## Facts

- Priscilla Young was injured in a rear-end collision caused by a driver insured by Allstate Insurance Company.
- Young alleged Allstate used an internal claims-handling program, “Claims Core Process Redesign” (CCPR), designed to increase profits by underpaying personal-injury claims and discouraging claimants from retaining counsel.
- Young claimed Allstate contacted her early, promised to treat her fairly, and advised she did not need an attorney.
- Young alleged Allstate offered less than her medical expenses, refused to make a reasonable offer after arbitration, appealed an arbitration award substantially higher than its offer, and made a similar low offer under Hawaiʻi’s Rule 68 procedure.
- Young ultimately obtained a jury verdict far exceeding Allstate’s offer.
- After the underlying injury case ended, Young sued Allstate and its adjuster, asserting abuse of process, “malicious defense,” breach of an assumed duty of good faith and fair dealing, and intentional infliction of emotional distress (IIED).
- The circuit court dismissed all claims under Rule 12(b)(6), and Young appealed; the appellate court treated the complaint’s factual allegations as true.

## Issues

1. Whether procedurally proper litigation actions (e.g., settlement posture, appeals, and Rule 68 offers), allegedly pursued for an ulterior corporate purpose, state a claim for abuse of process.
2. Whether Hawaiʻi should recognize a tort of “malicious defense” based on an allegedly meritless, bad-faith defense strategy in prior civil litigation.
3. Whether an insurer can assume a duty of good faith and fair dealing toward a third-party claimant through pre-litigation assurances and claims-handling conduct.
4. Whether allegations of a profit-driven scheme to underpay claims and punish claimants can state an IIED claim despite arguments that the conduct was privileged litigation activity.

## Decision

- The Hawaiʻi Supreme Court affirmed dismissal of the abuse of process claim.
- The court affirmed dismissal of the malicious defense claim and declined to recognize the tort in Hawaiʻi.
- The court affirmed dismissal of the assumed-duty good faith and fair dealing claim.
- The court vacated dismissal of the IIED claim and remanded for further proceedings.
- A concurrence/dissent would have recognized a malicious-defense tort but agreed with the majority’s rulings on the other claims.

## Legal Principles

- Abuse of process requires an improper use of judicial process after its issuance; using facially proper procedures (pleadings, appeals, settlement mechanisms) is not enough, even if motivated by an ulterior purpose.
- Hawaiʻi does not recognize a tort of “malicious defense”; concerns include protecting access to courts, encouraging zealous advocacy, and avoiding collateral litigation where sanctions and procedural tools may address misconduct.
- The insurer’s duty of good faith and fair dealing is grounded in the insurance contract and generally runs between insurer and insured; routine communications and assurances to a third-party claimant do not create an enforceable assumed duty comparable to contractual bad faith.
- IIED requires unprivileged conduct that is extreme and outrageous, intended (or recklessly likely) to cause severe emotional distress, and that causes severe distress; at the pleading stage, litigation privilege and the availability of lawful procedures do not automatically defeat IIED when a broader pattern of allegedly extreme and outrageous conduct is pled.

## Conclusion

The court limited tort liability for aggressive but procedurally proper litigation conduct by rejecting abuse of process and refusing to create a malicious-defense tort, and it declined to extend insurer bad-faith duties to third-party claimants based on alleged assurances. However, it allowed an IIED claim to proceed where the complaint alleged a deliberate, profit-driven scheme to underpay claims and punish or deter claimants, holding that such allegations could support a finding of extreme and outrageous conduct if proven.


Young v. Allstate Ins. Co., 119 Haw. 403, 198 P.3d 666 (Haw. 2008)