Gurnee v. Aetna Life and Cas. Co., STATE-WIDE

Decision Date18 February 1982
Docket NumberSTATE-WIDE
Citation433 N.E.2d 128,448 N.Y.S.2d 145,55 N.Y.2d 184
Parties, 433 N.E.2d 128 Morris C. GURNEE, Appellant, v. AETNA LIFE AND CASUALTY COMPANY, Respondent. Moshe WEINREICH, Appellant, v.INSURANCE COMPANY et al., Respondents, et al., Defendants.
CourtNew York Court of Appeals Court of Appeals
Willard M. Pottle, Jr., Buffalo, for appellant in the first above-entitled action
OPINION OF THE COURT

COOKE, Chief Judge.

These cases present the question whether the holding of Kurcsics v. Merchants Mut. Ins. Co., 49 N.Y.2d 451, 426 N.Y.S.2d 454, 403 N.E.2d 159 should be given retroactive effect. For the outlined reasons, this court holds that Kurcsics should be applied to all claims not barred by the Statute of Limitations.

In Kurcsics, the court construed the phrase "first party benefits", contained in section 671 of the Insurance Law, as it related to no-fault insurance protection. The court held that under section 671, a covered person injured in a motor vehicle accident who sustained lost earnings of more than $1,000 per month can recover as first-party benefits 80% of his or her actual lost earnings up to a maximum of $1,000 per month. The court rejected the Superintendent of Insurance's interpretation of section 671 as limiting recovery for lost earnings to a maximum of 80% of $1,000, or $800.

Morris Gurnee, plaintiff in one of the instant actions, was injured in November, 1977 while driving a car owned by an insured of Aetna Life and Casualty Company. He claimed lost wages of more than $3,200 per month. Aetna paid him $800 per month, in accordance with State Insurance Department regulations. After this court decided Kurcsics in February, 1980, Gurnee sued Aetna, claiming he was entitled to the maximum $1,000 per month for lost earnings. Supreme Court granted defendant's motion to dismiss the complaint for failure to state a cause of action, holding that Kurcsics should not be applied retroactively. That court also denied as academic plaintiff's motion to maintain the lawsuit as a class action. The Appellate Division affirmed.

Moshe Weinreich was injured in an accident in July, 1975 involving a vehicle insured by State-Wide Insurance Company. In the wake of Kurcsics, he sued State-Wide, alleging that it refused to pay him more than $800 per month in lost wages even though he was entitled to $1,000. Weinreich also moved for an order determining that the suit could be brought as a class action. Supreme Court granted defendant's motion to dismiss for failure to state a cause of action, holding that Kurcsics was not retroactive, and denied the motion for class certification. Appellate Division affirmance followed.

In determining whether the holding of Kurcsics is applicable to other claims that arose before the decision was handed down, it is questionable whether retroactivity analysis is relevant with respect to the application of the first decision of the State's highest court interpreting a new statute. Such analysis is traditionally used where there has been an abrupt shift in controlling decisional law. In Kurcsics, this court merely construed, at its first opportunity to do so, the language of a statute that had been in effect since 1974.

Even under what might be described as the traditional retroactivity analysis, however, it is clear that Kurcsics should be accorded full retroactive effect. Several principles provide guidance for such examination. First, it is well established that, "consonant with the common law's policy-laden assumptions, a change in decisional law usually will be applied retrospectively to all cases still in the normal litigating process" (Gager v. White, 53 N.Y.2d 475, 483, 442 N.Y.S.2d 463, 425 N.E.2d 851; see People v. Pepper, 53 N.Y.2d 213, 219-220, 440 N.Y.S.2d 889, 423 N.E.2d 366; People v. Morales, 37 N.Y.2d 262, 267-269, 372 N.Y.S.2d 25, 333 N.E.2d 339; Kelly v. Long Is. Light. Co., 31 N.Y.2d 25, 29, n. 3, 334 N.Y.S.2d 851, 286 N.E.2d 241; Knapp v. Fasbender, 1 N.Y.2d 212, 243, 151 N.Y.S.2d 668, 134 N.E.2d 482). As an exception to this general rule, however, "where there has been such a sharp break in the continuity of law that its impact will 'wreak more havoc in society than society's interest in stability will tolerate' " a court may direct that the new pronouncement operate prospectively alone (Gager v. White, supra, 53 N.Y.2d at pp. 483-484, 442 N.Y.S.2d 463, 425 N.E.2d 851, quoting Fairchild, Limitation of New Judge-Made Law to Prospective Effect Only: "Prospective Overruling" or "Sunbursting", 51 Marq.L.Rev. 254).

In Chevron Oil Co. v. Huson, 404 U.S. 97, 106-107, 92 S.Ct. 349, 355, 30 L.Ed.2d 296, the Supreme Court outlined three factors to consider in determining if a ruling should be prospective only. "First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied * * * or by deciding an issue of first impression whose resolution was not clearly foreshadowed" (404 U.S., at p. 106, 92 S.Ct., at p. 355). Second, the prior history of the rule at issue and the impact of retroactive application upon its purpose and effect should be considered. Finally, the court should take into account any inequity that would be created by retroactive application (id.).

Turning to the instant cases, defendants argue that Kurcsics should not be applied retroactively because its result was not clearly foreshadowed. In this regard it is important to emphasize that Kurcsics did not "establish a new principle of law." It merely construed a statute that had been in effect for a number of years. It is true that the Insurance Department had promulgated regulations based on a construction of section 671 contrary to that subsequently articulated by this court. A judicial decision construing the words of a statute, however, does not constitute the creation of a new legal principle. Additionally, the definitional language of section 671 itself foreshadowed the conclusion this...

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