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                                                                Electronically Filed
                                                                Supreme Court
                                                                SCWC-14-0000842
                                                                08-JUN-2018
                                                                08:30 AM




           IN THE SUPREME COURT OF THE STATE OF HAWAI#I

                                 ---o0o---


          HAWAIIAN DREDGING CONSTRUCTION COMPANY, INC.,
                 Respondent/Plaintiff-Appellant,

                                     vs.

                     FUJIKAWA ASSOCIATES, INC.,
            dba Continental Mechanical of the Pacific,
                   Petitioner/Defendant-Appellee.


                             SCWC-14-0000842

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
             (CAAP-14-0000842; CIV. NO. 13-1-0900-03)

                               JUNE 8, 2018

 RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

             OPINION OF THE COURT BY RECKTENWALD, C.J.

          This case arises from a worksite accident in which an

employee of Hawaiian Dredging Construction Company, Inc. (HDCC)

was injured, allegedly due to the actions of HDCC’s

subcontractor, Fujikawa Associates, Inc., dba Continental

Mechanical of the Pacific (Fujikawa).          After paying workers’
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compensation benefits to its injured employee, HDCC sought

reimbursement from Fujikawa based on a breach of contract theory,

claiming that workers’ compensation benefits were within the

scope of their subcontract’s indemnity clause.             The circuit court

granted summary judgment in favor of Fujikawa based on its

interpretation of the subcontract’s indemnity clause.

            While we affirm the grant of summary judgment, we do so

based on our interpretation of Hawai#i Revised Statutes (HRS)

§ 386-8, which governs a third party’s liability for workers’

compensation.     As set forth below, we conclude that this statute

provides the exclusive remedy for an employer to recover workers’

compensation benefits from a third-party tortfeasor.              Because

HDCC did not avail itself of that exclusive remedy, summary

judgment for Fujikawa was appropriate.

                               I.   Background

A.    The Subcontract and Accident

            HDCC hired Fujikawa to perform repairs to Edmonson Hall

at the University of Hawai#i at Mânoa.          On May 1, 2012, HDCC and

Fujikawa entered into a subcontract agreement (Subcontract).1

The Subcontract’s indemnity clause provided:



      1
            The Subcontract was attached as an exhibit to a declaration of
HDCC’s counsel, which was provided in support of HDCC’s motion for partial
summary judgment in the circuit court. The express language of the
Subcontract is undisputed.

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            12.4 To the fullest extent permitted by law,
            Subcontractor shall indemnify, and save harmless
            Contractor and Owner, and their agents and employees,
            from and against all Liabilities on account of: . . .
            (B) the filing of any claims by persons or entities
            furnishing labor, materials, equipment or other
            services or facilities in connection with the Work;
            (C) any breach or default by Subcontractor of its
            obligations under this Agreement; or (D) any and all
            damage or injury to person or property arising
            directly or indirectly from the performance of the
            Work and/or the operations of Subcontractor to the
            extent any such damage or injury is attributable in
            whole or in part to the acts or omissions of
            Subcontractor, anyone directly or indirectly employed
            by Subcontractor or anyone for whose acts
            Subcontractor may be liable; and, when requested by
            Contractor, Subcontractor shall defend any and all
            actions and pay all charges of attorneys and other
            expenses arising therefrom.

            The Subcontract defines “Liabilities” as:            “Separately

and collectively, any loss, injury, damage, fine, penalty, cost

and expense (including legal fees and costs) and other liability

whatsoever, and any action, suit, proceeding or claims, relating

to such liability.”

            HDCC alleges that, in the course of performing repairs

at the University of Hawai#i, HDCC employee Gabriel Balon was

injured.    HDCC sent Fujikawa a “Notice of Claim and Demand for

Indemnification,”2 which asserted the following:
            On June 26, 2012,[] one of HDCC’s employees, Mr.
            Gabriel Balon, a 55-year old laborer, sustained
            injuries at the Project site when he was struck by a
            piece of an air duct being installed by [Fujikawa].
            As a result of this accident, Mr. Balon suffered a
            concussion and contusions of his back and leg, and has
            not returned to work. Moreover, he has filed a claim


      2
            This notice was attached as an exhibit to a declaration of HDCC’s
counsel, which was provided in support of HDCC’s motion for partial summary
judgment in the circuit court. Fujikawa’s receipt of this notice is
undisputed.

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            for indemnity and medical/rehabilitation benefits
            under Hawaii’s Workers’ Compensation Law, H.R.S.
            Chapter 386, and HDCC is currently making payments
            thereunder.

            HDCC demanded that Fujikawa indemnify it “and its

insurer(s) from and against any and all liability, costs and

expenses . . . incurred in connection with the subject accident

and the resolution thereof.”

B.   Circuit Court Proceedings3

            HDCC subsequently filed a complaint in the circuit

court.   HDCC alleged that Fujikawa breached the Subcontract by

refusing to indemnify HDCC for the amounts it paid “on account of

the bodily injury to Gabriel Balon.”

            Fujikawa filed an answer, denying that it caused

Balon’s injury and denying that it breached the Subcontract.

Fujikawa asserted affirmative defenses related to comparative

negligence, estoppel, unclean hands, failure to mitigate damages,

waiver, and failure to join indispensable parties.

            HDCC filed a motion for partial summary judgment,

requesting judgment in its favor on the issue of Fujikawa’s

assumption of liability under the Subcontract for Balon’s

accident.    HDCC argued that summary judgment was appropriate

because the “Subcontract ‘clearly and unequivocally’ assigns

Fujikawa a responsibility to indemnify HDCC.”


     3
            The Honorable Rhonda A. Nishimura presided.

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           Fujikawa opposed HDCC’s motion, and requested the court

to instead enter summary judgment in its favor.             Fujikawa argued

that workers’ compensation benefits were outside the scope of the

Subcontract’s indemnity clause, and that summary judgment for

HDCC would violate Fujikawa’s due process rights and contravene

public policy by “attempt[ing] to use an ambiguous, equivocal

contractual indemnity to shift and evade [HDCC’s] liability for

compensation.”     Fujikawa also argued that HDCC’s action

“conflicts with the procedure for reimbursement mandated by the

Legislature” in HRS § 386-8.

           The circuit court held a hearing, and granted summary

judgment in favor of Fujikawa based on its interpretation of the

Subcontract.    The circuit court found no clear and unequivocal

assumption of liability to pay workers’ compensation benefits for

a work-related injury under the terms of the Subcontract.                The

court denied HDCC’s motion for partial summary judgment and

granted summary judgment in favor of Fujikawa.             The court

subsequently entered judgment in favor of Fujikawa.

C.   ICA Proceedings

           HDCC timely appealed, arguing that the circuit court

erred in failing to find Fujikawa liable for workers’

compensation payments under the plain language of the

Subcontract.    HDCC contended that Hawai#i law allows “risks of


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liabilities in construction” to be allocated by contract, and

that such an allocation between contractor and subcontractor has

no bearing on an injured worker’s ability to secure workers’

compensation benefits.      HDCC argued that Fujikawa’s broad promise

in the Subcontract to indemnify HDCC for “Liabilities”

attributable to Fujikawa should be interpreted to include

workers’ compensation costs, and that partial summary judgment

should have been granted in its favor.

          In its answering brief, Fujikawa characterized HDCC’s

appeal as an attempt to pass on its statutory workers’

compensation obligations through a vague contractual term.

Fujikawa argued that the circuit court correctly interpreted the

Subcontract, as “HDCC’s definition of ‘Liabilities’ did not

include any reference to ‘benefits,’ statutory obligations,

‘compensation,’ disability payments or benefits – any term that

would clearly and unequivocally indicate that Fujikawa agreed to

indemnify HDCC for payments made for Gabriel Balon’s workers’

compensation benefits.”

          Fujikawa also argued that HDCC’s claim attempted to

avoid the process specified by HRS § 386-84 (1993) (“Liability


     4
          HRS § 386-8 (1993) provided, in relevant part:

          [1] When a work injury for which compensation is
          payable under this chapter has been sustained under
          circumstances creating in some person other than the
                                                                 (continued...)

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4
 (...continued)
      employer or another employee of the employer acting in
      the course of employment a legal liability to pay
      damages on account thereof, the injured employee or
      his dependents (hereinafter referred to collectively
      as the employee) may claim compensation under this
      chapter and recover damages from such third person.

      [2] If the employee commences an action against such
      third person he shall without delay give the employer
      written notice of the action and the name and location
      of the court in which the action is brought by
      personal service or registered mail. The employer, at
      any time before trial on the facts, may join as party
      plaintiff.

      [3] If within nine months after the date of the
      personal injury the employee has not commenced an
      action against such third person, the employer, having
      paid or being liable for compensation under this
      chapter, shall be subrogated to the rights of the
      injured employee. Except as limited by chapter 657,
      the employee may at any time commence an action or
      join in any action commenced by the employer against
      such third person.

      [4] No release or settlement of any claim or action
      under this section is valid without the written
      consent of both employer and employee. The entire
      amount of the settlement after deductions for
      attorney's fees and costs as hereinafter provided, is
      subject to the employer’s right of reimbursement for
      his compensation payments under this chapter and his
      expenses and costs of action.

      [5] If the action is prosecuted by the employer alone,
      the employer shall be entitled to be paid from the
      proceeds received as a result of any judgment for
      damages, or settlement in case the action is
      compromised before judgment, the reasonable litigation
      expenses incurred in preparation and prosecution of
      such action, together with a reasonable attorney's
      fee, which shall be based solely upon the services
      rendered by the employer's attorney in effecting
      recovery both for the benefit of the employer and the
      employee. After the payment of the expenses and
      attorney's fee, the employer shall apply out of the
      amount of the judgment or settlement proceeds an
      amount sufficient to reimburse the employer for the
      amount of his expenditure for compensation and shall
      pay any excess to the injured employee or other person
      entitled thereto.

                                                             (continued...)

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4
 (...continued)
      [6] If the action is prosecuted by the employee alone,
      the employee shall be entitled to apply out of the
      amount of the judgment for damages, or settlement in
      case the action is compromised before judgment, the
      reasonable litigation expenses incurred in preparation
      and prosecution of the action, together with a
      reasonable attorney's fee which shall be based solely
      upon the services rendered by the employee's attorney
      in effecting recovery both for the benefit of the
      employee and the employer. After the payment of such
      expenses and attorney's fee, there shall be applied
      out of the amount of the judgment or settlement
      proceeds, the amount of the employer's expenditure for
      compensation, less his share of the expenses and
      attorney's fee. On application of the employer, the
      court shall allow as a first lien against the amount
      of the judgment for damages or settlement proceeds,
      the amount of the employer's expenditure for
      compensation, less his share of such expenses and
      attorney's fee.

      [7] If the action is prosecuted both by the employee
      and the employer, in a single action or in
      consolidated actions, and they are represented by the
      same agreed attorney or by separate attorneys, there
      shall first be paid from any judgment for damages
      recovered, or settlement proceeds in case the action
      or actions are settled before judgment, the reasonable
      litigation expenses incurred in preparation and
      prosecution of such action or actions, together with
      reasonable attorney's fees based solely on the
      services rendered for the benefit of both parties
      where they are represented by the same attorney, and
      where they are represented by separate attorneys,
      based solely upon the service rendered in each
      instance by the attorney in effecting recovery for the
      benefit of the party represented. After the payment of
      the expenses and attorneys' fees there shall be
      applied out of the amount of the judgment for damages,
      or settlement proceeds an amount sufficient to
      reimburse the employer for the amount of his
      expenditure for compensation and any excess shall be
      paid to the injured employee or other person entitled
      thereto.

      . . . .

      [10] The amount of compensation paid by the employer
      or the amount of compensation to which the injured
      employee is entitled shall not be admissible in
      evidence in any action brought to recover damages.

                                                             (continued...)

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of third person”), which establishes the procedure by which an

employer may seek to recover the workers’ compensation payments

that it made to its injured employee when a third party is

allegedly liable for the employee’s work-related injury.

Fujikawa also argued that HDCC’s request for damages conflicted

with HRS § 386-8’s provision that the “amount of [workers’]

compensation paid by the employer . . . shall not be admissible

in evidence in any action brought to recover damages.”

           The ICA vacated the circuit court’s judgment,

concluding that the Subcontract’s indemnification clause

encompassed workers’ compensation benefits.           The ICA held that

“the Subcontract includes the clear and unequivocal agreement of

Fujikawa to assume all Liabilities arising from its acts or

omissions, including costs and expenses related to Balon’s

workers compensation claim.”       The ICA rejected Fujikawa’s

arguments that HDCC was attempting to evade its statutory

workers’ compensation obligations, relying on Iddings v. Mee-Lee,

82 Hawai#i 1, 16, 919 P.2d 263, 278 (1996), which held that

contractual indemnification agreements “are valid in the workers’

compensation context and do not contravene or undermine the

purposes underlying workers’ compensation in general.”



     4
      (...continued)
           . . . .

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                         II.   Standards of Review

A.   Statutory Interpretation

           “Statutory interpretation is a question of law

reviewable de novo.”      State v. Wheeler, 121 Hawai#i 383, 390, 219

P.3d 1170, 1177 (2009) (internal quotation marks omitted).                This

court’s construction of statutes is guided by the following

rules:
           First, the fundamental starting point for statutory
           interpretation is the language of the statute itself.
           Second, where the statutory language is plain and
           unambiguous, our sole duty is to give effect to its
           plain and obvious meaning. Third, implicit in the
           task of statutory construction is our foremost
           obligation to ascertain and give effect to the
           intention of the legislature, which is to be obtained
           primarily from the language contained in the statute
           itself. Fourth, when there is doubt, doubleness of
           meaning, or indistinctiveness or uncertainty of an
           expression used in a statute, an ambiguity exists.


Id. (quoting Citizens Against Reckless Dev. v. Zoning Bd. of

Appeals of the City & Cnty. of Honolulu, 114 Hawai#i 184, 193,

159 P.3d 143, 152 (2007)).

B.   Summary Judgment

           [An appellate court] reviews the circuit court’s grant
           of summary judgment de novo. Price v. AIG Hawai#i
           Ins. Co., 107 Hawai#i 106, 110, 111 P.3d 1, 5 (2005).
           Summary judgment is appropriate “if the pleadings,
           depositions, answers to interrogatories, and
           admissions on file, together with the affidavits, if
           any, show that there is no genuine issue as to any
           material fact and that the moving party is entitled to
           a judgment as a matter of law.” HRCP Rule 56(c).

Gillan v. Gov’t Emps. Ins. Co., 119 Hawai#i 109, 114, 194 P.3d

1071, 1076 (2008).


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                              III.   Discussion

A.    Introduction

            Fujikawa presents several questions challenging the

ICA’s ruling.5    We focus on one question, as we find it

determinative:     whether an employer may recover workers’

compensation payments under a contractual indemnification

provision between the employer and the third-party tortfeasor who

causes injury to the employee.         We answer that question in the

negative, since HRS § 386-8 provides employers an exclusive

statutory reimbursement remedy under Hawaii’s workers’

compensation law (WCL).

            Fujikawa argues that such an indemnity clause violates

the WCL by shifting an employer’s responsibility for workers’

compensation to a subcontractor.           In response, HDCC argues that

“HRS § 386-8 neither requires an employer to assert its

subrogation interests nor does it limit an employer to this

statutorily-provided remedy.”         HDCC argues that it complied with

Hawaii’s WCL by accepting Balon’s claim and providing Balon

workers’ compensation benefits, and that its claim for indemnity



      5
            Fujikawa presents four questions to this court. Fujikawa’s first
two questions address whether the ICA misapplied contract law when it
interpreted the Subcontract, and Fujikawa’s remaining two questions address
whether the ICA’s ruling contravenes Hawaii’s workers’ compensation scheme and
public policy encouraging settlement of an injured workers’ claim, which we
construe as a single related question. In light of our disposition of this
case, we need not address Fujikawa’s contractual interpretation questions.

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“is based on an independent duty created by the indemnification

provision in the Subcontract.”

           Fujikawa filed a Reply to HDCC’s Response, arguing that

Yukumoto v. Tawarahara, 140 Hawai#i 285, 400 P.3d 486 (2017)

supports its position.      In Yukumoto, we held that a health

insurer’s contractual provision granting a right of subrogation

against third-party torteasors was invalid because it conflicted

with statutes that provided a health insurer’s exclusive right of

subrogation.    Yukumoto, 140 Hawai#i at 299, 400 P.3d at 500

(citing HRS §§ 663-10 (Supp. 2002) and 431-13:103(a)(10) (Supp.

2002)).   Fujikawa asserts that HDCC’s position similarly “would

jeopardize the comprehensive and exclusive workers’ compensation

scheme established by the legislature.”

           We conclude that the comprehensive workers’

compensation reimbursement scheme established by HRS § 386-8

provides the exclusive remedy for an employer’s recovery of

workers’ compensation benefits paid for its employee where injury

is allegedly attributable to a third party.           Thus, any

contractual provision that conflicts with this statutory remedy

is invalid.    HDCC is therefore not entitled to contractual

indemnity for workers’ compensation payments made as a result of

Balon’s injury, and summary judgment in favor of Fujikawa was

proper.   Although the circuit court erroneously granted


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Fujikawa’s cross-motion for summary judgment based on its

interpretation of the Subcontract, we affirm the circuit court’s

judgment based on our interpretation of HRS § 386-8.              See Reyes

v. Kuboyama, 76 Hawai#i 137, 140, 870 P.2d 1281, 1284 (1994)

(“This court may affirm a grant of summary judgment on any ground

appearing in the record, even if the circuit court did not rely

on it.”).

B.   Statutory Interpretation of HRS § 386-8

            Whether HRS § 386-8 provides the exclusive remedy for

an employer’s reimbursement of workers’ compensation benefits

paid for its employee due to the fault of a third party is a

question of first impression before this court.             When construing

a statute, our foremost obligation is to “give effect to the

intention of the legislature, which is to be obtained primarily

from the language contained in the statute itself.              And we must

read statutory language in the context of the entire statute and

construe it in a manner consistent with its purpose.”               Morgan v.

Planning Dep’t, Cnty. of Kauai, 104 Hawai#i 173, 179-80, 86 P.3d

982, 988-89 (2004) (citation omitted).           As set forth below, the

language, legislative history, and purpose of the statutory

framework governing workers’ compensation lead us to conclude

that the legislature intended to limit an employer’s right of




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recovery for workers’ compensation payments to the manner

prescribed by HRS § 386-8.

     1.   The Plain Language and Legislative History of HRS
          § 386-8

          The plain language and legislative history of HRS

§ 386-8 show that the legislature has created a uniform and

comprehensive procedure for the recovery of workers’ compensation

benefits paid as a result of a third party’s tortious conduct.

The comprehensive nature of this statutory scheme supports the

conclusion that the legislature intended HRS § 386-8 to provide

the employer’s exclusive remedy in these circumstances.

          Under the first paragraph of HRS § 386-8, when an

employee has sustained a work-related injury due to a third

party, the injured employee “may claim compensation under this

chapter and recover damages from such third person.”             The second

paragraph of HRS § 386-8 provides that “[i]f the employee

commences an action against such third person, the employee shall

without delay give the employer written notice of the action.”

As such, “[u]nder HRS § 386-8, the employee has the first

opportunity to bring suit, which promotes the efficient

resolution of his or her claims.”         First Ins. Co. of Hawaii v.

A&B Properties, 126 Hawai#i 406, 418, 271 P.3d 1165, 1177 (2012).

The third paragraph of HRS § 386-8 provides that “[i]f within

nine months after the date of the personal injury the employee

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has not commenced an action against such third person, the

employer, having paid or being liable for compensation under this

chapter, shall be subrogated to the rights of the injured

employee.”   (Emphasis added).       The fourth paragraph of HRS

§ 386-8 ensures that both the employee and employer have an

opportunity to protect their interests by providing that “[n]o

release or settlement of any claim or action under this section

is valid without the written consent of both employer and

employee.”

          Paragraphs five, six, and seven of HRS § 386-8 list the

types of actions that may be brought against a third party,

explain how litigation expenses and attorney’s fees are

apportioned, and specify how an employer may recover its workers’

compensation payments under each action.          Whether the action

against the third party is commenced by the employer alone, by

the employee alone, or by both the employee and employer, the

employer shall be reimbursed for the amount of its expenditure

for workers’ compensation from the judgment for damages or from

the amount of settlement.       HRS § 386-8.

          Accordingly, “HRS § 386–8 establishes a framework for

the employee, employer, and third party to attempt to resolve

their dispute at one time and in a single proceeding.”              First

Ins. Co., 126 Hawai#i at 418, 271 P.3d at 1177.           The


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comprehensive scope of HRS § 386–8, by detailing specific methods

for compensation reimbursement, suggests that the legislature’s

intent was to provide an exclusive method for recovering workers’

compensation payments from a third party.

          Consistent with this plain language interpretation, the

legislative history of HRS § 386–8 supports the conclusion that

an employer’s exclusive right to reimbursement is provided for in

the statute.   HRS § 386–8 can be traced to Hawaii’s first

Workers’ Compensation Act, which was enacted in 1915.6             1915 Haw.

Sess. Laws Act 221, § 5 at 324.        However, the original version

was quite different from the current provision.            Indeed, from the

time of its initial enactment, the statute has been progressively

amended, with each successive amendment providing a more

comprehensive framework.      Prior to 1951, an injured employee was



     6
          In 1915, Act 221, § 5, “Liability of Third Persons,” provided:

          When any injury for which compensation is payable
          under this Act shall have been sustained under
          circumstances creating in some other person than the
          employer a legal liability to pay damages in respect
          thereto, the injured employee may, at his option,
          either claim compensation under this Act or obtain
          damages from or proceed at law against such other
          person to recover damages; and if compensation is
          claimed and awarded under this Act any employer having
          paid the compensation or having become liable therefor
          shall be subrogated to the rights of the injured
          employee to recover against that person, provided, if
          the employer shall recover from such other person
          damages in excess of the compensation already paid or
          awarded to be paid under this Act, then any such
          excess shall be paid o the injured employee less the
          employer’s expenses and costs of action.

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required to “elect whether to claim compensation [from his

employer] or claim his damages [from the third-party tortfeasor],

and if he claims one, he loses the other.”              H. Stand. Comm. Rep.

No. 722, in 1951 House Journal, at 579.             In 1951, the legislature

amended the statute to allow the employee to claim workers’

compensation benefits and proceed against a third person without

waiving his rights to either.           1951 Haw. Sess. Laws Act 194, § 1

at 229; S. Stand. Comm. Rep. No. 195, in 1951 Senate Journal, at

589.    However, the amendment provided that if the employee

recovered damages from the tort suit, the employer would have the

right to reimbursement out of those damages for the workers’

compensation benefits it paid.           1951 Haw. Sess. Laws Act 194, § 1

at 229–30; S. Stand. Comm. Rep. No. 195, in 1951 Senate Journal,

at 589.

             Subsequent legislative amendments provided additional

detail regarding the employer’s rights and remedies, including

procedures for an employer’s recovery of workers’ compensation

benefits, litigation expenses, and attorney’s fees in suits

against third-party tortfeasors.             In 1967, the legislature

amended the WCL “to provide a method for fixing and paying

reasonable litigation expenses and attorney’s fees in third party

actions and for the apportionment of such expenses and fees.”                   S.

Stand. Comm. Rep. No. 163, in 1967 Senate Journal, at 904; 1967


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Haw. Sess. Laws Act 53, § 1 at 39-40.          In 1970, the legislature

amended the WCL to provide for litigation costs and attorney’s

fees where a third-party claim results in settlement.              1970 Haw.

Sess. Laws Act 58, § 1 at 106-07; H. Stand. Comm. Rep. No. 638-

70, in 1970 House Journal, at 1111.         In 1973, the legislature

amended the WCL to “require an employer or his insurance carrier

to pay a proportionate share of the attorney’s fees and costs on

sums recovered by an injured employee from a third party which

are reimbursable to the employer or his carrier.”             H. Stand.

Comm. Rep. No. 375, in 1973 House Journal, at 911; 1973 Haw.

Sess. Laws Act 144, § 1 at 225-26.

            In sum, the history of the statute reflects the

legislature’s intent to address an ever-wider range of scenarios,

and to provide a clear set of rules for each to ensure that both

the employer and the employee are treated fairly.             It would be

inconsistent with that carefully crafted scheme to allow the

employer to unilaterally vary those rules through agreements with

its subcontractors.     By providing a specific reimbursement remedy

and continuing to provide further specificity to the contours of

that remedy, the legislature intended to exclude other forms of

remedy for an employer’s payment of workers’ compensation

benefits.    Accordingly, the legislative history suggests that the

comprehensive workers’ compensation scheme is the whole source of


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rights and remedies for third-party tortfeasor actions under the

WCL.

             This conclusion is supported by our interpretation of

statutes governing reimbursement and subrogation rights in the

health insurance context.          See Yukumoto v. Tawarahara, 140

Hawai#i 285, 400 P.3d 486 (2017).            In Yukumoto, the Hawai#i

Medical Service Association (HMSA) argued that it was not limited

to the statutory procedure for reimbursement of the amounts it

paid for medical expenses associated with Yukumoto’s injuries in

an accident, but could recover those amounts through independent

contractual rights.        Id. at 288, 400 P.3d at 489.          Based on the

plain language and legislative history of the statutes at issue,

we held that the legislature had created a uniform and

comprehensive procedure for lienholders’ reimbursement and

subrogation recovery.         Id. at 294-98, 400 P.3d at 495-99.

Accordingly, any contractual provision in conflict with the

statutory procedure was invalid, and HMSA could not recover its

medical expense payments through contract instead of following

the procedure prescribed by the legislature.              Id. at 299, 400

P.3d at 500; see also Vinson v. Thomas, 288 F.3d 1145, 1156 (9th

Cir. 2002) (holding that the specificity and comprehensiveness of

the remedies provided by Title II of the Americans with

Disabilities Act suggested that Congress intended that remedial


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scheme to be the exclusive means by which a party could vindicate

his rights, and therefore plaintiff’s § 1983 claims were barred).

          Similarly here, HRS § 386-8 sets forth a comprehensive

scheme which reflects an intent to establish uniform and

exclusive remedies.     Accordingly, the plain language and

legislative history of HRS § 386–8 support the conclusion that

HDCC’s manner of compensation reimbursement is exclusively

provided for in the statute.

     2.   The Purpose of Workers’ Compensation Law

          Our conclusion that the plain language and legislative

history of HRS § 386-8 provides an employer’s exclusive remedy

for reimbursement is also consistent with the purpose of WCL.                In

Estate of Coates v. Pac. Engineering, a Div. of Pac. Lining Co.,

Inc., 71 Haw. 358, 364, 791 P.2d 1257, 1261 (1990), we noted that

WCL is “designed to obtain for the injured workman or his

dependents an assured, certain and prompt compensation to replace

the doubtful right accorded by common law, and to secure for the

employer freedom from vexatious, delaying and uncertain

litigation with its possibilities of heavy penalties in the way

of verdicts and high costs.”

          In accord with this purpose, we have said that HRS

§ 386–8 establishes a framework for dispute resolution “at one

time and in a single proceeding,” thereby promoting the efficient


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resolution of an employee’s claims.         First Ins. Co., 126 Hawai#i

at 418, 271 P.3d at 1177.       In First Ins. Co., we considered the

narrow question of whether an employee can intervene in his or

her employer’s timely lawsuit against a third party after the

two-year limitations period established by HRS § 657-7 (1993) has

passed.    Id. at 408, 271 P.3d at 1167.        We construed HRS § 386–8

consistent with WCL’s purpose of facilitating a fair and prompt

resolution, noting that HRS § 386–8 requires written consent by

both the employee and employer to a settlement or release of

claims in order to provide an opportunity for each party to

protect their respective interests.         Id. at 418, 271 P.3d at

1177.    Because it would be inconsistent to allow an injured

employee to object to a proposed settlement of claim but not

intervene in an employer’s suit to resolve that claim, we held

that “the structure of the workers’ compensation statute, which

encourages resolution of the dispute in a single action, suggests

an intent to allow intervention by both the employer and the

employee at any time prior to trial in the other’s timely filed

suit.”    Id.   Thus, while First Ins. Co. did not directly answer

the question here, it held that HRS § 386–8 should be construed

in order to accomplish the purpose of encouraging resolution of

disputes in a single action.       Id.




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            Interpreting HRS § 386-8 as providing an exclusive

remedy is consistent with WCL’s purpose because it “encourages

resolution of the dispute in a single action” and discourages

“vexatious, delaying and uncertain litigation” through contract-

based actions to recover workers’ compensation payments.               Id.;

Estate of Coates, 71 Haw. at 364, 791 P.2d at 1261.              Such actions

conflict with the statute’s goal of efficiently resolving an

injured employee’s claims in a single proceeding and assuring

prompt compensation for the injured employee.7

            Accordingly, based on the statute’s plain language,

legislative history, and purpose, we conclude that HRS § 386-8

provides HDCC’s exclusive remedy for reimbursement of workers’

compensation payments.

C.    Application to this Case

            In light of our conclusion that HRS § 386-8 provides an

employer’s exclusive remedy for reimbursement of workers’

compensation payments, HDCC’s breach of contract claim fails.

Even if the parties intended the Subcontract’s indemnity clause

to encompass workers’ compensation payments, that agreement would



      7
            Furthermore, permitting an employer to require its subcontractor
to indemnify it for workers’ compensation benefits could raise significant
public policy concerns. For example, allowing this contractual shifting of
responsibilities could discourage an employer from providing a safe work
environment for its employees, because an accident to which a subcontractor is
only marginally attributable could still fall within the scope of the
indemnity clause.

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be invalid.    An employer cannot contractually require a third-

party tortfeasor to indemnify it for workers’ compensation

payments.    Rather, the employer must follow the procedure

provided by HRS § 386-8.      Therefore, summary judgment in favor of

Fujikawa was proper.

            Respectfully, we disagree with the ICA’s conclusion

that Iddings, 82 Hawai#i 1, 919 P.2d 263, supports a contrary

result.   The ICA determined that contractual indemnification

agreements are valid in the workers’ compensation context and do

not undermine the purposes of WCL, quoting Iddings, 82 Hawai#i at

8, 919 P.2d at 270.     The ICA then interpreted the Subcontract,

and concluded that the Subcontract’s indemnity clause encompassed

expenses stemming from workers’ compensation benefits.              Iddings,

however, is distinguishable.

            In Iddings, the plaintiff nurse was injured while

subduing a violent patient.       Id. at 4, 919 P.2d at 266.         The

nurse applied for, and received, workers’ compensation benefits

from her employer, the hospital.          Id.    The nurse brought a

separate action in tort against her supervisory co-employee,

physician Mee-Lee, contending that Mee-Lee, by allowing the

hospital to become overcrowded, acted wilfully and wantonly in

creating an unsafe work environment.            Id.   The circuit court

granted Mee-Lee’s motion for summary judgment, finding that:                 (1)


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an actual intent to injure is required for a co-employee’s

conduct to satisfy the “wilful and wanton misconduct” exception

to co-employee immunity; and (2) the nurse’s contention that Mee-

Lee intentionally allowed her to work in an unsafe working

environment did not constitute willful and wanton misconduct.

Id. at 5, 919 P.2d at 267.

          We vacated and remanded, holding that an actual intent

to injure is not required in order for the injury-causing conduct

of a co-employee to fall within the scope of the wilful and

wanton misconduct exception, and that there were genuine issues

of material fact as to whether Mee-Lee engaged in willful and

wanton misconduct.     Id. at 4, 919 P.2d at 266.

          We discussed contractual indemnity agreements only in

the context of responding to the dissent.           Id. at 15-17, 919 P.2d

at 277-79.   The dissent contended that allowing tort claims

against supervisory co-employees would create an absurd result,

since the employer would provide benefits to the injured employee

through workers’ compensation, and, at the same time, indemnity

coverage to the supervisory employee.          Id. at 28 n. 11, 919 P.2d

at 290 n. 11 (Ramil, J., dissenting).          The dissent argued that a

typical situation where this absurd result would occur is the

following:   (1) the employee would seek workers’ compensation

benefits, and damages from the supervisory employee tortfeasor;


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(2) the supervisor would then seek indemnity from its employer;

(3) and the employer would then seek reimbursement for its

workers’ compensation benefits from the injured employee’s

recovery against the supervisor.          Id.; see also id. at 17, 919

P.2d at 279 (Ramil, J., dissenting).

          The majority responded that it failed to see the

absurdity of this result.       Id. at 17, 919 P.2d at 279.         We stated

that it is “well settled that contractual indemnification

agreements and ‘hold harmless’ clauses are valid in the workers’

compensation context and do not contravene or undermine the

purposes underlying workers’ compensation in general.”              Id. at

16, 919 P.2d at 278.     This statement related to a third-party

tortfeasor’s right to seek indemnity from an employer based on an

indemnity agreement.     See id.     We relied on previous cases:

Kamali v. Hawaiian Elec. Co., Inc., 54 Haw. 153, 504 P.2d 861

(1972), Messier v. Ass’n of Apartment Owners of Mt. Terrace, 6

Haw. App. 525, 735 P.2d 939 (1987), and Keawe v. Hawaiian Elec.

Co., Inc., 65 Haw. 232, 649 P.2d 1149 (1982), which all held that

a third-party tortfeasor may seek indemnification from an

employer based on a contractual indemnity agreement.             Iddings, 82

Hawai#i at 17, 919 P.2d at 279.       We stated that just as any other

third-party tortfeasor may seek indemnity from an employer for

the tort damages it paid to the injured employee, a co-employee


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liable in tort to the injured employee may seek indemnification

from his or her employer.         Id.   Finally, we stated that the

dissent’s third proposition “simply reiterates the employer’s

right of reimbursement for workers’ compensation benefits paid

out by the employer mandated by HRS § 386–8.”              Id.

            Thus, the reference to indemnity agreements in Iddings

involved only agreements in which a third party seeks

indemnification from the employer for damages the third party has

paid to an injured employee.         See id. at 15-17, 919 P.2d at 277-

79.   Iddings, and the earlier cases on which it relied, did not

address the wholly separate issue of whether an employer may

circumvent the statutory procedure provided in HRS § 386-8 by

using an indemnity agreement to recover workers’ compensation

benefits from a third-party tortfeasor.8

            In fact, Iddings stated that an employer, after

indemnifying a third-party tortfeasor, could seek reimbursement

for workers’ compensation benefits from the employee through the

statutory procedure mandated by HRS § 386-8.             Id. at 17, 919 P.2d

at 279.    Thus, Iddings did not contemplate an employer using an


      8
            We also note that, although not at issue here, any agreement in a
construction contract requiring the promisor to indemnify or 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, is invalid as
against public policy, and is void and unenforceable.” HRS § 431:10-222;
Arthur v. State, Dept. of Hawaiian Home Lands, 138 Hawai#i 85, 93-95, 377 P.3d
26, 34-36 (2016).

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indemnification agreement to recover workers’ compensation

benefits from a third-party tortfeasor.

          An agreement by an employer to indemnify a potential

third-party tortfeasor for tort damages does not implicate the

policies of WCL, because it does not alter the procedure by which

employers provide or receive reimbursement for workers’

compensation benefits.      In contrast, the indemnity agreement here

attempted to supplant the procedure mandated by HRS § 386-8.

          Accordingly, the ICA erred when it relied on Iddings to

conclude that the Subcontract’s indemnity provision was valid.

                              IV. Conclusion

          For the foregoing reasons, we conclude that HRS § 386-8

provides the exclusive remedy for an employer seeking

reimbursement for workers’ compensation benefits from a third-

party tortfeasor, and accordingly, that summary judgment in favor

of Fujikawa was proper.      We therefore vacate the ICA’s March 29,

2017 Judgment on Appeal, and affirm the circuit court’s May 2,

2014 Judgment.

Sheree Kon-Herrera                        /s/ Mark E. Recktenwald
for petitioner
                                          /s/ Paula A. Nakayama
James Shin (Jodie D.
Roeca on the briefs)                      /s/ Sabrina S. McKenna
for respondent
                                          /s/ Richard W. Pollack

                                          /s/ Michael D. Wilson


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