Full opinion text
ORDER DENYING DEFENDANT’S MOTION TO DISMISS, DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT, AND GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT KAY, District Judge. BACKGROUND This insurance coverage case arises out of a one-car accident on September 14, 1991 on the island of Hawaii. Kevin Dizol was a passenger in a van driven by Vernell Adams. Just prior to the accident, Adams was drinking at the Highlands Bar & Grill (“Highlands”). The Court addresses two motions in this Order. First, Alexander Dizol, Special Administrator of the Estate of Kevin Tate Dizol, deceased (“Defendant”), moves to dismiss the complaint of Government Employees Insurance Company (“Plaintiff’) and/or for summary judgment. Second, Plaintiff moves for summary judgment. At the time of the accident, the van Adams drove was insured by Fireman’s Fund Insurance Company of Hawaii, Inc. (“Fireman’s Fund”) with bodily injury liability limits of $35,000 per person. Highlands was also insured by Fireman’s Fund. In 1993, Defendant filed suits in Hawaii state court against both Highlands (under a dram shop theory) and Adams’s estate. On November 10, 1994, Defendant settled with Highlands and Fireman’s Fund for $255,000. The limit of Highlands’ policy was $1 million. On that date or sometime soon after, Defendant received from Fireman’s Fund $35,000 on behalf of Adams. On April 24, 1995, Defendant dismissed with prejudice his suits against Adams and Highlands. Defendant also received no-fault benefits of $15,000 on February 25, 1992 and underinsured motorist benefits of $35,000 (policy limit) from USAA Insurance Company on December 21, 1994. In total, Defendant has received $340,000. According to an economist retained by Defendant, the deceased’s projected loss of earnings is $357,177. No other evidence of damages is before the Court. On the date of the accident, Harvey Dizol, the deceased’s brother, was insured under a policy issued by Plaintiff (the “Policy”) which included underinsured motorist (“UIM”) coverage of $70,000. The Policy has a “relative resident” clause whereby relatives living in the policyholder’s household are insured. See Def. Mot. Dis., Ex. A, at 10. Under “LOSSES WE PAY,” the Policy states: We will pay damages an insured is legally entitled to recover for bodily injury caused by accident and arising out of the ownership, maintenance or use of an underinsured motor vehicle. However, we will not pay until the total of all bodily injury liability insurance available has been exhausted by payment of judgments or settlements. See id. at 11 (emphasis in original). The Policy also has a “consent-to-settle” clause: This coverage does not apply to bodily injury to an insured if the insured or his legal representative has made a settlement or has been awarded a judgment of his claim without our prior written consent. Id. (emphasis in original). It is undisputed that the settlements with Adams and Highlands were made without Plaintiffs prior written consent. Defendant first made a demand for UIM insurance on August 12, 1994. See PI. Mot. SJ, Ex. B, F, G. Jeffrey A. Todd was assigned to be the claims examiner. See PI. Mot. SJ, Aff. Jeffrey A. Todd ¶¶3, 5 (“Todd Aff.”). Todd was to investigate, inter alia, whether the deceased was a “relative resident” of Harvey Dizol’s household. See id. ¶ 6. Todd wrote Defendant a letter acknowledging the claim had been made on August 18,1994. Please note that your letter was the first notice we have received of this loss. At this time I have requested policy information from the mainland due to the fact that this loss occurred approximately three years ago. ... Please advise how much coverage is available under the Highland’s Bar and Grill policy. In your letter you noted that the trial date has yet to be set. Please advise what the status is in regards to the suit and whether all necessary depositions have been taken. PI. Mot. SJ., Ex. H (emphasis added). Also on August 18, 1994, Todd discovered from Fireman’s Fund representatives that, inter alia, suit had been filed against Adams “some years ago” but that the status of the lawsuit was unclear. Fireman’s Fund also informed Todd that it had tendered, but Defendant had not then accepted, $35,000 representing a full pay out of benefits for the policy held by Adams. See ToddAff. ¶8. On September 27, 1994, Defendant’s present counsel (James Ireijo) told Todd that “DIZOL had settled his claims against ADAMS and HIGHLANDS for the respective sums of $35,000.00 and $255,000.00; (b) HIGHLANDS had liability limits of one million dollars; and (c) DIZOL would be looking to obtain UIM benefits regardless of that settlement.” Todd Aff. ¶ 10. Todd also avers that upon learning this conversation with Ireijo, he “immediately called [Plaintiffs former attorney Carleton Reid] (that same day) and sent him the claims file for his review and future handling.” Id. ¶ 11. On October 3, 1994, Reid wrote Todd and suggested that he investigate whether Kevin Dizol truly resided with the policyholder. See Opp. PI. Mot. SJ, Ex. B. He also wrote: It is ... unclear if the Estate of Kevin Dizol has already accepted the entire amount of bodily injury liability coverage available to Vernell Adams.... Mr. Fitzgerald’s August 12, 1994 letter seems to suggest that a settlement has already been reached with Mr. Adams .... If there has been a settlement with Vernell Adams, such may be a violation of your policy where you have a right to withhold consent to a settlement where your interests would not be protected. If a settlement has not yet been reached, you might wish to intervene in the pending action or make it clear to the Estate of Kevin Dizol’s attorney that you will not consent to any settlement that releases Mr. Adams for his available policy coverage. Id. (emphasis added). Despite Reid’s suggestion, Plaintiff did not move to intervene in the underlying state tort case. According to Ireijo, he did not receive any objection to the pending settlements before late November of 1994. On November 28, 1994, Reid wrote Irei-jo, (1) requesting information about the deceased’s status as a “resident relative” and whether he had any other insurance coverage; (2) stating that if there had been a settlement with Adams, it was without the Plaintiffs consent and could mean that there was no UIM coverage available because of the policy violation; and (3) stating: If and when you wish to settle with Mr. Adams for his available policy limits, please advise me of such and the details surrounding your desire to do so. My suspicion is that you have not yet settled with Mr. Adams because of the “joint tortfeasor act” where you are pursuing the “deep pocket” liquor establishment. If my assumption is incorrect, please advise me of such and the status of the Estate’s circuit court claims for bodily injury. PL Mot. SJ., Ex. J. On December 1, 1994, Ireijo telephoned Reid and informed him that Defendant had settled his claim with Highlands for $255,000. This was the first Reid (but not Plaintiff) knew of the settlement. See Reply PI. Mot. SJ, at 2. On December 2,1994, Ireijo wrote Reid a letter informing him that Defendant had released Highlands and that he planned to settle with Adams shortly. See PI. Mot. SJ., Ex. K. On December 29,1994, Plaintiff filed the instant lawsuit under the Declaratory Judgment Act, 28 U.S.C. § 2201-02 (1994) (“DJA”). Plaintiff sought a declaration that Defendant is not entitled to collect under the Policy because he breached the consent-to-settle clause. Alternatively, Plaintiff requested a set off against Defendant’s damages of either: 1) the full amount of bodily injury coverage available to Adams and Highlands, or 2) the full amount of payments received by Defendant. On August 22, 1995, Plaintiff filed a motion for summary judgment. This Court granted the motion after finding that Defendant breached the consent-to-settle clause. See Order Granting Plaintiffs Motion for Summary Judgment, at 4, 14 (filed Nov. 9, 1995) (“1995 SJ Order”). The Court rejected Defendant’s estoppel/lach-es/waiver arguments based on Plaintiffs alleged untimely objection to the settlement with Highlands. Id. at 10-13. The Court denied Defendant’s motion for reconsideration. Defendant appealed. The Ninth Circuit vacated and remanded the 1995 Summary Judgment order because this Court had not sua sponte determined whether it was “appropriate” to exercise its discretionary jurisdiction under the DJA. See Government Employees Ins. Co. v. Dizol, 108 F.3d 999, 1004, 1010, 1012 (9th Cir.1997), vacated, 133 F.3d 1220 (9th Cir.1998) (“GEICO (Panel) ”). This Court had not examined the DJA issue as no parties had raised it. The panel’s opinion was reversed by the Ninth Circuit sitting en banc. See Government Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1222-23 (9th Cir.1998) (en banc) (“GEICO (En Banc) ”). The en banc court held that “when a district court has constitutional and statutory jurisdiction to hear a case brought pursuant to the [DJA], the district court may entertain the action without sua sponte addressing whether jurisdiction should be declined.” Id. at 1224. The en banc court vacated the panel opinion and returned control of the case to the panel for resolution of the appeal on the merits. See id. at 1227. The panel again vacated this Court’s entry of summary judgment. It remanded the case with instructions to reconsider the 1995 Summary Judgment Order in light of the Hawaii Supreme Court’s decision in Taylor v. GEICO, 90 Hawai’i 302, 978 P.2d 740 (1999). On May 19, 2000, Defendant filed an amended counterclaim for breach of the implied covenant of good faith and fair dealing. Plaintiff filed its motion for summary judgment on both its complaint and the amended counterclaim on June 5, 2000. Defendant filed his opposition August 11, 2000. Plaintiff filed its reply August 31, 2000. Without leave of Court, Defendant filed a supplement to his opposition on September 5, 2000. Defendant filed his motion to dismiss and/or motion for summary judgment on June 28, 2000. Plaintiff filed its opposition on August 4, 2000. Defendant did not file a reply. The Court held a hearing on the motions on September 11, 2000. STANDARD OF REVIEW I. MOTION FOR SUMMARY JUDGMENT Summary judgment shall be granted where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed. R.Civ.P. 56(c). The standard for summary adjudication is the same. See California v. Campbell, 138 F.3d 772, 780 (9th Cir.1998). A principal purpose of the summary judgment procedure is to identify and dispose of factually unsupported claims and defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The United States Supreme Court has declared that summary judgment must be granted against a party who fails to demonstrate facts to establish an element essential to his case where that party will bear the burden of proof of that essential element at trial. See id. at 322, 106 S.Ct. 2548. “If the party moving for summary judgment meets its initial burden of identifying for the court the portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact [citations omitted], the non-moving party may not rely on the mere allegations in the pleadings in order to preclude summary judgment.” T.W. Elec. Serv. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir.1987). Rather, Rule 56(e) requires that the nonmoving party set forth, by affidavit or as otherwise provided in Rule 56, specific facts showing that there is a genuine issue for trial. See id. at 630. At least some “significant probative evidence tending to support the complaint” must be produced. Id. Legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise valid motion for summary judgment. See British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir.1978). ■ The standard for a grant of summary judgment reflects the standard governing the grant of a directed verdict. See Eisenberg v. Insurance Co. of North America, 815 F.2d 1285, 1289 (9th Cir.1987) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). Thus, the question is whether “reasonable minds could differ as to the import of the evidence.” Anderson, 477 U.S. at 250-51, 106 S.Ct. 2505. The Ninth Circuit has established that “[n]o longer can it be argued that any disagreement about a material issue of fact precludes the use of summary judgment.” California Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir.1987). Moreover, the United States Supreme Court has stated that “[w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Indeed, “if the factual context makes the nonmoving party’s claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial.” Franciscan Ceramics, 818 F.2d at 1468 (emphasis in original) (citing Matsushita, 475 U.S. at 587, 106 S.Ct. 1348). Of course, all evidence and inferences to be drawn therefrom must be construed in the light most favorable to the nonmoving party. See T.W. Elec. Serv., 809 F.2d at 630-31. II. MOTION TO DISMISS “A party invoking the federal court’s jurisdiction has the burden of proving the actual existence of subject matter jurisdiction.” See Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir.1996). On a Rule 12(b)(1) motion, the court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction. See McCarthy v. United States, 850 F.2d 558, 560 (9th Cir.1988). “The requirement that the nonmoving party present evidence outside his pleadings in opposition to a motion to dismiss for lack of subject matter jurisdiction is the same as that required under Rule 56(e) that the nonmoving party to a motion for summary judgment must set forth specific facts, beyond his pleadings, to show that a genuine issue of material fact exists.” Trentacosta v. Frontier Pac. Aircraft Indus., Inc., 813 F.2d 1553, 1559 (9th Cir.1987); see also Biotics Research Corp. v. Heckler, 710 F.2d 1375, 1379 (9th Cir.1983) (noting that the district court may receive evidence to resolve underlying factual disputes in a 12(b)(1) motion to dismiss for lack of subject matter jurisdiction). The district court’s dismissal for lack of subject matter jurisdiction is reviewed de novo. See Seven Resorts, Inc. v. Cantlen, 57 F.3d 771, 772 (9th Cir.1995). Any factual determinations made by the district court in ruling on the motion to dismiss are reviewed for clear error. See Nike, Inc. v. Comercial Iberica de Exclusivas Deportivas, S.A., 20 F.3d 987, 990 (9th Cir.1994). Under Rule 12(b)(6), in determining whether a motion to dismiss for failure to state a claim upon which relief can be granted, this Court must accept as true the plaintiffs allegations contained in the complaint and view them in a light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Wileman Bros. & Elliott, Inc. v. Giannini, 909 F.2d 332, 334 (9th Cir.1990); Shah v. County of Los Angeles, 797 F.2d 743, 745 (9th Cir.1986). Thus, the complaint must stand unless it appears beyond doubt that the plaintiff has alleged no facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1988). A complaint may be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal theory or (2) insufficient facts under a cognizable legal theory. Balistreri, 901 F.2d at 699; Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.1984). In essence, as the Ninth Circuit has stated, “[t]he issue is not whether a plaintiffs success on the merits is likely but rather whether the claimant is entitled to proceed beyond the threshold in attempting to establish his claims.” De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir.), cert. denied, 441 U.S. 965, 99 S.Ct. 2416, 60 L.Ed.2d 1072 (1979). The Court must determine whether or not it appears to a certainty under existing law that no relief can be granted under any set of facts that might be proved in support of plaintiffs’ claims. Id. A motion under Rule 12(b)(6) should also be granted if an affirmative defense or other bar to relief is apparent from the face of the Complaint, such as lack of jurisdiction or the statute of limitations. 2A J. Moore, W. Taggart & J. Wicker, Moore’s Federal Practice, ¶ 12.07 at 12-68 to 12-69 (2d ed.1991 & supp. 1191-92) (citing Imbler v. Pachtman, 424 U.S. 409, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976)) (emphasis added). DISCUSSION I. STANDING The dissent to the en banc decision questioned whether this Court has subject matter jurisdiction over the instant action. See GEICO (En Banc), 133 F.3d at 1228-29 (Alarcon, J., dissenting). Although neither party to these motions discussed this issue, the Court will address it sua sponte. See United States v. Viltrakis, 108 F.3d 1159, 1160 (9th Cir.1997) (“the jurisdictional issue of standing can be raised at any time, including by the court sua sponte”). The dissent argued that Plaintiff did not carry its burden of showing it met the constitutional mínimums for standing outlined in Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (requiring that a plaintiff prove, inter alia, an injury in fact). Specifically, the dissent argued that Plaintiff “failed to carry its burden of demonstrating that it was threatened with injury because Adams was underinsured,” i.e., there was no evidence that the economic loss suffered by Defendant exceeded the sum of Adams’s policy limits and Highlands’s policy limits. Id. at 1228. The dissent also noted that no Hawaii court had addressed, “whether an insurance company has any liability under [a UIM] policy where a joint tortfeasor’s separate insurance policy provides sufficient coverage to pay for the entire loss suffered by the injured party.” Id. at 1229. The dissent then stated that: To exercise our subject matter jurisdiction in this matter, we must assume either [1] that [Highlands’s] dram shop insurance policy is not sufficient to pay the Dizol Estate for all of its losses, or even if it is sufficient, [2] a Hawaii court would nevertheless hold GEICO liable under its underinsurance policy. Id. (brackets added). The Court finds that Plaintiff has carried its burden of showing that it is threatened with injury. Before Plaintiff filed suit, Defendant sought to hold Plaintiff liable under the UIM policy regardless of Highlands’s policy limit. See PI. Mot. SJ, Ex. K, at 2 (“it is our position that should this case reach a decision, that your liability begins after $35,000 is ‘awarded,’ and not after $305,000”). Plaintiffs injuries were thus the possibilities that it would have to: a) honor the Policy despite the breach of the consent-to-settle clause, or b) honor the Policy regardless of the fact that a joint tortfeasor carried sufficient insurance to compensate Defendant fully. As the record reflects, Highlands’s insurance policy had a limit of $1 million. This may or may not be sufficient to pay Defendant’s losses. Assuming that it is sufficient, the dissent nevertheless argues that for Plaintiff to have standing this Court must find that a Hawaii court would still impose UIM liability even though the joint tortfeasor’s separate insurance policy provides sufficient coverage to pay for the entire loss. The Court respectfully disagrees. While it is true that the answer to this legal question will determine whether and at what point (after offsets) Plaintiff is liable to Defendant or not, it does not follow that a determination of no liability means that Plaintiff lacks standing. If that were true, every DJA plaintiff who filed a case claiming that he will be injured if the law is construed a certain way would be found to lack standing if the law is construed in his favor. This is clearly not the law. See, e.g., Fireman’s Fund Ins. Co. v. National Bank of Cooperatives, 103 F.3d 888, 890-91, 895-96 (9th Cir.1996) (insurance company filed a DJA action seeking a determination of no coverage and Ninth Circuit affirmed district court decision that insurer had no liability to the insured; case not dismissed for lack of standing because insurer had no liability to insured). The majority opinion in the en banc decision said as much when it explained that “a dispute between an insurer and its insureds over the duties imposed by an insurance contract satisfies Article Ill’s case and controversy requirement.” GEICO (En Banc), 133 F.3d at 1223 n. 2. Finally, despite the dissent’s suggestion to the contrary, the fact that the instant case requires the resolution of novel state law questions does not affect Plaintiffs standing. See id. at 1229. The presence of state law questions is a factor to be considered in whether this Court exercises its jurisdiction under the DJA, see Part II.A, infra, but is irrelevant to the standing question. See Lujan, 504 U.S. at 560-61, 112 S.Ct. 2130. Accordingly, the Court finds that Plaintiff has standing. II. DEFENDANT’S MOTION TO DISMISS AND FOR SUMMARY JUDGMENT Defendant filed the instant motion to dismiss or for summary judgment arguing: 1) that the Court lacks subject matter jurisdiction, 2) that Plaintiff failed to state a claim upon which relief can be granted, and 3) that Plaintiff failed to timely intervene in the underlying state tort case. A. Subject Matter Jurisdiction Defendant asks the Court to refrain from exercising its jurisdiction under the DJA. The DJA states, in relevant part: In a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. 28 U.S.C. § 2201(a) (emphasis added). A lawsuit seeking federal declaratory relief must pass constitutional muster by presenting an actual case or controversy and must also fulfill statutory jurisdictional prerequisites. See GEICO (En Banc), 133 F.3d at 1222-23. Additionally, it must be “appropriate” to entertain the action. See id. at 1223. “This determination is discretionary, for the [DJA] is deliberately cast in terms of permissive, rather than mandatory, authority.” Id. (citations omitted). The Court has already found that Plaintiff has standing and it is not disputed that an actual case or controversy is before the Court. Moreover, it is undisputed that diversity jurisdiction exists. See GEICO (Panel), 108 F.3d at 1004 n. 6. The only question, therefore, is whether entertaining the instant case is “appropriate.” It is within the discretion of the district court to determine whether it is “appropriate” to grant jurisdiction in a declaratory relief action based in diversity. See Wilton v. Seven Falls Co., 515 U.S. 277, 288-89, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (district court may use its discretion to stay or dismiss an action seeking a declaratory judgment); GEICO (En Banc), 133 F.3d at 1223 (noting the permissive, non-mandatory terms of the DJA). Wilton explicitly rejected the idea that a district court could only dismiss such actions in “exceptional circumstances,” stating that “[djistinct features of the [DJA] ... justify a standard vesting district courts with greater discretion in declaratory judgment actions than that permitted under the ‘exceptional circumstances’ test of Colorado River.” Id. at 286, 115 S.Ct. 2137. A district court is not required, sua sponte, to address the appropriateness of maintaining jurisdiction over a declaratory relief action. See GEICO (En Banc), 133 F.3d at 1224-25. If a party raises the issue, however, the district court must explain its reasoning for either accepting or declining jurisdiction. See id. The district court’s reasoning should focus on the following factors: 1) avoiding needless determination of state law issues; 2) discouraging litigants from filing declaratory actions as a means of forum shopping, and 3) avoiding duplicative litigation. See id. at 1225 (citing Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942)). Additionally, parallel state proceedings should be considered: If there are parallel state proceedings involving the same issues and parties pending at the time the federal declaratory action is filed, there is a presumption that the entire suit should be heard in state court. The pendency of a state court action does not, of itself, require a district court to refuse federal declaratory relief. Nonetheless, federal courts should generally decline to entertain reactive declaratory actions. However, there is no presumption in favor of abstention in declaratory actions generally, nor in insurance coverage cases specifically. Id. (citations and footnotes omitted); accord Maui Land & Pineapple Co. v. Occidental Chem. Corp., 24 F.Supp.2d 1079, 1083 (D.Haw.1998) (Kay, C.J.). Finally, when a DJA claim is joined by other, non-DJA claims, “the district court should not, as a general rule, remand or decline to entertain the claim for declaratory relief.” GEICO (En Banc), 133 F.3d at 1225-26. Defendant now challenges the Court’s exercise of its DJA jurisdiction. Accordingly, the Court will determine if exercising jurisdiction is appropriate. 1. Avoiding Needless Determination of State Law Resolution of the instant case will require determination of novel state law issues — the entire substantive case is governed by state law. This factor therefore weighs towards this Court declining jurisdiction. 2. Forum Shopping The court presumes that no forum shopping occurred, as Defendant has not made such an argument. This factor weighs against declining jurisdiction. 3. Avoidance of Duplicative Litigation While there was a state case pending when this case was filed, it was long ago (April 1995) settled and dismissed. Defendant has not informed the Court of other related litigation and thus, there is no reason to think that this litigation is duplica-tive. This factor weighs against declining jurisdiction. 4.Presence of Parallel Proceedings For proceedings to be “parallel” it is not required that all parties or issues involved be the same in each court action. See Golden Eagle Ins. Co. v. Travelers Cos., 103 F.3d 750, 754-55 (9th Cir.1996), overruled in part on other grounds by GEICO (En Banc), 133 F.3d at 1227. “It is enough that the state proceedings arise from the same factual circumstances.” Id.; see also Employers Reinsurance Corp. v. Karussos, 65 F.3d 796, 799-800 (9th Cir.1995) (abuse of discretion for a district court to retain jurisdiction over an insurer’s declaratory judgment coverage action in which only state law questions were posed during the pendency of state proceedings which were overlapping, but not completely identical, there were factual questions between the proceedings, and the insurer was not a party to the state court proceeding); Maui Land & Pineapple, 24 F.Supp.2d at 1083 (underlying liability suit in state court between the insured and a third party was parallel to the federal court coverage action between the insured and the insurer). When the instant case was filed there was a pending state court action by Defendant against Adams and Highlands. That lawsuit was not dismissed until April 24, 1995. Even assuming that the state court suit and the instant suit were “parallel,” this factor does not weigh in favor of declining jurisdiction. Plaintiff learned on December 1-2, 1994 that settlement had been consummated with Highlands and that it was imminent with Adams. Thus, although the state court action was still pending, by the time Plaintiff filed suit on December 29, 2000, the “parallel” suit was basically complete. By the time a motion for summary judgment was filed in this case (August 22,1995), the state court case had been over for four months. Moreover, as of this juncture, the “parallel” suit has been dismissed for over five years. The Court will not decline jurisdiction now because five years ago there was a parallel suit. This factor weighs against declining jurisdiction. 5. Presence of Joined Actions Defendant recently filed a counterclaim for breach of the implied covenant of fair dealing. Thus, although Defendant is the party seeking dismissal, its actions create the situation in which the GEICO (En Banc) court advised that “the district court should not, as a general rule, remand or decline to entertain the claim for declaratory relief.” GEICO (En Banc), 133 F.3d at 1225. This factor would therefore weigh in favor of retaining jurisdiction, except that Defendant offers to dismiss his claim in order to help the Court decide the instant motion in its favor. Accordingly, the Court finds this factor neither weighs for nor against the exercise of jurisdiction. 6. Conclusion The Court finds that the application of these factors counsels for retention of jurisdiction. The only factor weighing in favor of declining jurisdiction is the fact that state law issues will be before the Court. This is not unusual, as this Court routinely decides state law issues via its diversity jurisdiction. Moreover, it does not outweigh the fact that there is no evidence of forum shopping, no risk of duplicative litigation, no current (or even recent) parallel proceedings, and there are non-DJA counterclaims pending. Furthermore, it would be a waste of judicial resources to decline jurisdiction after six years have passed. Accordingly, Defendant’s motion to dismiss for lack of subject matter jurisdiction is DENIED. B. Failure to State a Claim Defendant argues that Plaintiffs offset argument fails to state a claim for which relief may be granted. Specifically, Defendant argues that the issue of offsets may be reached only after the parties go to arbitration on the amount of damages. The Policy’s arbitration clause, however, does not support Defendant’s argument. The clause states: If any insured making claim under this policy and we do not agree that he is legally entitled to recover damages under this coverage from the owner or operator of an underinsured motor vehicle because of bodily injury to the insured, or do not agree as to the amount payable, either party may request arbitration. See Def. Mot. Dis., Ex. A, at 12. Thus, arbitration may be invoked if Plaintiff and Defendant disagree on one of two issues: (1) whether Defendant is entitled to recover damages from the underinsured motorist (i.e., Adams), or (2) the amount owed in damages. This is not a general arbitration clause for all disputes. Indeed, a second clause in the Policy reiterates that the arbitrators “will then hear and determine only the question or questions of legal liability and/or damages that are in dispute, and no other issues.” Id. (emphasis added). Hawaii case law supports this reading. See National Fire Ins. Co. v. Reynolds, 77 Hawai’i 490, 889 P.2d 67 (1995). Faced with a similar arbitration clause, the court noted that, “most courts hold that arbitration is generally limited to issues of the offending motorist’s fault or liability to the covered person and the amount of damages resulting from the accident, leaving issues relating to policy coverage to the courts." Id. at 70 (emphasis added). The National Fire court then held that, [U]nder the standard arbitration clause in underinsured motorist provision, arbitration on the question ’of whether insured was “legally entitled to recover damages” is limited to determination of offending motorist’s fault and his or her resulting liability to the person covered under the policy, and does not include ascertainment of whether UIM coverage applies under any particular circumstance. Id. at 71 (emphasis added). The instant dispute concerns Plaintiffs obligation to provide coverage in light of Defendant’s settlements with Adams and Highlands. That issue is appropriately before this Court, not an arbitrator. See id. If the Court decides that Plaintiff must provide coverage, it must also decide the amount of Plaintiffs liability which will be “offset,” if at all, by the awards Defendant has already received. There is no dispute about Adams’s fault and his resulting liability to Defendant. See Opp. Def. Mot. Dis., 6. Moreover, to the extent that Defendant’s damages are yet undecided, Plaintiffs entitlement to offset these damages is a different matter that is appropriately before this Court, and not an arbitrator. Nothing in the Policy dictates that damages must be decided before the legality of certain offsets can be determined. Accordingly, the Court finds that Defendant’s argument that Plaintiff cannot receive relief from this Court, because it should have gone to arbitration first, is without merit. Defendant’s motion to dismiss on this basis is DENIED. C. Failure to Timely Intervene Defendant next argues that summary judgment should be granted to it based on Plaintiffs failure to timely intervene. Defendant argues that Plaintiff knew about Defendant’s UIM claim by August 17,1994 and also of the underlying state court tort actions against Adams and Highlands. Defendant also argues that Plaintiff knew of the settlements with Highlands and Adams by September 27, 1994. Defendant argues that it was improper for Plaintiff to wait until December 29, 1994 to file this action and that instead, Plaintiff should have intervened in the pending state court action and stopped Defendant from settling his claims. Defendant contends that “[Plaintiff] should be barred from now complaining because it was the lack of filing a timely intervention to protect it’s [sic] own alleged interest that caused it’s [sic] own harm.” Def. Mot. Dis., at 11. Plaintiff argues that it should not have intervened because even as of late November/early December of 1994, it was still investigating Defendant’s right to coverage. Specifically, Plaintiff contends that it was still investigating the issue of whether the decedent had “relative resident” status. Defendant’s motion for summary judgment is DENIED. Defendant cites no legal authority in support of his position that Plaintiffs DJA action should be dismissed solely because Plaintiff breached some alleged duty to intervene in the underlying state court case. As explained above, the existence of an underlying state court case is a factor in the Court’s analysis of whether it should exercise its jurisdiction under the DJA. Additionally, the “timeliness” and appropriateness of Plaintiffs intervention (or lack thereof) is also something to be considered in Defendant’s claim for bad faith denial of insurance benefits claim. See Part III.C, infra. Finally, when considering whether Plaintiffs subrogation rights have been prejudiced, see Part III.A.4, infra, the Court will consider whether Plaintiff exercised “reasonable diligence to protect its subrogation interest.” See Grain Dealers Mut. Ins. Co. v. Pacific Ins. Co., 70 Haw. 211, 768 P.2d 226, 230 (1989); see also State Farm Fire & Cas. Co. v. Pacific Rent-All, Inc., 90 Hawai’i 315, 978 P.2d 753, 771 (1999) (approving of the Grain Dealers equitable requirement of diligence in protecting sub-rogation interests). This inquiry could include whether timely intervention would have protected any lost subrogation rights. However, Defendant does not present and the Court has not found any authority stating that Plaintiffs non-intervention alone is a sufficient legal basis to grant Defendant summary judgment in Plaintiffs DJA action about coverage and offset questions. Instead, the Court finds that it is a factor to be examined within the aforementioned larger analyses. Defendant’s motion for summary judgment based solely on Plaintiffs “failure to timely intervene” is DENIED. III. PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT On June 28, 1999, the Ninth Circuit panel vacated the 1995 summary judgment Order and remanded the case “for reconsideration in light of Taylor v. GEICO.” Plaintiff filed the instant motion for summary judgment “to enable the District Court to reconsider its prior Order.” PI. Mot. SJ, at 8. The first issue is whether Defendant lost his coverage by settling with the tortfeasors without Plaintiffs consent. The second issue, which need only be reached if coverage is found, is whether Plaintiff may offset its UIM liability with amounts from a joint tortfeasor’s separate insurance policy. Third, Plaintiff seeks summary judgment of Defendant’s “bad faith” counterclaim. A. Coverage 1. Subrogation Subrogation is “the substitution of another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the rights of the creditor in relation to the debt.” Taylor, 978 P.2d at 748. “The general rule is that an insurer, on paying a loss, is subrogated in a corresponding amount to the insured’s right of action against any other person responsible for the loss.” 6A Appleman, Insurance Law and Practice, § 4051 (1972). “ ‘[S]ubrogation plays an important role in insurance law.... When subrogation[ ] runs its course, the legally responsible third party reimburses the insurer for having paid the debt which the party owed the insured.’ ” State Farm, 978 P.2d at 766 (citing Robert H. Jerry, II, Understanding Insurance Law §§ 96[a] and 96[b], at 600 (2nd ed.1996)) (some brackets added, some in original). The Taylor court explained subrogation in the UIM context as follows: In the UIM context, once the UIM carrier has paid benefits to the injured insured, the UIM carrier succeeds to the insured’s rights against the tortfeasor. The UIM carrier may then prosecute the insured’s claim against the tortfea-sor to the extent of the UIM carrier’s payments to the insured. Thus, where a tortfeasor has sufficient assets to offset his or her lack of insurance, the UIM carrier may recoup its payments to the insured victim. Taylor, 978 P.2d at 748 (quotation marks and citations omitted, emphasis added). Subrogation has been described as “stepping into” the shoes of another. See State Farm, 978 P.2d at 767. The State Farm court explained that, when an insurer brings an action against a tortfeasor based upon its subrogation rights, the insurer’s rights flow from the insured’s rights. The subrogated insurer, known as the “subrogee,” can be subrogated to and enforce only such rights as the insured, known as the “subrogor,” has against the party whose wrong caused the loss. In a subrogation suit, a tortfeasor may assert against the insurer any defense which the tortfeasor could have asserted against the insured. Id. (emphasis added) (citing 4 R. Long, The Law of Liability Insurance, § 23.03[2], at 23-13 to 23-14 (1998)). The court then reiterated the “general rule” that “an insured may affect its insurer’s subrogation rights because they are derivative, i.e., the insurer’s subrogation rights rest upon the viability of the insured’s claim against the tortfeasor.” Id. The court also explained that generally, if an insured releases a tortfeasor from liability before the insurer pays the loss under its policy, subrogation rights are lost. See id. The court next held, however, that this general rule does not apply (and thus, subrogation rights are not lost) when “the insurer proves (1) that the tortfeasor had actual or constructive knowledge of the insurer’s subrogation right of reimbursement or that the tortfeasor and insured colluded to destroy the insurer’s subrogation right and (2) that the insurer’s subro-gation right of reimbursement is actually prejudiced by the insured’s release of the tortfeasor.” Id. at 768. The court concluded that, “Where the insurer’s subrogation right clashes with the tortfeasor’s contractual release right, the insurer’s subrogation right will prevail if the tort-feasor acted inequitably.” Id. at 771. 2. The 1995 Summary Judgment Order In its 1995 motion for summary judgment, Plaintiff argued that Defendant’s failure to obtain prior written consent violated the “consent-to-settle” clause of the Policy. Plaintiff also argued that the result of this breach was the destruction of any subrogation rights Plaintiff would have had against Adams and Highlands, and that this action should prevent Defendant from recovering under the Policy. It is undisputed that Adams and Highlands were “joint tortfeasors.” Under Hawaii tort law, joint tortfeasors are jointly and severally hable for a victim’s injuries. See H.R.S. § 663-11. Accordingly, through Plaintiffs subrogation rights, it would have been able to pursue Highlands for the total amount of any award or judgment so long as Highlands was found partially responsible for Defendant’s damages. Under the general rules of subrogation, see supra, a settlement which released Adams and Highlands from further liability, however, would destroy Plaintiffs subrogation rights. The Court granted Plaintiff summary judgment after finding that Defendant failed to obtain consent prior to settling with Adams and Highlands and that Plaintiffs subrogation rights were destroyed thereby. See 1995 SJ Order, at 9, 14. The Court rejected Defendant’s argument that the consent-to-settle clause was void as against public policy. See id. at 13-14. 3. Taylor v. GEICO Subsequent to this Court’s ruling on the 1995 summary judgment motion, the Hawaii appellate courts addressed for the first time the validity and application of consent-to-settle clauses. See Taylor 978 P.2d at 746. In Taylor, a nearly (if not) identical UIM policy (by the same insurer) was in issue. Taylor’s insurance with GEICO included UIM coverage. After a collision with a vehicle driven by Mary McKaig, Taylor incurred damages estimated at a half million dollars and sued McKaig. McKaig offered to settle for $33,000, two thousand dollars under her $35,000 policy limit. Taylor informed GEICO of the offer. GEICO refused to approve the settlement because it did not exhaust the limits of McKaig’s bodily injury policy. Despite GEICO’s stance, Taylor settled with McKaig and executed a joint tortfeasor release, releasing McKaig and her insurers from liability in exchange for the $33,000. Taylor then made a claim for UIM benefits. GEICO refused to pay. See id. at 742-43. The Taylor Court began its analysis by noting that nothing in the legislative history of the UIM statute (H.R.S. § 431:100-301) “reveal[s] an express legislative intent to permit or prohibit the use of ‘consent-to-settle’ ... clauses to preclude recovery by insureds who present claims that would otherwise be compensable pursuant to the provisions of their UIM coverage.” Id. at 746. Next, the court noted that consent-to-settle provisions “have been widely litigated outside of Hawaii, and a majority of jurisdictions has upheld such provisions in the UIM context.” Id. The court held that [W]e are unable to hold that consent-to-settle clauses, per se, contravene the intent of H.R.S. § 431:10C301(b)(4). The UIM statute does not mandate that coverage be unqualified.... In our view, consent-to-settle provisions do not necessarily violate either the letter or the spirit of [the UIM statute]. Id. at 747. The Taylor court cautioned, however, that a consent-to-settle clause does not give an insurer “carte blanche” to deny coverage. “[W]e hold that a UIM carrier’s grounds for denying UIM benefits under a consent-to-settle provision in a UIM policy must be reasonable, in good faith, and within the bounds of the intent underlying HRS § 431:10C-301(b)(4).” Id. Taylor then held that “protection of the UIM carrier’s subrogation rights would be a reasonable basis for a refusal to consent to settlement.” Id. at 748. The court observed that “[c]onsent-to-settle provisions perform the crucial function of protecting a UIM carrier’s potential sub-rogation interests.” Id. It also held that preserving the UIM carrier’s subrogation rights is good public policy because it facilitates modestly priced UIM coverage by leaving UIM carriers in a position to recoup some of the UIM payments. See id. The court noted, “In fact, we find it difficult to imagine any basis for a UIM carrier to refuse to consent to a settlement apart from its need to protect its subrogation interest.” Id. at 752 n. 11. For example, the court held that it would be an unreasonable basis to withhold consent to settlement because the proposed settlement would not exhaust the tortfeasor’s policy limits. See id. at 752. A UIM insurer may not deny consent to settle, however, merely by making an unsupported assertion that it is doing so to protect its subrogation rights. Instead, the insurer must demonstrate prejudice by the insured’s failure to obtain consent before settling with the tortfeasor. See id. at 748. “In order to demonstrate prejudice, the UIM carrier’s investigation should address factors such as the amount of assets held by the tortfeasor, the likelihood of recovery via subrogation, and the expenses and risks of litigating the insured’s cause of action.” Id. (quotation marks and citations omitted). 4. Applying Taylor to the Instant Case It is undisputed that Defendant did not obtain Plaintiffs written consent before settling with Adams and Highlands. Defendant has not argued that Plaintiff implicitly consented to his settlement with Adams or Highlands. Plaintiff argues that it should be allowed to enforce the consent-to-settle provision (and deny coverage based on its breach) because the breach caused it to lose its subrogation rights. This is a reasonable basis to invoke the consent-to-settle clause if Defendant can show prejudice from the loss. See Taylor, 978 P.2d at 748-49. Thus, the Court first examines whether Plaintiffs subrogation rights have been lost. Second, it examines whether Plaintiff is prejudiced by the loss, if any. a. Loss of Plaintiffs Subrogation Rights It is undisputed that Defendant released Adams, Highlands, and Fireman’s Fund from liability before Plaintiff paid Defendant’s claim. See PI. Mot. SJ, Ex. K. As explained above, generally, if an insured releases a tortfeasor from liability before the insurer pays the loss under its policy, subrogation rights are lost. See State Farm, 978 P.2d at 767. The State Farm court created an exception to this general rule, however, holding that subrogation rights are not lost where “the insurer proves (1) that the tortfeasor had actual or constructive knowledge of the insurer’s subrogation right of reimbursement or that the tortfeasor and insured colluded to destroy the insurer’s subrogation right and (2) that the insurer’s subrogation right of reimbursement is actually prejudiced by the insured’s release of the tortfeasor.” Id. at 768 (emphasis added). i. Actual or Constructive Knowledge Defendant argues that Fireman’s Fund, Highlands’ insurer, had actual and/or constructive knowledge of Plaintiffs subrogation rights when Fireman’s Fund settled with Defendant. See Opp. PI. Mot. SJ, at 19-20. Evidence before the Court supports such a finding. First, Defendant brought forth evidence that Ireijo spoke with Fireman’s Fund about the UIM claim with Plaintiff. “I have a distinct recollection of discussing the DIZOL UIM claims with GEICO and USAA, respectively, with the Fireman’s Fund Insurance Company’s claims adjuster for HIGHLAND’S [sic] pri- or to actual settlement with the same, although I cannot recall giving written notice of the subject UIM claims to Fireman’s Fund.” See Ireijo Decl. ¶ 8, attached to Opp. PI. Mot SJ. Second, the Todd affidavit, presented by Plaintiff, makes clear that Plaintiffs employees had spoken with Fireman’s Fund while evaluating Defendant’s UIM claims before the release was signed. See Todd Aff. ¶8 (“affiant secured the following information from Howard Oshiro, the Fireman’s Fund representative assigned to handle [Defendant’s] bodily injury claim [on August 18, 1994]”). On the other hand, Plaintiff did not present any evidence to show that Fireman’s Fund did not have actual or constructive knowledge of Plaintiffs subro-gation rights. The Court finds that there is no genuine issue of fact whether Fireman’s Fund had knowledge of Plaintiffs subrogation rights. For the State Farm exception to not apply, Plaintiff must show that Fireman’s Fund did not have actual or constructive knowledge of Plaintiffs subrogation claim when it signed the release. As all the evidence is exactly to the contrary, the Court finds that Fireman’s Fund had knowledge of Plaintiffs subrogation rights when it signed the release with Defendant. ii. Is the Subrogation Right Actually Prejudiced (State Farm Prejudice Inquiry) The second prong of the State Farm exception for inequitable behavior requires that the UIM insurer’s subrogation rights be actually prejudiced by the release of the tortfeasor. “If the insurer could not have recovered, it is not prejudiced .... ” State Farm, 978 P.2d at 768 (citing 4 R. Long, The Law of Liability Insurance, § 23.04[1], at 23-41 to 23-42 (1998)). The Court concludes that Plaintiff was prejudiced by the release. Adams and Highlands were joint tortfeasors. While it appears that Adams’s estate would not have been a source of any funds, Highlands’s $1 million insurance policy clearly would have been. Defendant has not argued nor presented any evidence that Plaintiff could not have recouped its payments from Highlands if Defendant had not released Highlands as part of the settlement. Moreover, Defendant’s “waiver” argument does not compel a different conclusion. Defendant argues that to the extent Plaintiffs subrogation rights are lost, it is because Plaintiff waived these rights by not exercising “reasonable diligence.” See Grain Dealers, 768 P.2d at 230; see also State Farm, 978 P.2d at 771. In other words, Defendant argues that Plaintiff is not prejudiced by the release because Plaintiff had already lost its subrogation rights through its own actions. The Court disagrees. “Reasonable diligence” means that the insurer which claims a subrogation right “must give timely and reasonable notice of its claim to both the tortfeasor and the tortfeasor’s insurer.” See Grain Dealers, 768 P.2d at 230. Grain Dealers then held that it was “reasonable notice” when a UIM insurer informed a tortfeasor’s insurer (but not the tortfeasor) of its subrogation claim. See id. at 227, 230. As the Court noted in the preceding section, Plaintiff (and also Defendant) gave Fireman’s Fund notice of Plaintiffs subrogation claims as early as August 18, 1994 and Fireman’s Fund thereby had knowledge of Plaintiffs subrogation rights. Defendant’s argument that Plaintiff lost its subrogation rights by failing to use “reasonable diligence” is not well taken. Accordingly, there being no genuine issue of fact in dispute, the Court finds that Plaintiff was prejudiced by the release of Highlands. iii. Conclusion on Loss of Subrogation Rights To find that Plaintiffs subrogation rights were lost, the Court must conclude that the State Farm exception for inequitable behavior by a tortfeasor does not apply. The State Farm exception applies if: 1) Fireman’s Fund had actual or constructive knowledge of Plaintiffs subrogation claim when it signed the release, and 2) Plaintiffs subrogation rights were actually prejudiced by the release because it otherwise could have recovered from the tortfeasor. The Court has found that there is no genuine issue of fact that both of these factors are satisfied and therefore, the State Farm exception applies. Accordingly, despite the fact that Defendant released Highlands prior to Plaintiff paying Defendant’s UIM claim, the Court concludes as a matter of law that Plaintiffs subrogation rights were not lost. b. Prejudice (Taylor Prejudice Inquiry) The second prong of the Taylor test to enforce a consent-to-settle clause requires a party to show prejudice from the loss of its subrogation rights. In light of the holding that Plaintiffs subrogation rights were not lost, there was no prejudice. 5. Conclusion A consent-to-settle clause is only enforceable if a court finds that the settlements caused the insurer to lose its subro-gation rights and that the insurer was prejudiced thereby. See Taylor, 978 P.2d at 748^49. The Court finds that Plaintiffs subrogation rights were not lost by Defendant’s settlements with Highlands and Adams. Plaintiff has not set forth any other reason to enforce the consent-to-settle provision of the Policy and therefore, Plaintiffs motion for summary judgment on the issue of coverage is DENIED. B. Offsets Because the Court denies Plaintiffs motion for summary judgment on the issue of coverage, it now examines the amount by which Defendant’s UIM claim should be offset, if any. Plaintiff argues that it is entitled to an “offset” of the $1 million policy limits of the Highlands dram shop insurance, or, alternatively, $255,000 representing the amount actually received in settlement from Highlands. Put another way, Plaintiff argues that its liability to pay is not triggered unless Defendant has damages in excess of these offsets. Defendant argues that neither amount may be used to offset Plaintiffs obligation. The amount Plaintiff must pay Defendant is contingent on the amount of “underinsurance,” i.e., the difference between Defendant’s damages (to be decided by an arbitrator) and payments already received (and, potentially, those forgone) which can be used to “offset” its liability. The question in the instant case is whether amounts received and/or forgone in reaching a below-policy-limit settlement with an underinsured motorist’s dram shop joint tortfeasor without a UIM carrier’s consent can be used to offset the carrier’s liability to its insured. The Court will answer this question by separating it into two analy-ses: 1) may amounts received from a dram shop joint tortfeasor without a UIM carrier’s consent be used to offset the carrier’s liability to its insured, and 2) may amounts forgone in a below limits settlement with a dram shop joint tortfeasor without a UIM carrier’s consent also be used to offset the carrier’s liability? No Hawaii court has yet addressed this specific issue. Because the Court must apply substantive Hawaii law in this diversity action, the Court must use its best judgment in predicting how the Hawaii Supreme Court would decide this issue. See, e.g., Allstate, 847 F.Supp. at 789. After a careful consideration of Hawaii law, the Court answers both questions in the affirmative and holds that Plaintiff is entitled to a $1 million offset. 1. Payments Received From Joint Tortfeasors Without the UIM Carrier’s Consent Are Properly Used to Offset the Carrier’s Liability The first question is whether amounts received from a dram shop joint tortfeasor without the UIM carrier’s consent may be used to offset the carrier’s liability to its insured. A recent Hawaii appellate decision makes it clear that the answer is yes. The Intermediate Court of Appeals held that an insurer may offset amounts received from a joint tortfeasor when calculating the amount of UM benefits owed to the insured. See AIG Hawaii Ins. Co. v. Rutledge, 87 Hawai’i 337, 955 P.2d 1069, 1070 (1998); accord Prudential Property & Cas. Ins. Co. v. Dumont, 136 N.H. 569, 618 A.2d 839, 840 (1992) (holding that a UIM carrier may, in calculating its payment under a UIM policy, set off the amounts recovered from tortfeasors other than the underinsured motorist to the extent that those amounts represent double recovery); Bauter v. Hanover Ins. Co., 247 N.J.Super. 94, 588 A.2d 870, 873 (1991) (a UIM carrier may set off amounts received from joint tortfeasor dram shop’s insurance); but see American Universal Ins. Co. v. DelGreco, 205 Conn. 178, 530 A.2d 171, 173-74, 179-82 (1987) (UIM carrier’s liability may only be offset with payments received from other automobile policies and not dram shop’s insurance). In Rutledge, two family members were injured when an unidentified driver caused them to swerve their car out of its path and into a boulder. They received uninsured motorist (“UM”) benefits pursuant to their policy with AIG. The Rutledges then sued the City and County of Honolulu (“City”) alleging negligence in the design of the roadway and the maintenance of the shoulder. After an arbitrator apportioned liability between the Rutledges, the unidentified driver, and the City, the City paid the Rutledges damages which fully compensated them for their damages. See id. at 1072, 1080. AIG subsequently demanded reimbursement of the UM benefits it had paid. The Rutledge court began by noting that the purposes of the UM statute were “to promote protection ... for persons who are injured by uninsured motorists who cannot pay for personal injuries caused by motor vehicle accidents” and “to place those insured in the same position they would have occupied had the tortfeasor carried liability insurance.” Id. at 1074-75. The court held that when an insured receives an UM benefit from his insurer, and the insured then receives a tort recovery from a joint tortfeasor which fully compensates him, the insured must reimburse the UM benefits paid to the extent there is duplicative compensation. Id. at 1070, 1078. 'The court clarified that UM payments need not be returned simply because a joint tortfeasor paid some damages — reimbursement is owed only if the joint tortfeasor’s payments fully compensate the victim and double recovery would occur without reimbursement. See id. at 1078. Under this scheme, the goal of UM insurance — that the insured be compensated as well as if the uninsured driver had been insured — is achieved without the insured recovering more than if the uninsured driver had been insured. Accordingly, the court held that because the payments by the joint tortfeasor City placed the Rutledges in the same position as they would have occupied had the unidentified driver been identified and fully insured, the UM benefits paid by AIG should be reimbursed. See id. at 1080-81 (“We discern no reason, on the facts of this case, why reimbursement should be disallowed on the basis that a joint tortfea-sor paid the uninsured motorist’s portion of damages”). The Court finds that Rutledge is both analogous to the instant case and decisive on this issue. The Court reaches this decision despite the fact that it appears at first blush that there are a number of distinctions between Rutledge and the instant case. Upon a closer look it is apparent that these distinctions are of little or no consequence. For example, Rutledge deals with UM benefits and the instant case deals with UIM benefits. This does not affect Rutledge’s persuasiveness as authority for a UIM question because the Hawaii courts have treated UM and UIM cases as nearly interchangeable. See Caberto v. National Union Fire Ins. Co., 77 Hawai’i 89, 881 P.2d 526, 529 (1994) (stating that the issues concerning UIM insurance are governed by the same rules that apply to UM cases); Kang v. State Farm Mut. Auto. Ins. Co., 72 Haw. 251, 815 P.2d 1020, 1022 (1991) (same). Moreover, the purposes behind the UIM statute are nearly, if not completely, identical to those behind the UM statute. See Kang, 815 P.2d at 1022. Underinsured motorist coverage was designed to protect against loss resulting from bodily injury or death suffered by any person legally entitled to recover damages from an owner or operator of an underinsured motor vehicle. The stated purpose of the statute was that it be consistent with the overall inte