Summaries of Notable Tort Cases in 2012

• Jurisdiction: Hawaii,United States
• Citation: Vol. 17 No. 11
• Publication year: 2013

Summaries of Notable Tort Cases in 2012

by Maren L. Calvert

The facts and analysis of the following notable cases in 2012 are presented in this article:

Hart v. TICOR Title Insurance Company; Willis v. Swain; Brown v. Marquez; and Prim Ltd. Co. v. Pace-O-Matic, Inc.

Hart v. TICOR Title Insurance Company, 126 Hawai'i 448, 272 P.3d 1215 (2012) - Bad Faith/Insurance Coverage

Held: (1) State's escheat reservation in its answer in purchasers' action to consolidate two real property lots is sufficiently a "claim" to trigger insurer's duty to defend.

(2) An insurer's duty to defend arises the moment a claim is asserted, even if that claim is facially procedurally deficient.

Facts: Charles and Lisa Hart ("the Harts") purchased a title insurance policy from TICOR Title Insurance Company ("TICOR") for two properties in Ewa Beach ("Policy"). The Policy, in relevant part, covered "2. any defect in or lien or encumbrance on the title; 3. Unmarketability of the title; 4. Lack of a right of access to and from the land." However, the Policy excluded "[c]laims arising out of customary and traditional rights and practices" and "Rights or claims of persons or entities other than the insured involving or arising out of: mineral or metallic mines; geothermal resources; water; fishing, commerce or navigation; creation or loss of the land . . ."

In response to the Harts' petition to consolidate their two lots of land into one parcel, the State filed an answer asserting several potential interests in the property, including "all right, title, interest or claim to waters having their source upon or flowing over or under the property . . . an easement for the free flowage of waters . . . [and] interests in the property that may have escheated to the State." (Emphasis added). The Harts tendered their defense against all the State's claims to TICOR. TICOR refused the Harts' tender, explaining that because the Harts did not specify which of the "State's Claims" they were tendering, TICOR assumed they had tendered "the defense of the State's water and mineral rights, native tenants' rights, erosion and shoreline setback claims" -which were clearly excluded from the policy.

The Harts asked why TICOR had failed to cover the State's escheat claim. TICOR conceded that a claim of escheat is not excluded from coverage, but contended that "it does not appear that the [S]tate is currently making any claim of escheat." Rather, the State "has merely reserved its right to make that claim at some point in the future." Because the State had not presently asserted a claim, TICOR maintained it had no duty to defend.

The Harts defended the State's claims on their own and subsequently requested reimbursement from TICOR. TICOR refused to pay so the Harts brought suit. The district court found in favor of TICOR and awarded it attorneys' fees and costs of $5,281.49. The Harts appealed. The Intermediate Court of Appeals (ICA) affirmed the district court's judgment, noting "[t]he State's reservation of possible rights did not amount to a claim of an escheated interest," in part because the State did not follow the statutory...