Nebraska Supreme Court Clarifies Political Subdivision Appellate Rights

Under Nebraska law, political subdivisions may not be sued without an express grant of power because they maintain sovereign immunity. The Nebraska Political Subdivisions Tort Claims Act (“PSTCA”) provides a limited waiver of sovereign immunity with respect to some types of tort claims against political subdivisions. Neb. Rev. Stat. § 13-901 et seq. One of the newest features of the PSTCA is that political subdivisions enjoy an immediate right to appeal when a request for immunity is denied by a trial court on summary judgment. The Nebraska Supreme Court was recently presented with an issue of first impression as to the limitations of that right to immediate appeal.  

In Clark v. Sargent Irrigation Dist., 311 Neb. 123 (2022), the Nebraska Supreme Court analyzed whether a district court’s denial of a political subdivision’s pretrial motion was a final order under Neb. Rev. Stat. § 25-1902(1)(d). In Clark, an irrigation district employee prepared a mixture of herbicides and sprayed the mix on several trees along a canal, which damaged the crops of nearby landowners. The landowners filed suit in the District Court for Custer County, alleging that the district’s employee was negligent in preparing the herbicide. The irrigation district moved the district court for summary judgment, arguing that the employee’s actions of preparing the herbicide fell within the discretionary function exemption of the PSTCA. The exemption states that the performance or nonperformance of a discretionary function cannot be the basis of tort liability of the political subdivision under the PSTCA.

The district court denied the irrigation district’s motion, reasoning that the discretionary function exemption does not apply when a statute, regulation, or policy specifically describes a course of action. The irrigation district sought an interlocutory appeal on the district court’s Order denying its motion for summary judgment.

The Nebraska Supreme Court concluded that it had appellate jurisdiction to review the irrigation district’s assignment of error under § 25-1902(1)(d) because the motion at issue was based on the assertion of the district’s sovereign immunity, the denial of which does constitute an appealable order. Clark v. Sargent Irrigation Dist. stands for the proposition that a district court’s denial of a political subdivision’s motion for summary judgment asserting the PSTCA’s discretionary function exemption was a final appealable order under § 25-1902(1)(d).

E|S attorneys have vast experience and a deep understanding of the Nebraska Political Subdivision Torts Claim Act. Matt Reilly and E|S litigators can be reached at 402-397-2200. 

Nebraska Supreme Court Clarifies the Common Fund Doctrine

The common fund doctrine is a long held common law principle that allows recovery of reasonable attorney fees when legal services are used to recover money to which multiple people share an interest. The doctrine is typically applied where an insurance company makes a payment to its insured to cover certain out-of-pocket expenses. Then, when the insured files suit against the responsible party and recovers these out-of-pocket expenses, the insurance company has a right to recoup its earlier payments made pursuant to the policy, less the fees that the insured incurred to make that recovery.

While the doctrine has been around for decades, there still remain some gray areas in its application. One such gray area is whether the doctrine applies to an insurer's subrogation claim for medical payments under Neb. Rev. Stat. § 44-3,128.01. The Nebraska Supreme Court recently addressed that gray area and has provided some clarity.

In Hauptman O’Brien v. Auto-Owners Ins. Co., the insurer argued that an insurer who makes medical payments under an automobile liability policy is entitled to full reimbursement upon settlement of the case, without reduction for the attorney fees of the insured's lawyers. The basis for this argument was the insurer's position that § 44-3,128.01 preempts the common fund doctrine because the statute and doctrine were inconsistent and incompatible. The Court disagreed.

Applying rules of statutory construction, the Court found that is silent as to recovery of reasonable attorney fees under the common fund doctrine, and that by giving the insurer the right to recover medical payments in subrogation, the legislature did not necessarily rule out a reduction for attorney fees under the common fund doctrine. The Court decided that the legislature's silence in this regard meant that the common fund doctrine applies to allow for a reduction to account for attorney fees where a law firm secured a common fund in a pretrial settlement. The insurer was thus entitled to recover its $1,000 medical payment, less the 1/3 ($333) fee, to which the insured's counsel was entitled.

Thanks to law clerk Ross Serena for assistance in drafting this article. Matt Reilly and Erickson | Sederstrom’s litigation attorneys are ready to assist with a range of civil disputes and can be reached at 402-397-2200.