Felton v. Rebsamen Medical Center, Inc.

Jim Hannah, Chief Justice, dissenting. I respectfully dissent. Felton is being punished for complying with the law. When confronted with the law in Scamardo v. Jaggers, 356 Ark. 236 , 149 S.W.3d 311 (2004), which held that a medical insurer was no longer subject to a direct action under Ark. Code Ann. § 23-79-210 (Repl. 2004), Felton voluntarily nonsuited the insurer. Had Felton refused to voluntarily nonsuit, it is possible that Low v. Insurance Co. of North America, 364 Ark. 427 , 220 S.W.3d 670 (2005), which overruled Scamardo, might have interceded and saved his action against the insurer before a motion to dismiss was brought and heard under Scamardo. However, Felton did not do that. He relied upon and acted properly under the law as it existed. He is now being punished for acting honestly, for justifiably relying on the law, and for not pursuing an action for which there was no “basis in law.” Ark. R. Profl Conduct 3.1. Under these facts, our precedent and fairness dictate prospective application of Low.

An overruling opinion of this court is generally applied retrospectively because it is the current and correct statement of the law; 1 however, there are instances when retrospective application is inapplicable or unjust. This court has “acknowledged the need, when overruling prior case law, to recognize the validity of actions taken in faith upon old decisions while stating the rules to be followed in the future.” Wiles v. Wiles, 289 Ark. 340, 342 , 711 S.W.2d 789, 791 (1986).

Whether an overruling opinion is applied prospectively or retrospectively must be determined on a case-by-case basis. That analysis turns on whether a party justifiably relied on and assumed a now compromised position based on the overruled case while it was the law. Under such circumstances, where “fairness dictates,” a decision overruling an earlier case will be prospectively applied. See United Ins. Co. of Am. v. Murphy, 331 Ark. 364, 367 , 961 S.W.2d 752, 754 (1998). This case-by-case analysis controls regardless of the area of law at issue in the case. See Wiles, supra (divorce case); Oliver v. State, 323 Ark. 743 , 918 S.W.2d 690 (1996) (justifiable reliance in a criminal case); Hamilton v. State, 320 Ark. 346 , 896 S.W.2d 877 (1995) (same). As the majority notes, the law on prospective application is most abundant in cases concerning loss of contract rights; however, that is because that is the area of law where justifiable reliance on the overruled case often occurs. Nothing limits prospective application to cases concerning contracts. As indicated by Justice Cardozo’s discussion in Great Northern Railway Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 364 (1932), the issue on prospective application is raised in a case where giving retrospective application to a case overruling an earlier case would make “invalid what was valid in the doing.” The required analysis is not a search for exceptions to the rule of retrospective application, such as whether a contract was involved, but rather a question of fairness. Under the facts of this case, fairness dictates that Low be applied prospectively; therefore, I dissent.

Brown, J., joins. This idea is inaccurately set out as a case “when overruled, stands as though it had never been” Looney v. Bolt, 330 Ark. 530, 535 , 955 S.W.2d 509, 511 (1997); see also Flemens v. Harris, 323 Ark. 421 , 915 S.W.2d 685 (1995). Obviously an overruled case does not cease to exist as evidenced by prospective application. See Wiles v. Wiles, 289 Ark. 340, 342 , 711 S.W.2d 789, 791 (1986). Treating a case as if it has never been is illogical, and this approach has been criticized as fostering a “myth.” See S. R. Shapiro, Comment Note, Prospective or Retroactive Operation of Overruling Decision, 10 A.L.R.3d 1371 § 4, at 1383 (1966).