Court Opinion

ID: 9594620
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:31:27.093769+00
Date Added: 2024-06-11T18:01:23.976476
License: Public Domain

ADDENDUM

On Petitions for Rehearing

PER CURIAM.
Our lead opinion unanimously holds that the Howards are entitled to payment of benefits under the Blue Cross contract. By a majority vote, however, the opinion denies th§, Howards’ claim for attorney fees. After the opinion was issued, we received and granted petitions for rehearing on both sides. For reasons explained below, we adhere to our original decision.
We turn first to the question of benefits under the contract. Much argument upon rehearing has focused on the existence, or lack, of an agency relationship between Blue Cross and Mr. Howard’s employer (the Roper’s clothing store chain). Blue Cross argues that Roper’s was not its agent and, absent such agency, Blue Cross could not be bound by the statement, from Roper’s bookkeeper to Mr. Howard, that coverage automatically existed for the newborn child. In our lead opinion, we acknowledged that an agency issue had been raised but we declined to address it because, so far as the record then showed, the issue had not been urged on the initial appeal from the magistrate division to the district court. In conjunction with its petition for rehearing, Blue Cross sought and obtained leave to augment the record. The augmented record shows that the agency issue was argued to the district court. Accordingly, for the sake of discussion, we will assume that the issue was properly preserved for the appeal now before us.
It is one thing to say that the issue was preserved; it is quite another to say that the issue is dispositive. As explained *493in our lead opinion, timely enrollment of a newborn child was a condition precedent to coverage of the child under the Blue Cross contract. However, neither the contract nor an explanatory brochure furnished to the Howards set forth a mandatory method by which Blue Cross was to be notified of a child’s birth. It is a well-settled principle in contract law that if one party is required to give notice to another, such as notice of acceptance of an offer, and if no exclusive mode of communication has been prescribed, the notice may be given by any reasonable method. See generally 1 A. CORBIN, A COMPREHENSIVE TREATISE ON THE RULES OF CONTRACT LAW §§ 77, 88 (1963). We think the same principle applies to a notice required under the contract itself. A reasonable method of giving notice may be determined by reference to circumstances surrounding the contract and by a course of dealing between the parties. See RESTATEMENT SECOND OF CONTRACTS § 65. If the circumstances and course of dealing indicate that a third party will act as a point of contact for the parties, notice given through the third party will be deemed proper under the contract. RESTATEMENT § 65, comment b; cf. I.C. § 28-l-201(26)(b) (Uniform Commercial Code provision that, unless otherwise agreed, notice under a contract may be given “at the place of business through which the contract was made____”).
Here, the Blue Cross contract created a point of contact, designating the employer as the “group administrator.” Moreover, it is undisputed that the normal course of dealing between Blue Cross and its subscribers was through each subscriber’s employer. The employer was given certain functions as defined fully in a “group administrator’s manual.” This manual contained specific instructions on enrolling new subscribers, adding eligible dependents, collecting premiums from the employees, and remitting payments to Blue Cross. Upon these uncontroverted facts, we hold that when Mr. Howard informed Roper’s bookkeeper about the newborn child, he gave notice by a method which was reasonable and which was not excluded by the contract.
We need not decide whether the functions of the “group administrator” under the contract embraced all the trappings of an agency relationship with Blue Cross or with the subscribers. Nor need we decide whether Blue Cross was bound by the bookkeeper’s statement about automatic coverage. The dispositive issue is notice. On that issue it is sufficient to hold, as we have, that communication with the “group administrator” was a permissible means of giving notice under the contract in this case.
We now turn to the question of attorney fees. In the lead opinion, a majority of this Court held that Blue Cross, as a service corporation, is not subject to awards of attorney fees under I.C. § 41-1839. We also held, unanimously, that an attorney fee award could not be made under I.C. § 12-120 or I.C. § 12-121. In their petition for rehearing, the Howards have asked us to reconsider our rulings with respect to I.C. §§ 12-120 and 41-1839. Legislation affecting each of these statutes has been passed during the pendency of this appeal.
When the Howards’ suit was commenced, I.C. § 12-120 applied only to actions for money up to $2,500 and to actions based on certain enumerated forms of commercial transactions. The Howards’ complaint, seeking to recover medical and hospital benefits of approximately $2,900, did not fit within the existing confines of the statute. However, in 1986, the statute was broadened to include a civil action brought upon “a contract relating to ... services” or a civil action of any description seeking money up to $25,000. The Howards would have us apply the amended statute retrospectively to this case.
In Myers v. Vermaas, 114 Idaho 85, 753 P.2d 296 (Ct.App.1988), we recently declined to apply I.C. § 12-120 retrospectively. We discussed the oft-stated but elusive *494distinction between substantive and procedural rights. We observed that a statute such as I.C. § 12-120, which mandates an attorney fee award rather than simply authorizing a discretionary award, creates an entitlement closely akin to other vested rights in the underlying contract. It adds, in essence, a provision to the contract itself. Accordingly, we held that the entitlement to a mandatory award under I.C. § 12-120 more closely resembles a substantive right than a merely procedural right.
We also noted in Myers that a mandatory fee-shifting statute produces a harsh result for the non-prevailing party whose claim or defense is meritorious but unsuccessful. Such a result can be deemed fair only if the operation of the statute is known in advance and the parties are able to guide their litigation decisions accordingly. See DeWils Interiors, Inc. v. Dines, 106 Idaho 288, 293, 678 P.2d 80, 85 (Ct.App.1984). We concluded in Myers that “a retrospective application of the 1986 amendment to I.C. § 12-120 would distort this decision-making process. It would profoundly alter —after the fact — the costs and benefits of submitting a meritorious (albeit disputed) claim to the courts for resolution.” 114 Idaho at 87, 753 P.2d at 298. We adhere to that reasoning today.
This brings us to the claim for attorney fees under I.C. § 41-1839. As noted, a majority of this Court held in the lead opinion that a medical service corporation such as Blue Cross was not subject to this statute. Possibly in response to our opinion, the 1988 session of the Legislature amended I.C. § 41-3434, which enumerates provisions of the insurance code that will be deemed applicable to medical service corporations. As amended, I.C. § 41-3434 now includes I.C. § 41-1839.
A retroactivity analysis would not necessarily yield the same result on I.C. § 41-1839 as we reached on I.C. § 12-120. It could be argued that the broadened scope of I.C. § 41-1839 simply reflects a previously articulated policy of requiring companies like Blue Cross to bear the costs of litigation, including reasonable attorney fees, in successful suits for benefits due. See Linn v. North Idaho Dish Medical Service Bureau, Inc., 102 Idaho 679, 638 P.2d 876 (1981). However, we do not reach that question today. The bill containing the 1988 amendment did not carry an emergency clause. See 1988 Idaho Sess.Laws ch. 8, p. 10. Consequently, the amendment will not become effective until July 1, 1988.
We think it would be conceptually unsound for us to determine whether a statute not yet in effect should be given retrospective application — an exercise in prospective retroactivity, as it were. Neither do we think it would be proper for us to delay a decision on rehearing for the artificial purpose of awaiting the effective date of the statutory amendment. In any event, the appeal likely will be extended beyond July 1 because both sides already have filed petitions for review in the Supreme Court. The retroactivity question could be framed properly in that Court at the proper time. Upon the present record and state of the law, we will adhere to the views set forth by each of us in the lead opinion, or in the special opinions which accompanied it, on the attorney fee issue.