Opinion ID: 2617682
Heading Depth: 1
Heading Rank: 4

Heading: Should the defendant have been allowed to raise comparative negligence as a defense?

Text: In Federal Savings & Loan Ins. Corp. v. Huff, 237 Kan. 873, 704 P.2d 372 (1985), this court held that the comparative fault statute (K.S.A. 60-258a) does not apply to actions for economic damage. In Huff, the FSLIC, as receiver of an insolvent savings and loan association, brought an action in federal court against former officers and employees of the association for breach of fiduciary duty in making several improvident loans. The United States District Court for the District of Kansas certified the issue of the applicability of comparative negligence to this court pursuant to the Uniform Certification of Questions of Law Act (K.S.A. 60-3201 et seq. ). This court found that the comparative negligence statute did not apply to the action for several reasons. First, because the action was not one for which contributory negligence would have been a defense, the comparative negligence statute was not applicable See Haysville U.S.D. No. 261 v. GAF Corp., 233 Kan. 635, 666 P.2d 192 (1983). The court reasoned that a savings and loan association is a corporation and, accordingly, can only act through its directors and officers; therefore, it is legally impossible for the savings and loan association to be contributorily negligent. The reasoning of the above argument is, however, somewhat suspect because the defendants in Huff were not seeking to compare the negligence of the savings and loan association itself, but rather to compare the negligence of each other as well as certain nondefendant individuals (borrowers, guarantors and appraisers). The purpose of [the comparative fault] statute is `to impose individual liability for damages based on the proportionate fault of all parties to the occurrence which gave rise to the injuries and damages even though one or more parties cannot be joined formally as a litigant or be held legally responsible for his or her proportionate fault.' McGraw v. Sanders Co. Plumbing & Heating, Inc., 233 Kan. 766, 771-72, 667 P.2d 289 (1983) (quoting Brown v. Keill, 224 Kan. 195, 207, 580 P.2d 867 [1978]). Black seeks to have the negligence of the other directors compared to his negligence. He cites a number of findings by the trial court from which one could infer that the other directors were at least in some part negligent. The court also found that [d]efendant journalized the margin calls representing these losses as though he were buying and selling securities. This method of bookkeeping could not have alerted plaintiff that defendant was trading in financial futures. In Newton v. Horn-blower, Inc., 224 Kan. 506, 516, 582 P.2d 1136 (1978), this court said: Defendants were the active managers and officers and partners of both the corporation and the limited partnership, and plaintiff, as a stockholder, director, and limited partner, totally relied upon the defendants' reports for his information. A review of the financial information and other corporate papers furnished by the defendants did not disclose any wrongdoing on behalf of the defendants. The trial court, in weighing the evidence presented, found that plaintiff acted in a reasonable manner in reviewing the financial information provided and that concealment by the defendants was the true cause of plaintiff's lack of knowledge. Although the evidence indicates that the outside directors could not have known of Black's activities, there is some indication that Lawrence A. Tholen, the senior vice-president and secretary of the Board, should probably have been keeping closer tabs on Black. This is true especially in light of the findings of the Bank that there were not sufficient internal controls and that Black should not have been the sole person handling Wichita Federal's investments. A second reason that the defense of comparative negligence was rejected in Huff was that the original comparative fault statute did not provide for recoveries of economic loss, but only for damages for negligence resulting in death, personal injury or property damage. K.S.A. 60-258a. Two years later, the legislature amended K.S.A. 60-258a to specifically include claims for economic loss. (See K.S.A. 1988 Supp. 60-258a.) This amendment became effective July 1, 1987. In the case at bar, the alleged negligence and loss occurred in 1985 and the action was commenced in 1986, prior to the amendment of the comparative fault statute. Generally, a Statute operates prospectively unless its language clearly indicates the legislature intended it to operate retrospectively. McGraw, 233 Kan. at 768-69. When the legislature enacted the original K.S.A. 60-258a in 1974, it also enacted K.S.A. 60-258b, which stated: The provisions of this act shall not apply to any cause of action which has accrued prior to the effective date of this act. The majority of courts has held that a comparative fault statute which is silent as to retroactivity is not retroactive. Annot., 37 A.L.R.3d 1438. In Crutsinger v. Hess, 408 F. Supp. 548, 555 (D. Kan. 1976), the court held that the Kansas comparative fault statute did not apply where the plaintiff's cause of action arose before July 1, 1974. Black cites Wilfong v. Batdorf, 6 Ohio St.3d 100, 451 N.E.2d 1185 (1983), for the proposition that comparative fault statutes should be given retroactive application. The Supreme Court of Ohio has addressed this issue more recently in Van Fossen v. Babcock & Wilcox Co., 36 Ohio St.3d 100, 108, 522 N.E.2d 489 (1988): The majority in Wilfong, having discarded the proper inquiry in such matters, irrationally concluded that the comparative negligence statute was remedial since it did `not alter a defendant's liability for his negligent acts....' Id. at 104, 6 OBR at 165, 451 N.E.2d at 1189. Quite the reverse was obvious to most legal observers in Ohio since contributory negligence, which was obviated by the statute then at issue, had been, under the common law, a complete defense to any recovery, since it constituted an intervening cause of the plaintiff's injury. By mischaracterizing what was clearly a substantive defense, and by narrowly focusing upon the additional statutory provision allowing a prorata recovery, that decision created confusion for the substantive/remedial inquiry. Through the discussion herein we hopefully avoid this detour from sound legal analysis. Because comparative fault is a substantive defense, the 1987 amendment to K.S.A. 60-258a (which overruled Huff ) is not applicable to this action. Is the plaintiff entitled to prejudgment interest? Wichita Federal argues that the trial court erred in not awarding it prejudgment interest. Wichita Federal argues that prejudgment interest can be awarded in tort cases where the claim for damages is liquidated. Wichita Federal claims that the amount of its losses was never an issue. This is directly in conflict with the statement of issues made by Wichita Federal at oral argument and in the pretrial conference. Wichita Federal raised the amount of its damages as an issue in this case. In addition, the amount of damages could not possibly have been liquidated until the issue of offset was determined. As mentioned before, there is at least a question of whether the damages in this case should be $17.5 million or $17.1 million. [T]he district courts are vested with considerable discretion in the awarding of interest damages upon restitutory sums. Considerations of fairness and traditional equitable principles are to guide the exercise of this discretion. Lightcap v. Mobil Oil Corporation, 221 Kan. 448, 468, 562 P.2d 1, cert. denied 434 U.S. 876 (1977) (quoting Brooklyn Union Gas Co. v. Transcontinental Gas P.L. Corp., 201 F. Supp. 679 [S.D. Tex. 1960], aff'd 299 F.2d 692 [5th Cir.1962]). There is no indication that the denial of prejudgment interest in this case was an abuse of discretion. Affirmed. HOLMES and SIX, JJ., not participating.