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Nebraska Supreme Court Advance Sheets

310 Nebraska Reports

HAUPTMAN, O’BRIEN v. AUTO-OWNERS INS. CO.

Cite as 310 Neb. 147

Hauptman, O’Brien, Wolf & Lathrop, P.C., 

appellee and cross-appellant, v. Auto-Owners 

Insurance Company, appellant 

and cross-appellee.

Filed September 17, 2021. No. S-20-516.

1. Attorney Fees: Equity. The common fund doctrine provides that an 

attorney who renders services in recovering or preserving a fund, in 

which a number of persons are interested, may in equity be allowed 

his or her compensation out of the whole fund, only where the attorney’s services are rendered on behalf of, and are a benefit to, the common fund.

2. Actions: Subrogation: Attorney Fees. Where the holder of a subrogation right does not come into the action, whether he or she refuses to do 

so or acquiesces in the plaintiff’s action, but accepts the avails of the 

litigation, he or she should be subjected to his or her proportionate share 

of the expenses thereof, including attorney fees.

3. Statutes: Appeal and Error. To the extent an appeal calls for statutory 

interpretation or presents questions of law, an appellate court must reach 

an independent conclusion irrespective of the determination made by the 

court below.

4. Statutes: Legislature: Intent. There are three types of preemption: (1) 

express preemption, (2) field preemption, and (3) conflict preemption. 

In all three cases, the touchstone of preemption analysis is legislative intent.

5. Political Subdivisions: Statutes: Legislature: Intent. Field preemption 

and conflict preemption arise in situations where the Legislature did 

not explicitly express its intent to preempt local laws, but such can be 

inferred from other circumstances.

6. ____: ____: ____: ____. In field preemption, legislative intent to preempt local laws is inferred from a comprehensive scheme of legislation.

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

10/08/2021 01:08 AM CDT
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HAUPTMAN, O’BRIEN v. AUTO-OWNERS INS. CO.

Cite as 310 Neb. 147

7. Statutes: Legislature. The mere fact that the Legislature has enacted a 

law addressing a subject does not mean that the subject matter is completely preempted.

8. Political Subdivisions: Statutes: Legislature: Intent. In conflict preemption, legislative intent to preempt local laws is inferred to the extent 

that a local law actually conflicts with state law.

9. Statutes. If a statute is in derogation of common law, it is to be strictly 

construed.

10. Statutes: Intent. The construction of a statute which restricts or removes 

a common-law right should not be adopted unless the plain words of the 

statute compel it.

11. Statutes: Legislature: Intent. In construing 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.

12. Statutes. It is not within the province of the courts to read a meaning 

into a statute that is not there or to read anything direct and plain out of 

a statute.

13. Statutes: Legislature: Presumptions: Judicial Construction. In determining the meaning of a statute, the applicable rule is that when the 

Legislature enacts a law affecting an area which is already the subject 

of other statutes, it is presumed that it did so with full knowledge of the 

preexisting legislation and the decisions of the Nebraska Supreme Court 

construing and applying that legislation.

Petition for further review from the Court of Appeals, 

Pirtle, Chief Judge, and Moore and Arterburn, Judges, 

on appeal thereto from the District Court for Douglas County, 

Peter C. Bataillon, Judge. Judgment of Court of Appeals 

affirmed.

Michael T. Gibbons and Raymond E. Walden, of Woodke & 

Gibbons, P.C., L.L.O., for appellant.

Joshua J. Yambor and Stevie Chesterman, of Hauptman, 

O’Brien, Wolf & Lathrop, P.C., for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, 

Papik, and Freudenberg, JJ.
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310 Nebraska Reports

HAUPTMAN, O’BRIEN v. AUTO-OWNERS INS. CO.

Cite as 310 Neb. 147

Cassel, J.

INTRODUCTION

This appeal presents a question of law: Does a statute granting an insurer the right of subrogation preempt a common-law 

rule allowing an attorney to collect a pro rata share of his or 

her fees from an insurer? Because the statutory language is 

silent as to attorney fees and there is no indication that the 

Legislature intended to restrict or preclude the common fund 

doctrine, we conclude that attorney fees are not within the field 

occupied by the statute. We affirm.

BACKGROUND

Law at Issue

Before summarizing the facts, we set forth the statute and 

common-law rule central to this appeal. The statute, Neb. Rev. 

Stat. § 44-3,128.01 (Reissue 2010), 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.

[1,2] The common law implicated is known as the common fund doctrine. The common fund doctrine provides that 

an attorney who renders services in recovering or preserving a fund, in which a number of persons are interested, 

may in equity be allowed his or her compensation out of the 

whole fund, only where the attorney’s services are rendered 
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HAUPTMAN, O’BRIEN v. AUTO-OWNERS INS. CO.

Cite as 310 Neb. 147

on behalf of, and are a benefit to, the common fund. 1 Thus, 

“where the holder of the subrogation right does not come into 

the action, whether he refuses to do so or acquiesces in the 

plaintiff’s action, but accepts the avails of the litigation, he 

should be subjected to his proportionate share of the expenses 

thereof, including attorney’s fees.” 2

We now provide context for the dispute.

Factual Background

Auto-Owners Insurance Company (the insurer) issued an 

automobile insurance policy to Charlyn Imes. The policy and 

an endorsement both contained a section on preserving the 

insurer’s right to recover payments. The section of the endorsement addressed the right to recover disbursements made pursuant to medical payments coverage. This section stated in part 

that if the insurer makes a payment under the endorsement and 

the person for whom payment is made has a right to recover 

damages from another, the insurer will be entitled to that right 

and the person for whom payment is made shall transfer the 

right to the insurer and do nothing to prejudice it.

After Imes suffered injuries in a motor vehicle accident, 

the insurer made medical payments of $1,000 on her behalf. 

Imes retained Hauptman, O’Brien, Wolf & Lathrop, P.C. (the 

law firm), via a contingent fee agreement to pursue her claims 

against a negligent third party. Imes ultimately sued the negligent third party. She sought special and general damages, 

including medical expenses of $40,100.

Two months after the filing of the lawsuit, the insurer sent 

a letter to the negligent third party’s insurance company. 

The insurer requested that its right of recovery be “considered, protected and satisfied” in the event the negligent third 

party’s insurance company made payment. The letter further 

1 See Walentine, O’Toole v. Midwest Neurosurgery, 285 Neb. 80, 825 

N.W.2d 425 (2013).

2 United Services Automobile Assn. v. Hills, 172 Neb. 128, 133, 109 N.W.2d 

174, 177 (1961).
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HAUPTMAN, O’BRIEN v. AUTO-OWNERS INS. CO.

Cite as 310 Neb. 147

stated: “Please be advised that [the insurer] will represent 

our subrogation interest for payment made on behalf of our 

insured. We will not honor any requests for attorney fees 

unless we expressly request their assistance in pursuit of our 

subrogation.”

Eight months after filing suit, Imes settled for $48,200. The 

law firm asked the insurer to take a one-third reduction of its 

$1,000 medical payment subrogation interest in exchange for 

the law firm’s efforts in obtaining a settlement from which the 

insurer may be reimbursed. The insurer refused to accept less 

than $1,000.

Procedural Background

The law firm sued the insurer in county court. It alleged that 

its work in obtaining a recovery on behalf of Imes, including 

the insurer’s subrogation interest in the claim, created a common fund; that the insurer benefited from the law firm’s work; 

and that a fair and customary attorney fee under Nebraska 

common law was one-third of the amount recovered per the 

law firm’s fee agreement with Imes. The law firm therefore 

sought recovery of $333.33 against the insurer.

The insurer filed an answer and set forth various affirmative 

defenses. The insurer also filed a counterclaim, seeking a declaration that it was entitled to the full $1,000 under § 44-3,128.01 

and the terms of the insurance policy. Upon cross-motions 

for summary judgment, the county court sustained the law 

firm’s motion and overruled the insurer’s motion. The insurer 

appealed to the district court.

The district court affirmed the entry of summary judgment. 

The court stated that the statute “in no way limits or affects the 

Common Fund doctrine and the Common Fund doctrine in no 

way limits or affects section 44-3,128.01.”

The insurer then appealed to the Nebraska Court of Appeals. 

In considering whether the common fund doctrine survived 

§ 44-3,128.01, the Court of Appeals discussed the insurer’s 

preemption argument. The Court of Appeals clarified that the 
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HAUPTMAN, O’BRIEN v. AUTO-OWNERS INS. CO.

Cite as 310 Neb. 147

issue was the law firm’s entitlement to recover a reasonable 

attorney fee for its efforts in securing the insurer’s subrogated 

medical payment and stated: “This is not a ‘field’ addressed 

by the statute, which states that an insurer is entitled to full 

recovery of its medical payments when policy limits have not 

been received (as opposed to a pro rata share when they have 

and not all economic losses have been recovered).” 3 The court 

recognized that the statute was silent as to attorney fees and 

stated that there was nothing in case law to indicate that the 

statute preempted the common fund doctrine. Thus, the Court 

of Appeals affirmed the district court’s order.

The insurer filed a petition for further review, which we 

granted.

ASSIGNMENTS OF ERROR

The insurer assigns three errors in its petition for further 

review, which can be distilled to one: The Court of Appeals 

erred in failing to determine that the common fund doctrine 

was preempted by § 44-3,128.01.

STANDARD OF REVIEW

[3] To the extent an appeal calls for statutory interpretation 

or presents questions of law, an appellate court must reach an 

independent conclusion irrespective of the determination made 

by the court below. 4

ANALYSIS

The insurer has relied on preemption throughout the proceedings. Preemption typically arises in connection with federal law. Federal preemption arises from the Supremacy Clause 

of the U.S. Constitution and is the concept that state laws 

that conflict with federal law are invalid. 5 We have also 

3 Hauptman, O’Brien v. Auto-Owners Ins. Co., 29 Neb. App. 662, 676, 958 

N.W.2d 428, 439 (2021).

4 Peterson v. Jacobitz, 309 Neb. 486, 961 N.W.2d 258 (2021).

5 Eyl v. Ciba-Geigy Corp., 264 Neb. 582, 650 N.W.2d 744 (2002).
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encountered preemption claims with respect to whether municipal ordinances 6 or township laws 7 were preempted by state 

law. And the concept of preemption can arise in the interaction of common law and statutory law. 8 That is the situation 

before us.

The common fund doctrine is a part of the common law. 

In 1866, Nebraska adopted the common law of England. 9 An 

equity court’s authority over fees, including “the usual case . . . 

where through the complainant’s efforts a fund is recovered in 

which others share,” can be traced back to the English Court 

of Chancery. 10 But the common law is not immutable. No one 

has a vested interest in any rule of the common law, and the 

Nebraska Legislature has the power to abolish rights so long as 

no vested right is disturbed. 11

The insurer argues that within the statutorily defined field of 

automobile liability insurance, § 44-3,128.01 preempts application of the common fund doctrine. Whether the common fund 

doctrine should apply under the specific circumstances of this 

case is not at issue 12; instead, the limited issue before us is 

whether the doctrine is preempted by § 44-3,128.01.

[4-8] There are three types of preemption: (1) express preemption, (2) field preemption, and (3) conflict preemption. In 

6 See, e.g., State ex rel. City of Alma v. Furnas Cty. Farms, 266 Neb. 558, 

667 N.W.2d 512 (2003).

7 See Butler County Dairy v. Butler County, 285 Neb. 408, 827 N.W.2d 267 

(2013).

8 See Spear T Ranch v. Knaub, 269 Neb. 177, 691 N.W.2d 116 (2005). See, 

also, Beren v. Beren, 349 P.3d 233 (Colo. 2015); WSC/2005 LLC v. Trio 

Ventures, 460 Md. 244, 190 A.3d 255 (2018); In re Estate of Hannifin, 311 

P.3d 1016 (Utah 2013).

9 See Rev. Stat. ch. 7, § 1, p. 31 (1866), now codified at Neb. Rev. Stat. 

§ 49-101 (Reissue 2010).

10 See Sprague v. Ticonic Bank, 307 U.S. 161, 166, 59 S. Ct. 777, 83 L. Ed. 

1184 (1939).

11 See Peterson v. Cisper, 231 Neb. 450, 436 N.W.2d 533 (1989).

12 See, generally, 1 Robert L. Rossi, Attorneys’ Fees § 7:21 (3d ed. 2021).
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HAUPTMAN, O’BRIEN v. AUTO-OWNERS INS. CO.

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all three cases, the touchstone of preemption analysis is legislative intent. 13 Express preemption occurs when the Legislature 

has expressly declared in explicit statutory language its intent 

to preempt local laws. 14 That is clearly not the situation here. 

Field preemption and conflict preemption arise in situations 

where the Legislature did not explicitly express its intent to 

preempt local laws, but such can be inferred from other circumstances. 15 In field preemption, legislative intent to preempt local laws is inferred from a comprehensive scheme of 

legislation. 16 The mere fact that the Legislature has enacted a 

law addressing a subject does not mean that the subject matter 

is completely preempted. 17 In conflict preemption, legislative 

intent to preempt local laws is inferred to the extent that a local 

law actually conflicts with state law. 18

[9-12] In determining whether the Legislature intended 

to preempt the common fund doctrine when enacting 

§ 44-3,128.01, we are mindful of four principles of statutory 

interpretation and construction. First, if a statute is in derogation of common law, it is to be strictly construed. 19 Second, the 

construction of a statute which restricts or removes a commonlaw right should not be adopted unless the plain words of 

the statute compel it. 20 Third, in construing 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. 21

13 Malone v. City of Omaha, 294 Neb. 516, 883 N.W.2d 320 (2016).

14 Id.

15 Id.

16 Id.

17 Id.

18 Id.

19 ML Manager v. Jensen, 287 Neb. 171, 842 N.W.2d 566 (2014).

20 In re Trust of Shire, 299 Neb. 25, 907 N.W.2d 263 (2018).

21 State ex rel. BH Media Group v. Frakes, 305 Neb. 780, 943 N.W.2d 231 

(2020).
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HAUPTMAN, O’BRIEN v. AUTO-OWNERS INS. CO.

Cite as 310 Neb. 147

Last, it is not within the province of the courts to read a meaning into a statute that is not there or to read anything direct and 

plain out of a statute. 22

Application of these principles leads to the conclusion that 

the Legislature did not intend to preempt or abrogate the common fund doctrine. This court specifically extended the common fund doctrine to an insurer’s subrogation interest in 1961. 23

Thus, we applied the common law rule to an insurer’s subrogation interest 30 years prior to the enactment of § 44-3,128.01. 24

The plain language of § 44-3,128.01 makes enforceable an 

insurer’s right of subrogation for medical payments coverage 

under an automobile liability policy, but it is silent as to attorney fees. In light of this silence, the statutory language does 

not expressly abrogate the common law nor does the language 

lead to the conclusion that § 44-3,128.01 intended to restrict or 

preclude the common fund doctrine.

[13] The historical context of § 44-3,128.01 demonstrates 

that it was addressed to the validity of a specific type of 

subrogation clause and not to the common fund doctrine. In 

determining the meaning of a statute, the applicable rule is 

that when the Legislature enacts a law affecting an area which 

is already the subject of other statutes, it is presumed that it 

did so with full knowledge of the preexisting legislation and 

the decisions of the Nebraska Supreme Court construing and 

applying that legislation. 25 While statutes existed governing the 

topic of insurance, no statute specifically addressed the validity 

of a subrogation clause regarding medical payments coverage 

under an automobile insurance policy. By a 4-to-3 decision 

in Milbank Ins. Co. v. Henry,

 26 this court upheld this type of 

22 Id.

23 See United Services Automobile Assn. v. Hills, supra note 2.

24 1991 Neb. Laws, L.B. 224, § 1.

25 E.M. v. Nebraska Dept. of Health & Human Servs., 306 Neb. 1, 944 

N.W.2d 252 (2020).

26 Milbank Ins. Co. v. Henry, 232 Neb. 418, 441 N.W.2d 143 (1989).
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HAUPTMAN, O’BRIEN v. AUTO-OWNERS INS. CO.

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clause. The dissenting justices would have held the subrogation clause unenforceable as against public policy because, 

they reasoned, it made medical pay coverage illusory. 27 Section 

44-3,128.01 was the Legislature’s response to the validity of 

that type of subrogation clause.

For the sake of completeness, we digress to note that the 

legislation, as originally instituted, would have invalidated 

that type of subrogation clause. L.B. 224 was introduced to 

“prohibit an automobile insurance policy from containing a 

right of subrogation for the insurer to recover amounts paid on 

behalf of an injured person from any third party.” 28 Because 

the statute, as adopted, is not ambiguous, we do not rely upon 

this legislative history. The plain language of the statute, in the 

context of our Milbank Ins. Co. decision, is sufficient.

CONCLUSION

We do not read § 44-3,128.01 to effect a change in the 

common law with respect to the common fund doctrine and 

attorney fees. Because there is no preemption or abrogation, 

the county court properly entered summary judgment in favor 

of the law firm. The intermediate appellate courts correctly 

affirmed the judgment. We affirm the decision of the Court 

of Appeals.

Affirmed.

27 See id. (Fahrnbruch, J., dissenting; White and Grant, JJ., join).

28 Committee Statement, L.B. 224, Committee on Banking, Commerce and 

Insurance, 91st Leg., 1st Sess. (Feb. 4, 1991).