Del Monte v. Fireman's Fund Ins. Co.

183 P.3d 734

117 Hawai'i 357

DEL MONTE FRESH PRODUCE (HAWAII), INC., Plaintiff-Appellee, v. FIREMAN'S FUND INSURANCE COMPANY; American Home Assurance Company; American Re-Insurance Company; Commercial Union Insurance Company; Lexington Insurance Company; National Continental Insurance Company; Motor Vehicle Casualty Company, and London Market Insurers, Defendants-Appellants, and Continental Insurance Company, Lumbermens Mutual Insurance Company, Cigna Property & Casualty Company; Progressive Casualty Company, Accident & Casualty Company, Accident & Casualty Company No. 2 A/C, Accident & Casualty Insurance Company No. 3 A/C, Andrew Weir Insurance Company, Ltd., Argonaut Northwest Insurance Company, Ltd., Assicurazioni Generali di Trieste de Venezia, Assicurazionis Generali S.P.A., Bellafonte Insurance Company, Bermuda Fire & Marine Insurance Company, Bishopsgate Insurance Company, Ltd., Britishgate Insurance Company, Ltd., British North-Western Insurance Company, Ltd., Delta-Lloyd Non Life Insurance Company, Ltd., Edinburgh Assurance Company, Ltd., Excess Insurance Company, Ltd., Fidellidade Insurance Company, Ltd., Hawk Insurance Company, Ltd., Helvetia Insurance Company, Ltd., Highlands Insurance Company, London & Overseas Insurance Company, Ltd., Mentor Insurance Company, (UK), Ltd., Minster Insurance Co., Ltd., Mutual Reinsurance Company, Ltd., National Casualty Company of America, New London Reinsurance Company, Ltd., River Thames Insurance Company, Ltd., St. Helen's Insurance Company, Ltd., St. Katherine Insurance Company, Stronghold Insurance Company, Ltd., Swiss Union General Insurance Co., Ltd., Turegum Insurance Company, Ltd., Walbrook Insurance Company, Ltd., Winterthur Swiss Insurance Company, World Auxiliary Insurance Corporation, Ltd., Yasuda Fire & Marine Insurance Company (UK), Ltd., Certain Underwriters at Lloyd's London, Certain Underwriting Syndicates at Lloyds, London, Del Monte Corporation, RJR Nabisco, Inc., and Does 1 Through 2000, Inclusive, Defendants.

No. 24647.

Supreme Court of Hawai`i.

December 26, 2007.

Keith K. Hiraoka, April Luria and Jodie D. Roeca of Roeca Louie & Hiraoka, on the briefs, for defendant-appellant National Continental Insurance Company.

Peter W. Olson and Stacey Kawasaki Djou of Cades Schutte Fleming & Wright and Ray Tamaddon, (Pro hac vice), of Berman & Aiwasian, on the briefs, for defendant-appellant Motor Vehicle Casualty Company on the brief and joinder.

W. Thomas Fagan and Kelvin H. Kaneshiro of Reinwald O'Connor & Playdon LLP and Patrick A. Cathcart (Pro hac vice), Yvette D. Roland (Pro hac vice), Gina P. Mak (Pro hac vice), Michael R. Fischer (Pro hac vice), Banchmalak T. Abegaze (Pro hac vice), of Hancock Rothert & Bunshoft LLP, on the briefs, for defendants-appellants Certain Underwriters at Lloyd's London, and Certain London Market Insurance Companies.

Paul T. Yamamura and Wesley D. Shimazu of Kanae and Yamamura and Jeffrey C. Segal, (Pro hac vice), and Richard D. Bremer, (Pro hac vice), of Selman Breitman LLP, on the briefs, for defendant-appellant Commercial Union Insurance Company.

Faye M. Koyanagi and Adrian Y. Chang of the Law Office of Faye M. Koyanagi and Donald T. McMillan, (Pro hac vice), and George J. Keller, (Pro hac vice), of Rivkin Radler LLP, on the briefs, for defendant-appellant Fireman's Fund Insurance Company.

Kevin S.W. Chee, Keith K. Kato and Jeffrey S. Masatsugu of Chee & Markham and Maria G. Enriquez, (Pro hac vice), on the briefs, for defendant-appellant American Re-Insurance Company on the joinder.

Michael A. Lorusso and Brian A. Kang of Watanabe, Ing & Kawashima and J. Karren Baker, (Pro hac vice), of Sinnott, Dito, Moura & Puebla, on the briefs, for defendants-appellants American Home Assurance Company and Lexington Insurance Company on the joinder.

John R. Myrdal, Scott I. Batterman and Tred R. Eyerly of Stanton Clay Chapman Crumpton & Iwamura and Michael J. Lynch, (Pro hac vice), of Kirkpatrick & Lockhart LLP, on the briefs, for plaintiff-appellee Del Monte Fresh Produce (Hawaii) Inc.

MOON, C.J., LEVINSON, and NAKAYAMA, JJ., and ACOBA, J., concurring separately, with whom DUFFY, J., joins.

Opinion of the Court by NAKAYAMA, J.

Defendant-Appellant Fireman's Fund Insurance Company ("Fireman's Fund"), appeals from the order of the Circuit Court of the First Circuit ("circuit court") filed August 29, 2001, granting partial summary judgment in favor of Plaintiff-Appellee Del Monte Fresh Produce (Hawai`i), Inc. ("Del Monte Fresh"), and denying Fireman's Fund's motions for summary judgment.<sup>1</sup> On appeal, Fireman's Fund presents the following points of error: (1) the circuit court erred when it chose to apply the law of Hawai`i rather than California; (2) even assuming, arguendo, that Hawai`i law applies, the circuit court misapplied this court's jurisprudence relating to insurance contracts; (3) the circuit court misinterpreted and misapplied the word "suits" in its insurance policies when it determined that Fireman's Fund owed a duty to defend to Del Monte Fresh; and (4) the circuit court erred when it determined that Fireman's Fund owed a duty to indemnify on the basis that costs incurred in administrative proceedings are covered under the insurance policy as "damages."

Defendants-Appellants American Home Assurance Company ("American Home") Lexington Insurance Company ("Lexington"), American Re-Insurance Company ("American Re-Insurance"), Commercial Union Insurance Company ("Commercial Union"), London Market Insurers, Motor Vehicle Casualty Company ("Motor Vehicle"), and National Continental Insurance Company ("National Continental") appeal from the circuit court's separate August 29, 2001 order denying their joinders in Fireman's Fund's motions for summary judgment. On appeal, these remaining insurers essentially reiterate the points of error raised by Fireman's Fund, with London Market Insurers, National Continental, Commercial Union, and American Re-Insurance additionally asserting that, as excess liability insurers, providing coverage is contingent upon the primary insurers' responsibility to provide and exhaust their coverages under their respective policies.

For the following reasons, we hold that the circuit court erred when it determined that insurance coverage was assigned by operation of law to Del Monte Fresh. We also hold that the assignment by contract was invalid inasmuch as none of the insurers consented to the assignment. Accordingly, the circuit court's August 29, 2001 orders are vacated, and the case is remanded with instructions to enter summary judgment in favor of Defendant-Appellant insurers and against Del Monte Fresh consistent with this opinion.

I. BACKGROUND

A. Factual Background

1. Corporate history

In the 1940s, California Packing Corporation began pineapple growing operations on the island of O`ahu, Hawai`i. California Packing Corporation renamed itself Del Monte Corporation in 1967. In February 1979, Del Monte Corporation merged with R.J. Reynolds Merger Corp. (a subsidiary of R.J. Reynolds Industries, Inc.), pursuant to a Plan of Merger dated November 3, 1978. The surviving corporation, R.J. Reynolds Merger Corp., renamed itself Del Monte Corporation ("Del Monte Corp.") immediately following the transaction.

Pursuant to a stock and asset purchase agreement dated August 23, 1989, Del Monte Corp. agreed to sell various of its subsidiary fruit companies along with its operations in Hawai`i to Profwheel B.V. (a Dutch corporation owned by Polly Peck International PLC, an English corporation). On October 11, 1989, PPI Del Monte Fresh Produce (Hawaii) Inc. ("PPI-Del Monte Fresh") was incorporated in Delaware. Through a Bill of Sale and Assumption Agreement executed on October 17, 1989, Del Monte Corp. and its corporate parents transferred the assets and liabilities associated with its Hawai`i operations to PPI-Del Monte Fresh. PPI-Del Monte Fresh removed the "PPI" prefix from its corporate name on October 14, 1992.

2. The EPA's "special notice letter"

From the early 1940s to at least 1978, Del Monte Corp. and its predecessors owned and operated a six-thousand acre pineapple plantation located in Kunia on the island of O`ahu, Hawai`i. At the time of commencement of the instant case, this land was operated by Del Monte Fresh. In 1994, this land was placed on the U.S. Environmental Protection Agency's ("EPA") National Priorities List of contaminated sites after an EPA investigation revealed that the land had been contaminated with fumigants.

This investigation revealed that on April 7, 1977, a "trailer-type container owned by [Dow Chemical Company]" delivered the fumigant ethylene dibromide to Del Monte Corp., which reportedly may have been contaminated with dibromo-3-chloropropane. While the fumigant was being transferred from a "trailer-type container" to the on-site storage through a connecting hose, the connection broke or ruptured. The EPA determined that this caused the release of hundreds of gallons of fumigant into the soil located in the area on the plantation known as Kunia Camp, which is in the vicinity of a drinking water well known as the Kunia Camp Well. The EPA further noted that "[o]ther releases of fumigants to the soils are believed to have occurred over time at the Site, during transfer of fumigant from bulk storage to supply trucks."

On April 14, 1980, the EPA collected groundwater samples from the Kunia Camp Well. Testing of the water samples indicated that the water contained both fumigant and contaminant in levels exceeding federal and state limits. Additionally, testing of the soil by the EPA in the vicinity of the storage area resulted in the same conclusion. On April 25, 1980, the Kunia Camp Well was disconnected from the potable water system.

On April 28, 1995, the EPA issued a "special notice letter" to Del Monte Fresh as a "potentially responsible party" under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA").² In a...