WILLIAM A. ARTHUR, SR., Individually, and THE ESTATE OF MONA ARTHUR thru William A. Arthur, Sr. as the Personal Representative, Respondents/Plaintiffs/Appe11ants/Cross-Appellees,
STATE OF HAWAI'I, DEPARTMENT OF HAWAIIAN HOME LANDS; KAMEHAMEHA INVESTMENT CORPORATION; DESIGN PARTNERS INC., Respondents/Defendants/Appellees/Cross-Appellees, and COASTAL CONSTRUCTION CO., INC.; SATO AND ASSOCIATES, INC.; and DANIEL S. MIYASATO, Petitioners/Defendants/Appellees/Cross-Appellants, KAMEHAMEHA INVESTMENT CORPORATION, Respondent/Third-Party Plaintiff/Appellee/Cross-Appellee,
KIEWIT PACIFIC CO., Respondent/Third-Party Defendant/Appellee/Cross-Appellee KIEWIT PACIFIC CO., Respondent/Fourth-Party Plaintiff/Appellee/Cross-Appellee,
PACIFIC FENCE, INC., Respondent/Fourth-Party Defendant/Appellee/Cross-Appellee.
TO THE INTERMEDIATE COURT OF APPEALS (CAAP-13-0000531; CIVIL
P.H. Sumida for petitioners, Sato and Associates, Inc. and
Daniel S. Miyasato
S. Petrus for respondent, Kamehameha Investment Corporation
Michiro Iwanaga and Wayne M. Sakai for respondent, Coastal
Construction Co., Inc.
RECTENWALD, C.J., McKENNA, POLLACK, WILSON, JJ., AND CIRCUIT
COURT JUDGE BROWNING, IN PLACE OF NAKAYAMA, J., RECUSED
case is a contract dispute between Petitioners/
Defendants/Appellees/Cross-Appellants Sato and Associates,
Inc. and Daniel S. Miyasato (collectively, "Sato"
or "Engineer"), and
Investment Corporation ("KIC" or
"Developer"). Sato timely applied for writ of
certiorari ("Application") on August 7, 2015 from a
June 8, 2015 Judgment entered by the Intermediate Court of
Appeals ("ICA") pursuant to its February 27, 2015
Opinion ("Opinion"). In relevant part, the ICA
affirmed the Circuit Court of the First Circuit's
("circuit court['s]") "Order Granting
Defendant and Third-Party Plaintiff Kamehameha Investment
Corporation's Motion for Partial Summary Judgment Against
Defendant Sato & Associates, Inc. ..." filed May 27,
2011. Heavily relying on Pancakes of Hawaii, Inc. v.
Pomare Properties Corp., 85 Hawai'i 286, 944 P.2d 83
(App. 1997), the ICA concluded that pursuant to the Project
Consultant Agreement ("Agreement") between Sato and
KIC, Sato had a duty to defend KIC in the wrongful death
action brought by Respondents/
Plaintiffs/Appellants/Cross-Appellees, William A. Arthur, Sr.
("William") and the Estate of Mona Arthur
(collectively, "Arthurs") upon KICs tender of
defense to Sato. See Arthur v. State, Dep't of
Hawaiian Home Lands, 135 Hawai'i 149, 171, 346 P.3d
218, 241 (App. 2015) .
Application, Sato presented two questions:
1) Was Pancakes wrongly decided?
2) In applying Pancakes, did the ICA fail to strictly
construe the indemnity contracts at issue by treating Sato
and other contractual indemnitors as insurers and the subject
indemnity contracts as insurance policies?
(formatting added). KIC opposed the Application, whereas
Coastal Construction Co., Inc. ("Coastal"), a
co-defendant in the Arthurs' suit, filed a response in
support of the Application.
Application was accepted on September 18, 2015. This court
requested supplemental briefing from the parties addressing
(1) Is the duty to defend presented in Sato's
non-insurance, construction contract with KIC coextensive
with Sato's duty to indemnify?
(2) Given case law and legislative history, does Hawai'i
Revised Statutes [("HRS")] § 431:10-222
(2005), render void any provision in a construction contract
requiring the promisor to defend "the promisee
against liability for bodily injury to persons or damage to
property caused by or resulting from the sole negligence or
wilful misconduct of the promisee, the promisee's agents
or employees, or indemnitee?"
considering the parties' briefs, oral arguments, and the
relevant law, we hold as follows:
(1) HRS § 431:10-222 renders invalid any provision in a
construction contract requiring the promisor to
defend "the promisee against liability for
bodily injury to persons or damage to property caused by or
resulting from the sole negligence or wilful misconduct of
the promisee, the promisee's agents or employees, or
(2) Pancakes, 85 Hawai'i 286, 944 P.2d 83 (App.
1997), does not apply to defense provisions in construction
(3) the scope of a promisor's duty to defend that is
imposed by a construction contract is determined at the end
The Arthurs' Wrongful Death Action
Arthur ("Mona") and her husband, William, lived on
property in the Kalawahine Streamside Housing Development
("Project") under an Assignment of Lease and
Consent they executed with the Department of Hawaiian Home
Lands ("DHHL") on October 31, 2000. They typically
gardened on the hillside behind their home about three times
a week. To access the hillside, the Arthurs crossed a
concrete drainage ditch and climbed over a two-foot-high
chain link fence. Mona wore sneakers with snow spikes to
prevent her from sliding down the hill.
November 10, 2003, Mona and William gardened on the hillside.
William left Mona's side for a few minutes to get some
water for Mona, and when he returned, he found her lying in
the concrete ditch. No one witnessed how Mona came to be in
the ditch. Mona suffered severe head injuries, fell into a
coma, and died on March 9, 2004.
Arthurs subsequently filed suit for Mona's wrongful death
on November 4, 2005. Their First Amended Complaint, filed
November 8, 2005, alleged that Mona, while gardening on the
hillside, "slipped and fell, rolled down the slope of
the hillside over a fence, fell into the drainage embankment
and hit her head against the concrete walling. . . . [Mona] .
. . sustained injuries such that she was in a coma until her
death . . . ." The Arthurs asserted Mona's injuries
and death were due to the negligence of DHHL, KIC (as the
developer), Design Partners, Inc. ("Design
Partners") (as the architect), Coastal (as the general
contractor), Sato (as the civil engineer), and other
"Does"; and that that negligence was composed of,
but was not limited to, the following:
a. Negligent design of the hillside area, including the fence
b. Negligent construction of the hillside area, including the
fence and culvert;
c. Negligent supervision of the construction of the hillside
area, including the fence and culvert.
claims were unaltered in the Arthurs' Second Amended
Complaint, filed December 3, 2009. [95:315] The Second
Amended Complaint differed from the first primarily due to
the addition of the following allegations, which asserted a
punitive damages claim against KIC:
20. ELTON WONG was the project manager for [KIC].
21. At all times relevant, WONG was acting within the scope
of his employment with [KIC].
22. ELTON WONG, ordered [Sato] to lower the chain link fence
guarding the concrete drainage ditch from 4 feet to 2 feet.
23. The lowering of the fence reduced the construction costs
and thereby increased Defendant's profits.
24. ELTON WONG, in his own handwriting, directed that the
chain link fence be looked at for "value
25. ELTON WONG knew that the fence was intended to protect
persons from falling into the drainage culvert.
26. ELTON WONG specifically met MONA ARTHUR at least 20 times
and knew that she was going onto the steep hillside[.]
27. If ELTON WONG had allowed the fence to remain 4 feet
high, MONA ARTHUR would not have been fatally injured;
because of her lower center of gravity, a 4 foot high fence
would have prevented MONA ARTHUR, who was 5'4" in
height, from falling into the drainage ditch.
27.[sic] Instead of maintaining the safety of a 4 foot high
fence, ELTON WONG ordered the fence lowered to 2 feet. He
ordered the fence lowered simply to increase the Defendants
[sic] profits, without consideration to the safety of persons
such as MONA ARTHUR. He reduced the height of the fence
knowing that residents, such as MONA ARTHUR, were required to
maintain the steep hillside.
28. [KIC]'s overriding concern was for a minimum-expense
operation, regardless of the peril involved.
29. [KIC] acted wantonly or oppressively or with such malice
as implies a spirit of mischief or criminal indifference to
30. [KIC]'s conduct constituted wilful misconduct or an
entire want of care which would raise the presumption of a
conscious indifference to consequences.
KICs Tenders of Defense against the Arthurs' Claims
Pursuant to the Hold Harmless Clauses in Its Agreements with
Parties Involved in the Project's Construction
10, 1998 Project Consultant Agreement ("Agreement"
or "Contract") between KIC and Sato with respect to
the Project described Sato's "scope of work" to
involve preparing, among other things, grading and drainage
plans, electric and telephone plans, and sitework civil
drawings for various permit applications as necessary. The
Agreement also contained a paragraph titled, "Indemnity
by Consultant, " which stated:
Consultant [Engineer] hereby agrees to indemnify, defend and
hold harmless Developer, and each of its officers, directors
and employees, from and against any and all claims, demands,
losses, liabilities, actions, lawsuits, proceedings,
judgments, awards, costs and expenses (including reasonable
attorneys' fees), arising directly or indirectly, in
whole or in part, out of work undertaken by Consultant
[Engineer] outside the scope of this Agreement and/or out of
the negligence or any willful act or omission of Consultant
[Engineer], or any of its officers, directors, agents or
employees, in connection with this Agreement or
Consultant's [Engineer's] services or work hereunder,
whether within or beyond the scope of its duties or authority
hereunder. The provisions of this Section shall survive
completion of Consultant's [Engineer's] services
hereunder and/or the termination of this Agreement.
("Hold Harmless Clause"). KIC's contracts with
Design Partners, Coastal, and the general contractor for
grading and site work, Kiewit Pacific Co.
("Kiewit"), each contained indemnity language,
similar to that in the Hold Harmless Clause, requiring the
subcontractor to "indemnify, defend, and hold
harmless" KIC. Kiewit's contract with Pacific Fence,
Inc. ("Pacific Fence") to construct a debris fence
between the constructed homes and the adjacent hillside also
contained language requiring Pacific Fence to indemnify and
letter dated December 15, 2005, KIC tendered its defense
against the Arthurs' claims to Sato, pursuant to the Hold
Harmless Clause. Although Kiewit was not named in the First
Amended Complaint, based on its agreement with Developer, KIC
also tendered its defense to ...