THE HARMON CHRONICLES - 1997 - 1999
A Sighting from The Catbird Seat
01/05/97 BH sent a claim letter to John T. Sinnott, President and CEO of M&M, and enclosed a copy of his letter of December 29, 1996 to Trustees.
01/10/97 David Loo, John Mullen & Co., acknowledged receipt of Harmon’s letter and advised: “Various employees of our company have been listed as potential witnesses should the matter proceed to litigation. Under the circumstances, we have disqualified ourselves from handling this claim and have notified the insured and the insurer of our decision.”
01/22/97 Harmon applies for unemployment insurance with the Hawaii Dept. of Labor & Industrial Relations.
01/30/97 Robert Katz, Esq. of Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington wrote Plaintiff: “I have been retained by Kamehameha Schools Bishop Estate (“KSBE”) to assist and advise it in connection with your December 29, 1996 settlement proposal in the above-referenced matter. Due to the extent and complexity of your settlement proposal, it will not be possible for KSBE to respond by your requested date of January 31, 1997.”
02/02/97 ltr fm BH to Katz: “...Your letter does not disclose other information which is important in my responses to you and in my pursuit of these claims:
1. You state that you have been retained by KSBE. You do not indicate that you are also representing P&C Insurance Company, Inc. (P&C). Does this mean that your comments regarding disclosure of confidential information, etc. apply only to KSBE documents? Could you please provide me a copy of your retention letter in order to confirm your appointment.
2. Could you please clarify your statement that you have been retained by KSBE ‘to assist and advise it’ in connection with my claims. Does the scope of your responsibilities extend to actual settlement negotiations.
. 3. Has your engagement by KSBE been approved by the insurance carrier(s). If so, may I please have a copy of any letter evidencing this fact. ”
“. . . I am not aware of any information which may violate Hawaii’s Trade Secrets Law (H.R.S. Chapter 482B). However, if you will specify which documents you believe may be in violation of either KSBE’s policies or any applicable statutes, and detail valid reasons, I will certainly consider their immediate return. (emphasis added)”
cc: Trustees; Chubb Group; Mullen; & M&M.
02/07/97 Katz responded to BH: “In response to your February 2, 1997 letter, I wish to advise you as follows. First, our law firm is representing both P&C Insurance Company, Inc. and Kamehameha Schools Bishop Estate (emphasis added). For convenience I will refer to them collectively as ‘KSBE’. Our representation of KSBE would include settlement negotiations as deemed appropriate by KSBE. Finally, our representation of KSBE does not require approval by any insurance carrier.”
Katz’s statement that their representation of KSBE does not require approval by any insurance carrier was a material misrepresentation. Federal’s insurance policy, a copy of which was not received by BH until March 10, 1997, states:
DEFENSE AND SETTLEMENT
1.3 “The Company shall have the right and duty to defend any suit to which this insurance applies alleging a claim against an Insured even if any of the allegations are groundless, false or fraudulent, or alternately may, at the option of the Company, give its written consent to the defense of any such suit by the Insured (emphasis added).”
This misrepresentation was an unfair claims practice as defined under HRS 431:103(10)(A): “Misrepresentating pertinent facts or insurance policy provisions relating to coverages at issue.” Due to its deliberate and malicious nature, this constituted an act of bad faith.
02/07/97 P&C and Trustees of the Estate of Bernice Pauahi Bishop filed Civil No. 97-0512-02 against BH in the First Circuit Court, State of Hawaii. This civil lawsuit is ongoing.
02/08/97 BH tendered defense of this lawsuit to Michael Goolsby, Chubb Group, stating in part:
“...I am hereby tendering this claim to the Federal Insurance Company (Chubb Group) under the terms of its Directors & Officers and Association Liability policies issued to Kamehameha Schools Bishop Estate (KSBE) and P&C Insurance Company, Inc. . . . This lawsuit arises out of my employment as an employee of KSBE, and as an officer or P&C. As an insured person under the above policies, I am requesting that your company provides defense for this lawsuit. . . I understand an answer to the complaint is due withing twenty days of service. As I have not yet selected an attorney, I would appreciate your immediate response and recommendations. . .”
02/15/97 P&C and KSBE filed a Motion for Preliminary Injunction and Notice of Hearing of Motion. The Hearing of Motion was scheduled for February 18, 1997.
02/15/97 BH sent a letter by fax and mail to Goolsby: “This is to advise that I was served at 8:10 a.m., Saturday, Feb. 15, 1997 with PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION and NOTICE OF HEARING OF MOTION. . . The hearing is scheduled for this Tuesday, Feb. 18, 1997 at 1:30 p.m. As I have not had a response to my tender letter to you dated Feb. 8, 1997, or a return of my phone calls to your office, and as Monday, February 17th is a holiday, I am very concerned that this hearing may be held before I have the time and opportunity to obtain adequate and proper legal advice. . . . As I stated in my tender letter of February 8, 1997, I have not yet selected or retained an attorney. I have been awaiting Chubb’s response and advice before taking this action as I am unaware if the company intends to appoint an attorney of its choosing, or if I am to be permitted to select the attorney, subject to your approval.”
Federal did not respond to Harmon’s letter in time for Plaintiff to comply with the terms of the insurance policy which states in § 1.3: “The Company shall have the right and duty to defend any suit to which the insurance applies. . . No Defense Costs shall be incurred or settlements made without the Company’s consent, which shall not be unreasonably withheld. The Company shall not be liable hereunder with respect to any settlement or Defense Costs to which it has not consented.”
02/15/97 As Harmon did not receive a timely response from Chubb, he had no choice but to seek out an attorney on his own. Under duress and time constraints, Harmon retained John Marshall, Esq. at to represent him at the scheduled hearing of KSBE’s Motion for Preliminary Injunction. Federal’s failure to respond in a timely manner to Harmon resulted in the incurring of legal costs which could not be recovered under the terms of the policy, and constituted an act of bad faith.
02/18/97 Harmon, through his then-attorney, John Marshall, Esq., filed an Answer to Verified Complaint filed on 2/7/97, and a Counterclaim, alleging and averring, in part:
“. . . 2. Counterclaim Defendants P&C INSURANCE COMPANY, INC. (hereinafter “P&C”) and/or RICHARD S.H. WONG, OSWALD K. STENDER, LOKELANI LINDSEY, GERARD A. JERVIS and HENRY H. PETERS, as TRUSTEES OF THE ESTATE OF BERNICE PAUAHI BISHOP (hereinafter sometimes collectively referred to as “Bishop Estate”) were during the relevant period the employer(s) of Counterclaimant.
3. While so employed, Counterclaimant witnessed and refused to participate in or acquiesce to acts and practices by the Counterclaim Defendants which were in violation of Federal and/or State of Hawaii laws and/or regulations and/or rules.
4. As a result of Counterclaimant’s refusal to participate in or acquiesce to said acts and practices, as well as because the Counterclaim Defendants believed that Counterclaimant had reported and/or was about to report said acts and/or practices to governmental authorities, Counterclaim Defendants wrongfully terminated Counterclaimant.
5. Counterclaim Defendants’ conduct and wrongful termination of Counterclaimant violated clear mandates of public policy.
6. Counterclaim Defendants’ conduct and wrongful termination of Counterclaimant violated the Hawaii Whistleblowers’ Protection Act, set forth in Hawaii Revised Statutes Chapter 378, such that he is entitled to, amongst other things, injunctive relief, actual damages, reinstatement, back wages, reasonable attorneys’ fees and/or costs of suit.
7. Counterclaim Defendants’ conduct and wrongful termination of Counterclaimant constitutes a breach of contract.
8. Counterclaim Defendants’ conduct and wrongful termination of Counterclaimant constitutes a tortious breach of contract.
9. Counterclaim Defendants’ conduct and wrongful termination of Counterclaimant constitutes a violation of HRS Chapter 480, for which Counterclaimants are liable to pay treble damages and reasonable attorneys’ fees, together with costs of suit.
10. Counterclaim Defendants’ conduct caused Counterclaimant serious mental distress and anguish; and constitutes the negligent and/or intentional infliction of emotional distress upon Counterclaimant.
11. As a result of Counterclaim Defendants’ above-described acts, practices and wrongful termination, Counterclaimant has sustained injury and/or damages.
12. Counterclaimant is entitled to general, special, consequential and/or incidental damages in such amounts as shall be proven at the time of trial.
13. Counterclaim Defendants’ conduct was wilful and wanton, so as to warrant the imposition of punitive damages.
14. Counterclaim Defendants are the alter-egos of each other and are in such a controlled relationship with one another that they should be treated as one and the same entity under the law and the fiction of their separate existences should be disregarded such that they are each liable for the debts and obligations of the other.
WHEREFORE, Counterclaimant prays for judgment against the Counterclaim Defendants, and each of them, for compensatory damages in such amounts as may be proven at the time of trial, together with treble and/or punitive damages, attorneys’ fees and costs, and such other relief as is provided by the statutes referenced and/or is just in these premises.”
02/19/97 Hearing was held on P&C/KSBE’s Motion for Preliminary Injunction, before Judge Karen M. Radius. Appearing at the hearing were Aipa, Katz and Tsukazaki for Plaintiffs, and Harmon and Marshall for Defendant. A written statement prepared by Plaintiff’s attorney, John Marshall, to be presented orally to Judge Radius at the hearing, made the following points:
“Your Honor, it is important to know why these documents are such a bone of contention.
- On 11/20/96, Mr. Harmon was terminated from his job as the president of Bishop Estate’s captive insurance company, P&C. Although it is a wholly owned subsidiary, it is supposed to have a separate corporate existence.
- And, Bishop Estate knows that if it doesn’t maintain an ‘arms length’ with this profit-making subsidiary, then it has implications for its non-profit tax-free status.
- Mr. Harmon has documents which show, amongst other things, that Bishop Estate did not maintain an ‘arms-length’ relationship and that Mr. Harmon wasn’t going along with it. Said another way, there may have been, and continue to be, some tax fraud afoot and Mr. Harmon got in the way of it.
- Yesterday, Mr. Harmon filed a Counterclaim against Bishop Estate claiming a Parnar-public policy type wrongful termination, and that Bishop Estate violated the Hawaii Whistleblower Statute.
- Mr. Harmon believes that if he didn’t have these documents, there is some chance that they won’t still be in existence when he requests them in discovery.
- When Bishop Estate’s papers herein say that Mr. Harmon said he might be providing the documents to third-parties, I believe the facts will show that two of those parties were the Internal Revenue Service and the Justice Department.”
02/19/97 Patrick A. Richard, Chubb Group, acknowledged receipt of the claim and advised that Tony Rangel would be conducting an investigation and evaluation of the facts and policies issued to KSBE to determine the availability of coverage.
02/20/97 Judge Karen Radius issued an Order Granting Plaintiffs’ Motion for Preliminary Injunction against Defendant Bobby N. Harmon, in part, as follows:
“1. Any and all privileged and confidential information and documents, records and things, and copies thereof, and the subject matter discussed therein shall remain strictly privileged and confidential, and shall not be disclosed by Defendant to any person;
2. Defendant shall not disclose or release his Settlement Demand letter dated December 29, 1996, to any third-party and all forms, originals, drafts, and copies, thereof, shall be turned over to Defendant’s counsel;
3. Defendant shall not orally or in writing reveal or disclose to any third-party, except to his attorney, confidential and/or proprietary information, documents or records, related to his employment or that he obtained while employed by KSBE or serving as an officer of P&C;
4. Defendant shall give to his counsel by the close of business, February 20, 1997, all documents, records and/or things, including any computer programs, discs or tapes, and all copies thereof, relating to Plaintiffs, which he obtained as a result of his employment at KSBE or as an officer of P&C; . . .
6. Defendant’s counsel may bate-stamp and catalog all documents, records and/or things, including any computer programs, discs or tapes, and all copies thereof, provided to him by Defendant, and a copy of the catalog will be provided to Plaintiffs’ counsel; . . .
11. Plaintiffs shall preserve the documents, records and/or things returned to it by Defendant and/or things returned to it by Defendant and the Court until the entry of the final judgment in this matter;
12. Defendant shall not contact or meet with any person with whom Plaintiffs have transacted business and/or of whom Defendant learned about while employed by KSBE or serving as an officer or P&C to discuss any matter related to Plaintiffs’ businesses and/or operations, and Defendant’s employment appointment with Plaintiffs;
13. Except as otherwise provided for herein, any and all discovery of privileged, confidential and/or proprietary information, documents, records and things, which is secured by Defendant is subject to this Order and such information and evidence is protected from disclosure under this Order;
14. Pursuant to Haw. R. Civ. P. 65(d), this Order Granting Plaintiffs’ Motion for Preliminary Injunction is binding on Defendant’s Spouse, agents, servants, employees and/or attorneys, and upon those persons in active concert or participation with them; . .”
02/21/97 The Court issued an order granting Plaintiff KSBE’s, et al. Motion for Preliminary Injunction for the recovery of the alleged “stolen documents” and “trade secrets”.
02/25/97 Rangel contacted Marshall by phone and advised that he had only a renewal binder so he cannot be certain what coverages are afforded under the actual policy. He thinks the actual policy should be issued and he is working with the underwriters.
02/28/97 Marshall filed BH’s Counterclaim against P&C and KSBE for wrongful termination.
02/29/97 Hearing held on P&C/KSBE’s Motion for Preliminary Injunction against Harmon, before Judge Karen M. Radius. Judge Radius issued an Order Granting Plaintiffs’ Motion for Preliminary Injunction against Defendant Harmon.
03/04/97 Rangel wrote to Marshall (received 03/10/97) and enclosed a copy of the renewal policy. Rangel advised, “I anticipate being able to provide you with our coverage opinion within the very near future, or at least within the next 30 days.” The undue delay in Federal’s response was unconscionable and constituted an act of bad faith.
03/13/97 Harmon turned over the allegedly “stolen” documents to the Court under seal. These included his letter of 12/29/96 to Trustees with all enclosures.
03/13/97 Dept. of Labor denies Unemployment Insurance benefits to Harmon on the basis of KSBE’s statement that Harmon was discharged for misconduct.
03/20/97 Harmon files Appeal No. 9701016 to Dept of Labor for Unemployment benefits.
03/27/97 Rangel wrote to Marshall advising of Federal’s decision to decline coverage. Note that Federal delayed informing Harmon of their decision until after KSBE and P&C had obtained the return of all incriminating evidence. Rangel cited Endorsements No. 1, 8 and 9 which amend Section 8.1, Definitions, and Endorsement No. 6 which amended Section 3.1, Exclusions, as the primary reason for denying coverages. The undue delay in Federal’s response was an act of bad faith.
04/11/97 BH and Marshall met with Robert Katz and Sandie Wicklein to discuss a possible settlement. A tentative settlement proposal was made to Harmon which Katz and Wicklein indicated would need to be presented to Trustees for their approval. Although Harmon believed the tentative offer was far less than his actual losses, Federal’s refusal to defend him and the fact that he could not afford to pay his attorney for defending against P&C’s lawsuit, weighed heavily in Harmon’s mind to accept the offer. Upon closer review of the actual policy, however, Harmon discovered that Federal had fraudulently back-dated material exclusion endorsements.
04/14/97 BH responded to Rangel’s letter of 03/27/97, disagreeing with his coverage position. Harmon pointed out that Endorsement No. 6 was issued on February 13, 1997, but back-dated to be effective October 27, 1995. This endorsement replaced End. # 4 which was also effective October 27, 1995. Endorsements 6, 7, 8 and 9 were also issued on the same date, and were also back-dated to show an effective date of 10/27/95. BH also argued that this claim was employment related, which would allow the claim to be covered even under End. # 6. The backdated alteration of this contract clearly constituted fraud, and due to its malicious and deceptive nature was an act of bad faith. The policy was sent by mail, constituting mail fraud.
04/15/97 Harmon hired by American Mutual Underwriters, Ltd. as Marketing Manager (not a VP as he had been when he voluntarily left AMU to join KSBE), at annual salary of $52,000 (compared to $70,000 a year at KSBE). AMU had no retirement plan comparable with KSBE, and no monthly auto allowance.
04/22/97 Rangel wrote to Marshall and stated that Federal was undertaking a review of Harmon’s arguments and anticipated being able to provide a response within the next 30 days.
04/28/97 Harmon wrote to the California Dept. of Insurance to request review of this case due to Federal’s unfair claims settlement practices: “. . . It is my belief that the Federal Insurance Company; the insured organizations, P&C Insurance Company, Inc. and Kamehameha Schools Bishop Estate; their insurance broker, Marsh & McLennan, Inc.; their captive manager, M&M Insurance Management Services, Inc.; and certain officers, directors and employees of these entities, have conspired to wrongfully decline coverages under the referenced policy. In the process, the Federal Insurance Company, in collusion with these entities, has fraudulently altered and misrepresented the terms of the policy; has engaged in deceptive claims practices; and has acted in bad faith by declining to defend me in the referenced lawsuit. . .. My primary concern is that the insurance company, in collusion with the insured organizations and the broker, Marsh & McLennan, Inc., knowingly and deliberately back-dated an exclusion endorsement in order to deny coverages for the referenced claim. . . I consider the company’s refusal to defend this claim based upon the retroactively revised wording in Endorsement No. 6 to be one of the most extreme examples of fraud and bad faith that I have encountered in my 35 years of experience in the insurance business. If I were a typical insured without this background and experience in insurance matters, this retroactive revision in the terms of the policy would probably have gone unnoticed. By bringing this matter to your attention, I hope that your office will take prompt and appropriate action in this case in order to protect the public from similar unfair claims settlement practices. . . “
cc: Insurance Commissioner, State of Hawaii; John Marshall, Esq.; Tony Rangel, Chubb Group; Elizabeth K. Kellner, Assoc Litigation Counsel, M&M (w/encls.)
05/06/97 J. Craig Collins, Assoc. Claims Officer of the Calif. Dept. of Insurance, responded to Harmon stating that his inquiry does not relate to a matter within the jurisdiction of this Department, and it was being sent to the Insurance Commissioner, State of Hawaii.
05/08/97 BH made counteroffer for settlement to KSBE and P&C, to expire 05/15/97. There was NO RESPONSE from Federal, P&C, Katz, M&M or Mullen to this offer. Another bad faith act.
05/14/97 Cecelia Chock, Investigator, State of Hawaii, Insurance Div., answered BH’s letter of 04/28/97:
“. . . We regret to advise you the State of Hawaii Insurance Division does not have jurisdiction over the denial of a claim or interpretation of coverage. Proper jurisdiction would rest with the Court system. . . .”
05/14/97 First Unemployment Appeals hearing held before Hearings Officer, Ernest Hanaumi.
05/15/97 More than 500 Kamehameha Schools parents, students, alumni and supporters march on Bishop Estate headquarters to protest what they said was trustees’ micromanagement of the campus.
05/19/97 H. Paul Breslin, Esq., of Archer McComas Breslin McMahon & Chritton, responded to Marshall:
“. . .We have been retained by Federal Insurance Company to represent its rights in connection with this coverage dispute. . . In his letter of April 14, 1997 Mr. Harmon claims that Endorsement No. 6 which changed the language of the Insured v. Insured exclusion should not apply to his claim. He then makes the following specific charges against Federal:
‘From this chronology, it would strongly appear that a deliberate attempt has been made by your company to back-date this exclusion in Endorsement No. 6 solely for the purpose of denying coverages for this litigation.’ ‘. . . It is evident that Federal Insurance Company, in collusion with the insurance broker, Marsh & McLennan, Inc, has knowingly and intentionally breached its duty to defend in this case, and has flagrantly engaged in deceptive claims practices by back-dating endorsements to the policy in order to deny coverages.’
“Each of these charges is totally unfounded and totally untrue. The statements are libelous per se. Since they have now been published to a variety of third parties, they detrimentally impact Federal’s reputation in the insurance market place and the ability to do business therein. . .
“We vehemently reject Mr. Harmon’s assertions of collusion, deceptive claims practices, and breaches of duty. We demand that Mr. Harmon cease and desist from continued publication of such libelous statements. . .”
These threats were meant to intimidate Harmon from exercising his right of free speech and from presenting his legitimate claims. This constitutes extortion and bad faith.
05/23/97 BH responded to Collins’ letter of 05/06/97: “My reason for writing the California Department of Insurance on April 28, 1997, was due to the advice of Tony Rangel, Federal Insurance Company, in his letter dated March 27, 1997. . . I relied on this advice of the insurance carrier to have your office investigate my complaints of possible fraud . . . misrepresentations by the broker and carrier, and deceptive and unfair claims settlement practices. . . . My primary concern was that the insurance company, in collusion with certain individuals in the insured organizations and the broker, Marsh & McLennan, Inc., knowingly and deliberately back-dated an exclusion endorsement in order to deny coverages. By filing this complaint, I hoped to help protect others from being victimized by such deceptive practices. . . . In light of this new information, I would appreciate further clarification of the jurisdictional issues you raised. . .”
05/24/97 BH replied to Cecelia Chock, Hawaii Ins. Div.’s ltr of 05/14/97:
“I recognize the fact that the State of Hawaii Insurance Division does not have jurisdiction over the denial of a claim or interpretation of coverages. . . . My primary concern was that the insurance company, in collusion with certain individuals in the insured organizations and the broker, Marsh & McLennan, Inc., may have knowingly and deliberately back-dated an exclusion endorsement in order to deny coverages. If this is true, then by filing this complaint, I hoped to help protect others from being victimized by similar deceptive claims practices. . . . Contrary to the information provided by Federal’s claims adjuster, it now appears that my complaint should have been addressed to the State of Hawaii Insurance Division. Therefore, I am formally filing this complaint at this time in accordance with ¶ 431:13-103 of the State of Hawaii insurance statutes. . . . It is my belief that the Federal Insurance Company; Marsh & McLennan, Inc. (M&M), and it officer, Rocco Sansone; Marsh & McLennan Insurance Management Services, Inc. (MMIMS), and its officer, Peter Lowe, may have made false, deceptive and misleading statements regarding the insurance coverages provided to me as an insured person in order to improperly influence the settlement of the referenced claim.”
“ . . . The following sections of ¶ 431:13-103 Unfair methods of competition and unfair or deceptive acts or practices appear to apply in this case:
(a) The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance:
(1) Misrepresentations and false advertising of insurance policies. Making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which:
(A) Misrepresents the benefits, advantages, conditions, or terms of any insurance policy...”
(M&M and Federal represented that the referenced Directors and Officers Liability policy would defend claims made against directors and officers of P&C and against employees of KSBE for “wrongful acts” as defined in the policy. I consented to serve as President of P&C based partially on the conditions that: 1) P&C would indemnify and hold me harmless for acts performed in connection with my services to the company; 2) that Directors and Officers Liability insurance would be provided to defend me in the event of claims for any wrongful acts arising from my serving in this capacity.)
(10) Unfair claim settlement practices...
(A) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
(Prior to purchasing the referenced policy, M&M and Federal represented to me in my capacity as the Risk/Insurance & Safety Manager of KSBE, and as the President of P&C, that the policy had a duty to defend trustees, officers, directors and employees against claims for “wrongful acts”. I relied on the representations of M&M and Federal that the policy that was issued and in force at the time of P&C and KSBE’s claims against me provided this coverage. M&M, Federal and the plaintiffs in this case have apparently conspired and caused the policy to be changed through a “back-dated” endorsement in order to deny this defense.)
(O) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;
“ . . . This case involves an “insured vs. insured” situation with both defendants claiming coverages under the same policy. The carrier stated to me that they would assign separate adjusters to each side in order to create a “Chinese wall” in this case, so that any knowledge gained, or actions taken, by one adjuster would not be disclosed to the other. . . Apparently, this duty has been breached. A meeting was recently held with plaintiff’s attorney regarding a proposed settlement. It was after this meeting that I again reviewed the insurance policy and discovered that Federal’s letter denying coverages had been based on the back-dated endorsement. After reporting this fact to the adjuster, I relied on his advice that, under California statutes, I could report this matter to the California Department of Insurance for investigation. The fact that I had registered a complaint with the California Department of Insurance was somehow passed on to Robert Katz, Esq., the plaintiff’s attorney. I was informed that he was very upset at my action--to the point that the plaintiff’s were considering withdrawing the proposed settlement offer. . . .Consequently, it appears the purported “Chinese wall” has been breached to the advantage of the plaintiffs, as well as to the benefit of the insurance agents and carriers, P&C, M&M and Federal. It appears possible that the delays and refusal of Federal to provide defense coverages to me under the policy may have been deliberate and intentional in order to influence the settlement of my counter-claim covered under other portions of the insurance policy. . . . As stated earlier, I recognize that your office would not get involved in the court case or in the settlement negotiations. However, I believe that under these Hawaiian insurance statutes, your office would be responsible for investigating complaints against the insurance companies and their agents for unfair and deceptive practices. I also hope that your office will discourage and appropriately deal with any attempts by the plaintiffs, the insurance company or broker to retaliate against me in any manner for filing this complaint.”
cc: Craig Collins, Calif Dept of Ins; Tony Rangel, Federal Ins Co; Elizabeth Keliner, Esq., Marsh & McLennan; Board of Directors P&C; Trustees of KSBE; & Richard Wong, Pres., Pauahi Holdings.
BH received NO RESPONSE from the Ins. Dept. or any other entity.
06/02/97 2nd Unemployment Appeals hearing held.
06/12/97 On June 12, 1997, Harmon responds to Federal’s letter of May 19, 1997:
“. . . In your conclusion you reiterate, ‘There was never any discussion whatsoever between Federal on the one hand and Marsh on the other concerning the change in the Insured v. Insured endorsement.’ . . . If this is true, then it appears that you are admitting that Federal unilaterally made these changes without discussion with Marsh and without the mutual consent of the Insured . . . In what appears to be a contradiction, however, you indicate that Federal ‘suggested certain changes to the Insured v. Insured exclusion’ when they began to construct the exact language of the requested endorsements. You do not disclose the date these suggestions were made, or who was involved in the discussions and approval of these suggestions. I must assume, however, that these suggestions were made to Marsh and/or the Insured, and were made sometime prior to the issuance of Endorsement No. 6. If so, then this would bring us right back to collusion among these parties in the back-dating of this endorsement. Then it would appear that this is even further evidence of misrepresentation, wrongful denial of claims, unfair and deceptive claims practices, and bad faith. . . As the Federal has declined to provide defense to me under its insurance policy, this letter is written without advice of counsel. . .”
06/18/97 Harmon sent Katz a new settlement proposal.
06/25/97 Harmon retained attorney John Goemans to represent him in his whistle-blower countersuit.
06/26/97 BH received phone call from Katz that Trustees had rejected his settlement proposal of 06/18/97.
07/??/97 Harmon tendered KSBE’s claim against him to Tradewind Insurance Co., under his homeowner’s insurance policy. Tradewind accepted the tender with a reservation of rights letter, and assigned attorney Roy Hughes to handle the defense of KSBE’s lawsuit.
07/10/97 Breslin responded to Harmon’s letter of 06/12/97, and again denied defense coverages under Federal’s policy. Federal’s repeated denial in view of the fraudulently altered contract, was unreasonable, unconscionable and constituted another act of bad faith.
07/16/97 The Calif. Dept.of Insurance responded to Harmon’s letter of 05/23/97: “... Unfortunately, due to staffing cuts we are no longer able to furnish individual case investigation where an attorney is involved or the matter is in litigation....”
07/23/97 Harmon responded to Federal’s letter of July 10, 1997: “. . . I do not see that the complaint is ‘unequivocally clear that all of the alleged breaches and damage occurred after the termination of employment.’ As stated previously, the complaint specifically alleges that wrongful acts were committed both before and after my termination. And how does the fact that I allegedly breached my duties to the Association lead to the conclusion that there is no duty of the insurance company to defend me against these allegations? Again, I am the Insured Person under this policy . . . not P&C Insurance Company.”
“You state: ‘Mr. Harmon alleges that Marsh & McLennan is an agent of Federal. As Mr. Harmon well knows, Marsh & McLennan is an independent insurance broker which in this case acted as an agent of P&C Insurance and the other Insureds. Therefore, Federal had a perfect right to negotiate with and rely upon Marsh & McLennan regarding the insurance contract’.”
“THIS IS A COMPLETELY FALSE AND MISLEADING STATEMENT!”
“According to the Insurance Commissioner’s records, Marsh & McLennan, Inc. is an appointed agent of Federal Insurance Company in the State of Hawaii. They are not an independent insurance broker acting as an agent of P&C and other Insureds. . . . Consequently . . . Federal can be held legally liable for any misrepresentations made by its agent, Marsh & McLennan.”
“You state: ‘Mr. Harmon’s principal objection seems to be that he was not personally consulted about the retroactive applicability of Endorsement No. 6. Under the policy terms and conditions his specific consent is not required. The Association acts on behalf of all Insureds. At the time of the issuance of Endorsement No. 6, Mr. Harmon was no longer employed by the Association and therefore it is axiomatic that he was not involved and not authorized to be involved in the decision making process’.”
“Obviously, at the time of issuance of Endorsement No. 6, I was not involved in the decision making process. But you have not denied that I was directly involved in the decision making process at the time the contract was negotiated and the policy was issued. The highly questionable act is the back-dating of the endorsement to retroactively amend the contract conditions that I originally negotiated. Furthermore, Endorsement No. 6 is an exclusion which restricts the coverages originally afforded; and this exclusion endorsement was specifically cited to deny coverages. My objection is not that I wasn’t personally consulted; my objection is that this appears to constitute fraud, misrepresentation, breach of contract, wrongful denial of claims, unfair and deceptive claims practices, and extreme bad faith.”
“You state: ‘Mr. Harmon does not adequately respond to Federal’s allegations that the statements made in his prior letter are libelous per se.’ As I am not an attorney, I do not feel qualified to respond to these allegations. I am told, however, that truth is an absolute defense in libel suits. To the best of my knowledge and belief, all of the statements I have made regarding this matter are truthful and factual.”
Federal failed to respond to Harmon’s letter of July 23, 1997, which in view of the serious nature of the fraudulently altered contract, was unreasonable, unconscionable and constituted another act of bad faith.
08/09/97 The “Broken Trust” article in the Star-Bulletin authored by Randy Roth, Judge Samuel King and others alleges mismanagement of Bishop Estate assets and conflicts of interests by trustees.
08/12/97 Gov. Ben Cayetano orders Attorney General Margery Bronster to investigate KSBE.
08/21/97 P&C and KSBE filed an Emergency Motion to Enforce the Preliminary Injunction Order against Harmon, seeking contempt of court charges for allegedly violating a previous injunction that prevented him from disclosing “confidential” information and “trade secrets” about KSBE and P&C. Harmon was out-of-state. This was an obvious attemp to obstruct justice in the AG’s case against the Bishop Estate Trustees.
08/26/97 Harmon (Goemans) filed a Verified Petition for Writ of Prohibition in the Hawaii Supreme Court.
08/27/97 Hearing on P&C/KSBE’s Emergency Motion to Enforce Preliminary Injunction held in Circuit Court. Harmon was still out-of-state. Appearing in Harmon’s defense was Roy Hughes. John Goemans, as Harmon’s attorney in his countersuit against KSBE and P&C, also appeared.. Judge Bambi Eden Weil continued the matter to 09/26/97.
09/03/97 The Supreme Court denied Harmon’s Verified Petition for Writ of Prohibition.
09/18/97 Harmon filed a Motion to Dissolve the Preliminary Injunction Order.
09/19/97 Roy Hughes, Esq. wrote to Lawrence A. Goya, Dept. of the Attorney General, State of Hawaii, regarding P&C et al. v. Bobby Harmon, Civil No. 97-0512-02:
“Enclosed are copies of the KSBE Motions and related documents filed regarding Mr. Harmon prohibiting his dissemination of documents or statements relative to his former employer, KSBE. It remains the KSBE position that Mr. Harmon not discuss any of the information he has as to KSBE affairs. As the attorney general has expressed interest in further discussions with Mr. Harmon and perhaps obtaining documents referenced by Mr. Harmon, please know that it will not be until after the hearing on the KSBE Emergency Motion and the Motion of this office to modify or dissolve the injunction, Mr. Harmon will further cooperate with the attorney general.”
09/26/97 The Hearing on P&C’s and KSBE’s Emergency Motion to Enforce the Preliminary Injunction Order was held.
10/04/97 Harmon wrote a 23-page letter to the IRS, Tax Fraud Unit. Copies were sent to the A.G., State of Hawaii; Hawaii Tax Director; Hawaii Ins Commissioner; and Janet Reno, U.S. Atty General. No response to this letter was received from the IRS or Reno.
10/20/97 The Court granted in part and denied in part, KSBE’s and P&C’s Emergency Motion and ordered a continued hearing on the matter.
10/28/97 Harmon filed his Motion for Designation of this case as complex litigation.
10/30/97 In Civ. No. 97-0512-02, John Goemans files “Defendant Bobby Harmon’s Reply to Plaintiffs’ Request to Defendant Bobby Harmon’s Request that the Court Take Judicial Notice That Its Preliminary Injunction of February 21, 1997, Constitutes a Prior Restraint on Defendant Bobby Harmon’s Speech and Is Therefore Void.
10/31/97 The Court heard Arguments regarding KSBE’s and P&C’s Emergency Motion to Enforce the Preliminary Injunction. Judge Weil ruled that Harmon was in Contempt of Court for disclosing information to reporters, but that he did so on advice of his attorney, Goemans. Weil ruled that Goemans would be responsible for payment of legal costs.
11/10/97 On Nov. 11, 12 and 15, 1997, BH, with Goemans, met with the I.R.S. re audit of KSBE and its subsidiaries. Harmon hand-delivered a 10 page letter dated 11/10/97 to the I.R.S., which detailed his knowledge of the Trustees’ breach of interim sanctions and arms length issues.
11/24/97 Harmon, together with his attorney, Roy Hughes, met with Colbert Matsumoto, court-appointed Master for The Estate of Bernice Pauahi Bishop, and hand-delivered a 14 page letter regarding KSBE, Pauahi Holdings Corporation, and P&C. Copies of this letter were sent to Atty General, Margery Bronster; Goemans; and Hughes.
11/24/97 The Court denied Harmon’s Motion for Designation of this case as complex litigation.
12/12/97 Fact-finder Judge Patrick Yim alleges that trustee Lindsey managed KS by “intimidation”.
12/20/97 Supreme Court justices remove themselves from selecting Bishop Estate trustees.
12/29/97 Bishop Estate trustees Gerard Jervis and Oswald Stender file suit for Lindsey’s removal.
01/07/98 The Court issued a Minute Order Regarding Plaintiff’s (P&C and KSBE) Oral Motion for Attorney Fees Against John Goemans, Esq., Harmon’s attorney.
01/08/98 The Court issued a Minute Order Regarding Defendant’s Motion to Dissolve or Modify the Order Granting Plaintiffs’ Motion for Preliminary Injunction Filed February 21, 1997.
01/09/98 The Court issued a Minute Order Regarding Names of People Which Bobby Harmon Gave Bishop Estate Documents To.
01/09/98 The Court issued its Findings of Fact and Conclusions of Law Regarding Defendant Bobby N. Harmon’s Motion to Dissolve or Modify the Order Granting Plaintiffs’ Motion for Preliminary Injunction Filed February 21, 1997 & Filed September 18, 1997.
01/12/98 Court issues a Minute Order Regarding the Court’s Detail Basis for Award of Attorneys’ Fees.
02/05/98 BH sent ltr to Hawaii Ins. Commissioner re: Complaint/Request for Inquiry - P&C Ins. Co.:
“In my letter of January 28, 1998, I requested an inquiry into several questionable acts that occurred during the time I was the president of P&C. This letter is to request an inquiry into a separate issue that I also raised in my letter dated November 20, 1996, to Coopers & Lybrand. . . . This issue involves the Articles of Incorporation for P&C, and P&C’s application . . . for a license to operate as a captive insurance company. . . .”
02/16/98 Unemployment Appeals Office denies Harmon’s latest request for subpoenas.
02/24/98 Rey Graulty, Insurance Commissioner, replies: “This is to acknowledge the receipt of your complaint letters dated January 28, 1998, and February 5, 1998, concerning P&C Insurance Company, Inc. . . . We will investigate your complaint to determine whether provisions of the insurance laws were violated.”
No further response was ever received.
02/28/98 Third Unemployment Appeals hearing held.
03/05/98 By Decision 9701016, the Appeals Officer affirmed the Claims Examiner’s determination that Harmon was discharged for misconduct, and disqualified him for benefits beginning 11/17/96.
03/12/98 BH applied for Reopening of Unemployment Appeals Officer’s decision, stating he was denied due process because of dept’s denial of subpoena of witnesses and documents not available to him, and failure of KSBE to show wilful or wanton disregard of the employer’s interests.
03/24/98 Appeals Officer responds to Harmon’s request for reopening of Unemployment decision, asking him to again state the necessity for the issuance of the subpoena to compel the attendance of the witnesses and the production of documents.
03/24/98 Harmon wrote to the Hawaii State Bar Association, regarding: “Request for Inquiry into Professional Conduct Concerning: Nathan Aipa, Esq.; Louanne Kam, Esq.; Colleen Wong, Esq.; Allan Yee, Esq.; Lyn Anzai, Esq.”
03/31/98 KSBE and P&C took Harmon’s depositions. Hughes was present; Goemans was ill and could not attend. (See: www.the-catbird-seat.net/KSBE-INTERROGATORIES.htm)
04/02/98 Harmon responds to Unemployment Appeals Officer’s letter dated March 24, 1998:
“ . . . I do contend that I was denied due process because I was disallowed the subpoena of any witnesses and documents which I believe would have substantiated my claim. . .”
“ . . . There was only one witness at the hearing representing KSBE, Louanne Kam. I was allowed to cross-examine this one witness, but, because of the declination of subpoenas, I was denied the opportunity to question any witnesses of my choosing... or review key documents . . .”
“ . . . a key document relating to my employment by both entities is the letter dated August 9, 1994 from Mark McConaghy of Price Waterhouse, KSBE’s tax consultant, addressed to Myron Mitsuyasu (KSBE tax department). In this letter, McConaghy stated that their discussions had largely revolved around the implications a captive insurance subsidiary may have on the tax-exempt status of KSBE. He emphasized that maintaining arms-length relationships between KSBE and the captive would be absolutely necessary to prevent private inurement (benefits flowing to insiders such as trustees, directors or officers) and/or private benefit (benefits flowing to third parties such as other subsidiaries) from becoming a problem. This letter also stated that it would be necessary that the board of directors and corporate officers be independent in order to maintain the corporate separateness between KSBE and the for-profit captive. The letter stressed that it was important to keep the captive’s business activities separate from the tax-exempt activities of KSBE, so as not to create a situation where the captive’s activities could be collapsed into the activities of KSBE. McConaghy also stated that an independent board of directors would show that KSBE does not control the captive. A copy of McConaghy’s letter was included in P&C’s application to the Insurance Commissioner for its license to operate as a captive insurance company.”
“When Kam was asked at the hearing if she had seen this document, I believe her answer was that she had not. Without the production of this document, and by being denied access to Myron Mitsuyasu, Gil Ishikawa, or any other witnesses that were familiar with the contents and importance of this letter, I believe I was placed at a disadvantage in these hearings by being required to ‘prove’ my contentions, while KSBE was allowed to withhold the evidence.”
“I testified that Aipa had orally informed me that I was not being transferred to P&C (as had been previously proposed because of the potential IRS consequences described in McConaghy’s letter), because ‘arms-length was no longer an issue.’ When Aipa made this statement, I requested that it be put in writing, which he agreed to do, but never did. When Kam was asked (by you) what Aipa meant when he made the statement that ‘arms-length was no longer an issue’, she replied that it was her understanding that Aipa had received another opinion. I believe she indicated that she had not seen this letter either. I believe this opinion, if it exists, should be subpoenaed for examination. Also, the person to whom the letter was addressed should be subpoenaed for cross-examination.”
“There was another document that I requested subpoenaed, which stated that in situations where KSBE’s subsidiary is involved in litigation, negotiations with third parties, etc., it must be made abundantly clear to the third party that the subsidiary itself is in control of the negotiations and litigation, and not KSBE. The document also stated that the CEO of a subsidiary should not be a Trustee or an employee of KSBE, and that the directors and officers of a subsidiary should not be dominated by, or subject to, the control of individuals who are Trustees, officers or directors of KSBE.”
“This document also stated that management of the daily operations of the captive insurance company, including claims administration, should be largely free of influence or control of KSBE’s trustees and staff. One reprimand which I received from Kam, resulted from the attempts of Trustee Richard Wong, Aipa and Kam to influence or control the settlement of the Larry Ching flood damage claim previously denied by P&C’s independent adjuster, John Mullen & Co.”
“It was also stated in this document that, to the extent that KSBE staff is called upon to assist in the management of a subsidiary, KSBE should be reimbursed by the subsidiary for the consulting services provided by KSBE’s staff. This was not being done. Or, if such services were to consume a large amount of the employee’s time, then transfer of such employee from KSBE to the subsidiary should be considered.”
“Another statement was that the directors and officers of subsidiaries should be compensated appropriately by the subsidiary in order to demonstrate the separateness between a subsidiary and KSBE. It also stated that these policies would likely operate to improve the arms-length relationship between KSBE and its subsidiaries, and thereby further KSBE’s mission of perpetuating the legacy of Bernice Pauahi Bishop by protecting its assets and maintaining its tax exempt status. On the other hand, according to this document, failure to implement appropriate policies to maintain an arms-length relationship between KSBE and its affiliates may result in significant adverse impact and costs to KSBE. If I had disregarded this advice, then I believe I would have been acting in wilful disregard of the employers’ best interests. But it was this very advice that I was being orally directed by Aipa, Kam and Peters to ignore.”
“As a result of these documents, I drafted “arms-length” guidelines for P&C, which I attempted to abide by in my capacity as its president. I believe that any directives contrary to these written opinions should have come, in written form, from either KSBE’s board of trustees, or P&C’s board of directors--not orally from any one trustee or manager. I believed that if there were any subsequent documents that expressed contrary opinions, I should have been provided copies in my capacity as a manager and as an officer of a subsidiary. If any contrary opinion had been accepted by trustees, it would have represented a major change in policy. Major policy changes by trustees were supposedly communicated in writing to all managers, if not to all employees. No such communication was received by me in this case.”
“As I was not aware of the existence of any subsequent opinion regarding these tax issues until the testimony of Kam at these hearings, I would like to add this document to my request for subpoenaed items. I would also like to request the subpoena of the person or persons to whom this opinion was addressed, and any documents that would substantiate that this opinion was presented to, and approved by, KSBE’s board of trustees and P&C’s board of directors.”
“ . . . you state that you disqualified me for unemployment benefits because I acted in wilful disregard of the employer’s best interest. As I stated in my letter of March 12, 1998, I believe that I would be committing fraud and breaching my fiduciary duties if I followed the oral directives of Aipa and Kam that P&C should continue to pay excessive fees to Marsh & McLennan, Inc., without any accountability or written contract. It was my belief that this would not be in the best interests of my employers to continue to pay these excessive fees. I also indicated that I considered my employers to be KSBE, as governed by the board of trustees, and P&C, as governed by the board of directors--not the individuals, Aipa, Kam and Peters, who could well have been acting on their own without the knowledge or consent of the other trustees or directors.”
“As I also indicated in my previous letter, in addition to violations of I.R.S. codes, the documents which I requested subpoenaed would also present evidence of breaches of fiduciary duties and other wrongful acts. These include possible violations of other Federal and State laws, including the Americans With Disabilities Act; ERISA; OSHA; the Environmental Protection Act; EEOC regulations; State Insurance Codes; and the Federal Insurance Crimes Act. I cannot understand how it is possible, by any reasonable standards, to consider that I was acting with wilful disregard of my employer’s best interests by ‘looking the other way’ while these activities were going on, or by refusing to follow the directives of Aipa, Kam, Peters or others to disregard compliance with these laws.”
“Your third paragraph concludes, ‘You acknowledge that you understood the directives but refused to carry them out because you felt that you would be in violation of the I.R.S. Code and the Insurance Commission’s Regulations. However, you failed to provide any substantive evidence that supports you(r) concerns.’ As previously stated, I believe the substantive evidence you seek can be found in the documents, and from testimony of witnesses, that you declined to subpoena. I can provide sections of the I.R.S. code and other information which provides the basis for my contentions, but the actual evidence that laws were being violated can be found in the requested documents and witnesses.”
“As the complete I.R.S. codes regarding “Intermediate Sanctions” are quite lengthy, I am not including them with this letter. However, to illustrate my point about the need for subpoenaed documents and witnesses, I am enclosing some information that was distributed by Coopers & Lybrand (C&L) during a meeting on October 4, 1996. Keeping in mind that Kam stated that it was her understanding that Aipa’s comment that arms-length was no longer an issue, was made because he had received a subsequent legal opinion. Aipa made this statement, to the best of my recollection, sometime in May or June, 1996. Yet, C&L’s information, which was prepared on 01/24/96, and distributed on 10/04/96, describes the I.R.S. regulations which provide penalties for private inurement transactions. C&L’s bulletin also warns about acquisitions: “If sales transactions involve unrelated parties bargaining at arm’s-length, the actual sales price may establish fair market value. However, if such insiders as directors, key employees or substantial contributors were involved, arm’s-length status could be questioned.’ Nathan Aipa was present at this meeting. He did not question the accuracy of this information being distributed and discussed. He made no mention of the fact that he had another opinion that indicated that arms-length status was no longer an issue.”
“I am enclosing another article from Forbes, dated September 23, 1996, entitled, No more sweetheart deals. This article gives examples of types of unlawful transactions which were very similar to what was transpiring at KSBE. At my hearing I referred to the fact that I believed I could be personally fined for my participation in these transactions, even if I did not personally benefit. I call your attention to the second from last paragraph which says, “What about directors who sit still for this kind of mischief? They can be fined a collective $10,000, even if they didn’t profit.”
“In my letter of 12/27/96, to the trustees (which I requested subpoenaed), I document with exhibits many of the wrongful acts and questionable activities that we touched upon at the hearings. I was required by the court to return all copies of this letter and its exhibits as KSBE considered these documents property of KSBE. Thus, I no longer have access to these pertinent documents, and, consequently, must request that they be subpoenaed in order to present them as evidence at my hearing.”
“In this same letter, I also describe questionable political activities involving Henry Peters and Milton Holt. It has been recently reported that Holt charged thousands of dollars at strip bars and Las Vegas casinos on KSBE charge cards. In recent days, it has come to light that over $43,000 is unaccounted for in Holt’s campaign fund. At the very moment I am writing this letter, the television news is reporting that Holt borrowed $9,500 from the fund which has not been repaid, and the F.B.I. is now investing the matter. The same newscast is reporting that trustees Stender and Jervis appeared in court circuit today on their charges that they have been deliberately left out of certain decisions at the estate, including Holt’s use of a KSBE charge card.”
“With regard to my contention that insurance regulations were being violated, the evidence of these violations is contained in my letter of November 20, 1996 to Coopers & Lybrand. This is the reason that I have requested the subpoena of this document, along with all enclosures. All copies of these documents were returned to the estate under court order and are not available to me.”
“I also requested all documents in my personnel file, which I was also required to return to KSBE. As KSBE was permitted to produce certain documents of their choosing from my personnel file, I believe I should be allowed to introduce the remaining documents, so that the evidence is not incomplete or biased.”
“Regarding the necessity for issuance of the subpoena to compel certain witnesses, I am under court order not to speak to any employees of KSBE about any matter relating to my employment there. As I am prohibited from requesting their voluntary attendance at these hearings, it is necessary that I ask that their attendance be subpoenaed. I stated the reasons that each witness should be subpoenaed in my earlier letter, so for the sake of brevity I will not repeat them here. If, however, you feel that I should expand on these reasons, I will be happy to do so.”
“As Kam has made the statement that Aipa has a document that counters the previous tax opinions of Price Waterhouse relating to arms-length relationships between KSBE and P&C, I also request the subpoena of Nathan Aipa, and all documents, including staff reports, relating to arms-length relationships between KSBE and its for-profit subsidiaries, and the I.R.S. intermediate sanctions statutes.”
“If my list of documents and witnesses to subpoena is too extensive, then I would consider the most important witnesses to be Henry Peters, Oswald Stender, Nathan Aipa, Sandie Wicklein, Gil Tam, Peter Lowe, Gil Ishikawa, Dennis Fern and Eric Martinson. The most important documents would be my letter of November 20, 1996 to C & L, with enclosures; my letter to KSBE trustees dated December 27, 1996, with enclosures; all minutes of P&C’s board of directors meetings; P&C’s latest annual financial statement; KSBE’s latest Form 990 tax return; all documents relating to I.R.S. regulations concerning “arms-length” relationships and interim sanctions, including the legal opinion referred to by Kam. . .”
cc: U. S. Internal Revenue Service
Margery Bronster, Attorney General, State of Hawaii
Colbert Matsumoto, Master
Rey Graulty, Insurance Commissioner, State of Hawaii
Oswald Stender, KSBE Trustee
Gerard Jervis, KSBE Trustee
Sandie Wicklein, KSBE Director of Personnel
William Richardson, Director and Secretary-Treasurer, P&C
Gilbert Tam, Director, P&C
Richard Wong, President, Pauahi Holdings Corporation
04/02/98 Sabrina Toma, Torkildson Katz, wrote to Hanaumi, Appeals Officer, objecting to Harmon’s application for reopening.
04/06/98 Harmon wrote to Hanaumi in response to Toma’s letter of 04/02/98:
“Ms. Toma’s letter contains several erroneous statements and raises a new, unsubstantiated allegation which was not previously introduced in the hearings. Then, based on this erroneous information and unsubstantiated allegation, KSBE objects to my request for reopening and requests that you deny my application.”
“KSBE objects to my application for reopening because, according to their letter, I have not identified any new evidence which I could not have obtained to present at the previous hearings, and/or any new developments in the law since closure of the hearings on February 27, 1998. This is a false statement. The records will show that I could not obtain evidence at these previous hearings because P&C/KSBE had obtained a court injunction which required me to return all my employment records to KSBE. This included all my personnel records--performance reviews, commendation letters, reprimand letters, notice of salary adjustments, etc. Ms. Toma and Robert Katz are aware of this fact as it is their law firm (and Mr. Katz personally) that is litigating the case. The only way I could introduce these documents into evidence was by subpoena, which was denied.”
“Ms. Toma argues that my request simply reiterates the same evidence and arguments which I had ample opportunity to present during the hearings. Yet, she contradicts this statement in the footnote to this very sentence, by stating that I submitted a new document and raised a few new arguments which I failed to previously raise. She goes on to state that the Respondents object to the new argument and evidence.”
“The fact is, I did not have ample opportunity to present evidence at the hearings because this evidence was withheld by the Respondents. The only way I could have presented evidence to support my case would have been through the subpoena of documents and witnesses.”
“To address the four arguments presented by Ms. Toma:
A. Subpoena of Witnesses and Production of Documents. This section contains several misstatements. Regarding the Larry Ching matter, I dispute the allegation that I received a directive from Mr. Aipa that Ms. Kam was to hire an outside attorney and expert for this claim. I pointed this out in my response to Ms. Kam’s reprimand letter (Exhibit 38). This is an example of a verbal directive supposedly given to me by Aipa and Kam, which is uncorroborated by any third party witness. This was later followed by a written reprimand alleging that I failed to follow a directive which I never received. I also pointed out in my response that only John Mullen & Co. (Mullen), the independent claims adjuster contracted by P&C, had the authority to hire attorneys and experts. Ms. Kam was not an officer, director or employee of P&C, and did not have any authority to hire outside attorneys or direct the settlement of any P&C insurance claims. She did not have the authority to sign checks or enter into contracts with third party contractors. I submit that the subpoena of these documents, and Mr. Kimura as a witness, will corroborate my statements and provide new evidence which is relevant and material to the misconduct issue.”
“In the Marsh & McLennan matter, I submit that the subpoena of requested witnesses and documents will provide new evidence of misconduct and breach of fiduciary duties by Nathan Aipa, Louanne Kam, Colleen Wong, Allan Yee, Henry Peters, Lokelani Lindsey, Richard Wong, Eric Martinson and others. It is my contention that the reason this evidence is being withheld by KSBE is in an effort to a cover-up this misconduct.”
“KSBE argues that even if the Referee had signed the subpoenas, the evidence elicited would have been irrelevant, immaterial, and/or repetitious with respect to the salient issue. How can anyone be certain that this would be the case prior to the evidence and testimony of witnesses being presented? KSBE argues that the two individuals charged with supervising my work performance, Aipa and Kam, are the only witnesses who have personal knowledge crucial to the misconduct issue. I maintain that the Director of Personnel, Sandie Wicklein, and Patrick Chalfin, the Personnel Generalist who was assigned to investigate this matter, and others, have ample personal knowledge of the misconduct issues in this case. At the least, they are third party witnesses.”
“I submit that another party, Rocco Sansone, M&M, also has first-hand personal knowledge crucial to the misconduct issue. Sansone was in several meetings with Aipa, Kam and myself regarding this issue and the directives being given. Sansone even had several private meetings with Aipa, Kam and Peters. As Mr. Sansone’s testimony would be relevant, I ask that he be subpoenaed as a witness. Patricia Onogi, Claims Manager for M&M, likewise was present at a number of meetings with Sansone, Kam, and me. Ms. Onogi was directly involved with the Larry Ching claim issue. Therefore, I respectfully request that Ms. Onogi be subpoenaed as a material witness.”
“I do not dispute that I had opportunity to question Ms. Kam at the hearings. What I was denied, however, was the opportunity to question any third parties who could contradict Ms. Kam’s testimony.”
“KSBE states that none of the 13 identified individuals could provide any evidence as to whether my conduct constituted a deliberate disregard of the standards of behavior which the employer has a right to expect of an employee. She points out that three of the identified individuals, Robert Kuroda, Cary Okawa, Peter Lowe, are employed by third party vendors with whom KSBE did business and would have no direct personal knowledge of the directives issued by Aipa or Kam; or my noncompliance with those orders; or the legality of KSBE’s operations. This is a blatantly false statement.”
“First of all, these three individuals are employed by vendors who were hired by P&C Insurance Company, Inc., not by KSBE. Robert Kuroda, as previously mentioned, is a claims manager for Mullen. He and I had numerous discussions regarding the I.R.S. guidelines for maintaining the required “arms-length” between charitable, tax-exempt organizations and its for-profit, taxable subsidiaries. He also has direct knowledge about the Larry Ching case. Kuroda and I also had several meetings about the attempts of Kam, Colleen Wong and Carol Koza to wrongfully interfere with the claims adjusting process in other claims.”
“Cary Okawa is a C.P.A. for Coopers & Lybrand, auditors for P&C. He was one of the auditors with whom I discussed the wrongful interference of Aipa, Kam, Peters, Wong and others as it related to the day-to-day conduct of P&C’s business. I also reported the directives that were being given by Aipa and Kam for P&C to pay large sums of money to M&M for unspecified, and unaccounted for, services.”
“KSBE states that six of the identified individuals, Sandie Wicklein, Patrick Chalfin, Rodney Park, Wally Chin, Gilbert Ishikawa, and Glenn Hara are employed by KSBE’s Personnel Division, Controller Division, Administration Group, or KSBE subsidiaries, and, likewise, have no personal knowledge of either the directives issued by Aipa and/or Kam, or my deliberate disregard of those directives. Wicklein, who is the Personnel Director for KSBE, and Chalfin, who investigated the case at the request of Aipa, are both very familiar with circumstances and have documented evidence that was generated as a result of their investigation into this matter. These documents should be in my personnel file. If they have been removed or destroyed, my questions to Wicklein and Chalfin would be who ordered their removal or destruction, and why? Wicklein and Chalfin are also familiar with KSBE’s Employee and Supervisors’ Handbooks and with KSBE’s personnel policies. I would like to ask the question of the Personnel Director why one manager, who is also the unpaid president of a subsidiary company that makes a $1.2 profit in its first full year of operation, is denied a raise and is terminated because he refuses to follow directives of his co-worker to commit acts which he feels would be a breach of his fiduciary duties. . . while another employee, who’s job description was generally a mystery, can use a KSBE charge card to entertain yet unnamed parties (but rumored to include certain well-known politicians) in strip clubs and Las Vegas casinos, and still get a retroactive pay raise. I would like to ask if this conduct is consistent with the seven Hawaiian virtues used in KSBE’s performance evaluations, and if it generally merits a retroactive pay raise.”
“Rodney Park, Administration Group Director, Gilbert Ishikawa, Tax Manager, and Wally Chin, Controller, all have knowledge of the trustee-approved Policies and Procedures relating to the tax issues which are critical in this case. In their positions, Park and Chin had the responsibility to monitor expenditures to ensure they were proper. They would approve, for example, the use of charge cards for business expenses. Mr. Ishikawa would be in a position to know which directives from Peters, Aipa and Kam would be in accordance with I.R.S. regulations, and which would not. He had knowledge of the original tax opinion from Price Waterhouse and should be able to produce as evidence to support Aipa’s contention, any subsequent legal opinions that countermanded this original opinion.”
“Glenn Hara is the treasurer for Pauahi Holdings Corporation, the parent company of P&C. It was his responsibility to review P&C’s books, as their financial statements were consolidated with PHC’s. In his position, he would have responsibility for oversight of the financial operations of P&C, to make sure that I.R.S. regulations were being followed, etc. If he suspected any misappropriation or embezzlement of funds, or improper record keeping, he would be obliged to report it to the proper authorities. If I were to follow the directives of Aipa, Kam and Peters to pay vendors for work not contracted for or performed, then I would have to explain this to Mr. Hara. As I have stated, P&C was a separate, for-profit subsidiary of the for-profit PHC, not a subsidiary of KSBE. Therefore, any changes in policy regarding tax matters should have come from PHC, or from the full board of directors of P&C--not from Kam who was not an officer, director or even an employee of P&C.”
“KSBE maintains, according to Ms. Toma, that Oswald Stender, Henry Peters, and Richard Wong are KSBE Trustees who have no direct personal knowledge of the specific directives issued by Aipa and/or Kam or of my alleged disregard of those directives. This statement is unsubstantiated, and, in fact, untrue.. Henry Peters, as KSBE has admitted, is the very individual who gave me the directive that I was to follow the orders of Aipa and Kam involving the operations of P&C. I am reasonably sure Kam and Aipa reported back to Peters how the payments to M&M were coming along. And I am reasonably sure Kam reported back to Trustee Wong on how the claim of Larry Ching was coming along. Trustee Stender, and perhaps Trustee Jervis, probably were not advised of these directives originally; however, all the Trustees were made aware of the circumstances of this case by my letter of 12/29/96 (one of the documents that I have requested subpoenaed.)”
“I would also like to bring to the Referee’s attention that Peters’ oral directive was not given to me until 10/11/96. Aipa and Kam had actually been directing much of the operations of P&C from the time the company was formed in 1994, contrary to the written policies which stated that for-profit subsidiaries should not be controlled or managed by the tax-exempt charitable trust. The M&M excess billing issue, and the Larry Ching claim, arose well before I was given the order by Peters that Aipa was to be in charge of P&C’s operations. (Logic would lead one to think that if the trustees wanted Aipa to be in charge, they would have made him President, and I could have been the Assistant Treasurer. Then there would have been no question who was in charge.)”
“While on the topic of hierarchy of authority, a question occurs to me: Why does the signature of Aipa, the Assistant Treasurer, appear on the financial statement, and not the signature of the Treasurer, William Richardson? As this is a significant point, I would like to request that Mr. Richardson be added to my list of witnesses to be subpoenaed, along with the financial statements. As KSBE has stated that it is I who must provide evidence of wrongdoing, I also submit that Mr. Cary Okawa, CPA, Coopers & Lybrand, would be a material witness for attesting to the honesty and accuracy of the financial statements, and to the legal and tax issues involved.”
“Finally, Gil Tam, as a P&C Director, should have been informed by Peters of his order that I was to follow the directives of Aipa and Kam. This would be especially important if this oral directive directly contradicted the written policies of P&C’s board of directors, or resulted in the improper use of P&C funds. Also, Mr. Tam would have participated in the decision to terminate my position at P&C, so he should have been made aware of my “improper conduct” and any other reasons given for my termination. There should be minutes of the board of directors meeting at which my termination was discussed and decided. I submit that Mr. Tam, and the board of directors’ minutes, would be material and relevant evidence.”
“KSBE maintains that my personnel file and the KSBE employee and supervisor handbooks will not provide any relevant information regarding the Aipa and Kam directives. I submit that my personnel file, which I was obliged under court order to return to KSBE, contains relevant material which supports my claim that I was terminated because I was in the process of reporting serious misconduct and breach of fiduciary duties by Peters, Wong, Lindsey, Martinson, Aipa and Kam, among others. I submit that the Employee and Supervisors’ handbooks (which employees are required to return to KSBE upon termination of employment), contain relevant rules, such as:
● Report any acts which appear illegal or against the interests of the institution and its clients.
● Cooperate fully with KSBE accountants, auditors, and examiners.
● Obey the Law. Any requests or directions to perform illegal or inappropriate acts must be reported immediately to your supervisor or senior management. These include:
a. Making improper entries to KSBE records or reports;
b. Withholding entries that should be made;
c. Suppressing information which is vital to the operation of your group or department.”
“Unfortunately, these procedures do not instruct, or prepare an employee to handle, situations where it is a superior executive or trustee that is committing what appears to be improper or illegal acts, or is directing the employee to commit such acts. In my case, I was in the process of reporting my concerns to Coopers & Lybrand and the Insurance Commissioner at the time of my termination. I followed this up with a detailed disclosure to the Trustees of the various improper activities I had witnessed, and the reasons why I believed I had been wrongfully terminated. This is why my letter of December 29, 1996, to the Trustees is material to this case.”
“Ms. Toma states, “Moreover, one would expect that Mr. Harmon, as the author of those documents, would have retained copies of his own documents.” As Ms. Toma well knows (or certainly should know as it is her law firm, and Robert Katz, that is litigating KSBE/P&C’s claims against me), KSBE obtained a court order for the return of all documents related to my employment at KSBE and P&C, including documents I had authored. This even included my letter of 12/29/96 to the trustees, which was authored after I was discharged. Consequently, KSBE is well aware I could not produce these documents at these hearings without their being subpoenaed.”
“B. P&C Ability to Contest the Claim. Ms. Toma maintains that the appropriate employing entity in this matter is KSBE, and not P&C. Yet, she makes no argument to support this statement. I maintain that, as the president of this separate corporate entity, I was an employee of P&C, and entitled to whatever benefits are required under the law, including workers compensation insurance, temporary disability insurance and, possibly, unemployment insurance benefits. P&C’s workers compensation insurance policy, which I arranged while employed by KSBE and P&C, should evidence this fact. As President of P&C, I performed as an employee would perform. I maintained P&C’s files; I wrote P&C’s correspondence; I signed P&C’s checks and contracts; I traveled on P&C’s business; I was personally exposed to lawsuits as an officer of P&C; I was an insured person under P&C’s Officers & Directors Liability Policy; I was covered under P&C’s Workers Compensation policy; the majority of my time was spent performing my responsibilities for P&C. The only argument made by KSBE that I was not an employee of P&C is that I was not paid by P&C.”
“Contrary to KSBE’s position, I maintain that P&C’s (and KSBE’s) tax status and/or representation at the hearings are indeed relevant and provide a critical, legitimate basis for reopening the decision.”
“C. Errors and Misleading Statements. Ms. Toma does not deny that the Decision contained “errors and misleading statements,” but KSBE contends they are still insufficient to support my request for reopening. As set forth above, KSBE claims that I was not employed by P&C, but served as an officer. Ms. Toma is correct that as an officer, it was my understanding that I was directly accountable to the P&C Board of Directors. Both my oral testimony and documentary evidence (Employer’s 5-7) will attest to this fact. Both KSBE and I have acknowledged that Henry Peters did, in fact, order me to follow the directives of Nathan Aipa as respects the operations of P&C Insurance Company, Inc. I do not dispute the fact that the evidence (Employer’s 4) shows that Aipa designated Kam as my direct supervisor at KSBE, effective September 4, 1996.”
“As this “chain of command” can be a bit confusing to someone not familiar with the organization, perhaps it should be restated for clarity: I, as President of P&C, was ordered by Henry Peters, Chairman of the Board of P&C (and Trustee, KSBE), to follow the directives of Nathan Aipa, Asst. Treasurer and Asst. Secretary, P&C (and General Counsel & Legal Group Director of KSBE) as it related to the day-to-day operations of P&C. Aipa, in turn, ordered me to follow the directives of Louanne Kam, who was not an officer, director or employee of P&C. In other words, the daily operations of P&C were to be controlled and directed by these three individuals. I, as President, was to be a “straw man” with no true authority, to be controlled by the trustees, executives and employees of KSBE.”
“KSBE maintains that my explanation regarding the letter that I sent to M&M was immaterial, as is the fact that the letter was not introduced into evidence. I maintain that the letter is material evidence, as it documents the fact that the fees being paid to M&M were excessive and undeserved, and their performance was unsatisfactory. I have maintained throughout the hearings that I was being ordered by Aipa and Kam to perform what I believed were wrongful or illegal acts. I maintain that these payments of $200,000 a year to M&M, for which there was no contract or verbal agreement, and no satisfactory explanation of the services being rendered, had all the appearances of collusion and fraud. This letter, written on P&C letterhead and signed by me as president, is material and relevant evidence to my case.”
“KSBE maintains that my subjective belief as to what was in the “best interests” of KSBE does not justify my flagrant acts of insubordination. How does one act in the “best interests” of an employer, except through subjective beliefs? If an employee suspects that his supervisor is directing him to commit illegal acts and breach his fiduciary duties, is it not in the best interests of the company that the employee refuse to follow his superior’s orders? Does not KSBE’s Employee Handbook contain the rule that an employee is to report any acts which appear illegal or against the interests of the institution? Is this not asking for a subjective opinion? And does the Handbook not state that any requests or directions to perform illegal or inappropriate acts must be reported immediately to your supervisor or senior management?”
“As the fifth point in this section, KSBE maintains that my reference to “conflicts of interests” in the first full paragraph of page 5, are allegations which are new, unsubstantiated, and irrelevant to the misconduct issue. This information, which relates to the business relationships between Peters and M&M, was not known to me at the time I was employed at KSBE and P&C. I only recently became aware of this connection through KSBE’s filed tax returns, media reports and personal investigation. According to recent media reports, it appears much of this information was not disclosed to at least two of the trustees.”
“D. Rationale for Decision. KSBE’s first point has been answered in Section A above.”
“KSBE’s second point is that I, and not KSBE, must provide some concrete objective proof that my superior’s directives were illegal, and any evidence regarding tax or insurance matters is irrelevant to the misconduct issue. I maintain that directives to commit tax fraud, defraud the insurance company, etc. are relevant. The objective proof that KSBE requests is in the documents and witnesses I have asked subpoenaed.”
“KSBE’s third point is that my allegations regarding “ . . . the media, the I.R.S., the Attorney General, the court-appointed Master, and others . . . investigating possible illegal acts and breaches of fiduciary duties . . . ” is irrelevant and immaterial. KSBE makes this point immediately following their second point that I, and not KSBE, must provide some concrete proof that my superior’s directives were illegal. I maintain these investigations indicate that reasonable efforts are being made to provide this proof. (To this list, you can now add the F.B.I., and possibly the S.E.C.)”
“KSBE’s final point is that my reference to the “whistle-blower” statute again underscores the fact that I am attempting to litigate my civil suit before the Employment Security Appeals Office. Ms. Toma states that your office has no jurisdiction over such a claim and therefore my allegations are irrelevant. This is a subjective opinion and not a fact. First, I am not an attorney and I would not know how to begin litigating this case before your office. I made reference to the “whistle-blower” statute because it is my understanding, as a lay person, that this act was passed to protect employees who came forward and reported illegal activities of his employer. It is my contention that I was terminated from my positions at KSBE and P&C because I was in the process of reporting illegal activities. My letter of November 20, 1996, to Coopers & Lybrand, with a copy to the Insurance Commissioner, will give evidence of this. Therefore, my reference to the “whistle-blower” statute is material and relevant to my unemployment claim, as is my letter of November 20, 1996, to C&L.”
“I trust this satisfactorily addresses KSBE’s allegations, and gives adequate reasons for reopening the decision. . .”
cc: Sabrina R. Toma, Esq.
U. S. Internal Revenue Service
Federal Bureau of Investigation
Margery Bronster, Attorney General, State of Hawaii
Colbert Matsumoto, Master
Rey Graulty, Insurance Commissioner, State of Hawaii
Oswald Stender, KSBE Trustee
Gerard Jervis, KSBE Trustee
Henry Peters, KSBE Trustee
Richard Wong, KSBE Trustee
Lokelani Lindsey, KSBE Trustee
Nathan Aipa, KSBE General Counsel
Louanne Kam, KSBE Risk & Litigation Manager
Sandie Wicklein, KSBE Director of Personnel
William Richardson, Director and Secretary-Treasurer, P&C
Gilbert Tam, Director, P&C
Richard Wong, President, Pauahi Holdings Corporation
Cary Okawa, Coopers & Lybrand
Robert Kuroda, John Mullen & Co.
Rocco Sansone, J&H Marsh & McLennan, Inc.
Patricia Onogi, J&H Marsh & McLennan, Inc.
Peter Lowe, M&M Insurance Management Services, Inc.
04/06/98 Harmon wrote to the Federal Bureau of Investigation, re: “Investigation Relating to Milton Holt and Bishop Estate.”
04/07/98 Second day of KSBE and P&C taking Harmon’s depositions. Hughes was present.
04/15/98 The Court issued its Findings of Fact and Conclusions of Law Regarding Emergency Motion by Plaintiffs for Enforcement of the February 21, 1997 Order Granting Plaintiffs’ Motion for Preliminary Injunction Against Defendant Filed August 21, 1997.
04/29/98 Unemployment Appeals Officer, Hanauma, reaffirms his Decision 9701016 dated 03/05/98, and denies Harmon’s request for reopening.
05/27/98 Harmon, pro se, files Notice of Appeal with the Circuit Court of the 1st Circuit, Civ. No. 98-2394-05 (Agency Appeal), regarding Employment Security Appeals Office’s Decision 9701016.
06/01/98 P&C et al. filed an Ex Parte Motion for Extension of Time to file its Pretrial Statement in Civil No. 97-0512-02. In civil actions in this circuit, plaintiffs are required to file a pretrial statement within eight (8) months after the date the complaint was filed (Rule 12(b). This would mean that the pretrial statement was due on or about October 28, 1997. In this Motion, Plaintiffs moved the Court for an order extending the time within which Plaintiffs must file a pretrial statement to June 30, 1998. Plaintiff’s failure to proceed with their case in a timely manner was intended to delay justice, and was unreasonable, unconscionable and constituted an act of bad faith. Roy Hughes, consented to this extension without consultation with, or approval of, Harmon.
06/07/98 Harmon wrote to Hughes objecting to the extension of time to June 30, 1998 for Plaintiffs to file their pretrial statement.
07/06/98 Harmon met with the Attorney General’s office regarding their investigation of Bishop Estate.
09/09/98 Harmon sent a new claim settlement proposal to P&C, et al., via Hughes. This offer was to remain open until 4:00 p.m., 09/18/98. He received NO RESPONSE to this proposal during the open period -- an act of bad faith.
09/09/98 Attorney General Margery Bronster calls for temporary removal of four trustees, saying they jeopardized the tax-exempt status of the trust.
09/10/98 Bronster calls for removal of trustees Richard Wong, Henry Peters and Lindsey, charging they took part in a pattern of self-dealing and mismanagement.
09/15/98 Harmon involuntarily terminated from his position at American Mutual. (Production at agency declining, agency downsizing, they claim. Real reason could possibly be the Ko Olina business (Jeff Stone/Kevin Showe/National Housing deal) which went to Marsh & McLennan.)
09/21/98 Harmon sent another settlement proposal to P&C, et al, via Hughes. Harmon received NO RESPONSE to this proposal during the open period -- an act of bad faith.
09/27/98 Harmon sent a new settlement proposal to P&C, et al, via Hughes: “As P&C Insurance Company, Inc., Trustees of Kamehameha Schools/Bishop Estate, et al, have not responded to my settlement proposal dated September 21, 1998, that offer expired at 4:00 p.m., September 25, 1998. The purpose of this letter is to present a new settlement proposal. . . . If this global settlement proposal is not accepted by the insurance carriers (Federal Insurance Company and P&C Insurance Company) and/or their reinsurers, I would be willing to consider separate counter-proposals for claims settlement directly from any of these entities, including the individual Trustees. . . .This offer will remain open until 4:00 p.m., October 2, 1998. . .”
09/30/98 Matt Tsukazaki replied to Hughes: “I am in receipt of your letters dated September 11 and 30, 1998. On behalf of Plaintiffs P&C Insurance Company and the Trustees of the Estate of Bernice Pauahi Bishop we hereby reject Defendant Bobby N. Harmon’s settlement demands as stated in both of his letters. This letter is written pursuant to Haw. R. Evid. 408.”
It is Harmon’s belief that his settlement proposals had not been relayed to all involved parties. If this is proven to be true, this was another act of bad faith (and possibly Attorney E&O).
10/01/98 Milton Holt, former Senator and KSBE employee, indicted by federal grand jury for allegedly taking more than $6,600 from his campaign fund for personal use.
10/03/98 Not yet having received Tsukazaki’s letter of 09/30/98, Harmon sent a new settlement proposal to Katz and Tsukazaki: “ . . . As P&C Insurance Company, Inc., Trustees of Kamehameha Schools/Bishop Estate, et al, have not responded to my settlement proposal dated September 27, 1998, that offer expired at 4:00 p.m., October 2, 1998. The purpose of this letter is to present a new settlement proposal. . .” Harmon received NO RESPONSE to this proposal during the open period -- an act of bad faith.
10/11/98 Harmon responded to Tsukazaki’s letter of 09/30/98.
10/16/98 Harmon sent a revised settlement proposal to Tsukazaki, stating: “. . . if I receive no acknowledgment or response to these offers by this expiration date, I must assume that these insurance settlement offers are not being relayed to all insurance carriers and other involved entities. . .”
10/23/98 Harmon sent a new global settlement proposal to Katz and Tsukazaki, offering to release from all claims, Kamehameha Schools/Bishop Estate; P&C Insurance Company, Inc.; Federal Insurance Company (Chubb Group); American Reinsurance Company (AMRE); Coopers & Lybrand, LLP; John Mullen & Co.; Marsh & McLennan, Inc.; M&M Insurance Management Services, Inc.; Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington; and the trustees, officers, directors, employees and representatives of these entities: “. . . If this global settlement proposal is not accepted by Federal Insurance Company and P&C Insurance Company, I would be willing to consider separate proposals for claims settlements directly from any of the involved entities, including the individual Trustees. . . . This offer will remain open until 12:00 noon, 10/30/98.”
Copies of this letter were sent to:
John Goemans, Esq.
Trustee Richard S. H. Wong
Trustee Henry H. Peters
Trustee Lokelani Lindsey
Trustee Gerard Jervis
Trustee Oswald Stender
Nathan Aipa, Esq., KSBE
Louanne Kam, Esq., KSBE
Colleen Wong, KSBE
Sandie Wicklein, Personnel Director, KSBE
Pat Chalfin, Personnel Dept., KSBE
William Richardson, Dir./Treas., P&C
Gilbert Tam, Director, P&C
Peter Lowe, Vice-President, P&C
John Mullen & Company
Marsh & McLennan, Inc.
Rocco Sansone, Vice-President, M&M
Patricia Onogi, Claims Manager, M&M
Peter Lowe, Sr. VP, M&M Insurance Management Services, Inc.
Federal Insurance Company
Coopers & Lybrand
Only M&M and Mullen responded to this letter. The failure of Federal and P&C to respond constituted bad faith acts as to the insurance claims under their respective insurance policies.
10/29/98 Elizabeth Kellner, Esq., M&M, responded to Harmon’s letter of 10/23/98, denying that M&M had done anything illegal.
10/29/98 David Loo, Mullen, responded to Harmon’s letter of 10/23/98, denying that Mullen was involved in handling the claim.
10/31/98 Harmon wrote to Katz and Tsukazaki: “. . . It appears that Mr. Tsukazaki has not yet acknowledged receipt of, responded to, or submitted counter-offers to my settlement proposals dated September 27, 1998; October 3, 1998; October 11, 1998; October 16, 1998, and October 23, 1998. . . ”
Plaintiff included another another global settlement proposal in this letter to release from all claims, Kamehameha Schools/Bishop Estate (KSBE); P&C Insurance Company, Inc. (P&C); Federal Insurance Company; American Reinsurance Company (AMRE); Coopers & Lybrand, LLP; John Mullen & Co.; Marsh & McLennan, Inc.; M&M Insurance Management Services, Inc.; Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington; and the trustees, officers, directors, employees and representatives of these entities.
Harmon further advised: “. . . If this global settlement proposal is not accepted by Federal Insurance Company, P&C Insurance Company, Inc., and any other insurance or reinsurance carriers which may provide coverages in this case, I would be willing to consider separate proposals for claims settlements directly from any of the involved entities, including the individual Trustees. . . .This offer will remain open until 12:00 noon, November 6, 1998. . . I trust that Mr. Katz and/or Mr. Tsukazaki, in their capacities as third-party claims administrators, will relay this revised settlement offer to all parties concerned. Therefore, I am not sending courtesy copies to the above named entities at this time.”
Harmon received NO RESPONSE to this offer within the open period -- an act of bad faith.
11/07/98 Harmon made a new settlement proposal to Katz and Tsukazaki: “. . . Mr. Tsukazaki has not yet acknowledged receipt of, responded to, or submitted counter-offers to my settlement proposals dated September 27, 1998; October 3, 1998; October 11, 1998; October 16, 1998, October 23, 1998 and October 31, 1998. I do acknowledge receipt of a letter response dated October 29, 1998 from David Loo, Vice President, John Mullen & Co., and a letter response dated October 29, 1998 from Elizabeth K. Kellner, Esq., Marsh & McLennan Companies, Inc. I will be responding to these letters very soon under separate cover. In the meantime, I am taking these responses into consideration and thus presenting the following revised settlement proposals. . . . This offer will remain open until 12:00 noon, November 13, 1998. . . . I trust that Mr. Katz and/or Mr. Tsukazaki, in their capacities as third-party claims administrators, will relay this revised settlement offer to all parties concerned. Therefore, I am not sending courtesy copies to the above named entities at this time.”
Harmon received NO RESPONSE to this offer within the open period -- an act of bad faith.
11/11/98 The trial to remove trustee Lokelani Lindsey begins.
11/14/98 Harmon sent a new settlement proposal letter directly to Rodney Park, President, P&C: “. . . As I have received no response from the law firm of Torkildson, Katz, Fonseca, Jaffee, Moore & Hetherington to my most recent insurance claim settlement proposals dated September 27, 1998; October 3, 1998; October 11, 1998; October 16, 1998; October 23, 1998; October 31, 1998, and November 7, 1998, this is to inform you that I will be sending future settlement proposals directly to you. . . .”
Copies of this letter were sent to:
Marsh & McLennan Companies, Inc.
American Reinsurance Company
Coopers & Lybrand, LLP
Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington
John Mullen & Co., Inc.
Rey Graulty, Insurance Commissioner, State of Hawaii
Roy Hughes, Esq.
11/18/98 Harmon sent a new settlement proposal to Katz/Tsukazaki.
11/18/98 Harmon sent a new settlement proposal directly to Federal Insurance Company regarding their bad faith actions, in which he stated: “. . . As I am not represented by counsel in this matter, you or your legal representative may respond directly to me at the address shown above. This offer will expire at 12:00 noon, November 30, 1998.”
Harmon received NO RESPONSE to this offer within the open period -- an act of bad faith.
11/18/98 Harmon sent a new settlement proposal directly to Rodney Park, President, P&C: “For reasons stated in my letter dated November 14, 1998, I am sending this settlement proposal directly to you in your capacity as president of P&C Insurance Company, Inc.: I will agree to release from all bad faith, misrepresentation, unfair and deceptive claims practices, etc., P&C Insurance Company, Inc. (P&C); American Reinsurance Company; Marsh & McLennan Companies, Inc. and the officers, directors, employees and representatives of these entities, for $-----.”
Harmon received NO RESPONSE to this offer within the open period -- an act of bad faith.
11/18/98 Tsukazaki wrote to Hughes: “We have again received copies of letters dated October 31 and November 7, 1998 from . . . Bobby Harmon . . . demanding from Robert S. Katz and myself a sum of money in settlement of Harmon’s claims against the Trustees of Kamehameha Schools Bishop Estate and P&C Insurance Co., Inc. . . . Harmon’s settlement demand letters of October 31 and November 7, 12 and 14, 1998, are identical to his prior letters, which were rejected by KSBE and P&C Insurance. No further response is necessary.”
This statement is blatantly fraudulent constituting mail fraud and an act of bad faith.
11/18/98 Roy Hughes letter to Harmon re P&C Insurance Company/Federal Insurance Co.-Insurance Claims.
11/19/98 Harmon letter to Roy Hughes, Hughes & Taosaka, re P&C Insurance Company/Federal Insurance Co.-Insurance Claims. This letter stated:
This acknowledges receipt of your letter dated November 18, 1998.
In your letter you state, “Please note neither Mr. Katz nor Mr. Tsukazaki are claims administrators for any insurance carrier.” You have not disclosed your source of information. If this was an oral communication to you from Katz and/or Tsukazaki, I request that you please document this fact in writing. If you have written confirmation of this statement from either Katz, Tsukazaki or any other source, I request a copy of this document. This is extremely important to my case, as Mr. Katz and Mr. Tsukazaki have represented that they were the individuals responsible for communicating settlement offers to the insurance companies and other involved persons....
These responses would seem to confirm my suspicions that Katz/Tsukazaki were not relaying my settlement proposals, as I had requested, to all parties involved. This raises three simple questions:
1. If neither Mr. Katz nor Mr. Tsukazaki are claims administrators for any insurance carrier, why did they represent to me in their letter of February 7, 1997 that they represented both P&C and KSBE, and that their representation would include settlement negotiations?
2. Why have Katz/Tsukazaki not responded to my many global settlement offers, which involved numerous corporate entities and individuals in addition to KSBE and P&C, if only to advise that they were not acting as claims administrators for the insurance carriers?
3. If neither Katz/Tsukazaki nor John Mullen & Co. are acting as third party claims administrators for P&C and Federal Insurance Co., who is handling these claims? (In other words, to whom should I be addressing my settlement proposals?)
Copies of this letter were sent to:
John Goemans; P&C Insurance; Federal Insurance; David Loo, John Mullen & Co.; Elizabeth Kellner, Marsh & McLennan Companies; Trustees Richard S.H. Wong, Henry Peters, Lokelani Lindsey, Gerard Jervis, Oswald Stender; Nathan Aipa; Louanne Kam; Colleen Wong; Sandie Wicklein; William Richardson; Gilbert Tam; Rodney Park; Peter Lowe; Coopers & Lybrand; Torkildson Katz Fonseca Jaffe Moore & Hetherington; Rey Graulty, Hawaii Insurance Commissioner; Hawaii Attorney General; Internal Revenue Service
11/25/98 An Oahu grand jury indicts Peters on a charge of theft.
12/03/98 Harmon wrote to Roy Hughes, Esq.: “This responds to Matt A. Tsukazaki’s letter dated November 18, 1998, addressed to you and John Goemans, Esq.”
“In his first paragraph, Tsukazaki states that I am “demanding” a sum of money from Robert S. Katz and himself. . . . In his second paragraph, Tsukazaki states:’We are unaware of any claim in the pending action being asserted directly against Mr. Katz and myself. Therefore, please clarify your intent in sending the letters. Are you intending on behalf of Harmon or any other party to assert any claim related to the above-entitled matter against Mr. Katz, myself or any other attorney at Torkildson Katz?’ . . . As Mr. Tsukazaki well knows, you have been transmitting my settlement letters merely as a courtesy while Mr. Goemans is out-of-state. As I stated in my letters of November 14, 1998, and November 18, 1998, to Rodney Park, President, P&C Insurance Company, I am not represented by counsel in this matter relating to unfair and deceptive insurance acts and practices, bad faith, etc. . . . In his third paragraph, Tsukazaki states that: ‘Regardless of your response, we consider any claim asserted by or on behalf of Harmon to be frivolous, without any factual or legal basis whatsoever. Such allegations and claims are a violation of Rule 11, Haw. R. Civ. P.’. . . I also consider this to be another example of ‘bad faith’ in the handling of these claims settlement negotiations by Federal Insurance Company and P&C Insurance Company. It is my experience that insurance companies and the courts take bad faith claims very seriously. If legal action does become necessary, I believe that with evidence of misrepresentation, “backdating” endorsements to deny defense coverage, and repeated failure to respond to settlement offers, the court would not consider these to be frivolous claims. . . . In the third paragraph, Mr. Tsukazaki also alleges: ‘The assertion of the claim and the demand for money from KSBE’s and P&C’s Insurance’s counsel are attempts to create a conflict of interest between Torkildson Katz and its clients.’ There does appear to be a conflict of interest in this case, but one that was created by Torkildson Katz and not by me. First, they represent KSBE and P&C in their claim against me for allegedly stealing trade secrets, libel, etc. Second, they are defending KSBE and P&C against my wrongful termination and personal injury counterclaims. As KSBE and P&C have insurance for these types of claims under Federal Insurance Company’s Association Liability (D&O) policy, P&C’s Commercial General Liability (CGL) policy, and possibly their Excess Liability policies, this would ordinarily mean Torkildson Katz would be also be representing the insurance companies interests. This would involve reporting to the insurance companies (status, settlement proposals, etc.), and the law firm would be paid by the insurance companies once any self-insured retention was exceeded. . . . Torkildson Katz indicates that they had been retained by KSBE & P&C to handle this case, including negotiating any settlement. Once they represented that they would be handling these claims for the insurance carriers, I maintain that they subjected themselves to the same potential errors and omissions and bad faith claims to which insurance companies and independent claims adjusters are exposed.”
12/07/98 Harmon wrote directly to Park, P&C: “As I have not received a response to my settlement proposal dated November 18, 1998, I am sending this revised proposal: I will agree to release from all claims of bad faith, misrepresentation, unfair and deceptive claims practices, etc., P&C Insurance Company, Inc. (P&C); American Reinsurance Company; Marsh & McLennan Companies, Inc. and the officers, directors, employees and representatives of these entities, for the sum of . . . This offer will expire at 12:00 noon, December 27, 1998.”
12/07/98 Harmon wrote to Federal Insurance Company: “As I have not received a response to my settlement proposal dated November 18, 1998, addressed to your office, that proposal expired on November 30, 1998. Therefore, I am offering the following revised settlement proposal for your consideration . . . . As I am not represented by counsel in this matter, you or your legal representative may respond directly to me at the address shown above. This offer will expire at 12:00 noon, December 24, 1998.” Harmon received NO RESPONSE to this settlement offer within the open period — another act of bad faith.
12/11/98 Harmon wrote to Katz/Tsukazaki, via Hughes: “As I have received no response to my settlement proposals dated November 18, 1998, those offers expired on November 30, 1998. . . . Therefore, I am presenting the following revised proposals. . . . This offer will remain open until 12:00 noon, December 23, 1998. I trust that Mr. Katz and/or Mr. Tsukazaki will relay these revised settlement offers to all concerned parties.” Harmon received NO RESPONSE to this settlement offer within the open period — another act of bad faith.
12/16/98 Appellee KSBE files Answering Brief in Harmon’s Unemployment Ins Appeal.
12/23/98 Robert M. Pozin, of the Law Firm of Ross, Dixon & Masback, on behalf of Federal, wrote to Hughes and Goemans:
“We represent Federal Insurance Company. . .as insurer for Kamehameha Schools Bernice Pauahi Bishop Estate. . .under Association Liability Policy No. 8146-79-11. . .in connection with the counterclaim filed by Bobby Harmon against the Trustees of KSBE. . .and P&C Insurance Company. . .in Civil No. 97-0512-02. Correspondence addressed to “Chubb Group” and/or Federal by Mr. Harmon has been forwarded to Michael Goolsby, Federal’s claims counsel, who has asked us to respond to you.”
“We write to you, instead of Mr. Harmon directly, because you represent Mr. Harmon with respect to Civil 97-0512-02. We would appreciate your providing a copy of this letter to Mr. Harmon.”
“We have reviewed Mr. Harmon’s correspondence dated December 7, 1998 and November 21, 1998 (addressed to Federal and Chubb Group, respectively) and the enclosure thereto. We have also reviewed Mr. Harmon’s letter to Roy Hughes dated December 3, 1998 and the letter from Matt Tsukazaki to yourselves dated November 18, 1998 to which Mr. Harmon’ December 3 letter refers, together with other correspondence Mr. Harmon has recently submitted to Federal. This will respond to all of the foregoing correspondence. . .”
“. . .As Robert Katz and Matt Tsukazaki represent the Trustees and P&C with respect to Mr. Harmon’s counterclaim, any proposal advanced by Mr. Harmon in an effort to settle his counterclaim are properly directed to the Torkildson, Katz firm. We have been in communication with Mr. Katz about possible settlement of the counterclaim, and Mr. Katz has advised us that the counterclaim defendants do not wish to make a counteroffer at this time.”
“. . .Finally, we note that in Mr. Harmon’s letter of December 7, he refers to purported ‘claims’ against P&C and Marsh and McClennan (sic). Please be advised that we represent only Federal with respect to Mr. Harmon’s correspondence. Therefore, to the extent Mr. Harmon wishes to advance any settlement proposals to P&C and/or Marsh and McClennan (sic), Federal suggests that he submit those proposals directly to P&C (or its counsel, Mr. Katz) and/or Marsh and McClennan (sic).”
01/04/99 Harmon wrote to Michael Goolsby, Claims Dept., Federal: “As I have not received a response to my settlement proposal dated December 7, 1998, addressed to your office, that proposal expired on December 24, 1998. Therefore, I am offering the following revised settlement proposal for your consideration: I will agree to release from all claims of fraud, bad faith, unfair and deceptive claims practices, misrepresentation, etc., Federal Insurance Company; Marsh & McLennan Companies, Inc. and the officers, directors, employees and representatives of the entities, for the sum of _______. . . . As I am not represented by counsel in this matter, you or your legal representative may respond directly to me. . . This offer will expire at 12:00 noon, January 15, 1999.”
01/04/99 Harmon wrote the IRS re: “Investigation Into Activities of KSBE and P&C.”
01/05/99 Harmon wrote directly to Park, P&C: “As I have not received a response to my settlement proposal dated December 7, 1998, I am sending these revised settlement proposals . . . These offers will expire at 12:00 noon, January 15, 1999. . . . As previously advised, I am not represented by counsel in this matter. Therefore, you, or P&C’s contracted third-party claims administrator may respond to me directly.”
A copy of this letter was sent to Michael Goolsby, Federal Insurance Company.
NO RESPONSE was received in the open period — another act of bad faith.
01/17/99 Harmon wrote Park: “As I have not received a response to my settlement proposals dated January 5, 1999, those proposals expired on January 15, 1999. Consequently, I am offering the following new proposals. . . . ” cc: Tony Rangel, Federal Insurance Co.
01/19/99 Matt Tsukazaki (Torkildson, Katz, etc.) in a letter addressed to Harmon, Hughes and Goemans::
“We have again received a copy of a letter dated Jan 5, 1999 from Bobby Harmon to Rodney Park, President of P&C Insurance Co., Inc. See attached letter. To the extent that Mr. Harmon believes that the matters addressed by his letter are completely unrelated to the current lawsuit between himself and the Trustees of Kamehameha Schools Bishop Estate. . . and P&C . . . we have addressed this letter to him to make our point very, very clear.”
“My office is legal counsel to KSBE for all matters directly dealing with or concerning Mr. Harmon. My office is legal counsel to P&C... for all matters directly dealing with or concerning Mr. Harmon.”
“To the extent that Mr. Harmon believes that his letter addresses other claims not covered by his current lawsuit against KSBE and P&C Insurance, he shall NOT communicate with or contact any trustee, officer, manager, employee, or agent of KSBE and P&C Insurance about any matter, issue or claim without the express written consent of my office. Mr. Harmon shall NOT communicate with or contact anyone at KSBE or its affiliated and related entities about any matter related to his employment with KSBE or P&C Insurance or about any allegations or alleged claims he believes he may have against KSBE and P&C Insurance. Mr. Harmon shall STOP sending letters or other correspondence to Mr. Park at P&C Insurance. That means no more facsimile transmissions, letters, telephone calls, e-mails, or other types of communication.”
“Finally, Mr. Harmon’s letter again asserts a claim for settlement against Torkildson Katz. As we stated in my November 18, 1998 letter, such assertions and allegations are a violation of Rule 11, Haw. R. Civ. P. The assertion of the claim and the demand for money by Mr. Harmon from KSBE’s and P&C Insurances’s counsel is viewed as an attempt to create a conflict of interest between Torkildson Katz and its clients, where none exists. Should such frivolous claims be filed, Torkildson Katz shall hold all of you, including Mr. Harmon’s insurance carrier, who is funding Harmon’s case against KSBE and P&C Insurance, responsible for any damages and costs it may suffer or incur in defense of such frivolous claims.”
“We will not tolerate any further attempts by Mr. Harmon to communicate or contact KSBE and P&C Insurance employees or agents. Mr Harmon has been repeatedly warned and instructed to stop contacting our clients. If such activities do not stop we will ask the court to issue a temporary restraining order against Harmon prohibiting such conduct.”
“On behalf of KSBE and P&C Insurance, we have rejected all prior settlement demands from Mr. Harmon. On behalf of KSBE and P&C Insurance, we hereby reject the proposed settlement as reflected in the January 5, 1999 letter.”
cc: Colleen I. Wong, Esq. (KSBE)
01/21/99 Harmon responded to Tsukazaki’s letter of 01/19/99: “. . .First, as you are already aware, these ‘bad faith’ claims are separate claims relating to the misleading, unfair and deceptive acts of the insurance carrier and its independent contractors. These are not the same as my wrongful discharge and whistle-blower claims. These ‘bad faith’ claims did not arise until after Civil No. 97-0512-02 was initiated and my wrongful discharge counterclaim was filed.”
“As both Roy Hughes and I have repeatedly advised you, I am not represented by counsel in the filing of these claims against P&C Insurance Company. Neither Roy Hughes nor John Goemans represent me in this matter. As I have repeatedly advised you, the purpose of my settlement proposals is merely a good faith attempt to reach an out-of-court settlement with all parties involved . . .”
“ . . . as the purported counsel for P&C in the handling of these claims, I believe that your actions, and those of Mr. Katz and your law firm, may have contributed significantly to the commission of these wrongful insurance practices. I refer specifically to, among other things:
— Your failure to respond, or to respond in a timely manner, to my many settlement proposals;
— Your apparent neglect in transmitting my settlement proposals in a timely manner, if at all, to the responsible independent claims adjuster for P&C, or to its reinsurance carrier.”
“You claim that your office is legal counsel to P&C for all matters directly dealing with or concerning Mr. Harmon. In accordance with P&C’s Operating Procedures, only their independent third-party claims administrator (TPA) has the duty and authority to engage outside counsel to handle insurance claims covered under P&C policies. . . . I respectfully request that you provide me a copy of your engagement letter from P&C’s claims administrator in order to evidence your claim that you have been authorized by P&C to act on its behalf in negotiation or defending these ‘bad faith’ claims.”
“You again state in your letter that my settlement proposal asserts a claim for settlement against Torkildson Katz, and that such assertions and allegations are a violation of Rule 11, Haw. R. Civ. P. . . your statement, ‘Should such frivolous claims be filed, Torkildson Katz shall hold all of you, including Mr. Harmon’s insurance carrier, who is funding Harmon’s case against KSBE and P&C Insurance, responsible for any damages and costs it may suffer or incur in defense of such frivolous claims’ is, first of all, inaccurate, as you are well aware. My insurance carrier, and Mr. Hughes, are defending me in P&C’s et al. claim against me in Civil No. 97-0512-02.”
“. . . I consider the content and tone of your letter to be a clear, blatant attempt to threaten and intimidate me, my present attorneys, my insurance company, and any future prospective attorneys that I might be able to persuade to take on my case. As you well know, I have given evidence and testimony of what I consider to be wrongful and illegal acts on the part of various trustees, directors, officers, employees and independent contractors to the Attorney General’s office, the Insurance Commissioner, the Master, the IRS and the FBI. You are fully aware that I may be called as a witness in criminal or civil cases against one or more of the trustees, officers, directors employees or other entities connected with these alleged criminal or civil wrongs. Under these circumstances, I do consider that you may be in a conflict of interest situation. Under these same circumstances, I also consider your threats of further legal actions against me to be an attempt to intimidate me as a potential witness in any criminal or civil trials of these individuals or entities.”
“Your final paragraph states that on behalf of KSBE and P&C Insurance, you have rejected all prior settlement demands from me, and that you hereby reject the proposed settlement as reflected in my January 5, 1999 letter. Again, may I request a copy of your authorization and/or engagement letter from P&C to evidence that are authorized to negotiate or reject the settlement of my ‘bad faith’ claims against this insurance company. Also, would you please provide the letter from P&C’s reinsurance carrier approving your firm as counsel in this case, as I believe is required under the reinsurance contract. Would you also provide evidence, or a statement to the fact, that this claim has been reported to the company that is providing P&C’s . . . Errors & Omissions insurance, including the name of the carrier and their policy number. Last of all, would you please confirm that you have relayed these rejected settlement offers to all concerned parties other than KSBE and P&C, and that all of these parties have rejected my proposals.”
cc: Hughes; Goemans; Ins Commissioner, State of Hawaii; Colbert Matsumoto; IRS; FBI
NO RESPONSE was received to this letter — a further instance of bad faith.
01/22/99 Harmon wrote to the Hawaii Insurance Commissioner, re: “Complaint/Request for Inquiry - P&C Insurance Company, Inc.”: This transmission is to provide you with a copy of my latest correspondence dated January 21, 1999, addressed to Matt Tsukazaki, Esq. of the law firm of Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington. . . . This additional information is to supplement my original complaint letters to your office dated January 28, 1998, and February 5, 1998. Commissioner Rey Graulty acknowledged receipt of these letters on February 24, 1998. . . . In his letter, Commissioner Graulty stated: ‘We will investigate your complaint to determine whether provisions of the insurance laws were violated.’ . . . I would greatly appreciate your informing me of the status of the investigation. . .”
Copies were sent to M. Bronster, Atty Gen; Colbert Matsumoto, Master; Oswald Stender, Trustee; Gerard Jervis, Trustee; Rodney Park, Pres., P&C.
NO RESPONSE was received to this letter of 01/22/99 to the Insurance Commissioner.
02/02/99 Harmon responded to Pozin, Federal Insurance Co.:
“This responds to your letter of December 23, 1998, addressed to Roy Hughes, Esq. and John Goemans, Esq.”
“First, let me state again that neither Mr. Hughes nor Mr. Goemans represent me in these “bad faith” type claims. I respectfully request that to the extent you are addressing these claims, you correspond directly with me. It is not necessary for you to send copies to Mr. Hughes or Mr. Goemans, but I have no objection if you wish to do so.”
“In your letter you state that it is not clear whether I am making these allegations against Federal in my capacity as an insured or purported insured under the Policy, or rather in my capacity as a claimant against the Trustees. My global settlement proposal is that I will release all named parties for all claims of fraud, bad faith, unfair and deceptive claims practices, misrepresentation, etc. I have described these claims in great detail in previous correspondence. . . . Let me say, however, that I consider the apparent collusion among Henry Peters, Nathan Aipa, Louanne Kam, Rocco Sansone, Peter Lowe and Milton T. Perkins in wrongfully back-dating the amended “Insured vs. Insured” Exclusion (Endorsement No. 6 of Policy No. 8146 79 11), and the failure to respond in a timely manner to my initial tender to Federal to defend me in this case, to be the most evident and serious examples of fraud, breach of contract, unfair and deceptive claims practices and bad faith.”
“In your letter you state that Federal has decided that Tony Rangel, or his designee, will respond to any claims I purport to have against Federal based on Federal’s alleged actions as my insurer or purported insurer with respect to the claims made against me by the plaintiffs in the P&C litigation. . . . I have not as yet received any response to my settlement proposals dated December 7, 1998, and January 4, 1999, from Mr. Rangel or his designee. (My January 4th letter was addressed to Michael Goolsby as I had not yet received your letter of 12/23/98.)
“Finally, as to Federal’s suggestion that to the extent I wish to advance any settlement proposals to P&C and/or Marsh & McLennan, I should submit these proposals directly to P&C (or its counsel, Mr. Katz) and/or to Marsh & McLennan, please be advised that I have previously submitted proposals to these entities. However, I must also point out that Marsh & McLennan is an agent (not a broker) for Federal in Hawaii. As such, I respectfully submit that Federal may be legally liable for the acts of its agent, Marsh & McLennan. . .”
02/02/99 Harmon wrote to Rangel, Federal: “As I have not received a response to my settlement proposal dated January 4, 1999, addressed to Michael Goolsby, that proposal expired on January 15, 1999. Therefore, I am offering the following alternate settlement proposals for your consideration. . . . As previously advised, I am not represented by counsel in this matter. Therefore, you, P&C’s contracted third-party claims administrator, or authorized counsel may respond to me directly. If I am to correspond or negotiate with any third party, please provide me with a copy of your specific written authorization agreement . . . These offers will expire at 12:00 noon, February 15, 1999.”
Harmon received NO RESPONSE to this proposal — another act of bad faith.
02/02/99 Harmon wrote to Park, P&C: “As I have not received a response to my settlement proposals dated January 17, 1999, those proposals expired on January 31, 1999. Consequently, I am offering the following new proposals . . . As previously advised, I am not represented by counsel in this matter. Therefore, you, P&C’s contracted third-party claims administrator, or authorized counsel may respond to me directly. If I am to correspond or negotiate with any third party, please provide me with a copy of your specific written authorization agreement for the handling of these claims with such third party or parties. . . These offers will expire at 12:00 noon, February 15, 1999.” cc: Tony Rangel, Federal Ins Co.
02/03/99 Park wrote Harmon: “In response to your February 2, 1999 letter and all previous related correspondence, all matters raised in your letters including any issues you believe to exist between you and P&C Insurance, should be addressed to Robert S. Katz or Matt A. Tsukazaki at the law firm of Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington . . . I will not respond separately to your February 2, 1999 letter.”
02/06/99 Harmon responded to Park:
“This is in response to your February 3, 1999 letter addressed to me, with copies to Matt A. Tsukazaki, Esq. and Roy F. Hughes, Esq. With due respect, I must point out several statements in your letter which do not adequately respond to my letter of February 2, 1999.”
“First, your reference is to P&C Insurance Company, Inc. et al. v. Bobby N. Harmon, Civil No. 97-0512-02, while my letter referenced the above matter. This is a completely separate and different claim not covered in Civil No. 97-0512-02.”
“Second, I requested in my letter, ‘If I am to correspond or negotiate with any third party, please provide me with a copy of your specific written authorization agreement for the handling of these claims with such third party or parties.’ If I am to address Robert S. Katz or Matt A. Tsukazaki directly on these ‘bad faith’ claims against P&C, then I will require a copy of P&C’s engagement letter to the law firm of Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington evidencing that they have been retained to handle these specific claims.”
“Third, I am of the opinion that there would be a conflict of interest on the part of this law firm if they were to handle both my ‘whistle-blower’ wrongful termination claim, and the referenced bad faith claim. In fact, Torkildson, Katz would be a named defendant in any law suit that may be filed in the referenced matter. This fact, in itself, would probably be sufficient cause for them to have a conflict of interest.”
“Fourth, now that all five trustees have been removed by the court from handling any matters related to the I.R.S. audit, and Trustee Henry Peters has been indicted on grand theft, will Mr. Peters, through Nathan Aipa and Louanne Kam, be allowed to continue to direct the operations of P&C, including the handling of claims and the awarding of non-bid contracts, such as to Marsh & McLennan and Torkildson, Katz?”
“Until the above issues have been resolved, I do not believe it would be appropriate for me to correspond directly with Mr. Katz or Mr. Tsukazaki. Therefore, I anticipate that you will either personally respond to my February 2, 1999 letter, or that P&C’s authorized third-party claims administrator or designated attorney for this matter will respond to my proposal and adequately address the four issues stated above.”
“As previously advised, I am not represented by counsel in this matter. Therefore, it may be inappropriate for you to send copies of any correspondence to Roy Hughes, Esq., at this time as he is involved only in Civil No. 97-0512-02.”
Copies of this letter were sent to:
Peter Lowe, M&M Ins. Mgt. Services - VIA Fax: (808) 521-5892
William S. Richardson - P&C Ins Co - VIA Fax: (808) 521-5892
Gilbert Tam - P&C Ins Co - VIA Fax: (808) 521-5892
Nathan Aipa - P&C Ins Co - VIA Fax: (808) 521-5892
Trustee Richard S. H. Wong - VIA Fax: (808) 536-6895
Trustee Henry H. Peters - VIA Fax: (808) 536-6895
Trustee Lokelani Lindsey - VIA Fax: (808) 536-6895
Trustee Gerard Jervis - VIA Fax: (808) 536-6895
Trustee Oswald Stender - VIA Fax: (808) 536-6895
Tony Rangel, Federal Insurance Company - VIA Fax: (213) 833-5200
American Reinsurance Co. - VIA Fax: (415) 398-2074
Elizabeth Kellner, Marsh & McLennan - VIA Fax: (212) 345-2045
David Loo, John Mullen & Co. - VIA Fax: (808) 531-0053
Cary Okawa, Coopers & Lybrand - VIA Fax (808) 531-3433
Insurance Commissioner, State of Hawaii - VIA Fax: (808) 586-2806
Attorney General, State of Hawaii - VIA Fax: (808) 586-1375
Colbert Matsumoto, Esq., Master, KSBE - VIA Fax: (808) 523-7885
Internal Revenue Service - VIA Fax: (808) 541-1109
Federal Bureau of Investigation - VIA Fax: (808) 566-4470
Robert Katz, Esq. - VIA Fax: (808) 523-6001
Roy Hughes, Esq. - VIA Fax: (808) 521-7489
Harmon received NO RESPONSE to this letter from any parties.
03/??/99 Hearing on KSBE’s Motion to Dismiss Harmon’s Wrongful Termination Countersuit before Judge B. Weil. Goemans had moved to Washington, D.C.; did not receive Notice of Hearing. Harmon appeared on his own behalf; made oral motion to Continue hearing to enable him to find substitute counsel. Weil denied motion and dismissed Harmon’s countersuit with prejudice.
03/11/99 Trustee Jervis is rushed to a hospital after taking an overdose of sleeping pills a week after a trust employee died in an apparent suicide. The day before her death, Jervis and the female worker were caught having sex in a men’s restroom by security workers at the Hawaii Prince Hotel.
03/29/99 Unemployment Insurance Appeal - Oral Argument, Judge B. Eden Weil presiding. Harmon appeared by telephone on his own behalf, with Katz appearing on behalf of Bishop Estate. Judge Weil ruled in Harmon’s favor.
04/12/99 Trustee Wong is indicted on charges of first-degree theft, perjury and conspiracy.
04/27/99 Harmon filed pro se RICO Civil No. CV99-00304 DAE against Federal Insurance Co.; P&C Insurance Co.; Marsh & McLennan, Inc.; Pricewaterhouse, Coopers & Lybrand; Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington; Henry H. Peters, Richard S.H. Wong, Lokelani Lindsey, Gerard Jervis and Oswald Stender, Trustees of the Estate of Bernice Pauahi Bishop; John Mullen & Co., Inc.; Nathan Aipa; Louanne Kam; Rodney Park; William S. Richardson; Gilbert Tam; Peter Lowe; John & Jane Does 1-1,000.
04/27/99 IRS files a report saying it may revoke the tax-exempt status of the estate if the five trustees do not step down.
04/29/99 Senate votes to reject Atty General Bronster and Budget Director Earl Anzai for second terms.
05/06/99 Judge Bambi Weil permanently removes Lindsey as trustee.
05/07/99 Probate Court Judge Kevin Chang temporarily removes four trustees and accepts Stender’s resignation on an interim basis.
05/08/99 Judge Chang appoints five interim trustees.
05/27/99 Judge Bambi Weil issues Order Reversing Employment Security Appeals Office’s Decision 9701016 filed in 1st Circuit Court:
“. . . The first issued raised is the appeals officer’s failure to allow Appellant’s request to subpoena records and witnesses. The Court notes that the answering brief filed by Employer . . . states . . . that Appellant, who was a participant in conversations with many of the proposed witnesses, should have produced or could have testified to the documents that he authored and could have testified about his conversations. . .”
“. . . The Court finds it appropriate to take judicial notice of Civ. No. 97-0512-02, an action entitled P&C Insurance Co, Inc. and Richard S.H. Wong, Oswald K. Stender, Lokelani Lindsey, Gerard A. Jervis and Henry H. Peters as Trustees of the Estate of Bernice Pauahi Bishop [vs. Bobby N. Harmon]: Therefore, an action brought by Employer as well as by P&C Insurance Co.”
“In Civ. No. 97-0512-02, on Feb. 21, 1997, Judge Radius sitting in the Circuit Court, granted KSBE’s motion for preliminary injunction against Appellant. By the court taking judicial notice of the minute order for that date, the Court notes that Mr. Katz was present when that occurred with his partner or associate Mr. Tsukazaki of the same law office, the same law office which is representing KSBE today, and did throughout the unemployment insurance hearing.”
“That on May 27, 1997, in the agency appeal, Appellant requested subpoenas and records including his personnel records which the Appeals Office denied.”
“On Aug 21, 1997, Mr. Katz’s law firm with Mr. Katz again on the pleading, filed an emergency motion for enforcement of Judge Radius’ order in Civ. No. 97-0512-02. On Aug. 26, Sept. 26, and Oct. 31, 1997, this particular judge heard that motion. Mr. Katz did not argue, but the attorney from his law firm, Mr. Tsukazaki argued the motion.”
“On Feb. 16, 1998, the Appeals Office rejected another of Appellant’s requests for subpoenas.”
“On Mar. 5, 1998, the Appeals Office decision was entered.”
“On Mar. 12, 1998, Appellant brought a motion for reconsideration and again requested subpoenas for the documents, and based on the testimony of Louanne Kam at the hearing, added the need for Mr. Aipa to be called as a witness, and a specific document to which Ms. Kam had referred that being a second opinion on the arms length relationship between KSBE and P&C.”
“In requesting the additional subpoenas along with the previously requested subpoenas, Appellant included a justification, among others that the court order he was under would not allow him to provide it himself.”
“On April 29, 1998, the Appeals Office denied the request to reopen the case and again denied Appellant’s request for subpoenas on the basis that Appellant failed to show the necessity of the individuals and documents for a fair hearing.”
“Based on the above, the argument that Appellant should have brought forth the documents he was precluded from having because of actions taken by Mr. Katz’s law office in the companion case will not prevail.”
“The law regarding subpoenas is found at Hawaii Administrative Rules § 12-5-93(e)(20(1997) and reads, “upon a showing of necessity by any party for the issuance of a subpoena to compel the attendance of a witness or the production of account records and documents at any hearing, a subpoena shall be issued by the referee.” It is not a matter of discretion.”
“. . . the Court finds there was a showing of necessity. Appellant was under court order so he did not have the documents and had no way to compel the testimony of Employer. The Court also finds that the information sought to be subpoenaed was relevant to the underlying unemployment case, inter alia, because it could go to reasons for Appellant’s actions, the importance of non-compliance, the importance of being in non-compliance to Employer KSBE, and whether Appellant was acting with wilful and wanton disregard of Employer’s best interest. The Court also finds that it is beyond cavil that it is against the best interest of a charitable trust, namely KSBE, to lose its tax exempt status.”
“The documents sought by Appellant would be relevant to whether Appellant’s ‘insubordination’ was an exercise of good faith discretion as KSBE’s risk manager.”
“The relevant issue is whether Appellant exercised good faith discretion as KSBE’s risk manager, because KSBE was Employer.”
“The Court additionally finds that there was probative, substantial and reliable evidence in the record to support the finding that Appellant ‘ignored his superior’s directives because he concluded that he would be violating the IRS code or the insurance commissioner’s regulation if he complied with the directive.’ It is not disputed that Appellant was acting on information that indicated such action could or would jeopardize Employer’s tax-exempt status. Ms. Kam testified and the Appeals Office found at the Certified Record on Appeal page 248 that Appellant had a genuine concern for the organization and that concern was understandable.”
“The Court finds because of those uncontested findings for which there is support in the record, Appellant cannot be denied unemployment benefits because he was not fired for misconduct as Hawaii Revised Statutes § 383-30(2) defines that term.”
“The record shows there was no wilful or wanton disregard of Employer’s interests, Employer being KSBE, the charitable estate as opposed to any individual who worked for KSBE, and that his actions were an exercise of his discretion. The Court cannot say whether it was error in Appellant’s judgment to disobey orders, but even if it was an error in judgment, it was truly a good faith error.”
“IT IS THEREFORE HEREBY ORDERED that the Employment Security Appeals Office Decision 9701016 dated March 5, 1998, finding Appellant disqualified for benefits is reversed and unemployment insurance benefits be paid. . .”
05/27/99 Harmon filed his RICO Case Statement.
07/23/99 Milton Holt incarcerated after admitting he used crystal meth, thus violating his bail agreement.
07/30/99 Harmon filed a Motion to Allow Amendment to RICO Complaint.
??/??/99 First RICO case hearing before Federal Judge David A. Ezra, District of Hawaii.
08/09/99 Judge David A. Ezra’s Order Granting Plaintiff’s Motion to Voluntarily Dismiss Action Against Defendants Federal Ins Co, Inc,; Marsh & McLennan Companies, Inc.; PricewaterhouseCoopers, LLP; John Mullen & Co., Inc.; Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington; Dismissing Defendants Federal Insurance Company, Inc.; Marsh & McLennan Companies, Inc.; Pricewaterhousecoopers, LLP; John Mullen & Co., Inc.; Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington; striking Defendants Federal Insurance Co., Inc.; PricewatershouseCoopers, LLP’s; and Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington’s Motions to Dismiss and All Related Joinders as Moot; Striking Plaintiff’s Motion Requesting Continuance of Hearing Date on Defendants’ Motion to Dismiss as Moot; Granting Plaintiff’s Motion for Extension of Time to Serve Original Complaint.
08/14/99 Initial meeting with Arnold Phillips.
08/17/99 RICO Rule 16 Pretrial Scheduling Conference, Judge Barry Kurren. Conference continued until after Hearing on Harmon’s Motion to Allow Amendment to Complaint.
08/24/99 Milton Holt pleads guilty to one count of felony mail fraud related to illegally spending about $15,000 of his campaign money for personal use. Holt is currently in prison on drug charges. He faces up to 5 years in prison when he is sentenced by U.S. Dist. Judge Alan Kay on 12/06/99.
09/03/99 First Hearing on Harmon’s Motion to Allow Amendment to Complaint before U.S. Magistrate Judge Barry M. Kurren. Judge Kurren granted a Continuation to 09/24/99 in order to allow Harmon to prepare and deliver a draft of his amended Complaint to Plaintiff’s KSBE and P&C. If KSBE and P&C agree with the draft, Kurren may waive another hearing and accept the amended complaint.
09/07/99 Harmon hand-delivers a copy of his amended RICO complaint to Hipp and Sia. Sia does not agree with the amended Complaint as individual Directors & Officers of P&C are still named, so hearing before Judge Kurren is still on for 09/24/99.
09/11/99 Arnold T. Phillips engaged as Harmon’s attorney in his wrongful termination counterclaim.
09/13/99 KSBE files Appeal in the Hawaii Supreme Court from the Order Reversing Employment Security Appeals Office’s Decision 9701016, filed on 05/27/99. (Answer due in 40 days.)
09/18/99 Phillips agrees to represent BH and wife in the bad faith claims against Federal, P&C & M&M.
09/22/99 Defendant P&C files Supplemental Memorandum in Opposition to Motion to Allow Plaintiff Harmon’s Motion to Allow Amendment to Complaint Filed July 30, 1999.
09/24/99 Hearing on Harmon’s Motion to Amend RICO Complaint before Judge Kurren. Phillips appears on behalf of Harmon; requested extension of time to prepare a revised amended Complaint.
09/29/99 Order Denying Plaintiff’s Motion for Amended Complaint issued by Judge Kurren. However, because Plaintiff has engaged counsel, the Court will grant an extension to allow Plaintiff to amend his pleading in accordance with Fed. R. Civ. P. 8(a)(2). Accordingly, Plaintiff’s counsel is to deliver to Defendants a copy of a proposed amended complaint no later than 11/01/99. Defendants’ opposition, if any, to the amendment is due to this court by 11/12/99. Plaintiff’s reply to any opposition will be due no later than 11/23/99. A Pre-Trial Conference in this case, pursuant to Fed. R. Civ. P. 16, is continued to 12/07/99, at 9:00 a.m. If the amended complaint is opposed, the court will take up the matter at the 12/07/99 hearing.
11/01/99 Plaintiff’s counsel is to deliver to Defendants a copy of a proposed amended complaint.
11/12/99 Defendants’ opposition, if any, to the amendment is due to this court.
11/23/99 Plaintiff’s reply to any opposition will be due.
12/07/99 Pre-Trial Conference with Judge Kurren, pursuant to Fed. R. Civ. P. 16, is continued to 12/07/99, at 9:00 a.m.
This is a leaf from
Claims By Harmon
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To go to the top of the tree
The Catbird Seat