Hilyard v. Estate of Clearwater

Citation240 Kan. 362,729 P.2d 1195
Decision Date05 December 1986
Docket NumberNos. 58919,59113,s. 58919
PartiesCynthia HILYARD, individually and as next friend and parent of Michael Hilyard, Jeff Hilyard, and Harry Hilyard, all minors, Appellee, v. The ESTATE OF Dorothy CLEARWATER, deceased, Defendant, and The State Farm Mutual Automobile Insurance Company, Appellant. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee, v. Elizabeth ROCKWELL, Appellant.
CourtUnited States State Supreme Court of Kansas

Syllabus by the Court

1. Generally, a statute operates prospectively unless its language clearly indicates legislative intent that it operate retrospectively. However, the general rule is modified where the statutory change is merely procedural or remedial in nature and does not prejudicially affect the substantive rights of the parties.

2. K.S.A. 40-3107(i)(1) (repealed L.1984, ch. 167, § 2), which authorized household exclusion clauses in motor vehicle liability insurance policies, is substantive in nature. As such, its repeal can only operate prospectively in the absence of any contrary legislative intent.

3. A provision in an automobile liability insurance policy providing that an "uninsured motor vehicle" does not include a vehicle insured under the liability coverage of the policy is not inconsistent with K.S.A. 40-284.

Kevin L. Diehl of Ralston & Starrett, Topeka, argued the cause and Eugene B. Ralston, of the same firm, was with him, on brief, for appellant State Farm.

Steven A. Ediger of Juhnke, Howell & Ediger, Hutchinson, was on brief, for appellant Rockwell.

Jerry R. Palmer of Palmer, Marquardt & Snyder, P.A., Topeka, argued the cause and was on brief, for appellees Hilyard.

Michael R. O'Neal of Reynolds, Peirce, Forker, Suter & O'Neal, Hutchinson, argued the cause and Stephen M. Kerwick of Foulston, Siefkin, Powers & Eberhardt, Wichita, was with him, on brief, for appellee State Farm.

HERD, Justice:

These are consolidated cases. The issue in each case is the validity of a household exclusion clause in an automobile insurance policy. In case No. 58,919, the Shawnee County District Court denied State Farm Mutual Automobile Insurance Company's (State Farm) motion for summary judgment and State Farm appeals. In case No. 59,113, the Reno County district court granted a declaratory judgment to State Farm and the Rockwell appeals.

The facts in each case follow:

Case No. 58,919

On January 22, 1983, the plaintiffs/appellees, Michael, Jeffrey, and Harry Hilyard, were passengers in an automobile driven by their mother, Cynthia Hilyard. The Hilyard automobile was involved in an accident with a vehicle driven by defendant, Dorothy Clearwater. At the time of the accident, Cynthia Hilyard was the named insured of an insurance policy with State Farm. The policy contained a household exclusion clause.

After the accident, Cynthia Hilyard brought an action in Shawnee County individually and on behalf of her minor children against the estate of Dorothy Clearwater, alleging negligence on behalf of Dorothy Clearwater. She also brought an action on behalf of her children against State Farm alleging minimal negligence on behalf of Cynthia Hilyard. Plaintiffs argued that because of the household exclusion clause, K.S.A. 40-284 mandated uninsured motorist coverage in this case. State Farm's motion for summary judgment was denied.

Case No. 59,113

On October 24, 1983, the defendant/appellant, Elizabeth Rockwell, (then a two-year-old child) was a passenger in a pickup truck driven by her mother, Donnita Rockwell. Elizabeth Rockwell suffered severe injuries when the vehicle driven by her mother collided with a second vehicle. At the time of the accident, Donnita and Kent Rockwell were the named insureds on an automobile insurance policy with State Farm. This policy, like the Hilyard policy, contained a clause excluding liability for bodily injury to any family member of the insured residing in the same household as the insured.

Elizabeth Rockwell brought suit in Reno County against her mother seeking to recover for personal injuries caused by her mother's negligence. State Farm then instituted this declaratory judgment action to ascertain its rights under the policy. The district court ruled that Elizabeth Rockwell was properly denied liability coverage under the household exclusion clause and further held the appellant was not entitled to uninsured motorist coverage under K.S.A. 40-284.

The household exclusion clause which is the subject of these consolidated cases is worded identically in both the Hilyard and Rockwell policies. It provides:

"THERE IS NO COVERAGE:

....

"2. FOR ANY BODILY INJURY TO ANY MEMBER OF THE FAMILY OF THE INSURED RESIDING IN THE SAME HOUSEHOLD AS THE INSURED. The term 'insured' as used here means the person against whom claim is made or suit is brought."

The parties concede that this provision, if valid, excluded the Hilyard children and Elizabeth Rockwell from liability coverage. It is also conceded that household exclusion clauses such as the one contained in the State Farm policies were specifically authorized by K.S.A. 40-3107(i)(1) at the time of the accidents in these cases.

Before discussing the issues raised on appeal, let us consider the background and history of K.S.A. 40-3107(i)(1).

In 1980, this court concluded that an unemancipated minor child may recover damages in a personal injury action against a parent for the negligent operation of a motor vehicle. Nocktonick v. Nocktonick, 227 Kan. 758, 767, 611 P.2d 135 (1980). This decision aligned Kansas with numerous other states which have abolished parental immunity in all cases or in automobile accident cases.

The following year, in Dewitt v. Young, 229 Kan. 474, 625 P.2d 478 (1981), we held a household exclusion clause void and unenforceable in violation of the requirements of the Kansas Automobile Injury Reparations Act (KAIRA). Specifically, we noted that the KAIRA mandates motor vehicle liability coverage unless a vehicle is statutorily exempt or included within an approved self-insurance plan (K.S.A. 1980 Supp. 40-3104). KAIRA at that time had no provision for household exclusions.

Shortly after the Dewitt decision, the legislature amended the KAIRA to authorize household exclusion clauses. See L.1981, ch. 191, § 2(i)(1) (codified at K.S.A. 40-3107[i] ). This legislation became effective on January 1, 1982, and provided as follows:

"(i) in addition to the provisions of subsection (h) and notwithstanding any other provision contained in subsections (a), (b), (c) and (d) of this section, any insurer may exclude coverage for:

"(1) Any bodily injury to any insured or any family member of an insured residing in the insured's household."

This statute was in effect throughout 1983 when the accidents in these consolidated cases occurred.

In 1984, the statute authorizing household exclusions was repealed effective July 1, 1984. See L.1984, ch. 167, § 2 and ch. 175, § 1.

Appellant, Elizabeth Rockwell, contends the 1984 amendment repealing authorization for the household exclusion clause was remedial in nature and therefore should be applied retroactively. This would render the household exclusion clause in State Farm's policies invalid.

We have consistently held that a statute operates prospectively unless its language clearly indicates legislative intent that it operate retrospectively. Tew v. Topeka Police & Fire Civ. Serv. Comm'n, 237 Kan. 96, 103, 697 P.2d 1279 (1985); State, ex rel. Stephan v. Board of Lyon County Comm'rs, 234 Kan. 732, 740, 676 P.2d 134 (1984). However, the general rule is modified where the statutory change is merely procedural or remedial in nature and does not prejudicially affect the substantive rights of the parties. Lakeview Village, Inc., v. Board of Johnson County Comm'rs, 232 Kan. 711, Syl. p 8, 659 P.2d 187 (1983); Davis v. Hughes, 229 Kan. 91, 101, 622 P.2d 641 (1981). Further, K.S.A. 1985 Supp. 77-201 First prohibits the repeal of a statute from affecting any right which accrued, any duty imposed, any penalty incurred, or any proceeding commenced, under or by virtue of the statute repealed. American State Bank v. White, 217 Kan. 78, 86, 535 P.2d 424 (1975).

The 1984 repeal of authorization for the household exclusion clause contained no evidence of legislative intent for retroactive application. Therefore, unless the statute was remedial in nature, the repeal of K.S.A. 40-3107(i)(1) has no retroactive application.

Appellant argues the statute is remedial in nature because "the KAIRA, like all financial responsibility or compulsory insurance acts is remedial legislation." In Davis v. Hughes, 229 Kan. 91, Syl. p 8, 622 P.2d 641, we held otherwise and recognized the substantive nature of provisions within the KAIRA.

In Davis, we held that a setoff provision (K.S.A. 1976 Supp. 40-3113[e] authorizing the deduction of PIP benefits from uninsured motorist benefits was substantive in nature. Accordingly, the court determined that a later provision (K.S.A.1979 Supp. 40-3113a) repealing the setoff provision operated prospectively since there was no language in the statute indicating the legislature intended the repeal to operate retroactively. 229 Kan. at 102-03, 622 P.2d 641.

A similar analysis is applicable here. The statute authorizing household exclusion clauses affected the substantive rights of the parties covered by the insurance policies. Accordingly, the repeal of this statute also affected substantive rights and thus applies prospectively in the absence of contrary legislative intent. We hold the household exclusion clauses in the insurance policies at issue here were valid.

Having determined the household exclusion clauses were valid at the time the accidents giving rise to this litigation occurred, we must now consider whether K.S.A. 40-284 mandates uninsured motorist coverage in these cases. It is argued that even though the vehicles involved in the present cases were insured, they were uninsured as to the children because of...

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