Castro v. State Farm Mutual Automobile Insurance Company

── Castro v. State Farm Mutual Automobile Insurance Company ── Court: Hawaii Intermediate Court of Appeals Date: May 28, 2026 Category: General NOT FOR PUBLICATION IN WEST'S HAWAI I REPORTS AND PACIFIC REPORTER Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 28-MAY-2026 08:04 AM Dkt. 61 MO NO. CAAP-XX-XXXXXXX IN THE INTERMEDIATE COURT OF APPEALS OF THE STATE OF HAWAI I GWENDOLYN CASTRO, Claimant-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent-Appellant APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT (CASE NO. 3CSP-XX-XXXXXXX) MEMORANDUM OPINION (By: Nakasone, Chief Judge, Leonard and Wadsworth, JJ.) Respondent-Appellant State Farm Mutual Automobile Insurance Company (State Farm) appeals from the April 16, 2024 Order Granting Claimant[-Appellee] Gwendolyn Castro's Motion To Confirm Arbitration Award; And For Post Judgment Attorneys' Fees, Costs, and Post Judgment Interest And Order Denying Respondent's Motion To Vacate Partial Arbitration Award (Order re Arbitration Award) entered against it by the Circuit Court of the Third Circuit (Circuit Court).1 I. BACKGROUND On August 12, 2019, Gwendolyn Castro (Castro) was injured in an automobile accident. The driver of the other vehicle was James Besser (Besser). Both of them were insured by 1 The Honorable Robert D.S. Kim presided.  NOT FOR PUBLICATION IN WEST'S HAWAI I REPORTS AND PACIFIC REPORTER State Farm. Castro settled her claim with Besser for $245,000. On September 16, 2022, Castro filed an application to the Circuit Court for an order appointing an arbitrator and directing arbitration, contending that she was entitled to Underinsured Motorist (UIM) benefits under her policy with State Farm. On October 17, 2022, the Circuit Court entered an Order Appointing Arbitrator and Directing Arbitration, which appointed Jerry Hiatt, Esq., as the arbitrator (Arbitrator). The Arbitrator held a hearing on June 20, 2023, and August 16, 2023. The Arbitrator issued his Partial Final Award (PFA) on September 4, 2023, awarding Castro $882,103.56 in damages, costs, and prejudgment interest. 2 The Arbitrator reserved the issue of attorney's fees and directed Castro to supplement the record, with respect to attorney's fees, within 14 days of the filing of the PFA and directed State Farm to file any opposition 14 days thereafter. On September 11, 2023, Castro requested attorney's fees in the amount of $234,711.30, or 1/3 of $704,133.91, pursuant to a contingent fee agreement with Castro's attorney. On September 12, 2023, State Farm objected to the award of attorney's fees and prejudgment interest. State Farm argued, inter alia, that the Arbitrator lacked authority to award 2 The breakdown of the award was: Total Special Damages (Medical Expenses) $182,440.77 Total Out of Pocket Costs $386.92 Total General Damages $750,000.00 Total Costs $21,813.34 Subtotal $954,641.03 Less Stipulated Reduction ($260,000.00) Subtotal $694,641.03 Less Deduction for Apportionment of 2.4% ($16,671.38) Subtotal $677,969.65. Plus Pre-Judgment Interest $204,133.91 TOTAL AMOUNT AWARDED TO CLAIMANT $882,103.56 2  NOT FOR PUBLICATION IN WEST'S HAWAI I REPORTS AND PACIFIC REPORTER attorney's fees because they were not raised at the hearing and were "extra-contractual." The Arbitra