Opinion ID: 2299089
Heading Depth: 1
Heading Rank: 6

Heading: Validity of Retroactive Application

Text: Allstate mounts a multi-faceted Constitutional attack on any retroactive application of Chapter 199. Such an application, it urges, would violate the due process and taking provisions of the Maryland Constitution (Article 24 of the Md. Declaration of Rights and Art. III, § 40 of the Md. Constitution), the due process clause of the Fourteenth Amendment to the U.S. Constitution, and the impairment of contract clause of the U.S. Constitution (Article I, § 10). We dealt with some of these issues most recently in Dua v. Comcast Cable, supra, 370 Md. 604, 805 A.2d 1061. We made clear in Dua that, although Article 24 and Article III, § 40 are counterparts, respectively, to the due process clause of the Fourteenth Amendment and the takings clause of the Fifth Amendment, we have applied a different standard in judging the validity of a retroactive statute under the Maryland provisions than the Supreme Court has applied in examining retroactive statutes under the Federal provisions. The standard with respect to the Federal provisionsboth due process and taking is whether the legislative Act was arbitrary or irrational. The test with respect to the Maryland provisionsArticle 24 and Article III, § 40, is whether retroactive effect would impair vested rights. Unless, as in Dua, the statute clearly fails one of those tests, both must be considered. In dealing with the retroactive effect of statutes challenged under the Federal due process and taking provisions, the Supreme Court has, on the whole, given considerable leeway to legislative bodies, at least with respect to economic legislation. In Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15-16, 96 S.Ct. 2882, 2892, 49 L.Ed.2d 752, 766 (1976), Pension Benefit Guaranty Corporation v. R.A. Gray & Co. 467 U.S. 717, 729-30, 104 S.Ct. 2709, 2717-18, 81 L.Ed.2d 601, 610-11 (1984), Connolly v. Pension Benefit Guaranty Corporation, 475 U.S. 211, 106 S.Ct. 1018, 89 L.Ed.2d 166. 475 U.S. 211, 106 S.Ct. 1018, 89 L.Ed.2d 166 (1986), and Concrete Pipe & Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern Cal., 508 U.S. 602, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993), the Court adopted the view, with respect to both due process and regulatory taking challenges that (1) statutes adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality, (2) the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way ( Usery, supra, 428 U.S. at 15, 96 S.Ct. at 2892, 49 L.Ed.2d at 766), (3) statutes readjusting rights and burdens are not unlawful solely because they upset otherwise settled expectations, and (4) legislatures may impose retroactive liability to some degree, but a statute may be unconstitutional if it imposes severe retroactive liability on a limited class of parties that could not have anticipated the liability, and the extent of that liability is substantially disproportionate to the parties' experience. Eastern Enterprises v. Apfel, 524 U.S. 498, 528-529, 118 S.Ct. 2131, 2149, 141 L.Ed.2d 451, 474 (1998) (plurality Opinion by O'Connor, J.). The ultimate test, both generally and with respect to legislation pertaining to State tort law, is whether the legislative decision being challenged is arbitrary and irrational. In Martinez v. California, 444 U.S. 277, 282, 100 S.Ct. 553, 557, 62 L.Ed.2d 481, 487 (1980), the Court concluded that the State's interest in fashioning its own rules of tort law is paramount to any discernible federal interest, except perhaps an interest in protecting the individual citizen from state action that is wholly arbitrary or irrational. See also Logan v. Zimmerman Brush Co., 455 U.S. 422, 433, 102 S.Ct. 1148, 1156, 71 L.Ed.2d 265, 276 (1982). In our discussion of the equal protection issue, we concluded that it was not unreasonable, and therefore not irrational, for the Legislature, as a matter of substantive tort law, to abrogate parent-child immunity in motor tort cases up to the amount of compulsory insurance. Notwithstanding its more frequent choice to exclude application of a statute affecting immunities to causes of action arising prior to the effective date of the statute ( see ante, n. 2), we see nothing arbitrary or irrational about the Legislature's use of a prospective filing date as the criterion of applicability for the abrogation. It is evident that the Legislature perceived a great unfairness in continuing to deny a class of minor children a right of redress for injuries suffered as a result of their parent's negligent driving that everyone else had, including emancipated, adult, and step-siblings. With knowledge that the insurance industry, having appeared at hearings on the 1998 and 1999 bills to abrogate immunity in motor tort cases, was well aware of legislative efforts in that regard, the Legislature no doubt concluded that enactment of such a measure would come as no shock to insurers. The evidence regarding any actual impact on the insurance industry of a retroactive application of Chapter 199 ranges from non-existent to meager. Although Allstate alleged in its complaint that retroactive application would affect claims involving a large number of minors, no evidence was presented as to the expected number of additional claims or the potential expense of them. A fiscal note prepared by the Department of Legislative Services indicated that the Maryland Automobile Insurance Fund, one of the major motor vehicle insurers in the State, with 135,000 policies outstanding in 2001, approximately six cases involving insureds would arise annually as a result of this bill and that, if each case were settled for the maximum amount of $20,000, the total cost would be $120,000 per year. There was no indication of what, if any, portion of that expenditure would be due to applying the law retroactively to causes of action arising prior to October 1, 2001. Given the rational desire by the Legislature to end the denial of redress to parents and minor children and the extreme paucity of evidence that the retroactive application would create any significant burden to Allstate or anyone else, we cannot conclude that such application is irrational or arbitrary and therefore find no violation of Federal due process or the Federal prohibition against the taking of property without just compensation. As Dua makes clear, the standard for determining whether retroactive legislation violates Art. 24 of the Maryland Declaration of Rights or Art. III, § 40 of the Maryland Constitution is whether it abrogates or significantly impairs vested rights. Although we have not enunciated any single all-encompassing definition of that term, we have held that it includes that which is regarded as a property right under Maryland property law. Dua, supra, 370 Md. at 631, 805 A.2d at 1077. With respect to causes of action, we confirmed in Dua that the Maryland Constitution ordinarily precludes the Legislature (1) from retroactively abolishing an accrued cause of action, thereby depriving the plaintiff of a vested right, and (2) from retroactively creating a cause of action, or reviving a barred cause of action, thereby violating the vested right of the defendant. Id., at 633, 805 A.2d at 1078. At issue here, at least in the broadest sense, is the latter principlewhether by applying the abrogation of parent-child immunity to negligent conduct that occurred prior to October 1, 2001, the Legislature has, in effect, retroactively created a cause of action and thereby violated a vested right of Allstate. In WSSC v. Riverdale Heights Fire Co., supra, 308 Md. 556, 560, 520 A.2d 1319, 1321, we held that the granting of immunity effects more than mere change of practice, procedure, or remedy and instead establishes a rule of substantive law, thus intimating that a statute conferring such immunity retroactively might transgress a vested right. We have not, however, considered whether the retroactive abrogation of an existing immunity would have a similar effect. [3] Mr. Kim urges that there is an important distinction between statutes that retroactively abrogate the right to pursue an accrued cause of action and those that retroactively curtail or eliminate a possible defense to a cause of action. The right to pursue a cause of action, he notes, vests when the cause of action ariseswhen the operative events upon which the action is based occur. The right to assert a defense, on the other hand, does not arise and therefore cannot vest until the action is filed. For that proposition, he cites a number of out-of-State cases in which legislation was approved that retroactively eliminated the defense of contributory negligence, extended a statute of limitations, or applied the defense of sovereign immunity. See Hall v. A.N.R. Freight Syst., Inc., 149 Ariz. 130, 717 P.2d 434 (1986), and Godfrey v. State, 84 Wash.2d 959, 530 P.2d 630, 632 (1975) (retroactive abrogation of defense of contributory negligence); D.J.L. v. Armour Pharmaceutical Co., 307 N.J.Super. 61, 704 A.2d 104 (Law Div.1997) (extension of statute of limitations); and Mispagel v. Highway and Transp. Comm'n, 785 S.W.2d 279 (Mo.1990) (retroactive application of sovereign immunity). The theory underlying those decisions was well articulated by the Arizona Supreme Court in Hall and the Washington Supreme Court in Godfrey. Citing an earlier decision ( Steinfeld v. Nielsen, 15 Ariz.424, 139 P.879 (1913)), that defined a right that was vested by comparing it to a right that was either expectant or contingent, the Hall court concluded that a right vests only when it is actually assertable as a legal cause of action or defense or is so substantially relied upon that retroactive divestiture would be manifestly unjust. Hall, 717 P.2d at 444. A defensecontributory negligence in that casewhile a substantive right, does not vest until a lawsuit has been filed. Prior to that time it is merely an inchoate right which cannot be asserted `until the happening of some future event.' Id., quoting in part from Steinfeld v. Nielsen, 139 P. at 896. The Godfrey court said basically the same thing. Beginning with the proposition that a person does not have an inherent vested right in the continuation of an existing law, the court concluded: A vested right, entitled to protection from legislation, must be something more than a mere expectation based upon an anticipated continuance of the existing law; it must have become a title, legal or equitable, to the present or future enjoyment of property, a demand, or a legal exemption from a demand by another.  Godfrey, 530 P.2d at 632 (Emphasis in original). That principle, Mr. Kim avers, applies as well to the abrogation of the defense of parent-child immunity. It is, in his view, an inchoate defense that cannot be asserted until an action in which it might be applicable has been filed and therefore cannot be regarded as a vested right before that time. We need not consider here whether we would adopt the actual holdings in Hall or Godfrey, should the General Assembly attempt, retroactively, to abolish the defense of contributory negligence; nor need we determine their applicability to Ms. Kim, who would be able to waive the immunity even if she had it. We are persuaded that the theory asserted in those cases, and others, is applicable to the ability of Allstate to assert the defense of parent-child immunity, however. Immunities are not favored in the law, and this one, in particular, has been under challenge, in both this Court and the Legislature, for several years. We find no violation of any vested right enjoyed by Allstate by a retroactive application of Chapter 199.