Three Million Dollar Judgment Against Insured Set Aside by Hawai`i Supreme Court

    Addressing  a procedurally obscure case, the Hawai`i Supreme Court set aside a three million dollar verdict entered against the insured driver who was sued for wrongful death.  Franco v. Reinhardt, 2023 Haw. LEXIS 208 (Haw. Nov. 30, 2023).

    Reinhardt was involved in an accident, crashing his girlfriend's pickup. A passenger, Tiara Franco, died. Her family sued Reinhardt for wrongful death. The insurer of the truck, National Interstate Insurance Company, Inc. (NIIC) retained counsel to defend Reinhardt. NIIC also filed a declaratory judgment action for a determination that it had no duty to defend or indemnify. The circuit court granted NIIC's summary judgment motion. With no duty to defend, Reinhardt's attorney withdrew. 

    In 2015, the Francis appealed the circuit court's declaratory judgment decision. They argued NIIC's policy covered Reinhardt. With the declaratory action appeal pending, the circuit court scheduled a jury trial. Reinhardt did not appear for the trial. No lawyer appeared for Reinhardt for the trial. The jury found Reinhardt negligent and awarded the Francos $3.56 million. 

    Ten months later, the Intermediate Court of Appeals (ICA) ruled for the Francos in the declaratory action appeal. The circuit court should not have granted NIIC's summary judgment motion. NIIC then retained the same attorney to represent Reinhardt. NIIC reached Reinhardt by certified mail and informed him about the ICA's remand and that he would be defended by the same lawyer, who was moving to set aside the judgment. The lawyer could not locate Reinhardt, but filed a motion to set aside the judgment under Haw. R. Civ. P. Rule 60 (b) (5). The motion alleged several trial errors.

    The Francos opposed the Rule 60 (b) motion and moved to disqualify Reinhardt's counsel, making ethical accusations against him. The circuit court denied the Francos' motion to disqualify counsel and granted Reinhardt's motion to set aside the final judgment.

    The Francos appealed. The ICA determined that the trial court erred by denying the Francos' motion to disqualify counsel. The ICA ruled that the lawyer lacked authority to represent Reinhardt when he filed the Rule 60 (b) motion to set aside the judgment because Reinhardt did not consent to filing the motion. The ICA also vacated the order setting aside the judgment. 

    Reinhardt appealed and the Hawai`i Supreme Court granted certiorari. The court first held that Reinhardt's counsel obtained consent to file the Rule 60 (b) motion. Equity principles guided Rule 60 (b). The circuit court denied the Francos' motion to disqualify because there was no ethical violation. Reinhardt never responded to NIIC's letter assigning counsel, but he also never refused counsel's help. Rule 1.4, HRPC, stated the attorney should "consult with the client as to the means by which the objectives were to be pursued. A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation." NIIC's letter sufficed to re-establish representation under the circumstances. 

    Once Reinhardt's attorney was back on the case, he had the authority, and the obligation, to file the Rule 60 (b) motion. The lawyer did not violate the Rules of Professional Conduct. The motion did not compromise Reinhardt's rights. 

    Finally, the circuit court correctly set aside the verdict. Not only was Reinhardt unrepresented and not present at the trial, several ostensible errors plagued the trial. The court agreed with the circuit court's conclusion that "extraordinary circumstances surround the trial' warranted the Rule 60 (b) relief.

    The ICA's judgment was vacated and the circuit court's order were affirmed. The case was remanded to the circuit court.