Farber v. Idaho State Ins. Fund

• Court: Idaho Supreme Court
• Writing for the Court: J. Jones
• Citation: Farber v. Idaho State Ins. Fund, 208 P.3d 289, 147 Idaho 307 (Idaho 2009)
• Decision Date: 05 May 2009
• Docket Number: No. 35144.,35144.
• Parties: Randolph E. FARBER, Scott Alan Becker and Critter Clinic, an Idaho professional association, Plaintiffs-Appellants, v. The IDAHO STATE INSURANCE FUND, James M. Alcorn, its manager, and William Deal, Wayne Meyer, Marguerite McLaughlin, Gerald Geddes, Milford Terrell, Judi Danielson, John Goedde, Elaine Martin, and Mark Snodgrass in their capacity as members of the Board of Directors of the State Insurance Fund, Defendants-Respondents.

208 P.3d 289

147 Idaho 307

Randolph E. FARBER, Scott Alan Becker and Critter Clinic, an Idaho professional association, Plaintiffs-Appellants, v. The IDAHO STATE INSURANCE FUND, James M. Alcorn, its manager, and William Deal, Wayne Meyer, Marguerite McLaughlin, Gerald Geddes, Milford Terrell, Judi Danielson, John Goedde, Elaine Martin, and Mark Snodgrass in their capacity as members of the Board of Directors of the State Insurance Fund, Defendants-Respondents.

No. 35144.

Supreme Court of Idaho, Boise, February 2009 Term.

May 5, 2009.

Rehearing Denied May 12, 2009.

Lojek Law Offices, Chtd., and Gordon Law Offices, Boise, for appellants. Donald W. Lojek and Bruce S. Bistline argued.

Hall, Farley, Oberrecht & Blanton, P.A., Boise, for respondents. Richard E. Hall and Keely E. Duke argued.

SUBSTITUTE OPINION

THE COURT'S PRIOR OPINION DATED MARCH 5, 2009, IS HEREBY WITHDRAWN

J. JONES, Justice.

This class action lawsuit arises out of a decision by the Idaho State Insurance Fund (the Fund) to distribute dividends pursuant to I.C. § 72-915 only to those policyholders who paid more than $2,500.00 in premiums. The Plaintiffs—those policyholders whose annual premiums were $2,500.00 or less—sued the Fund, its Manager, and its Board of Directors¹ for damages and injunctive relief. Both parties moved for partial summary judgment regarding the interpretation of I.C. § 72-915. The district court denied the Plaintiffs' motion and granted the Fund's motion. We reverse and remand.

I.

The Fund was created in 1917 to provide worker's compensation insurance to Idaho employers, particularly those employers who could not otherwise obtain insurance from private carriers. See I.C. § 72-901. The Board of Directors sets the Fund's policies while the Manager conducts the Fund's day-to-day operations. I.C. §§ 72-901 & 902. Since the Fund's inception, the Manager has, on occasion, distributed a dividend to policyholders pursuant to I.C. § 72-915. This dividend is different from the dividend issued to stockholders of a corporation and is instead a refund based upon a rate readjustment. From at least 1982 until 2003, whenever the Manager decided to distribute a dividend it was distributed to all policyholders who had paid premiums for at least six months prior to the distribution.² The amount of dividend each policyholder received was determined based on the premium amount the policyholder paid. Beginning in 2003, however, the Manager decided to calculate the dividend by splitting the entire surplus between those few policyholders who paid more than $2,500.00 in annual premiums to the Fund.³ This practice continued during the following years' distributions as well.

The Plaintiffs of this class action lawsuit are those Idaho employers who paid annual premiums of $2,500.00 or less to the Fund for worker's compensation insurance from the policy year beginning in 2001 onward. These class members comprise the majority of the Fund's policyholders.⁴ Both parties moved for partial summary judgment regarding the proper interpretation of I.C. § 72-915. The Fund argued that the statute does not require the Manager to distribute dividends according to a set formula, but rather allows the Manager to exercise his discretion in determining how to distribute dividends amongst policyholders. The Plaintiffs conceded that the statute grants the Manager discretion in making the decision as to whether to distribute dividends, but argued that the statute prescribes how to distribute dividends once the Manager decides to make a distribution. The district court denied the Plaintiffs' motion for summary judgment, and instead granted the Fund's motion for partial summary judgment. It then certified the judgment for appeal pursuant to Idaho Rule of Civil Procedure 54(b).

The Plaintiffs appealed to this Court, reiterating their argument that the statute grants the Manager no discretion regarding how to distribute dividends amongst policyholders.

II.

A. Standard of Review

When reviewing an order for summary judgment, the standard of review for this Court is the same standard used by the district court in ruling on the motion. P.O. Ventures, Inc. v. Loucks Family Irrevocable Trust, 144 Idaho 233, 237, 159 P.3d 870, 874 (2007). The Court exercises free review over the entire record that was before the district judge to determine whether either side was entitled to summary judgment. Id. Summary judgment is proper when "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Idaho R. Civ. P. 56(c).

In order to resolve this appeal we must engage in statutory interpretation, which is an issue of law over which this Court exercises free review. In re Daniel W., 145 Idaho 677, 679, 183 P.3d 765, 767 (2008). The objective of statutory interpretation is to derive the intent of the legislative body that adopted the act. Payette River Prop. Owners Ass'n v. Bd. of Comm'rs of Valley County, 132 Idaho 551, 557, 976 P.2d 477, 483 (1999). Statutory interpretation begins with the literal language of the statute. Paolini v. Albertson's, Inc., 143 Idaho 547, 549, 149 P.3d 822, 824 (2006). Provisions should not be read in isolation, but must be interpreted in the context of the entire document. Westerberg v. Andrus, 114 Idaho 401, 403, 757 P.2d 664, 666 (1988). The statute should be considered as a whole, and words should be given their plain, usual, and ordinary meanings. Id. It should be noted that the Court must give effect to all the words and provisions of the statute so that none will be void, superfluous, or redundant. AmeriTel Inns, Inc. v. Pocatello-Chubbuck Auditorium Dist., 146 Idaho 202, 204, 192 P.3d 1026, 1028 (2008). When the statutory language is unambiguous, the clearly expressed intent of the legislative body must be given effect, and the Court need not consider rules of statutory construction. Payette River, 132 Idaho at 557, 976 P.2d at 483. Therefore, the plain meaning of a statute will prevail unless it leads to absurd results. Driver v. SI Corp., 139 Idaho 423, 427, 80 P.3d 1024, 1028 (2003).

A statute is ambiguous when the language is capable of more than one reasonable interpretation. Porter v. Bd. of Trustees, 141 Idaho 11, 14, 105 P.3d 671, 674 (2004). However, a statute may not be deemed ambiguous merely because parties present differing interpretations to the court. Id.

B. The Statute Unambiguously Requires the Manager to Distribute the Dividend According to the Formula Provided Therein

The Fund argues that I.C. § 72-915 is ambiguous and, when read together with other statutes and laws, the affidavit of the Manager, and holdings from sister states, it grants the Manager the discretion to distribute dividends however he sees fit. The Plaintiffs, on the other hand, argue that the statute unambiguously requires the Manager to distribute the dividend monies proportionately according to the amount of premium paid by each policyholder who meets the six-month longevity requirement and who falls within the classes of employment sharing in the dividends.

The statute in question reads:

DIVIDENDS. At the end of every year, and at such other times as the manager in his discretion may determine, a readjustment of the rate shall be made for each of the several classes of employments or industries. If at any time there is an aggregate balance remaining to the credit of any class of employment or industry which the manager deems may be safely and properly divided, he may in his discretion, credit to each individual member of such class who shall have been a subscriber to the state insurance fund for a period of six (6) months or more, prior to the time of such readjustment, such proportion of such balance as he is properly entitled to, having regard to his prior paid premiums since the last readjustment of rates.

I.C. § 72-915.

1. The District Court Erred in Finding the Statute Ambiguous

The district court found that the statute was ambiguous because, in the court's view, the statute could reasonably be interpreted three ways. In addition to the interpretation advanced by the Plaintiffs, the district court posited two alternate interpretations. First, the district court stated that the statute could be interpreted to mean that the Manager could distribute dividends only to the larger policyholders because they are the only ones "properly entitled" to receive a dividend. However, a careful reading of the statute does not support this conclusion. The statute reads "[the Manager] may in his discretion, credit to each individual member [a dividend]." I.C. § 72-915 (emphasis added). This language indicates that all members who meet the longevity requirement are entitled to receive a dividend. The district court's emphasis on the language "properly entitled" is misplaced, as that language relates to the requirement that the dividend be distributed pro rata "having regard to [the policyholder's] prior paid premiums." See id.

Second, the district court asserted that the statute could be interpreted to mean that each policyholder is entitled to a dividend, but that the dividend need not "be in direct proportion to the amount of premium the [policyholder] paid relative to the whole." Again, this interpretation is not supported by the plain language of the statute. Should a dividend be declared, the statute provides that each policyholder who has been a subscriber for at least six months prior shall be credited "such proportion of such balance as he is properly entitled to, having regard to his prior paid premiums." I.C. § 72-915. The inclusion of the words "proportion" of the balance, and "having regard to" the policyholder's "prior paid premiums" can only mean that the distribution of dividends must be done on a pro rata basis. Id. The language is not ambiguous as to this requirement and the...