REPORT TITLE: 
Tort Liability


Limits recovery for all noneconomic damages in certain tort
actions to $500,000.  Codifies court rule relating to offers of
judgment.   Requires payment of reasonable attorneys' fees and
court costs to encourage pre-trial settlements.  Limits punitive
damages awards.  (SB186 HD1)


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                H.D. 1
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO TORT LIABILITY.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that noneconomic damages
 
 2 generally include such claims as pain and suffering, mental
 
 3 anguish, disfigurement, loss of enjoyment of life, loss of
 
 4 consortium, and other nonpecuniary losses.  Under current law,
 
 5 the maximum limit on damages recoverable for only one type of
 
 6 noneconomic damage--pain and suffering--is $375,000.  However,
 
 7 there is no upper limit on maximum damages with respect to other
 
 8 types of noneconomic damages.  The legislature finds that placing
 
 9 a realistic cap on all noneconomic damages in certain tort
 
10 actions, rather than only for pain and suffering, will help to
 
11 lower the costs of liability insurance for Hawaii's consumers.
 
12      Under current law, when a frivolous claim or defense is made
 
13 by a party in a civil action, for a court to make an award of
 
14 attorneys' fees in that action, the court must first find in
 
15 writing that "all" of the claims or defenses made by a party are
 
16 frivolous and are not reasonably supported by the facts and the
 
17 law in the civil action.  The legislature finds, however, that it
 
18 is often the case that only a portion, but not all, of the claims
 
19 or defenses made by a party may be found to be frivolous.  In
 
20 these cases, however, the court would be prohibited from awarding
 

 
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 1 attorneys' fees to the other party since not "all" of the claims
 
 2 or defenses were found to be frivolous.
 
 3      The legislature further finds that there is a need to codify
 
 4 rule 68 of the Hawaii Rules of Civil Procedure relating to offers
 
 5 of judgment.  That rule permits the recovery of costs by either
 
 6 party contingent on that party's having made an offer of
 
 7 settlement that was not accepted and which was at least as
 
 8 favorable to the offeree as the final judgment in the case.  In
 
 9 addition to codifying rule 68, this Act also requires the payment
 
10 of reasonable attorneys' fees as well as court costs to encourage
 
11 pre-trial settlements.
 
12      The legislature further finds that there is an immediate
 
13 need to reform Hawaii's laws providing for the award of punitive
 
14 damages.  Punitive damages, also known as exemplary damages, are
 
15 intended to punish the defendant and deter both the defendant and
 
16 others from engaging in similar acts of wrongdoing in the future.
 
17 Punitive damages are distinguishable from compensatory damages,
 
18 which are the primary form of damages awarded under tort law and
 
19 are designed to "make the plaintiff whole".  Compensatory damages
 
20 compensate tort victims for damages including payment for out-of-
 
21 pocket expenses, such as lost wages and medical costs, and awards
 
22 for pain and suffering.  In contrast, punitive damages were
 
23 developed as an auxiliary to criminal law to impose a public
 

 
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 1 sanction on conduct that might not be pursued by criminal law
 
 2 enforcement.
 
 3      The legislature finds that while large punitive damages
 
 4 awards can be reduced on appeal as being excessive, the effect of
 
 5 the assertion of these claims is to raise the cost of litigation,
 
 6 undermine confidence in the civil justice system, handicap
 
 7 Hawaii's businesses in competition with foreign enterprises, and
 
 8 generally increase the costs of doing business in the State.
 
 9      The purpose of this Act is to:
 
10      (1)  Limit recovery for all noneconomic damages in certain
 
11           tort actions to $500,000;
 
12      (2)  Allow the court to award attorneys' fees where the
 
13           court finds that less than all of the claims or
 
14           defenses are determined to be frivolous.  If the court
 
15           finds that only a portion of the claims or defenses are
 
16           frivolous, it must determine the amount of the award of
 
17           attorneys' fees and costs based on the percentage of
 
18           the claims or defenses deemed to be frivolous.  The
 
19           amount of the award is to be allocated in direct
 
20           proportion to the percentage of frivolous claims or
 
21           defenses.  In addition, this Act further allows the
 
22           court to award courts costs as well as attorneys' fees
 
23           in the event that a party makes frivolous claims or
 

 
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 1           defenses in civil actions;
 
 2      (3)  Limit punitive damages awards to three times the amount
 
 3           of compensatory damages; and
 
 4      (4)  Require a judge to determine the dollar amount of any
 
 5           award of punitive damages, rather than the jury, to
 
 6           ensure that the amount of these awards is determined in
 
 7           a fair and constitutional manner and will be less
 
 8           likely to be overturned or reduced on appeal.  The
 
 9           determination as to whether punitive damages should be
 
10           awarded will continue to be made by juries or judges in
 
11           jury-waived trials.
 
12      SECTION 2.  Chapter 607, Hawaii Revised Statutes, is amended
 
13 by adding a new section to be appropriately designated and to
 
14 read as follows:
 
15      "§607-    Offer of judgment.  (a)  At any time more than ten
 
16 days before the trial begins, a party defending against a claim
 
17 may serve upon the adverse party an offer to allow judgment to be
 
18 taken against the offeror for the money or property or to the
 
19 effect specified in that offer, with costs then accrued.
 
20      (b)  If within ten days after the service of the offer the
 
21 adverse party serves written notice that the offer is accepted,
 
22 either party may then file the offer and notice of acceptance
 
23 together with proof of service and thereupon the clerk shall
 

 
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 1 enter judgment.
 
 2      (c)  An offer not accepted shall be deemed withdrawn and
 
 3 evidence thereof shall not be admissible except in a proceeding
 
 4 to determine costs.
 
 5      (d)  If the judgment finally obtained by the offeree is not
 
 6 more favorable than the offer, the offeree shall pay the costs
 
 7 incurred after the making of the offer.
 
 8      (e)  The fact that an offer is made but not accepted shall
 
 9 not preclude a subsequent offer.
 
10      (f)  When the liability of one party to another has been
 
11 determined by verdict or order or judgment, but the amount or
 
12 extent of the liability remains to be determined by further
 
13 proceedings, the party adjudged liable may make an offer of
 
14 judgment, which shall have the same effect as an offer made
 
15 before trial if it is served within a reasonable time not fewer
 
16 than ten days prior to the commencement of hearings to determine
 
17 the amount or extent of liability.
 
18      (g)  As used in this section, "costs" include both court
 
19 costs and reasonable attorneys' fees."
 
20      SECTION 3.  Chapter 663, Hawaii Revised Statutes, is amended
 
21 by adding a new section to be appropriately designated and to
 
22 read as follows:
 
23      "§663-    Punitive damages.  (a)  Except as otherwise
 

 
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 1 provided by law, no award of punitive damages may be made in any
 
 2 court of competent jurisdiction in this State except as provided
 
 3 in this section.
 
 4      (b)  The dollar amount of any punitive damages awarded in
 
 5 any case shall be determined only by the judge in the judge's
 
 6 discretion, and not the jury.
 
 7      (c)  Punitive damages imposed against a defendant in any
 
 8 case shall not exceed three times the amount of compensatory
 
 9 damages."
 
10      SECTION 4.  Section 607-14.5, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "§607-14.5  Attorneys' fees and costs in civil actions.(a)
 
13 In any civil action in this State where a party seeks money
 
14 damages or injunctive relief, or both, against another party, and
 
15 the case is subsequently decided, the court may, as it deems
 
16 just, assess against either party, and enter as part of its
 
17 order, for which execution may issue, a reasonable sum for
 
18 attorneys' fees[,] and costs, in an amount to be determined by
 
19 the court upon a specific finding that all or a portion of the
 
20 party's claim or defense was frivolous[.] as provided in
 
21 subsection (b).
 
22      (b)  In determining the award of attorneys' fees and costs
 
23 and the amounts to be awarded, the court must find in writing
 

 
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 1 that all or a portion of the claims or defenses made by the party
 
 2 are frivolous and are not reasonably supported by the facts and
 
 3 the law in the civil action.  If the court determines that only a
 
 4 portion of the claims or defenses made by the party are
 
 5 frivolous, the court shall determine the amount of the award of
 
 6 attorneys' fees and costs based on the percentage of the claims
 
 7 or defenses deemed to be frivolous.  The amount of the award
 
 8 shall be allocated in direct proportion to the percentage of
 
 9 frivolous claims or defenses."
 
10      SECTION 5.  Section 663-8.7, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "[[]§663-8.7[]]  Limitation on [pain and suffering.]
 
13 noneconomic damages.  Damages recoverable for [pain and
 
14 suffering] all noneconomic damages as defined in section 663-8.5
 
15 shall be limited to a maximum award of [$375,000; provided that
 
16 this limitation shall not apply to tort actions enumerated in
 
17 section 663-10.9(2).] $500,000 with respect to tort actions,
 
18 except for tort actions involving severe bodily injury.  For
 
19 purposes of this section "severe bodily injury" means any
 
20 physical injury or physical impairment of condition that:
 
21      (1)  Results in paraplegia or quadriplegia; or
 
22      (2)  The finder of fact determines to be as damaging or
 
23           severe to an individual to the same extent as if the
 

 
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 1           individual was rendered a paraplegic or quadriplegic."
 
 2      Section 6.  Section 663-10.9, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "[[]§663-10.9[]]  Abolition of joint and several liability;
 
 5 exceptions.  Joint and several liability for joint tortfeasors as
 
 6 defined in section 663-11 is abolished except in the following
 
 7 circumstances:
 
 8      (1)  For the recovery of economic damages against joint
 
 9           tortfeasors in actions involving injury or death to
 
10           persons[.];
 
11      (2)  For the recovery of economic and noneconomic damages
 
12           against joint tortfeasors in actions involving:
 
13           (A)  Intentional torts;
 
14           (B)  Torts relating to environmental pollution;
 
15           (C)  Toxic and asbestos-related torts;
 
16           (D)  Torts relating to aircraft accidents;
 
17           (E)  Strict and products liability torts; or
 
18           (F)  Torts relating to motor vehicle accidents except
 
19                as provided in paragraph (4)[.];
 
20      (3)  For the recovery of noneconomic damages in actions,
 
21           other than those enumerated in paragraph (2), involving
 
22           injury or death to persons against those tortfeasors
 
23           whose individual degree of negligence is found to be
 

 
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 1           [twenty-five] __________ per cent or more under section
 
 2           663-31.  Where a tortfeasor's degree of negligence is
 
 3           less than [twenty-five] __________ per cent, then the
 
 4           amount recoverable against that tortfeasor for
 
 5           noneconomic damages shall be in direct proportion to
 
 6           the degree of negligence assigned[.]; and
 
 7      (4)  For recovery of noneconomic damages in motor vehicle
 
 8           accidents involving tort actions relating to the
 
 9           maintenance and design of highways including actions
 
10           involving guardrails, utility poles, street and
 
11           directional signs, and any other highway-related device
 
12           upon a showing that the affected joint tortfeasor was
 
13           given reasonable prior notice of a prior occurrence
 
14           under similar circumstances to the occurrence upon
 
15           which the tort claim is based.  In actions in which the
 
16           affected joint tortfeasor has not been shown to have
 
17           had such reasonable prior notice, the recovery of
 
18           noneconomic damages shall be as provided in paragraph
 
19           (3)."
 
20      SECTION 7.  Section 4 shall apply only to civil actions
 
21 filed on or after the effective date of this Act.
 
22      SECTION 8.  Section 5 shall apply only to causes of action
 
23 based upon acts or omissions occurring on or after the effective
 

 
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 1 date of this Act.
 
 2      SECTION 9.  This Act does not affect the rights and duties
 
 3 that matured, penalties that were incurred, and proceedings that
 
 4 were begun, before its effective date.
 
 5      SECTION 10.  If any provision of this Act, or the
 
 6 application thereof to any person or circumstance is held
 
 7 invalid, the invalidity does not affect other provisions or
 
 8 applications of the Act which can be given effect without the
 
 9 invalid provision or application, and to this end the provisions
 
10 of this Act are severable.
 
11      SECTION 11.  Statutory material to be repealed is bracketed.
 
12 New statutory material is underscored.
 
13      SECTION 12.  This Act shall take effect on ________________.