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Oral Argument Before the Hawaii Supreme Court

No. SCWC-28958, Wednesday, May 7, 2014, 8:45 a.m.

C. BREWER AND COMPANY, LTD., Respondent/Plaintiff-Appellant, vs. JAMES RIVER INSURANCE COMPANY, Petitioner/Defendant-Appellee; and INDUSTRIAL INDEMNITY COMPANY; INDUSTRIAL INSURANCE COMPANY OF HAWAII, LTD; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH; et al., Respondents/Defendants-Appellees; and STATE OF HAWAI`I, Respondent/Third-Party Plaintiff-Cross-Appellant, vs. MARSH USA, INC., Respondent/Third-Party Defendant-Appellee; and KEHALANI HOLDINGS COMPANY, INC., Respondent/Third-Party Plaintiff-Cross-Appellant, vs. UNITED NATIONAL INSURANCE COMPANY; COMMONWEALTH INSURANCE COMPANY; et al., Respondents/Third-Party Appellees.

The above-captioned case was for argument on the merits at:

Supreme Court Courtroom
Ali`iolani Hale, 2nd Floor
417 South King Street
Honolulu, HI 96813

Attorneys for Petitioner James River Ins.: 

Keith K. Hiraoka and Jodie D. Roeca of Roeca Luria Hiraoka LLP

Attorneys for Respondent C. Brewer & Co.:

Kenneth R. Kupchak, Tred R. Eyerly, and Mark M. Murakami of Damon Key Leong Kupchak Hastert

Attorneys for Respondent Kehalani Holdings:

William Meheula and Natasha Baldauf

Attorney for Respondent Marine Indemnity:

Gale L.F. Ching

Attorneys for Respondent Fireman’s Fund:

Kevin S.W. Chee and Devon I. Peterson of Chee Markham & Feldman

Attorneys for Respondent State of Hawai`i:

Russell A. Suzuki, First Deputy Attorney General; Reese R. Nakamura and Michael S. Vincent, Deputy Attorneys General

Attorney for Respondents Lexington Ins. and National Union Fire Ins.:

William A. Bordner of Burke McPheeters Bordner & Estes

Attorneys for Respondent U.S. Fire Ins.:

Richard B. Miller and Patricia Kehau Wall of Tom Petrus & Miller

Attorney for Respondents Tradewind Ins. and Island Ins.:

Michelle-Lynn E. Luke of Kessner Umebayashi Bain & Matsunaga

Attorneys for Respondent Columbia Casualty Ins.:

Jeffrey A. Griswold and Bradford F.K. Bliss of Lyons Brandt Cook & Hiramatsu

Attorney for Respondent First State Ins.:

Peter W. Olson of Cades Schutte LLP

Attorney for Respondents Ace Property (fka CIGNA Property) and Pacific Employers Ins.:

Shelton G.W. Jim On of SJO & Associates, LLLC

Attorneys for Respondent Liberty Mutual Ins.:

Randall Y.S. Chung and Ward F.N. Fujimoto of Matsui Chung

Attorneys for Respondent Scottsdale Ins.:

Paul T. Yamamura and Wesley D. Shimazu of Yamamura & Shimazu

NOTE: Certificate of Recusal, by Chief Justice Mark E. Recktenwald, filed 12/24/13.

NOTE: Certificate of Recusal, by Associate Justice Simeon R. Acoba, Jr., filed 12/27/13.

NOTE: Order assigning Circuit Court Judges Edward H. Kubo, Jr. and Patrick W. Border, in places of Recktenwald, C.J., and Acoba, J., both recused, respectively, filed 01/14/14.

NOTE: Order accepting Application for Writ of Certiorari, filed 02/03/14.

NOTE: Order assigning Circuit Court Judge Michael D. Wilson, due to a vacancy, filed 04/08/14.

COURT: PAN, Acting C.J.; SSM & RWP, JJ.; Circuit Court Judges Kubo and Wilson, in places of Recktenwald, C.J., recused, and a vacancy, respectively.

 [ Listen to the entire audio recording in mp3 format ]

Brief Description:

Petitioner/Defendant-Appellee James River Insurance Company (James River) applied for writ of certiorari from the Intermediate Court of Appeals’s (ICA) October 22, 2013 Judgment on Appeal, entered pursuant to its August 7, 2013 Memorandum Opinion, which vacated and remanded the Circuit Court of the Fifth Circuit’s December 21, 2007 Final Judgment entered pursuant to Hawai`i Rules of Civil Procedure Rule 54(b).

This case arose from the March 14, 2006 collapse of the Kaloko Dam in Kilauea, Kauai (Dam Breach). The Dam Breach caused the release of over three million gallons of water from the reservoir, the loss of seven lives, and extensive property damage. At the time of the breach, James Pflueger (Pflueger) was the owner of the Kaloko Dam. Pflueger had purchased the land under the Kaloko Dam in 1987 from C. Brewer and Company, Ltd. (C. Brewer).

Pflueger sued C. Brewer in the Circuit Court of the First Circuit seeking damages and indemnification against claims brought against Pflueger arising out of the Dam Breach. Pflueger alleged that C. Brewer had sold the property to Pflueger fully aware that the Dam’s structural stability was questionable, failed to repair it before selling it, and intentionally concealed the Dam’s instability.

C. Brewer filed a complaint in the Circuit Court of the Fifth Circuit (circuit court) seeking a declaration regarding the insurance coverage obligations owed by seventeen insurance companies that had at varying times issued it a range of different policies. A commercial general liability policy issued to C. Brewer by James River was in effect at the time of the Dam Breach.

James River moved for summary judgment in the circuit court arguing, inter alia, that its policy’s Designated Premise Endorsement (DPE) limited coverage to liability arising out of the ownership, maintenance, or use of a very specific number of identified premises, none of which included the Kaloko Dam site. James River also argued that its Classification Limitation Endorsement limited coverage to those operations specified in the policy, described as “real estate owners,” but that C. Brewer did not own the Kaloko Dam site at the time of the Dam Breach. C. Brewer argued that the DPE was ambiguous and could be interpreted as covering injuries resulting from decisions made at C. Brewer’s headquarters, a location covered by the DPE. The circuit court granted James River’s motion for summary judgment, concluding that James River was not obligated to provide coverage to C. Brewer for the Dam Breach.

On appeal, the ICA vacated the circuit court’s judgment, concluding that the James River policy was ambiguous with respect to whether the DPE barred coverage because C. Brewer and James River had presented differing, but reasonable interpretations of the clause; therefore, the parties’ intent in using this endorsement raised genuine issues of material fact.

On application for writ of certiorari, James River presents the following question:

“Did the ICA gravely err when it reversed the Circuit Court’s finding that the ‘Limitation of Coverage to Designated Premises Endorsement’ in the James River liability policy issued to C. Brewer, considered in the context of the entire policy, unambiguously precludes coverage, as a matter of law, for the bodily injury and property damage claims stated against C. Brewer in underlying actions arising from the March 2006 failure of the Ka Loko Dam and Reservoir.”