Ofstad v. South Dakota Department of Transportation

387 N.W.2d 539, 1986 S.D. LEXIS 263

• Court: South Dakota Supreme Court
• Decided: May 21, 1986
• Docket: 14720
• Status: Published

Opinions

WUEST, Justice.

In this appeal Carl A. Ofstad Jr. (employee), an employee of the South Dakota Department of Transportation, State Highway Division (employer), was awarded worker’s compensation benefits and attorneys’ fees by an administrative hearing examiner. The circuit court reversed the hearing examiner’s award of attorneys’ fees. We affirm.

Employee injured his back while working for employer. As employee’s treatment continued, employer paid partial disability benefits for a time. Nearly two years after the injury employer determined that employee did not qualify for benefits because employer had not received adequate notice of the injury. After an administrative hearing, the hearing examiner awarded employee worker’s compensation benefits. The hearing examiner later awarded employee attorneys’ fees.

The sole issue in this case is whether employer may be liable for attorneys’ fees under SDCL 58-12-3,

* which generally authorizes an award of attorneys’ fees against any insurance company. Employer has conceded that benefits were payable despite the issue that had been raised concerning notice of the injury.

Generally, attorneys’ fees are not recoverable in South Dakota unless they are specifically authorized by statute. SDCL 15-17-7 provides in part: “The court may allow attorneys’ fees as costs for or against any party to an action only in the cases if it is specifically provided by statute [emphasis added][.]” See also Lowe v. Steele Constr. Co., 368 N.W.2d 610 (S.D.1985); Noll v. Brende, 318 N.W.2d 319 (S.D.1982); Estate of Weickum, 317 N.W.2d 142 (S.D.1982). Employee contends that because employer is an “insurer” as defined in SDCL 58-1-2(2), employer may be held liable for attorneys’ fees as an “insurance company” under SDCL 58-12-3.

An “ ‘[ijnsurer’ includes every person as indemnitor, surety, or contractor in the business of entering into contracts of insurance.” SDCL 58-1-2(2). Because employer is not in the business of entering into contracts of insurance but merely pays claims from its departmental fund, SDCL 62-4-33, it is not an insurer within SDCL 58-1-2(2). This interpretation of the definition of “insurer” is consistent with what we believe to be the intent and the plain, ordinary, and popular meaning of the statute, Moulton v. State, 363 N.W.2d 405 (S.D.1985), SDCL 58-12-3, which specifically refers only to insurance companies and not to the South Dakota Department of Transportation. Accordingly, we hold that SDCL 58-12-3 does not authorize an award of attorneys’ fees against employer on employee’s claim for worker’s compensation benefits.

The circuit court’s order is affirmed.

FOSHEIM, C.J., concurs. HENDERSON, J., specially concurs. MORGAN and SABERS, JJ., dissent.

SDCL 58-12-3 provides in pertinent part:

In all actions or proceedings hereafter commenced against any insurance company, including any reciprocal or interinsurance exchange, on any policy or certificate of any type or kind of insurance, if it appears from the evidence that such company or exchange has refused to pay the full amount of such loss, and that such refusal is vexatious or without reasonable cause, the department of labor, the trial court and the appellate court, shall, if judgment or an award is rendered for plaintiff, allow the plaintiff a reasonable sum as an attorney’s fee to be recovered and collected as a part of the costs[.]