Hawaii Appellate Court Finds Agent May Be Liable for Failing to Submit Claim

After the agent informed the insured there was no coverage and that submitting a claim would be a useless effort, the Hawaii Intermediate Court of Appeal reversed the trial court’s dismissal of the insured’s suit against the agent. Pflueger, Inc. v. AIG Holdings, Inc., 2022 Haw. App. LEXIS 279 (Haw. Ct. App. Sept. 2, 2022).

In May 2008, Pflueger notified its agent, Noguchi & Associates, Inc., that it had received federal grand jury subpoenas. Noguchi informed Pflueger that the subpoenas did not qualify as a “claim” under two policies issued by National Union. Consequently, Noguchi did not forward a claim or the subpoenas to National Union and did not seek clarification as to whether the grand jury subpoenas were covered under the policies. Pflueger relied upon Noguchi’s representations and took no further action until its attorney submitted a demand letter tendering Pflueger’s defense to Nation Union nine months later, in February 2009.

National Union found the claim untimely. Further, the materials submitted to National Union did not constitute a claim. The policies required the materials submitted to be an indictment, information or similar document to be a claim.

Pflueger filed suit against National Union and Noguchi. Pflueger alleged Noguichi was negligent and had made negligent misrepresentations. Pflueger eventually settled with National Union.

Prior to trial, the court granted Pflueger’s motion for partial summary judgment, finding that the grand jury subpoenas constituted a “claim” as that term was defined in National Union’s policy. The jury then returned a special verdict in favor of Pflueger. Noguchi appealed, and the Intermediate Court of Appeal (ICA) vacated the judgment, holding that the circuit court erred in excluding deposition testimony that was essential to Noguchi’s defense.

On remand, Noguchi moved for summary judgment on the issue of causation, arguing there was no evidence of proximate cause against Noguchi. The circuit court agreed, finding Pflueger had put forth no evidence to establish that Noguchi’s conduct was a contributing or substantial factor in National Union’s decision to deny coverage. Pflueger appealed.

The ICA held that the causation issued as framed by Noguchi (i.e., whether National Union would have denied coverage even if Noguchi had timely tendered the grand jury subpoena matter) involved a genuine issue of material fact. The issue of causation was generally left to the fact finder. Whether Noguchi’s actions and inactions were legal causes of Pflueger’s losses in light of National Union’s denial of the claim were issues for the fact finder and could not be decided as a matter of law. The circuit court erred in granting Noguchi’s motion for summary judgment.

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