Nitchals v. Williams

• Decision Date: 12 February 1979
• Docket Number: Nos. 49817,49735 and 50496,49977,s. 49817
• Citation: 590 P.2d 582,225 Kan. 285
• Parties: Daniel A. NITCHALS, Plaintiff-Appellee, v. Preston Robert WILLIAMS, Defendant-Appellee, and American Family Mutual Insurance Co., Intervenor-Appellant. Leland G. SPECHT and Alice E. Specht, Plaintiffs-Appellees, v. David V. HUNTLEY, Defendant-Appellee, and Farmers Insurance Company, Inc., Intervenor-Appellant. Carolyn R. DRAKE, Plaintiff-Appellee, v. Robert SCHNELLE, Defendant-Appellee, and M. F. A. Insurance Company, Intervenor-Appellant. Gerald E. THOMAS, Plaintiff-Appellant, v. Robert E. EARNSHAW, Defendant-Appellee, and State Farm Mutual Automobile Insurance Company, Intervenor-Appellee.
• Court: Kansas Supreme Court

Page 582

590 P.2d 582

225 Kan. 285

Daniel A. NITCHALS, Plaintiff-Appellee, v. Preston Robert WILLIAMS, Defendant-Appellee, and American Family Mutual Insurance Co., Intervenor-Appellant.

Leland G. SPECHT and Alice E. Specht, Plaintiffs-Appellees, v. David V. HUNTLEY, Defendant-Appellee, and Farmers Insurance Company, Inc., Intervenor-Appellant.

Carolyn R. DRAKE, Plaintiff-Appellee, v. Robert SCHNELLE, Defendant-Appellee, and M. F. A. Insurance Company, Intervenor-Appellant.

Gerald E. THOMAS, Plaintiff-Appellant, v. Robert E. EARNSHAW, Defendant-Appellee, and State Farm Mutual Automobile Insurance Company, Intervenor-Appellee.

Nos. 49817, 49977, 49735 and 50496.

Supreme Court of Kansas.

Feb. 12, 1979.

Syllabus by the Court

1. The general rule of statutory construction is that a statute will operate prospectively unless its language clearly indicates that the legislature intended that it operate retrospectively. This rule is normally applied when an amendment to an existing statute or a new statute is enacted which creates a new liability not existing before under the law or which changes the substantive rights of the parties.

2. The general rule of statutory construction is modified where the statutory change is merely procedural or remedial in nature and does not prejudicially affect the substantive rights of the parties.

3. While generally statutes will not be construed to give them retrospective application unless it appears that such was the legislative intent, nevertheless when a change of law merely affects the remedy or law of procedure, all rights of action will be enforced under the new procedure without regard to whether they accrued before or after such change of law and without regard to whether or not the suit has been instituted, unless there is a savings clause as to existing litigation.

4. A statute which authorizes the recovery of attorney fees in litigation is procedural or remedial in nature, and when a change in the law permits the recovery of attorney fees, it may be applied retrospectively to pending cases.

5. K.S.A. 1977 Supp. 40-3113a(E ), which authorizes an apportionment of attorney fees between an insured and an insurance carrier that has paid PIP benefits, should be applied retrospectively in all pending no-fault insurance cases where the insured had not yet obtained a recovery from a third-party tortfeasor "by judgment, settlement, or otherwise" prior to July 1, 1977.

John C. Tillotson, of Murray & Tillotson, Chartered, Leavenworth, argued the cause and was on the brief for appellant in No. 49817.

Donald W. Vasos, Kansas City, argued the cause, and Thomas M. Dawson and Ethan Potter, Leavenworth, were with him on the brief for appellee in No. 49817.

Robert L. Howard, of Foulston, Siefkin, Powers & Eberhardt, Wichita, was on the Amicus curiae brief for State Farm Mutual Automobile Ins. Co. in No. 49817.

John A. Bausch, of Ascough, Bausch & Eschmann, Topeka, argued the cause and was on the brief for appellant in No. 49977.

James C. Wright, of Shaw, Hergenreter, Quarnstrom & Wright, Topeka, argued the cause and was on the brief for appellee in No. 49977.

Harold E. Doherty, Topeka, was on the brief for appellant in No. 49735.

Eugene C. Riling, of Riling, Burkhead & Rhudy, Chartered, Lawrence, was on the brief for appellee in No. 49735.

Robert E. Keeshan, of Scott, Quinlan & Hecht, Topeka, was on the amicus curiae brief for the Kansas Trial Lawyers Association in No. 49735.

PRAGER, Justice:

This opinion has been written to determine four separate cases on appeal in this court, each involving the same basic issue. The cases were argued to the court and submitted during the week of January 15, 1979. In each of the cases, the appeal was from a judgment of the district court construing certain provisions of the Kansas automobile injury reparations act, commonly referred to as the no-fault insurance law. (K.S.A.1975[225 Kan. 287] Supp. 40-3101 Et seq., as amended). We have considered all of the excellent briefs filed by counsel in the four cases. Each of the cases involves a dispute between an insured and his insurance carrier over the payment of attorney fees assessed by the trial court against the insurance company after a recovery of damages was obtained by the insured from a third-party tortfeasor.

The controversy in each case arose as an aftermath of the decision of this court in Easom v. Farmers Insurance Co., 221 Kan. 415, 560 P.2d 117 (1977). There the court construed K.S.A.1975 Supp. 40-3113 which provided in pertinent part as follows:

"40-3113. Insurer's or self-insurer's rights of reimbursement and indemnity. . . .

"(A ) No subtraction from personal injury protection benefits shall be made because of the value of a claim in tort based on the same bodily injury, but after recovery of damages by judgment, settlement or otherwise is realized upon any such tort claim, a subtraction shall be made to the extent of the recovery, less reasonable attorney's fees and other reasonable expenses incurred in effecting the recovery, but only to the extent that the injured person has recovered damages from the tortfeasor or his insurer or insurers, which are duplicative of personal injury protection benefits payable. If personal injury protection benefits have already been received, the claimant shall repay to the insurer or insurers out of any such recovery a sum equal to the benefits received, but no more than the recovery, exclusive of reasonable attorneys' fees and other reasonable expenses incurred in effecting the recovery, but only to the extent that the injured person has recovered said damages from the tortfeasor or his insurer or insurers which are duplicative of personal injury protection benefits received. The injured person's insurer or insurers shall have a lien on such recovery to this extent. No recovery of damages by an injured person or his estate shall be subtracted by an insurer in calculating benefits due after such person's death resulting from an injury for which the benefits were payable, and no recovery under K.S.A.1973 Supp. 60-1903 shall be subtracted in calculating funeral benefits."

It should be noted that subsection (A ) grants to an insurance carrier, which has paid personal injury protection (PIP) benefits, the right of reimbursement and indemnity in the event the injured insured thereafter recovers damages by way of judgment, settlement, or otherwise from a third-party tortfeasor. In Easom, the primary question before the court was whether, under 40-3113, a PIP carrier was entitled to the complete reimbursement of all PIP benefits paid to the insured, in the event the insured later recovered damages against a tortfeasor, without deduction of a proportionate share of the attorney fees and expenses incurred by the insured in obtaining the recovery from the tortfeasor. In Easom, this court, by a four-to-three decision, construed K.S.A.1975 Supp. 40-3113(A ) as providing that, when an insured plaintiff recovers damages against the tortfeasor in an amount in excess of the PIP benefits paid to the plaintiff by the PIP carrier, the PIP carrier is entitled to full reimbursement out of the insured's recovery for all PIP benefits paid without a reduction for any part of the attorney fees and expenses incurred by the insured. 221 Kan. at 431-433, 560 P.2d 117. The majority opinion in Easom agreed with the insured's counsel that the statute, as interpreted, appeared to work an injustice where the claimant has borne the expense of discovery depositions and attorney fees necessary to bring about a settlement, while the insurer has sat on the sidelines, yet reaped the benefits of reimbursement. The effect of Easom was to give the PIP carrier a free ride whenever the insured proceeded against a third party.

Apparently in response to the court's interpretation of 40-3113 in Easom, the 1977 legislature, which was in session when Easom was decided, repealed K.S.A.1975 Supp. 40-3113 and, in its place, enacted K.S.A.1977 Supp. 40-3113a, which provides in pertinent part as follows:

"40-3113a. Remedy against a tortfeasor, insurer or self-insurer subrogated, when; credits against future payments; limitation of actions; attorney fees. (A ) When the injury for which personal injury protection benefits are payable under this act are caused under circumstances creating a legal liability against a tortfeasor pursuant to K.S.A.1977 Supp. 40-3117, the injured person, his or her dependents or personal representatives shall have the right to pursue his, her or their remedy by proper action in a court of competent jurisdiction against such tortfeasor.

"(B ) In the event of recovery from such tortfeasor by the injured person, his or her dependents or personal representatives by judgment, settlement or otherwise, the insurer or self-insurer shall be subrogated to the extent of duplicative personal injury protection benefits provided to date of such recovery and shall have a lien therefor against such recovery and the insurer or self-insurer may intervene in any action to protect and enforce such lien. Whenever any judgment in any such action, settlement or recovery otherwise shall be recovered by the injured person, his or her dependents or personal representatives prior to the completion of personal injury protection benefits, the amount of such judgment, settlement or recovery otherwise actually paid and recovered which is in excess of the amount of personal injury protection benefits paid to the date of recovery of such judgment, settlement or recovery otherwise shall be credited against future payments of said personal injury protection benefits.

"(E ) Pursuant to this section, the court shall fix attorney fees which shall be paid proportionately by the insurer or self-insurer and the injured person, his or her dependents or personal representatives in the amounts determined by the court."

It should be noted that the right of reimbursement and indemnity under the...