (App. Nov. 23, 2015) (Mem. Op.). This court
denied Pflueger’s application for writ of certiorari. Pflueger
Inc. v. Noguchi & Associates, Inc., No. SCWC-XX-XXXXXXX, 2016 WL
830982 (Haw. Mar. 2, 2016).
C. Pflueger II
1. Circuit Court Proceedings on Remand
On April 11, 2016, Noguchi moved for summary judgment
on causation grounds, arguing that the testimony of witnesses
“fails to put forth any evidence which might support a finding
of proximate cause against Noguchi.” In opposition, Pflueger
noted the circuit court already ruled that the subpoenas were a
claim under Pflueger’s insurance policies. Pflueger argued the
testimony of five witnesses demonstrates that Noguchi was a
substantial factor in bringing about Pflueger’s harm.
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The circuit court granted Noguchi’s motion for summary
judgment on September 16, 2016. The circuit court held that in
light of Van Dina’s and Ngeo’s testimonies that AIU would have
denied the claim regardless of timeliness, the burden shifted to
Pflueger to demonstrate Noguchi’s negligence was a legal cause
of Pflueger’s injuries, which Pflueger did not do.
Pflueger filed a motion for reconsideration on
September 26, 2016, arguing that the causation issue had been
repeatedly decided in Pflueger’s favor in prior rulings, making
the “law of the case” doctrine apply in favor of Pflueger.
Noguchi argued Pflueger’s law of the case argument was
inapplicable, not controlling, and improper as it could have
been made previously. The circuit court denied the motion for
reconsideration and issued a Final Judgment on March 14, 2017.
2. ICA Proceedings
On March 24, 2017, Pflueger filed a notice of appeal.
Pflueger argued (1) the circuit court erred in granting
Noguchi’s motion for summary judgment because questions of
material fact existed, and (2) the circuit court abused its
discretion in denying Pflueger’s motion for reconsideration.
In response, Noguchi maintained the burden shifted to
Pflueger to demonstrate a genuine issue of material fact, which
Pflueger did not do, making the grant of summary judgment for
Noguchi proper. Noguchi contended the records before the court
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were not sufficient to support a finding of causation. Noguchi
also argued that Pflueger’s causation argument should be
rejected because Pflueger did not make the argument before the
circuit court.
In its reply brief, Pflueger argued, among other
things, that the bases of its arguments remained the same before
the ICA as before the circuit court.
On August 31, 2022, the ICA issued a Summary
Disposition Order, with a majority and concurring opinion,
determining the circuit court erred in granting Noguchi’s motion
for summary judgment. Pflueger, Inc. v. Noguchi & Assocs.,
Inc., 151 Hawaiʻi 430, 516 P.3d 984, No. CAAP-XX-XXXXXXX, 2022 WL
3928540 (App. Aug. 31, 2022) (SDO). The ICA vacated the circuit
court’s March 14, 2017 Final Judgment and remanded.
The ICA majority accepted Noguchi’s premise that what
AIU “would have done” had a timely tender been made was
material. The majority agreed that “this testimony [of Van Dina
and Ngeo] undermined the causation element,” but found that “it
was not subject to only one inference and, thus, did not
completely dispose of the causation element.” Therefore, the
majority determined Noguchi did not meet its “burden of
establishing that there was no genuine issue as to whether its
conduct caused Pflueger's losses,” making the issue one for the
fact finder. The majority also noted that even if Noguchi had
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met its burden, Pflueger submitted opposing evidence that raised
genuine issues of material fact.
In a concurrence, Judge Hiraoka agreed that Noguchi
did not satisfy its burden as a summary judgment movant, but did
not agree that what AIU “‘would have done’ had Noguchi timely
tendered Pflueger’s subpoena” is material. The concurrence
explained that had Noguchi timely tendered the subpoena:
National Union would have had three options: “(1) advance
Pflueger's defense costs to respond to the subpoena; (2)
decline to advance defense costs; or (3) advance defense
costs under a reservation of rights. National Union's
denial of a tender would not end the story; Pflueger could
have filed a declaratory relief action, with or without a
claim for bad faith. If National Union agreed to advance
defense costs under a reservation of rights, National Union
could itself have filed a declaratory relief action, with
or without a claim for reimbursement of defense costs
advanced.
If a court were to rule that National Union was not
obligated to advance Pflueger's defense costs, Noguchi's
failure to tender the subpoena to National Union could not
have been the legal cause of any damage to Pflueger; even
if Noguchi had tendered, National Union would not have been
obligated to advance defense costs. On the other hand, if
a court were to rule that National Union would have been
obligated to advance defense costs, Pflueger would satisfy
the legal cause element of its negligence claim against
Noguchi.
Thus, the concurrence determined that whether National
Union would have actually been obligated to advance Pflueger’s
defense costs if Noguchi timely tendered the subpoena was
material, not what National Union would have done in response to
a timely tender of the subpoena. Therefore, to sustain its
burden as the summary judgment movant, Noguchi had to show that
even if Pflueger’s subpoena had been timely tendered, National
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Union would not have been obligated to advance defense costs.
“Only then could Noguchi’s failure to tender the subpoena to
National Union not have been a legal cause of damage to
Pflueger.” Consequently, the concurrence concluded that Noguchi
did not meet its burden and the circuit court erred by granting
summary judgment.
D. Application for Writ of Certiorari
On November 30, 2022, Noguchi timely filed an
application for writ of certiorari, asking this court to vacate
the ICA judgment and reinstate the circuit court’s grant of
summary judgment in favor of Noguchi. Noguchi raises three
questions:
(1) Whether the ICA grievously erred in holding Noguchi
did not meet its initial burden on summary judgment,
violating law of the case and ignoring requirements
for causation in cases involving insurance agent
malpractice.
(2) Whether the ICA grievously erred in finding that a
question of fact existed as to what AIU would have
done with a timely tender in spite of the fact that
nothing contradicted its representatives’ unambiguous
testimony that they would have denied it.
(3) Whether the ICA grievously erred in reversing a grant
of summary judgment based on arguments and evidence
that were not presented to the trial court (or even
in Pflueger’s brief on appeal).
II. STANDARD OF REVIEW
A. Summary Judgment
On appeal, the grant or denial of summary judgment is
reviewed de novo. Furthermore,
[S]ummary judgment is appropriate if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
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is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law. A
fact is material if proof of that fact would have the
effect of establishing or refuting one of the essential
elements of a cause of action or defense asserted by the
parties. The evidence must be viewed in the light most
favorable to the non-moving party. In other words, we must
view all of the evidence and inferences drawn therefrom in
the light most favorable to the party opposing the motion.
First Ins. Co. of Haw. v. A & B Props., Inc., 126 Hawaiʻi 406,
413, 271 P.3d 1165, 1172 (2012) (citations omitted).
The burdens of the moving and non-moving parties on
summary judgment are as follows:
The burden is on the party moving for summary judgment
(moving party) to show the absence of any genuine issue as
to all material facts, which, under applicable principles
of substantive law, entitles the moving party to judgment
as a matter of law. This burden has two components.
First, the moving party has the burden of producing support
for its claim that: (1) no genuine issue of material fact
exists with respect to the essential elements of the claim
or defense which the motion seeks to establish or which the
motion questions; and (2) based on the undisputed facts, it
is entitled to summary judgment as a matter of law. Only
when the moving party satisfies its initial burden of
production does the burden shift to the non-moving party to
respond to the motion for summary judgment and demonstrate
specific facts, as opposed to general allegations, that
present a genuine issue worthy of trial. Second, the
moving party bears the ultimate burden of persuasion. This
burden always remains with the moving party and requires
the moving party to convince the court that no genuine
issue of material fact exists and that the moving part is
entitled to summary judgment as a matter of law.
French v. Hawaiʻi Pizza Hut, Inc., 105 Hawaiʻi 462, 470, 99
P.3d 1046, 1054 (2004) (quoting GECC Fin. Corp. v. Jaffarian, 79
Hawaiʻi 516, 521, 904 P.2d 530, 535 (App. 1995)) (emphasis
omitted).
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III. DISCUSSION
On summary judgment, Noguchi cannot negate the
causation element by demonstrating that National Union would
have denied coverage even if Pflueger’s grand jury subpoena
matter were timely tendered. We believe Judge Hiraoka’s
concurrence provides a cogent analysis and a path forward in
analyzing this matter.
This court has explained:
[W]here the non-movant bears the burden of proof at trial,
a movant may demonstrate that there is no genuine issue of
material fact by either: (1) presenting evidence negating
an element of the non-movant's claim, or (2) demonstrating
that the non-movant will be unable to carry his or her
burden of proof at trial.
Ralston v. Yim, 129 Hawaiʻi 46, 57, 292 P.3d 1276, 1287 (2013).
Noguchi attempted to demonstrate that the causation
element of Pflueger’s claims was negated by the testimony of Van
Dina and Ngeo, which purportedly shows that no causal connection
existed between Noguchi’s negligence and Pflueger’s injury
because National Union would have denied coverage regardless of
the claim’s timeliness.7, 8
7 Noguchi indirectly or impliedly made this second argument before the
circuit court, and made the argument more clearly before the ICA.
8 Noguchi also argued before the circuit court that Pflueger would not be
able to carry its burden of proof at trial due to lack of evidence,
specifically that “Pflueger has presented no evidence that Noguchi’s conduct
was a contributing factor in AIUH’s decision to deny coverage to Pflueger.”
Noguchi appears to have dropped this argument before the ICA and on
certiorari. As such, this court will not address it.
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Noguchi misunderstands what it must demonstrate to
negate the causation element of Pflueger’s claims. To prove
causation, Pflueger must prove a case within a case, namely that
National Union would be obligated to advance Pflueger’s defense
costs if Pflueger’s grand jury subpoena matter were timely
tendered to National Union. Pflueger needs to demonstrate that
Noguchi was a substantial factor in causing Pflueger’s harm in
order to establish causation. See Mitchell v. Branch, 45 Haw.
128, 132, 363 P.2d 969, 973 (1961); see also Knodle v. Waikiki
Gateway Hotel, 69 Haw. 376, 390, 742 P.2d 377, 386 (1987).
Noguchi can only be a substantial factor in causing Pflueger’s
harm if National Union were obligated to advance Pflueger’s
defense costs if the grand jury subpoena matter were timely
tendered. If National Union was not obligated to advance
Pflueger’s defense costs, Pflueger could not have been harmed by
Noguchi’s failure to tender the grand jury subpoena matter or
Noguchi’s role in the untimely tender. Therefore, Noguchi
cannot be a legal cause of Pflueger’s harm if National Union
were not legally obligated to advance Pflueger’s defense costs.
See Thomas v. Kidani, 126 Hawaiʻi 125, 129, 267 P.3d 1230, 1234
(2011) (“The causation element of legal malpractice is often
thought of as requiring a plaintiff to litigate a ‘trial within
a trial.’ That is, a plaintiff must show ‘both the attorney’s
negligence and also what the outcome of the mishandled
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litigation would have been if it had been properly tried.’”)
(citation omitted); see also Gibbons v. Ludlow, 304 P.3d 239,
244-45 (Colo. 2013) (noting the “case within a case” framework
for analyzing legal malpractice is apt for analyzing broker
malpractice, and applying the standard that “plaintiff must
prove causation by showing that the claim underlying the
malpractice action would have been successful ‘but for’ the
attorney’s negligence” to the broker context).
Because Pflueger must demonstrate that National Union
would be obligated to advance defense costs if the grand jury
subpoena matter were timely tendered to establish causation,
Noguchi must demonstrate that National Union would not be
obligated to advance Pflueger’s defense costs if the grand jury
subpoena matter were timely tendered in order to negate
causation. See Hawaiʻi Pizza Hut, Inc., 105 Hawaiʻi at 470-471,
99 P.3d at 1054-55 (rejecting Pizza Hut’s argument that
plaintiff did not meet her burden of establishing she was
disabled by not being able to lift twenty-five pounds because
she did not produce evidence the average person could lift more
than twenty-five pounds and concluding it was Pizza Hut’s burden
as the summary judgment movant to produce admissible evidence
that the average person in the population cannot lift more than
twenty-five pounds). Only then would Noguchi have demonstrated
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that its role in the untimely tender was not a legal cause of
Pflueger’s harm.
Instead, Noguchi offered the testimonies of Ngeo and
Van Dina, which both suggested that National Union would not
have considered the subpoenas to be a covered claim if timely
tendered, in an attempt to negate the causation element of
Pflueger’s claims. However, this testimony does not negate
causation. As Judge Hiraoka’s concurrence noted, if National
Union denied coverage after the timely tender of Pflueger’s
grand jury subpoena matter, Pflueger could then file a
declaratory relief action, with or without a claim for bad
faith. See Hawaiʻi Revised Statutes § 632-1 (2016) (providing
that courts may grant declaratory relief where an actual
controversy exists between parties); Best Place, Inc. v. Penn
Am. Ins. Co., 82 Hawaiʻi 120, 132, 920 P.2d 334, 346 (1996)
(holding that “there is a legal duty, implied in a first- and
third-party insurance contract, that the insurer must act in
good faith in dealing with its insured, and a breach of that
duty of good faith gives rise to an independent tort cause of
action.”); see also Steven Plitt, et al., Couch on Insurance §
202:4 (3d ed. Nov. 2022) (“[I]f the insurer refuses to defend an
action against the insured based on a claim actually within the
coverage of the policy, on the ground that it is outside policy
coverage, such a refusal . . . constitutes an unjustified
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refusal and renders the insurer liable for breach of its
contract. The failure to provide a defense when the insurer is
obligated to do so is sufficient to sustain a cause of action in
tort in addition to one for breach of contract.”). National
Union’s disclaimer of coverage is not determinative of
Pflueger’s legal rights or legally cognizable harm – only a
court’s ruling on the matter is.9
Therefore, the circuit court’s grant of summary
judgment in favor of Noguchi on the grounds that Van Dina’s and
Ngeo’s testimonies negated the causation element was incorrect.
The ICA majority’s acceptance of Noguchi’s causation argument
was similarly incorrect.
In light of our foregoing analysis, Noguchi’s
remaining arguments on certiorari do not need to be addressed.
IV. CONCLUSION
As the summary judgment movant, Noguchi cannot refute
the causation element by demonstrating National Union would have
denied coverage if Pflueger’s grand jury subpoena matter were
9 Indeed, Noguchi’s argument leads to an absurd result. The insurer
would determine whether the insured had a legally cognizable harm sufficient
for causation, and would effectively insulate insurance brokers from
liability by stating more than one ground for the denial of coverage (which
insurers may be incentivized to do). See generally, Steven Plitt, et al.,
Couch on Insurance § 198:52-55 (3d ed. Nov. 2022) (discussing waiver and
estoppel of an insurer’s defenses based on the insurer’s disclaimer of
coverage); see also Van Dina’s testimony stating: “generally you try and be
as thorough as you can. Not to say that you throw in the kitchen sink, but –
but you try and – really anything that’s going to be applicable is
applicable.”
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timely tendered to National Union. Rather, Noguchi had to
demonstrate that even if Pflueger’s grand jury subpoena matter
were timely tendered, National Union would not have been legally
obligated to advance Pflueger’s defense costs. Because the
circuit court and the ICA majority incorrectly analyzed
Noguchi’s burden regarding the causation element, we vacate the
ICA’s October 5, 2022 Judgment on Appeal, and remand to the
circuit court for proceedings consistent with this opinion.
Christopher Shea Goodwin /s/ Paula A. Nakayama
for petitioner
Noguchi & Associates, Inc. /s/ Sabrina S. McKenna
/s/ Michael D. Wilson
Lyle S. Hosoda,
Kourtney H. Wong and /s/ Todd W. Eddins
Spencer J. Lau for
respondent Pflueger, Inc. /s/ Robert D.S. Kim
20