Nebraska Life and Health Ins. Guar. Ass'n v. Dobias

• Decision Date: 05 May 1995
• Docket Number: No. S-93-962,S-93-962
• Citation: 247 Neb. 900,531 N.W.2d 217
• Parties: The NEBRASKA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION, Appellee, v. Jerry DOBIAS and Anne Dobias, Husband and Wife, and Pam Dobias, an Individual, Appellants, and John Thomas, an Individual, Appellee.
• Court: Nebraska Supreme Court

Page 217

531 N.W.2d 217

247 Neb. 900

The NEBRASKA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION, Appellee, v. Jerry DOBIAS and Anne Dobias, Husband and Wife, and Pam Dobias, an Individual, Appellants and John Thomas, an Individual, Appellee.

No. S-93-962.

Supreme Court of Nebraska.

May 5, 1995.

Syllabus by the Court

1. Declaratory Judgments. Whether a declaratory judgment action is treated as an action at law or one in equity is determined by the nature of the dispute.

2. Statutes: Appeal and Error. The interpretation of statutory language presents a question of law, in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the determination made by the court below.

3. Statutes: Legislature: Intent: Appeal and Error. When asked to interpret a statute, a court must determine and give effect to the purpose and intent of the Legislature as ascertained from the entire language of the statute considered in its plain, ordinary, and popular sense.

4. Statutes: Legislature: Intent. To determine the legislative intent of a statute, a court generally considers the subject matter of the whole act, as well as the particular topic of the statute containing the questioned language.

5. Statutes. Absent anything indicating to the contrary, statutory language is to be given its plain and ordinary meaning; when the words of a statute are plain, direct, and unambiguous, no interpretation is necessary or will be indulged to ascertain their meaning.

6. Insurance: Contracts: Liability. The language of Neb.Rev.Stat. §§ 44-2702(4) and 44-2707(3)(b) (Reissue 1993) does not encompass liability of an insolvent insurer arising under law rather than under the provisions of the policy such insurer issued.

7. Statutes: Appeal and Error. It is not within the province of the courts to read a meaning into a statute that is not there, nor to read anything direct and plain out of a statute.

John Thomas and Gregory M. Neuhaus, for appellants.

Susan Kubert Sapp, of Cline, Williams, Wright, Johnson & Oldfather, for appellee Neb. Life & Health.

WHITE, C.J., CAPORALE, FAHRNBRUCH, LANPHIER, and CONNOLLY, JJ.

CAPORALE, Justice.

I. STATEMENT OF CASE

In this declaratory judgment action, the defendants- Jerry Dobias; his wife, Anne Dobias; and their daughter, Pam Dobias, and the defendant-appellee, their attorney, John Thomas, challenge the summary judgment entered by the district court in favor of the plaintiff-appellee, The Nebraska Life and Health Insurance Guaranty Association, determining that the association is not obligated to pay the interest, costs, and attorney fees awarded the Dobiases on a judgment entered in their favor in another case. The brief filed in the Nebraska Court of Appeals asserts that the district court erred in concluding that the language of the Nebraska Life and Health Insurance Guaranty Association Act, Neb.Rev.Stat. §§ 44-2701 through 44-2720 (Reissue 1993), precludes such payment. Under our authority to regulate the caseloads of the two appellate courts, we, on our own motion, removed the matter to this court. We now affirm the judgment of the district court.

II. SCOPE OF REVIEW

Whether a declaratory judgment action is treated as an action at law or one in equity is determined by the nature of the dispute. VRT, Inc. v. Dutton-Lainson Co., 247 Neb. 845, 530 N.W.2d 619 (1995). As resolution of the dispute here rests upon the interpretation of statutory language, the questions presented are matters of law, in connection with which we have an obligation to reach an independent conclusion irrespective of the determination made by the court below. See Rust v. Buckler, 247 Neb. 852, 530 N.W.2d 630 (1995).

III. FACTS AND CONTENTIONS

The Dobiases were insured under a health insurance policy issued by Service Life Insurance Company of Omaha. After our determination in Dobias v. Service Life Ins. Co., 238 Neb. 87, 469 N.W.2d 143 (1991), that the expenses incurred as the result of the daughter's injuries and which Service Life had refused to pay were covered under the policy, the Dobiases obtained a judgment against Service Life in the amount of $31,462.23 for the covered expenses, plus $9,609.34 for interest, $494.56 for costs, and $13,748.48 for an attorney fee (a total of $55,314.61).

Before payment of the judgment, Service Life became Omaha Life Insurance Company and, as such, requested and obtained approval of a bulk reinsurance contract under which Legacy Life Insurance Company, a Nebraska insurance corporation, assumed and reinsured Omaha Life's business.

Legacy Life thereafter became insolvent and was ordered dissolved. As of the summary judgment hearing, the liquidation of Legacy Life had not been completed, and the liquidator had neither denied nor objected to the claim for payment of all sums awarded which the Dobiases presented to the liquidator. The claim before the liquidator, however, is not before us. What is before us is the claim the Dobiases filed with the association for $55,314.61, representing the total of the sums the association had previously been awarded against Service Life. The association caused payment to the Dobiases in the amount of $31,462.33 but has refused to cause payment of the remaining sums, asserting that it is prohibited from doing so by statute.

The Dobiases urge that as interest, costs, and attorney fees were awarded pursuant to law incident to the judgment resulting from their successful prosecution of an action against their insurer, the association is obligated to cause payment of said items to them.

IV. ANALYSIS

The association's obligation under the act being the issue before us, we recall that when asked to interpret a statute, a court must determine and give effect to the purpose and intent of the Legislature as ascertained from the entire language of the statute considered in its plain, ordinary, and popular sense. Arizona Motor Speedway v. Hoppe, 244 Neb. 316, 506 N.W.2d 699 (1993). To determine the legislative intent of a statute, a court generally considers the subject matter of the whole act, as well as the particular topic of the statute containing the questioned language. Anderson v. Peterson, 221 Neb. 149, 375 N.W.2d 901 (1985).

The stated purpose of the act is to protect resident policyowners and insureds against the failure of an insolvent or financially impaired insurer to perform its contractual obligations and to assist in the detection and prevention of insurer insolvencies. Section 44-2701. The funds required to carry out the powers and duties of the association are obtained by assessments levied against member insurers. § 44-2708. In determining premium rates and policyowner dividends, member insurers may consider the amount reasonably necessary to meet their assessment obligations under the act. § 44-2708(7). Every insurance company transacting business in Nebraska pays a tax consisting of a percentage of the gross amount of direct writing premiums received by the company during the preceding calendar year. Neb.Rev.Stat. § 77-908 (Cum.Supp.1994).

The act applies to health insurance policies. § 44-2703. If a domestic health insurer is insolvent, the association is, subject to the approval of the director, to "[a]ssure payment of the contractual obligations of the insolvent insurer to residents." § 44-2707(3)(b). "Contractual obligation" is defined as "any obligation under a policy or contract or portion of such policy or contract for which coverage is provided under § 44-2703." Section 44-2702(4). The act is to be construed liberally "to effect the purposes enumerated in section 44-2701 which shall constitute an aid and guide to interpretation." § 44-2704.

We have not heretofore been called upon to determine whether under the act's definition of contractual obligation the association is obliged to pay interest, costs, or attorney fees awarded pursuant to law on a judgment against an insolvent insurer.

However, a review of the decisions of other jurisdictions reveals that the majority of decisions which have considered the issue under statutes similar to ours holds that a guarantor such as the association is not obligated to pay such items. This is so because such a guarantor is not the legal successor of the insolvent insurer. City of Greensboro v. Reserve Insurance Co., 70 N.C.App. 651, 321 S.E.2d 232 (1984). Rather, as a statutory creation, the guarantor is only liable to the extent provided by the statute creating the guarantor. Virginia Prop. and Cas. Ins. v. Int'l Ins., 238 Va. 702, 385 S.E.2d 614 (1989); Saylin v. Cal. Ins. Guarantee Ass'n., 179 Cal.App.3d 256, 224 Cal.Rptr. 493 (1986); City of Greensboro, supra.

For example, in Rowley v. First Columbia Life Ins., 741 F.Supp. 1259 (S.D.Miss.1989), the court held that, under a statute defining "contractual obligation" as any obligation under covered policies, the guarantor was not liable for the portion of a default judgment representing punitive damages and attorney fees obtained against an insolvent insurer, as the items were not contractual obligations owed by the insolvent insurer. Rowley relied heavily on Crider v. Ga. Life & Health Ins., etc., 188 Ga.App. 407, 373 S.E.2d 30 (1988), a case on which the association here also places heavy reliance.

The Crider court held that the insureds of an insolvent insurance company were not entitled to recover penalties and attorney fees from the guarantor to satisfy a judgment rendered against the insurer prior to insolvency.

It is worth noting that by the time Crider was decided, the Georgia Legislature had amended the insurance guaranty statute to expressly exclude any claim or judgment for punitive damages and attorney fees associated therewith against any insolvent insurer, or the insurer's insolvency pool. However, in Colwell v. Voyager Cas. Ins. Co., 184 Ga.App. 842, 363 S.E.2d 310 (1987), the court noted the amendment and rejected the argument that claims for punitive...