IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI`I
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JAMES R. CHRISTIANSEN and JANE-BARRIE CHRISTIANSEN,
Plaintiffs-Appellants, v. FIRST INSURANCE COMPANY OF HAWAII, LTD., Defendant-Appellee, and DOES 1 THROUGH 15, INCLUSIVE, Defendants
NO. 19968
ORDER OF AMENDMENT
(CIV. NO. 93-0238)
April 22, 1998
WATANABE, ACOBA, AND KIRIMITSU, JJ.
The opinion of the court, filed on March 18, 1998, is amended as follows:
1. On pages 28 and 29, subsection b. is deleted in its entirety and replaced with the following:
The limitation provision in the instant case provides that "[n]o action shall be brought unless there has been compliance with the policy provisions and the action is started within one year after the date of loss." The Christiansens' claim is therefore valid if the limitation provision was tolled, such that it did not run for more than 365 days.
In applying the doctrine of equitable tolling, the circuit court should first assess the date of loss, which in this case is undisputedly September 11, 1992; the limitation period begins to run from this date. It is then tolled on the date that the claimant files his or her claim for loss with his or her insurance carrier. In the instant case, the record on appeal does not include that date; we thus remand this fact to be determined by the circuit court.
The limitation provision is re-activated upon the claimant's receipt of notice from the insurance company that it has denied his or her claim.(1) The running of the limitation period then terminates after the limitation period has run, in its entirety, for 365 days, or on the date that legal action is brought for compensation by the claimant, whichever is first.
In this case, the circuit court erred if it granted dismissal based upon the expiration of the limitation period without applying the doctrine of equitable tolling, which omission is implied by the record on appeal. Consequently, we vacate the circuit court's final judgment in regards to the Christiansens' claim for breach of contract and remand to the circuit court to determine (1) the date on which the Christiansens' claim for loss was filed, and (2) the resulting timeliness of the Christiansens' legal action."
2. The footnote in the aforesaid amended subsection b. is renumbered from 17 to 16, and all footnotes thereafter are renumbered numerically.
3. On pages 31 and 32, paragraph "IV. CONCLUSION" is amended, in its entirety, to read as follows:
In conclusion, we reverse the circuit court's final judgment and remand for further proceedings, as follows: (1) we reverse the circuit court's final judgment in regards to the Christiansens' action for bad faith and remand those claims of bad faith for further proceedings; (2) we vacate the circuit court's dismissal of the Christiansens' legal breach of contract claims as to the limitations defense and remand for further proceedings; and (3) we vacate the circuit court's judgment in regards to the arbitration issue and remand for further proceedings consistent with this opinion."
The Clerk of the Court is directed to incorporate the foregoing changes in the original opinion.
1. First Insurance argues that the limitation period was never tolled because it never "denied" the Christiansens' claim, in that its June 15, 1993 letter awarded the Christiansens $12,583.31. However, the Christiansens' original claim for loss was approximately $79,000 and, according to John Mankin, he and First Insurance's appraiser initially agreed to appraise the loss at $51,823. In light of these and other facts indicating bad faith tactics, First Insurance's award appears suspiciously low. We believe that a questionably low award of benefits may, in some circumstances, be unreasonable and thus be a constructive denial of benefits. In the instant case, at least, a question of fact was raised regarding whether First Insurance reasonably "denied" the Christiansens the full amount of their claim, thus precluding the circuit court from granting First Insurance's motion to dismiss.