Ploen v. Union Ins. Co.

• Decision Date: 30 January 1998
• Docket Number: Nos. S-96-453,S-96-454,s. S-96-453
• Citation: 573 N.W.2d 436,253 Neb. 867
• Parties: Arlyn W. PLOEN, Appellant, v. UNION INSURANCE COMPANY, Appellee. Arlyn W. PLOEN, Appellant, v. UNION INSURANCE COMPANY and Shelter Mutual Insurance Company, Appellees.
• Court: Nebraska Supreme Court

Page 436

573 N.W.2d 436

253 Neb. 867

Arlyn W. PLOEN, Appellant, v. UNION INSURANCE COMPANY, Appellee.

Arlyn W. PLOEN, Appellant, v. UNION INSURANCE COMPANY and Shelter Mutual Insurance Company, Appellees.

Nos. S-96-453, S-96-454.

Supreme Court of Nebraska.

Jan. 30, 1998.

Syllabus by the Court

1. Constitutional Law: Statutes: Appeal and Error. Whether a statute is constitutional is a question of law; accordingly, the Nebraska Supreme Court is obligated to 2. Insurance: Contracts: Appeal and Error. The interpretation and construction of an insurance contract or policy involve questions of law, in connection with which an appellate court has an obligation to reach its conclusions independent of the determinations made by the court below.

reach a conclusion independent of the decision reached by the court below.

3. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an appellate court views the evidence in a light most favorable to the party against whom judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.

4. Insurance: Subrogation. In the absence of a valid contractual provision or statute to the contrary, an insurer may exercise its right of subrogation only when the insured has obtained an amount that exceeds the insured's loss.

5. Due Process: Statutes: Presumptions. Statutes creating a permanent irrebuttable presumption have long been disfavored under the Due Process Clauses of the 5th and 14th Amendments.

6. Due Process: Statutes: Presumptions. In cases involving constitutionally protected rights, a challenged irrebuttable presumption under the 5th Amendment Due Process Clause must meet the applicable 14th Amendment standard. In contrast, other irrebuttable classifications need meet only the standard of legislative reasonableness.

7. Legislature: Discrimination. Under the standard of legislative reasonableness, the Legislature's action is sufficient if it is rationally based and free from invidious discrimination.

8. Constitutional Law: Statutes. Neb.Rev.Stat. § 44-3,128.01 (Reissue 1993) meets the standard of legislative reasonableness and is therefore constitutional and enforceable.

9. Insurance: Contracts: Motor Vehicles: Compromise and Settlement. Under the terms of the Underinsured Motorist Insurance Coverage Act, an insurer could avoid its policy obligation only if the insured's settlement with the tort-feasor adversely affected the insurer's rights.

10. Insurance: Contracts: Intent. When the terms of an insurance contract are clear, the court may not resort to rules of construction, and the terms are to be accorded their plain and ordinary meaning as an ordinary or reasonable person would understand them. In such a case, the court shall seek to ascertain the intention of the parties from the plain meaning of the policy.

11. Affidavits. Statements in affidavits as to opinion, belief, or conclusions of law are of no effect.

12. Insurance: Contracts. The parties to an insurance contract may make the contract in any legal form they desire, and in the absence of statutory provisions to the contrary, insurance companies have the same right as individuals to limit their liability and to impose whatever restrictions and conditions they please upon their obligations, not inconsistent with public policy.

13. Public Policy: Words and Phrases. Public policy is that principle of the law which holds that no subject can lawfully do that which has a tendency to be injurious to the public or against the public good, the principles under which the freedom of contract or private dealings are restricted by law for the good of the community.

14. Contracts: Public Policy. The determination of whether a contract violates public policy presents a question of law.

William G. Line, Fremont, for appellant.

David L. Welch and Michael C. Pallesen, of Gaines, Mullen, Pansing & Hogan, Omaha, for appellee Union Insurance Co.

WHITE, C.J., and CAPORALE, WRIGHT, CONNOLLY, GERRARD, STEPHAN, and McCORMACK, JJ.

WRIGHT, Justice.

Arlyn W. Ploen commenced two actions for declaratory judgment in the district court for Dodge County, one against Union Insurance Company (Union) and the other against Union and Shelter Mutual Insurance Company (Shelter). On April 23, 1996, the district

court sustained Union's motion for summary judgment and overruled Ploen's cross-motion for summary judgment. On the same date, the court sustained the motions for summary judgment of Union and Shelter and overruled Ploen's crossmotion for summary judgment. Ploen appeals, and the cases have been consolidated for purposes of appeal.

SCOPE OF REVIEW

Whether a statute is constitutional is a question of law; accordingly, the Nebraska Supreme Court is obligated to reach a conclusion independent of the decision reached by the court below. State v. Severin, 250 Neb. 841, 553 N.W.2d 452 (1996); Kuchar v. Krings, 248 Neb. 995, 540 N.W.2d 582 (1995).

The interpretation and construction of an insurance contract or policy involve questions of law, in connection with which an appellate court has an obligation to reach its conclusions independent of the determinations made by the court below. Kast v. American-Amicable Life Ins. Co., 251 Neb. 698, 559 N.W.2d 460 (1997).

In reviewing a summary judgment, an appellate court views the evidence in a light most favorable to the party against whom judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. Kramer v. Kramer, 252 Neb. 526, 567 N.W.2d 100 (1997).

FACTS

On December 24, 1991, Ploen was a passenger in a car owned and operated by his father. The car was hit from behind by a car driven by Karen Keller, and Ploen allegedly suffered back injuries as a result of the accident. Ploen sued Keller, who admitted liability, and the parties eventually settled for $54,000 of Keller's policy liability limit of $100,000. However, Ploen alleges that his damages total at least $250,000.

Ploen was covered by his father's policy with Union for $5,000 in medical payments and $25,000 in underinsured motorist benefits. He was also covered by his own policy with Shelter for $25,000 in medical payments and $100,000 in underinsured motorist benefits. Ploen alleges that as a result of the accident, he incurred medical expenses in the amount of at least $50,364. Union paid to or on behalf of Ploen $5,000 in medical payments, and Shelter paid $25,000 to Ploen for medical payments.

Prior to his settlement with Kelter, Ploen requested that Union and Shelter give their consent to the proposed settlement agreement and requested that Union and Shelter waive their subrogation interests. Both companies denied such requests on the basis that Ploen should not settle for less than Keller's policy limit if his damages were indeed $250,000.

Thereafter, Ploen filed petitions for declaratory judgment against Union and Shelter. In its answer denying liability for underinsured coverage and asserting subrogation rights, Union relied on its contractual provision stating that recovery will be had only after "the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements." Shelter relied on its contractual provision stating that it was obligated to pay only such damages as "are in excess of the total limits of all bodily injury liability insurance policies and bonds applicable to the person or persons legally responsible for such damages and available to cover the insured's damages." Union and Shelter also asserted that Ploen had breached the insurance contracts by settling without their written consent.

Union and Shelter each moved for summary judgment, and Ploen filed cross-motions for summary judgment. The district court sustained Union's and Shelter's motions for summary judgment, overruled Ploen's cross-motions for summary judgment, and dismissed the lawsuits. In so doing, the court specifically found that Neb.Rev.Stat. § 44-3,128.01 (Reissue 1993), a statute providing for subrogation of medical payments, is constitutional. Ploen timely appealed the orders granting summary judgments to Union and Shelter and overruling his cross-motions for summary judgment.

ASSIGNMENTS OF ERROR

Ploen makes the following assignments of error: (1) The district court erred in finding that Ploen's settlement with Keller adversely affected Union and Shelter, (2) the court erred in finding that § 44-3,128.01 is constitutional, and (3) the court erred in sustaining Union's and Shelter's motions for summary judgment and overruling Ploen's cross-motions for summary judgment.

ANALYSIS

SUBROGATION FOR MEDICAL PAYMENTS

We first address whether Union and Shelter are able to subrogate for the medical payments made to or on behalf of Ploen. In support of their right to subrogate, Union and Shelter rely on § 44-3,128.01, which provides:

A provision in an automobile liability policy or endorsement which is effective in this state and which grants the insurer the right of subrogation for payment of benefits under the medical payments coverage portion of the policy shall be valid and enforceable, except that if the claimant receives less than actual economic loss from all parties liable for the bodily injuries, subrogation of medical payments shall be allowed in the same proportion that the medical expenses bear to the total economic loss. For purposes of this section, it shall be conclusively presumed that any settlement or judgment which is less than the policy limits of any applicable liability insurance coverage constitutes complete recovery of actual economic loss.

In Shelter Ins. Cos. v. Frohlich, 243 Neb. 111, 122, 498 N.W.2d 74, 81 (1993), we explained that "in the absence of a valid contractual provision or statute to the contrary, an insurer may exercise its right of subrogation only when the insured has obtained an amount that exceeds the...