Motorists Insurance Companies v. Sykes

Per Curiam. Plaintiff, Motorists Insurance Companies (“Motorists”), appeals the trial court’s decision granting defendant city of Akron’s motion to dismiss based on R.C. 2744.05(B), which eliminates contractual subrogation rights against a political subdivision. Motorists argues that application of R.C. 2744.05(B) violates the constitutional prohibition against retroactive legislation, and also that the statute violates the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. Because we hold that the statute may not be applied retroactively, we reverse and remand. On December 31, 1982, defendant, Robert E. Sykes, while driving on the eastbound leg of 1-76 in Akron, struck a patch of ice causing him to lose control of his car and run into another car. This second car was being driven by plaintiff Frederick Zenner with plaintiffs Mildred and Elizabeth Zenner and Steven Zenner as passengers. Sykes was uninsured. The Zenners had uninsured motorist coverage through an insurance policy issued by plaintiff Motorists Insurance Companies. The Zenners obtained compensation from Motorists under this policy. Motorists filed suit against Sykes and the city of Akron pursuant to subrogation rights contained in the insurance policy. On September 11, 1986, Akron moved to dismiss Motorists’ complaint against it based on R.C. 2744.05(B), which reads in part: “Notwithstanding any other provisions of the Revised Code or rules of a court to the contrary, in an action against a political subdivision to recover damages for injury, death, or loss to persons or property caused by an act or omission in connection with a governmental or proprietary function: U* * * “(B) If a claimant receives or is entitled to receive benefits for injuries or loss allegedly incurred from a policy or policies of insurance or any other source, the benefits shall be disclosed to the court, and the amount of the benefits shall be deducted from any award against a political subdivision recovered by that claimant. No insurer or other person is entitled to bring an action under a subrogation provision in an insurance or other contract against a political subdivision with respect to such benefits. * * *” Section 3(B) of Sub. S.B. No. 297 (141 Ohio Laws, Part I, 701, 703) amended Section 5 of Am. Sub. H.B. No. 176 (141 Ohio Laws, Part I, 1699, 1732) to make R.C. 2744.05(B) applicable to untried causes of action arising prior to its effective date (November 20, 1985). The trial court granted Akron’s motion, holding that “by the clear language of [R.C. 2744.05], the subrogation rights against a political subdivision are cut off.” Motorists appeals. Assignment of Error II “Retroactive application of Ohio Revised Code Section 2744.05(B) violates the United States and Ohio Constitutions.” As noted above, R.C. 2744.05(B) is expressly made retroactive. R.C. 1.48 requires such a conclusion before we inquire into the constitutionality of a retroactive statute. Van Fossen v. Babcock & Wilcox Co. (1988), 36 Ohio St. *97 3d 100, 522 N.E. 2d 489, paragraph one of the syllabus. Having determined that R.C. 2744.05(B) satisfies the requirement of R.C. 1.48, we now address Motorists’ constitutional arguments. Motorists argues that retroactive application of R.C. 2744.05(B) violates the prohibition against retroactive legislation contained in Section 28, Article II of the Ohio Constitution, and also violates the Due Process Clause in the Fourteenth Amendment to the United States Constitution, both of which forbid the ex-tinguishment of vested or substantive rights. Motorists contends that R.C. 2744.05(B) “retroactively destroys a subrogation claim which existed prior to the effective date of the statute.” Motorists argues that, because the law recognizes a vested property right in an accrued cause of action, retroactive application of the statute which would destroy Motorists’ claim is unconstitutional. We agree. In Van Fossen, supra, at 106-07, 522 N.E. 2d at 496, the court recognized: “With regard to substantive rights, it has been more particularly held that a statute is substantive when it does any of the following: impairs or takes away vested rights * * *; affects an accrued substantive right * * *; imposes new or additional burdens, duties, obligations or liabilities as to a past transaction * * *; creates a new right out of an act which gave no right and imposed no obligation when it occurred * * *; creates a new right * * *; [or] gives rise to or takes away the right to sue or defend actions at law * * (Citations omitted.) These non-remedial statutes may not be applied retroactively. We hold that R.C. 2744.05(B) as applied to insurer-subrogees is a substantive law. The United States Supreme Court held that an insurer-subrogee has substantive rights against a tortfeasor. United States v. Aetna Cas. & Sur. Co. (1949), 338 U.S. 366, 381. R.C. 2744.05(B) is a substantive law in that it “affects an accrued substantive right” of the insurer-subrogee — that right being the right to recover from the tort-feaser the amount of the benefits paid by the insurer-subrogee to the subrogor. This explanation points to an additional reason for terming R.C. 2744.05(B) a substantive law — it “takes away the right [of the insurer-subrogee] to sue at law.” Clearly, the procedural posture 1 of the case points at this to be true. The assignment of error is sustained. Assignment of Error I “Ohio Revised Code Section 2744.05(B) creates a classification which discriminates against insurance companies and other subrogated claim-holders in violation of constitutional equal protection guarantees.” Given our disposition of the previous assignment of error, Motorists’ equal protection argument is moot. The judgment of the trial court is reversed and the cause is remanded. Judgment reversed and cause remanded. Baird, P.J., and Mahoney, J., concur. Quillin, J., dissents. Footnotes [1] This case had already been filed and a trial date had been set when the new statute became effective.