Idaho State Ins. Fund v. Van Tine

• Decision Date: 09 June 1999
• Docket Number: No. 24723,24723
• Citation: 980 P.2d 566,132 Idaho 902
• Parties: IDAHO STATE INSURANCE FUND, Plaintiff-Counterdefendant-Respondent, v. Kerby VAN TINE, Defendant-Counterplaintiff-Appellant. Boise, March 1999 Term
• Court: Idaho Supreme Court

Page 566

980 P.2d 566

IDAHO STATE INSURANCE FUND, Plaintiff-Counterdefendant-Respondent, v. Kerby VAN TINE, Defendant-Counterplaintiff-Appellant.

No. 24723.

Supreme Court of Idaho,

Boise, March 1999 Term.

June 9, 1999.

Aherin, Rice & Anegon, Lewiston, for appellant. Darrel W. Aherin argued.

Hon. Alan G. Lance, Attorney General; David J. Lee, Deputy Attorney General, Boise, for respondent. David J. Lee argued.

SILAK, Justice.

This is an appeal from the dismissal of a counterclaim seeking damages against a worker's compensation surety for breach of the duty of good faith and fair dealing arising out of the surety's subrogation claim. We affirm.

I. FACTS AND PROCEDURAL BACKGROUND

A. Facts

On January 30, 1990, appellant Kerby Van Tine (Van Tine) was injured during the course of his employment with the Idaho Department of Transportation when the vehicle he was driving was struck by a semi-truck. Van Tine submitted a worker's compensation claim to his employer's worker's compensation surety, respondent Idaho State Insurance Fund (SIF). The SIF made payments on certain of Van Tine's medical bills, but refused payment on others. Van Tine also filed suit against the third-party tortfeasor, the driver of the semi-truck.

In March 1992, Van Tine and the tortfeasor reached a settlement whereby the tortfeasor paid Van Tine $125,000, which Van Tine's attorney placed in his trust account. The SIF thereafter claimed subrogation. Van Tine disputed the subrogation claim, arguing that the SIF interfered with the tort litigation thereby causing Van Tine to recover less than that to which he was entitled.

In July 1992, Van Tine filed suit against the SIF in Nez Perce County alleging breach of the duty of good faith and fair dealing and breach of a fiduciary duty, and claiming that the SIF waived subrogation rights to the proceeds of the third party tort recovery. The next day the SIF filed suit against Van Tine's attorney, Darrel Aherin, in Nez Perce County for its subrogation claim.

In November 1993, the Idaho Industrial Commission (Commission) approved a lump sum settlement agreement for the worker's compensation case. The total amount of all benefits, including medical benefits, income benefits, and consideration for settlement was $45,532.05. In the agreement, the parties also agreed that the issue of the SIF's subrogation claim would be resolved in one of the two suits filed in Nez Perce County. Van Tine's suit eventually came before this Court which held that the district court did not have subject matter jurisdiction to decide the subrogation issue, but rather that the Commission had exclusive jurisdiction to decide In February 1996, the SIF petitioned the Commission for a declaratory ruling on the subrogation issue. The Commission ruled that it lacked authority to review the lump sum agreement as the petition was not timely filed and no other statutory basis for review existed. The SIF filed a second petition with the Industrial Commission seeking a declaratory ruling which the Commission again denied in April 1998.

                this issue as it came under the worker's compensation law.  Van Tine v. Idaho State Ins. Fund, 126 Idaho 688, 690, 889 P.2d 717, 719 (1994) (Van Tine I ).   The Court also held that the district court lacked subject matter jurisdiction to decide whether the SIF breached the duty of good faith and fair dealing.  The SIF's suit against Van Tine's attorney was subsequently dismissed
                

B. Procedural Background

In June 1996, the SIF instituted the present action by filing a complaint for declaratory judgment on the subrogation issue. Van Tine filed a counterclaim alleging that the SIF waived the subrogation claim (Count I), that it would be unconstitutional for the SIF to maintain a claim for subrogation since the SIF engaged in conduct which reduced the amount of Van Tine's recovery received from the tortfeasor (Count II), and that the SIF breached its duty of good faith and fair dealing (Count III). The district court granted Van Tine's summary judgment motion on the basis that it lacked subject matter jurisdiction. The SIF did not appeal. The district court also granted the SIF's summary judgment motion on Van Tine's counterclaim ruling that Count I of the counterclaim was moot by virtue of prior orders of the court, and that the court lacked jurisdiction to decide Counts II and III. The district court thereafter awarded Van Tine certain costs as a matter of right, but denied his request for discretionary costs and attorney fees with respect to the granting of Van Tine's summary judgment motion against the SIF. Van Tine appeals the dismissal of his counterclaim and the denial of his request for discretionary costs and attorney fees.

II. ISSUES ON APPEAL

1. Whether the district court improperly granted the SIF's summary judgment motion on Van Tine's counterclaim based on lack of subject matter jurisdiction.

2. Whether the constitutional rights of Van Tine were violated by a blanket denial of a cause of action for bad faith.

3. Whether the district court improperly denied Van Tine's request for discretionary costs and attorney fees.

4. Whether Van Tine is entitled to costs and attorney fees on appeal.

The SIF raises the following additional issue on appeal:

1. Whether the SIF is entitled to costs and attorney fees on appeal.

III.

ANALYSIS

A. Standard of Review

In an appeal from an order granting summary judgment, this Court applies the same standard of review as that used by the district court when originally ruling on the motion. Mitchell v. Bingham Memorial Hosp., 130 Idaho 420, 422, 942 P.2d 544, 546 (1997); State v. Rubbermaid, Inc., 129 Idaho 353, 355-56, 924 P.2d 615, 617-18 (1996). Upon review, all disputed facts are to be construed liberally in favor of the non-moving party, and all reasonable inferences that can be drawn from the record are to be drawn in favor of the non-moving party. Mitchell, 130 Idaho at 422, 942 P.2d at 546; Rubbermaid, 129 Idaho at 356, 924 P.2d at 618. Summary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. McCoy v. Lyons, 120 Idaho 765, 769, 820 P.2d 360, 364 (1991). Because the construction and application of a legislative act are pure questions of law, this Court exercises free review over such questions. Mitchell, 130 Idaho at 422, 942 P.2d at 546. The Court also exercises free review over constitutional issues as they,

too, are purely questions of law. Meisner v. Potlatch Corp., 131 Idaho 258, 260, 954 P.2d 676, 678 (1998).

B. The District Court Properly Dismissed Count III Of Van Tine's Counterclaim Alleging Breach Of The Duty Of Good Faith And Fair Dealing On The Basis That It Lacked Subject Matter Jurisdiction.

This issue falls squarely within our holding of Van Tine I, and as such, we affirm the district court's order dismissing Count III of Van Tine's counterclaim.

In Van Tine I, Van Tine filed suit against the SIF alleging breach of the duty of good faith and fair dealing and breach of fiduciary duty. ¹ Van Tine listed six specific allegations in his complaint which explicitly related to the SIF's failure to pay certain of Van Tine's medical expenses. Additionally, Van Tine listed the three following allegations:

7. SIF used its position with the Commission to have a position of superiority over Van Tine and other workers.

8. SIF authorized a suit to be filed against the Van Tines' attorney in an attempt to disrupt the Van Tines' relationship with their attorney and apply pressure to the Van Tines.

9. SIF lobbies for changes that are beneficial to SIF and detrimental to Van Tine and other workers.

Van Tine I, 126 Idaho at 690, 889 P.2d at 719.

The Court in Van Tine I first held that all questions arising under the worker's compensation law are within the exclusive jurisdiction of the Industrial Commission. Id. at 689, 889 P.2d at 718 (quoting I.C. § 72-707 (1989)). See also Walters v. Indus. Indem. Co. of Idaho, 127 Idaho 933, 908 P.2d 1240 (1996) (holding that complaint alleging that insurer intentionally and unreasonably denied worker's compensation benefits arose under worker's compensation law and thus was within the exclusive jurisdiction of the Commission.). The Court noted that if any of Van Tine's claims against the SIF arose under the worker's compensation law, the district court would not have subject matter jurisdiction to decide them. Van Tine I, 126 Idaho at 689, 889 P.2d at 718.

Secondly, with respect to the first six allegations of Van Tine's bad faith claim, the Court held that they came within the purview of I.C. § 72-804 of the Worker's Compensation Act and that, therefore, the Commission had exclusive jurisdiction over them. Id.

I.C. 72-804 provides:

Attorney's fees--Punitive costs in certain cases.--If the commission or any court before whom any proceedings are brought under this law determines that the employer or his surety contested a claim for compensation made by an injured employee or dependent of a deceased employee without reasonable ground, or that an employer or his surety neglected or refused within a reasonable time after receipt of a written claim for compensation to pay to the injured employee or his dependents the compensation provided by law, or without reasonable grounds discontinued payment of compensation as provided by law justly due and owing to the employee or his dependents, the employer shall pay reasonable attorney fees in addition to the compensation provided by this law. In all such cases the fees of attorneys employed by injured employees or their dependents shall be fixed by the commission.

The Court concluded that because those first six allegations explicitly related to contested claims for compensation without reasonable ground, SIF's refusal to pay compensation within a reasonable time, and discontinued payment of compensation justly due and owing without reasonable ground, they arose under ...