author: JUSTICE GRAY JUSTICE TRIEWEILER

text:
    KATHLEEN A. REYNOLDS, Plaintiff and Appellant, v. PACIFIC TELECOM, INC., a Washington Corporation, and NORTHWESTERN TELEPHONE, INC., an Oregon Corporation, Defendants and Respondents.
    No. 92-497.
    Submitted on Briefs February 4, 1993.
    Decided July 12, 1993.
    50 St.Rep. 809.
    259 Mont. 309.
    856 P.2d 1365.

      For Plaintiff and Appellant: Elizabeth A. Best, Best Law Offices, Great Falls.
    For Defendants and Respondents: C. Eugene Phillips, Murphy, Robinson, Heckathorn, & Phillips, Kalispell; Howard Rubin & Amy Alpern, Amburgey, Segel & Rubin, Portland, Oregon; Claren Neal, Montana Department of Labor and Industry, Helena.
   JUSTICE GRAY

delivered the Opinion of the Court.

Kathleen Reynolds appeals from an order of the Eleventh Judicial District Court, Flathead County, upholding the Board of Labor Appeals’ denial of unemployment insurance benefits. We affirm.

We restate the issues on appeal as follows:

1. Did the District Court err in concluding that the Board of Labor Appeals was properly constituted?

2. Did the District Court err in determining that the Board of Labor Appeals’ findings of fact were supported by substantial evidence?

3. Did the District Court err in determining that the Board of Labor Appeals properly disqualified Reynolds from receiving unemployment insurance benefits under § 39-51-2302, MCA?

Kathleen Reynolds (Reynolds) was employed by Northwestern Telephone Systems, Inc. (Northwestern Telephone), a division of Pacific Telecom, Inc., in Kalispell. Reynolds worked as a traffic supervisor in operator services.

In early 1990, Reynolds complained to Helen Shirtliff (Shirtliff), manager of operator services, and Ken Sprain (Sprain), division vice president, that supervisors were monitoring conversations between employees. She characterized the monitoring as a “public policy” violation. Reynolds asserts that Shirtliff reduced her job responsibilities in response to this complaint. Reynolds also complained to Shirtliff that supervisors had made false statements regarding an employee’s workers’ compensation claim, and that she had been denied the opportunity to make a statement. According to Reynolds, Shirtliff responded to this complaint by threatening to change the way in which work and vacation schedules were selected.

On June 19, 1990, Reynolds began a six-month medical leave of absence. Reynolds had developed depression, dysthymia and anxiety, which she attributed to Shirtliff’s retaliation. Her medical conditions were diagnosed as work-related. While on medical leave, Reynolds made a statement in support of the employee seeking workers’ compensation benefits. When her medical leave expired in December of 1990, Reynolds went on unpaid leave.

Early in 1991, Toni Welliver (Welliver) replaced Shirtliff as manager of operator services. Sprain also left his position as division vice president and was replaced by Ken Laing (Laing). When Reynolds learned of these changes in personnel, she obtained a medical release and returned to her position as a supervisor in operator services on February 11, 1991.

Reynolds’ conflicts with management personnel continued. Northwestern Telephone had begun assigning vacation and work schedules to supervisors in operator services on a rotating basis; the schedules previously had been assigned by seniority. Reynolds, who had the most seniority in her work pool, characterized the change as retaliation for the statement she made during her leave of absence regarding the workers’ compensation claim. Welliver also declined to implement Reynolds’ suggestion that the fire department’s telephone number be placed on a “quick list” of frequently called telephone numbers.

Reynolds complained to Laing about the continued monitoring of employee conversations and the handling of the workers’ compensation claim. On February 20, Reynolds asked Laing for help in obtaining compensation for the time that she was on unpaid leave. Laing responded that he would not recommend pursuing the compensation. Reynolds also inquired about a merit salary increase that she did not receive while on medical leave. Laing indicated that he did not know if she was entitled to the salary increase. Reynolds then asked Laing to terminate her employment with Northwestern Telephone. Reynolds subsequently took part in a conference call with Wes Carson, manager of employee relations, who suggested that she apply for long-term disability benefits. Reynolds declined to do so. On March 1, Reynolds submitted a letter of termination.

Reynolds filed a Claimant’s Discharge Statement with the Montana Department of Labor and Industry Unemployment Insurance Division on April 4, 1991. Reynolds asserted that Northwestern Telephone had “made work conditions intolerable causing severe anxiety and depression and ulcers.” Additionally, Reynolds asserted that she was fired for refusing to violate public policy and for reporting public policy violations.

On May 3, a claims specialist denied Reynolds’ application for unemployment insurance benefits. Reynolds appealed the decision to a Department of Labor and Industry appeals referee. The referee determined that Reynolds had terminated her employment for good cause and, therefore, was eligible to receive unemployment insurance benefits.

Northwestern Telephone appealed the referee’s decision to the three-member Board of Labor Appeals (the Board). On July 26,1991, the Board reversed the referee’s decision. Daniel Johns (Johns), the attorney member of the Board, abstained.

Reynolds requested that the Board reconsider its decision because she had not received notice of, and did not have the opportunity to participate in, the July decision. The Board granted Reynolds’request and held a hearing on October 8. The Board again reversed the referee’s decision, determining that Reynolds was disqualified from receiving unemployment insurance benefits. Johns again abstained.

Reynolds petitioned the District Court to review the Board’s decision. The District Court upheld the decision, determining, in pertinent part, that the Board was properly constituted, that the Board’s findings were supported by substantial evidence, and that the Board’s disqualification of Reynolds from receiving benefits was not erroneous under § 39-51-2302, MCA. This appeal follows.

Did the District Court err in concluding that the Board of Labor Appeals was properly constituted?

Johns, the attorney member of the Board, abstained from participating in the October 8 hearing due to a conflict of interest. Johns indicated that a pro tempore member would be appointed in the event that Joseph Thares and Stephen Birch, the remaining Board members, did not reach a consensus on Reynolds’ eligibility for unemployment insurance benefits. Thares and Birch both signed the Board’s decision denying unemployment insurance benefits.

The District Court concluded that the Board was properly constituted when it denied Reynolds benefits. On appeal, Reynolds reasserts her argument that the Board was not properly constituted. We review a district court’s conclusion of law to determine whether the court’s interpretation of the law is correct. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601, 603.

We agree with Reynolds that § 2-15-1704(3), MCA, establishes a three-member Board and § 2-15-124(1), MCA, requires that one member of the Board be a licensed attorney. We disagree, however, with her contention that these statutes require all three members, including the attorney member, to participate in the decision.

In construing statutes, courts are to ascertain what is in terms or in substance contained within the statute; they may not insert what has been omitted or omit what has been inserted. Section 1-2-101, MCA. No language in §§ 2-15-1704(3) or 2-15-124(1), MCA, requires the participation of all three members, or the attorney member, in every case before the Board.

Furthermore, statutes must be construed to give effect to all provisions wherever possible. Section 1-2-101, MCA. Under § 2-15-124(8), MCA, a majority of the membership of the Board of Labor Appeals constitutes a quorum for the purpose of conducting business and at least a majority vote of all members of the Board is required to adopt a decision. A majority of the three-member Board is two members. Nothing in § 2-15-124(8), MCA, requires that the attorney member be one of the members making up the quorum; nor does the statute require the attorney member’s vote to adopt a decision of the Board. We decline to construe §§ 2-15-1704(3), and 2-15-124(1), MCA, as Reynolds suggests. Requiring all three members, including the attorney member, to participate in a decision would vitiate § 2-15-124(8), MCA, which requires only a majority of the Board’s members to constitute a quorum to do business and a majority vote of all members to adopt a decision.

The composition of the Board of Labor Appeals complied with §§ 2-15-1704(3), 2-15-124(1), and 2-15-124(8), MCA, when the Board determined that Reynolds was disqualified from receiving unemployment insurance benefits. We hold that the District Court did not err in concluding that the Board of Labor Appeals was properly constituted.

Did the District Court err in determining that the Board of Labor Appeals’ findings of fact were supported by substantial evidence?

A district court’s review of a decision of the Board of Labor Appeals is limited by § 39-51-2410(5), MCA, which provides:

In any judicial proceeding under 39-51-2406 through 39-51-2410, the findings of the board as to the facts, if supported by evidence, and in the absence of fraud, shall be conclusive and the jurisdiction of said court shall be confined to questions of law.

A finding is supported by evidence if it is supported by substantial evidence. Substantial evidence is more than a scintilla of evidence, but it may be less than a preponderance of the evidence. Ward v. Johnson (1990), 242 Mont. 225, 228, 790 P.2d 483, 485.

Pursuant to § 39-51-2410(5), MCA, a district court is not permitted to balance conflicting evidence in support of and in opposition to the Board’s findings, determine which is the more substantial evidence, or consider where the preponderance of the evidence lies. To do so would substitute the district court’s view of the evidence for that of the Board, effectively nullifying the conclusive nature of the Board’s findings provided by § 39-51-2410(5), MCA. Ward, 790 P.2d at 485.

This Court’s review of the Board’s findings is governed by the same standard. Zimmer-Jackson v. Department of Labor and Indus. (1988), 231 Mont. 357, 360, 752 P.2d 1095, 1098. Accordingly, we review the record to determine whether substantial evidence supports the Board’s findings.

The Board made the following finding regarding Reynolds’ complaint that other supervisors violated “public policy” by monitoring conversations between employees:

The Board of Labor Appeals feels that the charge of illegal monitoring of conversations is questionable. Listening to others [sic] conversations may be immature and even unethical, but it is not a violation of the wiretap laws or F.C.C. regulations. If the claimant felt strongly about the practice other remedies to the situation were available. None of the employees whose conversations were listened to complained about the practice and no known grievance was filed.

Reynolds first contends that the absence of employee complaints or grievances is unsupported in the record. Because she concedes that their existence is not particularly relevant in determining whether she had good cause to leave her employment, we need not review the record for substantial evidence to support the finding that no employee complained or filed a grievance about the monitoring.

Reynolds also contends that this finding, as a whole, does not address the gravamen of her claim, which is that she left her employment for good cause because she was subjected to retaliation. According to Reynolds, Northwestern Telephone retaliated in response to this complaint by reducing job responsibilities, changing the assignment of work and vacation schedules, and denying a merit salary increase. The only retaliation which is even arguably supported by the record is Shirtliff’s reduction of Reynolds’ job responsibilities prior to her June, 1990, medical leave. This alleged retaliation predates Reynolds’ return to work in February of 1991 under a new manager and her subsequent resignation. Thus, it does not form a basis for her claim that she had good cause to leave her employment on March 1, 1991.

The Board made the following finding concerning Reynolds’ complaint that Northwestern Telephone had mishandled a workers’ compensation claim:

The claimant was also upset that in her view the company failed to respond properly to a workers [sic] compensation claim. Testimony from the claimant reveals that when she was asked who was responsible for filing the companies [sic] answer to the claim she responded that her responsibility was to report the incident to her manager and that she didn’t know where the claim went from there. Her testimony also indicates that some months prior to her termination she provided a statement of the incident to both the union representative and to company management. The burden of filing and following up on the industrial accident claim falls on he [sic] injured workman and his union.

Reynolds contends that this finding ignores Northwestern Telephone’s retaliatory response to her workers’ compensation statement. According to Reynolds, Northwestern Telephone terminated her leave on December 5 after it learned of her statement instead of allowing the six-month leave to expire on December 19. Other evidence of record, however, refutes this testimony. A letter written by Robert Kemp, employment manager of Pacific Telecom, Inc., Northwestern Telephone’s parent company, indicates that Reynolds was notified in December that she would be placed on unpaid leave effective December 20. The Kemp letter was admitted as an exhibit before the Board, without objection, and constitutes substantial evidence for the Board to disregard Reynolds’ allegation that Northwestern Telephone responded to her workers’ compensation statement by terminating her medical leave.

The Board made the following finding regarding Reynolds’ suggestion that the fire department’s telephone number be added to the “quick list”:

The claimant also stated she incurred additional stress when her suggestion that the fire departments [sic] telephone number be returned to the “quick lists” was not acted upon. For reasons of their own management elected not to implement her suggestion. They are not bound to put into practice every employee suggestion however worthy that suggestion might be. Final decisions are a management prerogative.
About two weeks after returning to work the claimant felt the prior stress situations had not gone away and tendered her resignation.

Reynolds contends that no evidence of record supports the finding that she terminated her employment because she was unhappy that her suggestion was not implemented. However, Reynolds testified that she was upset when Welliver declined to implement her suggestion and that she terminated her employment on March 1 when Laing did not respond to this and other concerns. We determine that substantial evidence supports the finding that she terminated her employment in part because she was unhappy that her suggestion was not implemented.

Reynolds also contends that this finding failed to address Northwestern Telephone’s retaliatory response to her suggestion. According to Reynolds, Northwestern Telephone responded by withdrawing job responsibilities and benefits. Nothing in the record supports Reynolds’ assertion that the Company retaliated in response to this suggestion. Therefore, it was unnecessary for the Board to address the alleged retaliation relating to this suggestion.

The Board made the following finding regarding the change in vacation and shift scheduling:

Claimant was also opposed to the new procedure in scheduling work shifts and vacation scheduling. Management must have the flexibility to decide these matters. None of the other employees affected by the changes complained about the practice or the method of notification.

Reynolds again contends that the Board failed to consider the change in scheduling as a retaliatory response to her complaint that other supervisors had made false statements regarding a workers’ compensation claim and to her own statement regarding the claim. However, other evidence of record indicates that the scheduling changes were not related to Reynolds in any way. The Kemp letter indicates that the change in scheduling resulted from a business decision. According to the letter, the assignment of vacation and work schedules on a rotating basis met the needs of Northwestern Telephone and complied with its policies. The letter also indicates that Northwestern Telephone contemplated changing the scheduling of vacation and work shifts as early as 1989, prior to Reynolds’ workers’ compensation statement. Because this evidence refutes Reynolds’ assertion that Northwestern Telephone changed the scheduling in retaliation for her actions, the Board could disregard the assertion.

The Board made the fohowing finding regarding Northwestern Telephone’s reaction to Reynolds’ request to terminate her employment:

When management learned of her planned resignation they initiated a series of conference calls in an attempt to have her accept long term disability instead. She declined the offers and resigned her employment.

Reynolds contends that the record does not support the finding that management initiated the conference calls concerning the long-term disability. We disagree. Reynolds testified that she was placed on three conference calls with Wes Carson after she requested Laing to terminate her employment and that Carson suggested that she go on long-term disability.

Reynolds also contends that this finding ignores her rationale for declining to accept long-term disability. According to Reynolds, unrefuted testimony established that long-term disability would result in a substantial loss of pay, terminate in two years, and not guarantee employment at its expiration. Reynolds also asserts that long-term disability would have been used as a device to terminate her employment. Reynolds’ reasons for declining to go on long-term disability, however, do not form a basis for her claim that she left her employment with good cause. Accordingly, the Board did not have to consider those reasons in the above finding.

Finally, the Board made the following finding concerning the conditions of Reynolds’ employment after she returned to work:

The Board feels that the claimant was not treated differently than others in the work group and that the pay and conditions were substantially the same as before her medical leave and continuing employment was available.

Reynolds contends that other evidence of record contradicts this finding. While this may be true, we have discussed above our scope in reviewing findings of the Board, which is to review the record only to determine whether the finding is supported by substantial evidence. See § 39-51-2410(5), MCA; Ward v. Johnson (1990), 242 Mont. 225, 228, 790 P.2d 483, 485. The Kemp letter, which reflects that Reynolds was not treated differently than other supervisors in operator services, constitutes substantial evidence that supports this finding.

We hold that the District Court did not err in determining that the Board’s findings were supported by substantial evidence.

Did the District Court err in determining that the Board of Labor Appeals properly disqualified Reynolds from receiving unemployment insurance benefits under § 39-51-2302, MCA?

The Board of Labor Appeals determined that Reynolds was disqualified from receiving unemployment insurance benefits. The District Court determined that the Board’s denial of unemployment insurance benefits was not erroneous under § 39-51-2302, MCA. Section 39-51-2302, MCA, provides in pertinent part:

Disqualification for leaving work without good cause.
(1) An individual shall be disqualified for benefits if he has left work without good cause attributable to his employment.
(2) He may not be disqualified if the department finds that he left his employment because of personal illness or injury not associated with misconduct upon the advice of a licensed and practicing physician and, after recovering from his illness or injury when recovery is certified by a licensed and practicing physician, he returned to his employer and offered his service and his regular or comparable suitable work was not available, if so found by the department, provided he is otherwise eligible.

Reynolds advances three separate arguments as to why she was not disqualified from receiving benefits under § 39-51-2302, MCA.

Reynolds first contends that she is not disqualified because she left work with good cause as defined in § 24.11.457, ARM. Section 24.11.457, ARM, provides in pertinent part:

(1) A claimant has left work with good cause attributable to employment if:
(a) compelling reasons arising from the work environment caused the claimant to leave;
(b) the claimant attempted to correct the problem in the work environment; and
(c) the claimant informed the employer of the problem and gave the employer a reasonable opportunity to correct it;
(d) the claimant left work which the department determines to be unsuitable under 39-51-2304, MCA.
(2) The term “compelling reasons” as used in this rule includes but is not limited to:
(a) undue risk of injury, illness, physical impairment, or reasonably foreseeable risks to the claimant’s morals;
(b) unreasonable actions by the employer concerning hours, wages, terms of employment or working conditions, including, but not limited to, unilaterally imposed reductions of 20% or more in the claimant’s customary wages or hours. ...

Reynolds asserts that Northwestern Telephone responded to her complaints by reducing job responsibilities, changing the method of selecting work and vacation schedules, shortening her medical leave of absence, and denying a merit salary increase. According to Reynolds, these alleged acts of retaliation created an undue risk of illness and constituted unreasonable actions on the part of Northwestern Telephone concerning hours, wages, terms of employment or working conditions. On that basis, Reynolds contends that she had compelling reasons and, therefore, good cause to leave her employment under § 24.11.457, ARM.

The existence of a compelling reason, in itself, is not sufficient to constitute good cause under § 24.11.457, ARM. That rule also requires the employee to give the employer a reasonable opportunity to correct the problem before the employee can be considered to have left employment with good cause.

Here, even assuming that “compelling reasons” existed, Reynolds failed to give Northwestern Telephone a reasonable opportunity to address her complaints. Reynolds returned from her leave of absence on February 11. According to her testimony, she requested Laing, the new district vice president, to terminate her employment on February 20 when he indicated that he would not recommend that she receive compensation for her unpaid leave and did not know whether she should receive a merit salary increase. Reynolds farther testified that she terminated her employment on March 1, when Laing “did not have any answers” to her concerns regarding the workers’ compensation claim, the monitoring of employees’ conversations, and the “quick list.” Reynolds terminated her employment less than three weeks after returning to work.

The Kemp letter substantiates Reynolds’ failure to give management a reasonable opportunity to address her concerns. The letter indicates that Northwestern Telephone had thoroughly investigated Reynolds’ complaints and remained willing to continue its dialogue with her. Furthermore, the letter indicates that Laing was in the process of responding to her request for a merit salary increase when she submitted her letter of termination. We conclude that Reynolds did not have good cause to leave her employment under § 24.11.457, ARM, because she failed to give the new management a reasonable opportunity to address her concerns. On that basis, Reynolds properly was disqualified from receiving benefits under § 39-51-2302(1), MCA, which permits disqualification when an employee leaves work without good cause attributable to the employment.

Reynolds also contends that she left her employment on June 19, 1990, on the advice of a physician and that her regular or comparable work was not available when she returned from the leave of absence on February 11,1991. According to Reynolds, the same or comparable work was not available because she had not been restored job responsibilities, had not been given a merit salary increase and could no longer select work and vacation schedules on the basis of seniority. On that basis, Reynolds contends that she should not have been disqualified from receiving unemployment insurance benefits under § 39-51-2302(2), MCA.

Section 39-51-2302(2), MCA, provides that a claimant may not be disqualified from receiving unemployment insurance benefits if the claimant has left employment on the advice of a physician and the same or comparable suitable work is unavailable when the claimant recovers. We note first, in this regard, that in neither her Claimant’s Discharge Statement nor her Claimant’s Response to Employer Statement did Reynolds claim that she left Northwestern Telephone because work comparable to that she performed prior to her leave was not available. Furthermore, as discussed above, Reynolds returned to work as a traffic supervisor in operator services, the position she held prior to her leave. The work duties were essentially the same as when she left. The changes asserted by Reynolds do not render her post-leave employment substantially different from her employment prior to her leave.

Finally, Reynolds contends that she should not have been disqualified from receiving the benefits under § 39-51-2302(2), MCA, because she continued to suffer from her medical condition when she submitted her letter of termination on March 1. While she may or may not have been suffering from the same medical condition, we disagree that § 39-51-2302(2), MCA, precludes disqualification on these facts.

Nothing on the record before us indicates that Reynolds left her employment on March 1 on “the advice of a licensed and practicing physician;” nor did she subsequently return and offer her services. Because Reynolds failed to meet these two statutory conditions, we conclude that § 39-51-2302(2), MCA, does not bar her disqualification from receiving unemployment insurance benefits.

We hold that the District Court properly determined that the Board of Labor Appeals’ disqualification of Reynolds from receiving unemployment insurance benefits was not erroneous under § 39-51-2302, MCA.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON, McDONOUGH and WEBER concur.

JUSTICE TRIEWEILER

dissenting.

I dissent from the majority opinion.

Section 2-15-1704, MCA, establishes a Board of Labor Appeals. Subsection (4) of that statute designates the board as a “quasi-judicial board for purposes of 2-15-124.”

Section 2-15-124, MCA, provides that:

If an agency is designated by law as a quasi-judicial board for the purposes of this section, the following requirements apply:
(1) The number of and qualifications of its members are as prescribed by law. In addition to those qualifications, unless otherwise provided by law, at least one member shall be an attorney licensed to practice law in this state.
(8) A majority of the membership constitutes a quorum to do business. A favorable vote of at least a majority of all members of a board is required to adopt any resolution, motion, or other decision, unless otherwise provided by law.

It is obvious that when the Legislature established a requirement that quasi-judicial boards include an attorney, it was concerned that boards which decide legal as well as factual issues have the benefit of at least one member who is trained in the law.

In this case, it is stipulated by the parties that Dan Johns, who was the board’s chairman and its only attorney, was neither present for Kathleen Reynolds’ hearing, nor participated in the board’s determination of her rights. Therefore, the board which denied Reynolds’ claim was not properly constituted, as is required under § 2-15-124(1), MCA.

The majority has set forth the proper rule for construing this statute, but then completely ignores the rule in arriving at its conclusion. Section 1-2-101, MCA, provides that “[i]n the construction of a statute ... [wjhere there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all.”

The only way to construe § 2-15-124, MCA, in a way that gives effect to both subsections (1) and (8), is to hold that while a majority of a quasi-judicial board can constitute a quorum, and while a vote of at least a majority of the members is sufficient to render a decision, the decision is not binding unless an attorney licensed to practice law participated in the decision. If one of the two members constituting a quorum is an attorney, the third member need not be present. So long as an attorney is present for the hearing and deliberations, he or she need not vote for the final decision, so long as there are two other votes in support of that decision.

This construction of § 2-15-124, MCA, is the only way to give effect to both subsections (1) and (8).

In addition to ignoring the rule of statutory construction which it held is controlling, the majority opinion also ignores the following rule of statutory construction:

In the construction of a statute, the intention of the legislature is to ■be pursued if possible. When a general and particular provision are inconsistent, the latter is paramount to the former, so a particular intent will control a general one that is inconsistent with it.

Section 1-2-102, MCA.

The requirement that two members of a three person board are necessary to constitute a quorum and that two out of three votes are necessary to render a decision is a general requirement. The requirement that one of the members of the three member board be an attorney is a specific requirement. In this case, the majority ignored legislative intent and elevated the general provisions pertaining to a quorum and a majority over the specific requirement that an attorney be a member of the Board of Labor Appeals.

The majority opinion completely defeats the Legislature’s intention that when boards such as this one decide the legal rights of Montana’s citizens, they include a member who has some working familiarity with Montana’s laws. Kathleen Reynolds did not have the benefit of that reasonable requirement. Therefore, I dissent from the majority opinion. I would reverse the judgment of the District Court.

JUSTICE HUNT joins in the foregoing dissent.


source: Caselaw Access Project

author: JUSTICE GRAY

license: Public Domain

text:
    TEAL, INC., a corporation d/b/a COOK TRAVEL, Plaintiff and Respondent, v. BARBARA WIEDRICH, Defendant and Appellant.
    No. 92-613.
    Submitted on Briefs June 17, 1993.
    Decided July 13, 1993.
    50 St.Rep. 816.
    259 Mont. 323.
    856 P.2d 543.

      For Defendant and Appellant: Donna K. Davis, Matovich, Addy & Keller, Billings.
    For Plaintiff and Respondent: Earl J. Hanson, Hanson & Todd, Billings; Richard S. Mandelson, Baker & Hostetler, Denver, Colorado; Laurence R. Martin, Randall G. Nelson, Felt, Martin Frazier & Lovas, Billings; and John L. Pratt, Ask & Pratt, Roundup.
   JUSTICE GRAY

delivered the Opinion of the Court.

Barbara Wiedrich appeals from an order entered by the Thirteenth Judicial District Court, Yellowstone County, dismissing the action against her with prejudice but awarding no attorney’s fees. We affirm.

The issue on appeal is whether the District Court abused its discretion when, in dismissing the action against defendant, it refused to award her attorney’s fees.

Defendant/appellant Barbara Wiedrich was a travel agent and officer manager at Rainbow Travel, Inc. (Rainbow), a travel agency in Billings, Montana. Dale and Joan Galles (collectively, Galles) were the sole stockholders of Rainbow. Late in 1991, Teal, Inc. (Teal), doing business as Cook Travel, entered into negotiations with Galles to purchase all of Rainbow’s issued and outstanding stock; Ted Fink negotiated on behalf of Teal. The parties met several times and exchanged draft buy-sell agreements. Rainbow’s employees did not have employment contracts and, essentially, worked under month-to-month employment arrangements. Thus, Rainbow and Galles could not guarantee that the employees would “transfer” to Cook Travel after Teal’s purchase of Rainbow; it was Fink’s understanding, however, that those employees would move to the Cook Travel offices.

On the morning of January 2, 1992, the proposed closing date for the stock sale, both Dale Galles and Fink discovered for the first time that Wiedrich and another employee, Mary Goffena, had resigned their employment with Rainbow pursuant to letters dated December 27,1991. It was later ascertained that Wiedrich had accepted employment with a competitor travel agency, Boardwalk Travel, on December 27, to begin on January 2, 1992. Fink and Galles also discovered that on December 30, subsequent to her resignation letter but while still employed by Rainbow, Wiedrich had mailed a letter to Rainbow’s customers informing them of the sale, enclosing each customer’s frequent flyer information accumulated by Rainbow, and advising that she would “call you after the 1st of January.” The letter was not authorized by Galles and, given Wiedrich’s resignation from Rainbow, it was clear that any follow-up calls by Wiedrich would not be made from either Rainbow or Cook. Teal refused to close on the purchase of the Rainbow stock.

On February 4, 1992, Teal filed suit against The Travel Company of Montana, Inc. (doing business as Boardwalk Travel) and its manager M. Kathleen Rice, Mary Goffena and Barbara Wiedrich. The complaint alleged intentional interference with business relationships and tortious interference with the proposed sale and purchase of Rainbow by virtue of specified acts and misconduct, including Wiedrich’s letter to Rainbow’s customers. On May 15, Teal dismissed defendant Goffena without prejudice pursuant to Rule 41(a)(1), M.R.Civ.R On July 10, Teal and defendants The Travel Company and M. Kathleen Rice stipulated to dismissal with prejudice, stating that the action between those parties was fully and finally settled; the court ordered the dismissal.

On September 10, 1992, Teal moved to dismiss Wiedrich without prejudice pursuant to Rule 41(a)(2), M.R.Civ.R; it later converted the motion to one for dismissal with prejudice. Wiedrich objected to dismissal unless “curative conditions,” including her attorney’s fees, were imposed. The District Court dismissed the action against Wiedrich with prejudice, but awarded no attorney’s fees. This appeal followed.

Did the District Court abuse its discretion when, in dismissing the action against defendant, it refused to award her attorney’s fees?

The District Court dismissed the action against Wiedrich with prejudice pursuant to Rule 41(a)(2), M.R.Civ.R, but refused to award Wiedrich attorney’s fees. Wiedrich asserts error, relying on Petritz v. Albertsons, Inc. (1980), 187 Mont. 102, 608 P.2d 1089, and federal cases interpreting the identical Federal Rule of Civil Procedure.

Rule 41(a)(2), M.R.Civ.P., provides in pertinent part:

[A]n action shall not be dismissed at the plaintiff’s instance save upon order of the court and upon such terms and conditions as the court deems proper. ... Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice.

The wording of the rule is clear that appropriate terms and conditions on dismissal by order of the court are matters within the court’s discretion. Indeed, we have determined that, in granting a motion for voluntary dismissal under Rule 41(a)(2), a district court “is vested with wide discretion in determining what conditions may attach to the dismissal!;]” a court may require the payment of costs and attorney’s fees or it may choose to impose no conditions at all. Petritz, 608 P.2d at 1092. Our standard in reviewing discretionary trial court rulings is whether the court abused its discretion. Steer, Inc. v. Dep’t of Revenue (1990), 245 Mont. 470, 475, 803 P.2d 601, 604.

Here, the District Court dismissed with prejudice and required Teal to pay Wiedrich’s costs. Under the facts and record before us, we cannot conclude that the court abused its discretion in refusing to award attorney’s fees.

The District Court’s refusal to award attorney’s fees was based in large part on its determination that Teal had at least a colorable claim against Wiedrich and, thus, that the litigation could not be deemed frivolous. Wiedrich challenges a number of the allegations contained in Teal’s complaint against her as either known misrepresentations or so lacking in foundation that reasonable investigation prior to filing the complaint would have indicated that they were baseless. On this basis, she strenuously asserts that Teal’s complaint constituted abusive and harassing litigation for which she was entitled to attorney’s fees upon voluntary dismissal, relying primarily on federal cases interpreting Rule 41(a)(2) of the Federal Rules of Civil Procedure. See, e.g., Klar v. Firestone Tire & Rubber Co. (S.D.N.Y. 1953), 14 F.R.D. 176; Bishop v. West American Ins. Co. (N.D.Ga. 1982), 95 F.R.D. 494.

We agree with Wiedrich that the “upon such terms and conditions as the court deems proper” language in Rule 41(a)(2) is intended to end “abusive practices whereby defendants were put to expense by plaintiffs who had no real object in mind other than ... harassment.” Klar, 14 F.R.D. at 176. Stated differently, a purpose of awarding curative relief under the rule is “to deter vexatious litigation.” Bishop, 95 ER.D. at 495.

The flaw in Wiedrich’s argument is that it ignores the District Court’s determination that Teal had at least a colorable claim against her and, therefore, that the litigation could not be deemed frivolous. Wiedrich does not specifically challenge or attack this determination; moreover, the record contains sufficient evidence to support a determination that at least an arguable case could be made that Wiedrich interfered with Teal’s contractual relationship and prospective business advantage with regard to the purchase of Rainbow’s stock when she wrote the letter to Rainbow customers stating that she would contact them after January 1, 1992. The District Court’s determination, together with its corresponding determination that the claim could not be deemed frivolous, in essence constitutes a determination that the litigation was not harassing or vexatious and removes this case from the ambit of those where attorney’s fees were properly awarded for harassing or vexatious litigation.

Bishop and KLar, relied on by Wiedrich, are appropriate authority for the salutary purposes of Rule 41(a)(2). However, they do not support Wiedrich’s position that she is entitled to attorney’s fees here. The issue in Bishop was whether “costs” under the rule were limited to statutory taxable costs or included removal costs; thus, Bishop is inapposite on the facts. In KLar, the trial court determined that “[n]o such abusive intent appears in the instant case,” dismissed the action without prejudice so that plaintiff could commence a new action in Ohio, and awarded costs and a minimal attorney’s fee. KLar, 14 F.R.D. at 176-77. KLar bears some similarity to the case before us in that neither involved abusive intent or vexatious litigation; in KLar, however, the action was dismissed without prejudice. Nothing in KLar provides authority for Wiedrich’s claim of entitlement to attorney’s fees here, particularly in light of the broad discretion vested in trial courts under Rule 41(a)(2), M.R.Civ.R, and Petritz.

Nor does Petritz, the leading Rule 41(a)(2) case in Montana, support Wiedrich’s position. In Petritz, the plaintiff moved for voluntary dismissal without prejudice on the day before trial, some twenty months after the complaint was filed and after extensive pretrial discovery and trial preparation by the defense. The court ordered the dismissal without prejudice. We determined, “in view of the lateness of plaintiff’s motion for dismissal, and the extensive preparation on the part of the defense” that the district court should have attached a more reasonable award of attorney’s fees as a condition to the dismissal. Petritz, 608 P.2d at 1094.

The facts now before us differ significantly from those in Petritz. Here, Teal moved for dismissal seven months after filing the complaint and eight and one-half months before the case was scheduled for trial. In addition, discovery was relatively limited here as compared to the extensive discovery and pretrial motions, hearings and trial preparation undertaken by the defendant in Petritz. We also note that the Petritz action was dismissed without prejudice and the plaintiff therein filed another action six weeks later.

We hold that the District Court did not abuse its discretion when, in dismissing the action against defendant, it refused to award her attorney’s fees.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES HUNT, NELSON and WEBER concur.


author: JUSTICE HARRISON

text:
    MICHELLE CHAPMAN, Claimant and Appellant, v. RESEARCH COTTRELL, Employer, and NATIONAL UNION FIRE LOSS OF PITTSBURGH, Defendant and Respondent.
    No. 93-043.
    Submitted on Briefs May 27, 1993.
    Decided July 13, 1993.
    50 St.Rep. 819.
    259 Mont. 329.
    856 P.2d 234.

      For Claimant and Appellant: Don Edgar Burris, Billings.
    For Defendant and Respondent: William J. Mattix, Crowley, Haughey, Hanson, Toole & Dietrich, Billings.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from an order of the Workers’ Compensation Court, denying appellant’s claims for medical payments, statutory penalties, costs, and attorney’s fees. We affirm.

Appellant Michelle Chapman (Chapman) was injured on May 16, 1989, while in the course and scope of her employment as a laborer for Research Cottrell at Colstrip, Montana. She fell twelve feet from a cooling tower and sustained injuries to her right arm and shoulder and to her neck and back. The insurer has paid temporary total disability benefits to Chapman since May 25, 1989. At the time this appeal was filed she was 24 years old and had not returned to work.

In June 1989, Dr. Richard Nelson, a neurologist, diagnosed Chapman’s injuries as cervical and lumbosacral sprain. At first, the insurer refused to pay for Dr. Nelson’s services, on the grounds that it had not authorized this treatment. Chapman filed a petition with the Workers’ Compensation Court, which determined that the insurer was not liable for services rendered by Dr. Nelson. We reversed the Workers’ Compensation Court because the evidence demonstrated that Dr. Nelson should be recognized as Chapman’s treating physician, pursuant to A.R.M. 24.29.1403. Chapman v. Research Cottrell (1991), 248 Mont. 353, 811 P.2d 1283.

Dr. Nelson is still Chapman’s treating physician. He has referred her to other specialists, including Drs. Thomas Johnson and Robert Snider, orthopedic surgeons. These doctors referred Chapman for physical therapy in January 1990. She was evaluated at the Physical Therapy and Sports Medicine Center in Billings on January 10,1990, and for the next eight months was treated at the Center with moist heat, ultrasound, and resistance exercises. Therapy was administered by Susan Zimmerman, an occupational therapist.

In August 1990, Chapman began an independent exercise program at the Billings YMCA. Zimmerman testified that Chapman had a prescription for this program, though she could not recall who had written it, and that she had designed the exercise program, which consisted of water exercises, free weights, and some Nautilus equipment. In September and October, 1990, Zimmerman testified, Chapman visited the Physical Therapy and Sports Medicine Center to use an “upper body ergometer” prescribed by Dr. Snider. Zimmerman had no records showing that Chapman had visited the Center or used the upper body ergometer between October 1990 and July 1991. The insurer paid all the costs of Chapman’s therapy during this period, including the cost of her YMCA membership.

In July 1991, Chapman moved briefly to Florida, where her mother lived. Her lawyer notified the insurer’s adjusting agent, Crawford and Company (Crawford) in June that Chapman was moving to Florida. He enclosed a prescription from Dr. Nelson for continuation of her swim therapy. In September 1991, Chapman’s lawyer wrote again to Crawford, stating that Chapman had not been able to continue her therapy because “there has been no approval for use of gym facilities in Florida.” Later that month, Crawford received a bill from a health club in Crystal River, Florida, for four months membership for Chapman. Crawford paid this bill in November 1991, but by then Chapman had returned to Montana without usingthe health club.

Dr. Nelson saw Chapman on November 21, 1991, and reported in his notes that she had not been doing well, due to increasing stiffness of her neck and shoulder. He stated that she needed “about six months therapy with a program of exercise” and wrote a new prescription for water exercise, mentioning the YMCA specifically. The Billings YMCA, however, refused to give Chapman a membership without six months payment in advance. Chapman’s lawyer forwarded the prescription to Crawford for authorization and payment, but without specifying the amount due. In December he sent Crawford the YMCA’s bill for $290, covering six months membership. Crawford responded by stating that the insurer would pay for a physical therapy program only if it were supervised by a registered physical therapist.

Dr. Nelson examined Chapman again on January 31, 1992. His notes indicate that she “has not had any swimming or physical therapy programs ... at the Y which we had previously asked for,” and that she was still experiencing pain and a restricted range of motion with her right arm. He concluded that “the patient requires a formal and active program of intervention with swim therapy, walking, stretching, whirlpool and jacuzzi and a deep massage program.”

On March 5, 1992, Chapman filed a petition for hearing in the Workers’ Compensation Court, complaining that the insurer had unreasonably refused payment for her therapy at the health club in Florida and at the Billings YMCA after she returned from Florida. A hearing was held on May 12, 1992, on the issues of what constitutes reasonable medical treatment in terms of physical therapy and whether the insurer was liable for the 20 percent penalty authorized by § 39-71-2907, MCA (1987), and for costs and attorney’s fees. Occupational therapist Susan Zimmerman was the only witness who testified. The hearing examiner eventually decided all three issues in favor of the insurer.

In the meantime, Chapman returned to Zimmerman on March 13, 1992. Zimmerman provided eight treatments and then enrolled her in a swim therapy program at Rocky Mountain College, prescribed by Dr. Nelson on April 2, 1992. The insurer paid the costs of the treatment and the swim therapy program.

On July 2, 1992, the insurer advised Chapman that it would pay for a “structured, monitored physical therapy program” and that such a program was available through Health Partners, which is sponsored jointly by the Billings YMCA and the Deaconess Medical Center of Billings. Apparently in response to this letter, Chapman enrolled in Health Partners in July, but without notifying the insurer. In September, Health Partners notified the insurer that Chapman had completed two months of therapy and would no longer need the supervision of a physical therapist. The insurer paid the cost of the supervised therapy with Health Partners and authorized an extended conditioning program that would allow Chapman to work more independently but with periodic review by a physical therapist.

The Workers’ Compensation Court adopted the hearing examiner’s findings of fact and conclusions of law and entered judgment on December 24,1992. It determined that Chapman was not entitled to medical payments for the YMCA membership prescribed by Dr. Nelson in November 1991, and that she was not entitled to statutory penalties or to costs and attorney’s fees. Chapman appealed.

The issues raised by Chapman on appeal are the same as those addressed by the Workers’ Compensation Court in May 1992. We have restated them as follows:

1. Whether Chapman’s proposed exercise at the health club in Florida and at the Billings YMCA constituted reasonable physical therapy, compensable as a reasonable and necessary medical expense under § 39-71-704, MCA (1987).
2. Whether the Workers’ Compensation Court erred in denying Chapman a 20 percent penalty under § 39-71-2907, MCA (1987).
3. Whether the Workers’ Compensation Court erred in denying Chapman costs and attorney's fees.

Two standards of review govern our decision in this case. First, we will not overturn factual findings of the Workers’ Compensation Court if they are supported by substantial, credible evidence in the record. Field v. Sears, Roebuck & Co. (1993), [257 Mont. 81], 847 P.2d 306, 310. Second, we will uphold the court’s conclusions of law if its interpretation of the law is correct. Plooster v. Pierce Packing Co. (Mont. 1993), 846 P.2d 976, 978, 50 St. Rep. 59, 60; Steer, Inc. v. Dep’t of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.

I

Did Chapman’s proposed exercise at the health club in Florida and at the Billings YMCA constitute reasonable physical therapy, compensable as a reasonable and necessary medical expense under § 39-71-704, MCA?

The Workers’ Compensation Court concluded that as the insurer eventually paid for a health club membership in Florida, the only dispute between the parties was whether the “two month unsupervised YMCA membership” prescribed by Dr. Nelson was “reasonable physical therapy” for which the insurer should pay. The court also concluded that Chapman was not entitled to a medical payment for the “two months of unsupervised YMCA membership prescribed by her physician on November 21, 1991, which [Chapman] failed to use.” These conclusions were based on the following findings of fact:

7. Claimant returned to Billings from Florida and on November 21,1991, she was again examined by Dr. Nelson.... Dr. Nelson gave claimant a prescription for six months of exercise therapy at the Billings YMCA....
8. Dr. Nelson examined claimant again on January 31, 1992. He noted that she had not carried out his request for an unsupervised exercise program at the YMCA, so he prescribed a formal and active physical therapy program. Claimant was not deposed and she failed to appear at trial which made it difficult to judge her credibility or to fully understand why she failed to appear at the YMCA for the exercise program prescribed by Dr. Nelson on November 21, 1991. After her January 31, 1992 visit, she did participate in the supervised program of occupational therapist Susan Zimmerman, which defendant accepted and paid.

The Workers’ Compensation Court apparently misread the record in characterizing the case as a dispute between Chapman and the insurer over “two months of unsupervised YMCA membership.” Chapman requested payment for a six-month YMCA membership in December 1991. This membership presumably would have provided therapy for her through June 1992, but the insurer refused to pay for that membership and did not pay for any therapy until March 1992, when Chapman resumed treatment under Zimmerman’s supervision. Chapman therefore had no access to the prescribed water exercise or to any therapeutic program from the time Dr. Nelson saw her in November 1991 until she went back to Zimmerman on March 13, 1992, a period of almost four months.

Moreover, it is not clear that Dr. Nelson intended the “program of exercise” he prescribed in November 1991 to be unsupervised, as the Workers’ Compensation Court inferred. Zimmerman testified that to her, “program of exercise” meant treatment supervised by a therapist. She also testified that she would not recommend unsupervised exercise for a person in Chapman’s condition who had had no therapeutic exercise for several months. Dr. Nelson did not testify. Thus, the question is not whether the insurer should have paid for therapy that Chapman never attempted, but whether unsupervised exercise at the YMCA was reasonable physical therapy, compensable as a reasonable and necessary medical expense under § 39-71-704, MCA.

We conclude that substantial, credible evidence supports the insurer’s view that unsupervised exercise was not reasonable physical therapy for Chapman after she returned from Florida in November 1991. We hold, therefore, that the insurer did not act unreasonably in refusing to pay for it.

II

Did the Workers’ Compensation Court err in denying Chapman a 20 percent penalty under § 39-71-2907, MCA?

Section 39-71-2907(1), MCA (1987) (emphasis added) provides that: When payment of compensation has been unreasonably delayed or refused by an insurer... the full amount of the compensation benefits due a claimant between the time compensation benefits were delayed or refused and the date of the order granting a claimant compensation benefits may be increased by the workers’ compensation judge by 20%. The question of unreasonable delay or refusal shall be determined by the workers’compensation judge ....

The Workers’ Compensation Court concluded that Chapman was not entitled to statutory penalties because the insurer acted reasonably throughout.

Chapman argues that she is entitled to the 20 percent penalty because the insurer’s refusal to pay for unsupervised exercise in January 1992 was unreasonable in view of the fact that it had paid for unsupervised exercise at the YMCA in 1991. She contends that the insurer’s four-month delay in paying for her health club membership in Florida during the summer of 1991 also was unreasonable, for the same reason.

Unreasonable delay or refusal is a question of fact to be determined by the Workers’ Compensation Court; we will not reverse its decision on awarding a penalty if the decision is supported by substantial, credible evidence. Field, 847 P.2d at 310; Jaenish v. Super 8 Motel (1991), 248 Mont. 383, 389-90, 812 P.2d 1241, 1245. Here, the court determined, based on the record, that the insurer paid for Chapman’s health club membership in Florida within a reasonable time after it received the club’s bill; it found, therefore, that the delay was not unreasonable. This decision is supported by substantial evidence.

Having concluded under the first issue that the insurer’s refusal to pay for Chapman’s YMCA membership in January 1992 also was not unreasonable, we hold that the Workers’ Compensation Court did not err in denying penalties under § 39-71-2907, MCA (1987).

Ill

Did the Workers’ Compensation Court err in denying Chapman costs and attorney’s fees?

Section 39-71-611, MCA (1987), requires an insurer to pay a claimant’s reasonable costs and attorney’s fees if the insurer unreasonably denies liability for a claim later adjudged compensable by the Workers’ Compensation Court. As the claims for which the insurer denied liability in this case were not later adjudged compensable by the Workers’ Compensation Court, this statute does not apply. The Workers’ Compensation Court did not err in denying Chapman costs and attorney’s fees.

AFFIRMED.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY, TRIEWEILER and WEBER concur.


author: CHIEF JUSTICE TURNAGE JUSTICE TRIEWEILER JUSTICE GRAY,

text:
    IN RE THE MARRIAGE OF NORMAN R. SILVERMAN, Petitioner and Appellant, and MARCIA M. SILVERMAN, Respondent and Respondent.
    No. 93-050.
    Submitted on Briefs June 1, 1993.
    Decided July 13, 1993.
    50 St.Rep. 823.
    259 Mont. 337.
    856 P.2d 533.

      For Appellant: Craig R. Buehler, Lewistown.
    For Respondent: Torger S. Oaas, Lewistown.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Norman Silverman appeals from the portion of the decree dissolving his marriage to Marcia Silverman which requires him to pay her maintenance. We affirm the decree entered by the District Court for the Tenth Judicial District, Fergus County.

The issue is whether the court erred in awarding maintenance to Marcia Silverman.

The parties were married in 1986 and separated in July 1990. No children were born of their union, although both have children from previous marriages.

Norman Silverman, who was fifty-three years old at the time of the dissolution, is a physician specializing in radiology. Marcia Silverman, who was thirty-seven years old at the time of the dissolution, was employed prior to the marriage selling X-ray and diagnostic medical equipment. During the marriage, the parties moved to Lewistown, Montana, where Norman ran the radiology department at the local hospital. Norman’s income rose from $40,000 in 1986 to $385,000 in 1990. After moving to Lewistown, Marcia did not seek employment outside the home, but served as a homemaker, mother, and civic volunteer.

When the parties separated, Marcia moved back to Arizona, where she had lived prior to this marriage. She became re-employed in her field with an annual base salary of $24,000. Norman moved to Texas, where he contracted to supply radiology services to a rural hospital for approximately $400,000 per year.

The District Court found that the parties had marital assets worth $903,000 and debts of $727,900. The assets included two homes in Lewistown and one in Eagle Bend, outside Bigfork, Montana. The court further found that the vast majority of the net worth of $175,000 was acquired during the marriage. It divided the net worth precisely in half, requiring payment by Norman to Marcia of $72,500 in cash. Marcia was also awarded the equity in a home in Phoenix, Arizona, which she had owned prior to the marriage. The court ordered Norman to pay Marcia, in addition, maintenance of $1,000 per month for two years.

Norman appealed. In an unpublished opinion, this Court made minor modification to the District Court’s property and debt division and remanded the maintenance issue for consideration of the requirements of § 40-4-203(l)(a) and (b), MCA. On remand, the District Court found:

The court in making this decision is aware that wife was reemployed at the time of trial and would receive an award of marital property.
However, as noted in the original memorandum opinion wife was to immediately incur debts of $34,000.00 associated with her move to Phoenix, Arizona where she was employed. Considering the threshold requirements under 40-4-203(l)(a) and (b), the District Court specifically finds that wife’s earnings and property are insufficient to meet her reasonable needs in light of these debts. Therefore, husband shall pay wife maintenance in the amount of $1,000.00 per month over a two-year adjustment period.

Norman now appeals from the order in which that finding was made.

Did the court err in awarding maintenance to Marcia Silverman?

Norman initially questions the court’s finding that Marcia incurred expenses of $34,000 in relocating to Arizona. In its original findings, the District Court stated that Marcia had to borrow $8,000 to pay expenses of her move back to Phoenix, purchase a new car for $16,000 (Norman kept both of the marital vehicles), and would be required to expend $10,000 to conduct necessary repairs to her Phoenix home. These figures are supported in Marcia’s testimony and were not contradicted on cross-examination or in the testimony of other witnesses.

Norman’s chief argument is that Marcia is not eligible for maintenance under the standard set forth at § 40-4-203(l)(a) and (b), MCA. That statute provides, in applicable part:

(1) In a proceeding for dissolution of marriage ... the court may grant a maintenance order for either spouse only if it finds that the spouse seeking maintenance:
(a) lacks sufficient property to provide for his reasonable needs; and
(b) is unable to support himself through appropriate employment

Norman points out that, after the dissolution as modified by this Court, Marcia had a job, a home with $15,000 in equity, $64,650 in cash, and other personal property. He maintains the finding that she lacks sufficient property to provide for her reasonable needs and is unable to support herself with suitable employment is clearly erroneous, misapprehends the facts, and is a mistake.

The statutory requirements for maintenance must be viewed with relation to the standard of living achieved by the parties during the marriage. In re Marriage of Madson (1979), 180 Mont. 220, 224-25, 590 P.2d 110, 112. Further, the diverse fact situations in marital dissolutions sometimes justify deviation from the rule disfavoring maintenance, in the interest of an equitable dissolution. In re Marriage of Luisi (1988), 232 Mont. 243, 247, 756 P.2d 456, 459. This Court therefore grants wide discretion to district courts in determining whether maintenance is proper. Luisi, 756 P.2d at 459.

The terms “reasonable needs” and “suitable employment” in the statement of prerequisites for an award of maintenance under § 40-4-203(1), MCA, allow room for discretion in tailoring a dissolution decree to the particular facts before the court. The record demonstrates that Norman and Marcia maintained a luxurious standard of living during their marriage and that Norman’s level of income continues to be extremely high. It also demonstrates Marcia’s relatively modest level of income post-dissolution and the substantial expenses related to her move back to Arizona to resume employment. In light of these factors, we conclude that the court did not err in awarding maintenance for a limited duration.

Affirmed.

JUSTICES HARRISON, HUNT, NELSON and WEBER concur.

JUSTICE TRIEWEILER

dissenting.

I dissent from the opinion of the majority.

By statute, maintenance is only permitted if Marcia lacked sufficient property to provide for her reasonable needs and was unable to support herself through appropriate employment. Neither condition is established by the record in this case. The majority has, therefore, simply established its own standard for maintenance. To do so ignores the proper judicial role of simply applying statutory law as written. Therefore, I dissent from the majority opinion.

JUSTICE GRAY,

dissenting.

I respectfully dissent from the opinion of the Court, which attempts to resolve this dispute on the basis of a continued void in the District Court’s findings on the maintenance issue. I would remand for the entry of sufficient findings with regard to Marcia’s “reasonable needs” and “suitable employment” vis-a-vis the maintenance issue.

This is the second time this case has been before the Court. In an unpublished opinion in the first appeal, we modified and otherwise affirmed the District Court’s determination of the value of the marital estate, vacated the award of maintenance and remanded for consideration of the statutory requirements contained in § 40-4-203(l)(a) and (b), MCA. We stated that the statute

requires that the court find that a spouse lacks sufficient property to provide for her reasonable needs or is unable to support herself through appropriate employment. The court made no such finding in this case.

We noted that Marcia’s then-current earnings were determined by the court, but that “[i]t is not apparent from the findings that the threshold requirements of § 40-4-203(l)(a) and (b), MCA, were considered in this case.”

On remand, the court found “that the original award of maintenance is still valid.” It stated that it considered the statutory requirements and specifically “found” that Marcia’s “earnings and property are insufficient to meet her reasonable needs in light of [certain debts incurred in her post-dissolution relocation to Arizona].” The District Court made no findings whatsoever regarding Marcia’s living expenses and reasonable needs or to what extent those needs were unmet by her property and income. It merely made a conclusory statement that the statutory requirements were met.

I recognize that the district courts of Montana labor under an ever-increasing workload with insufficient staff and other resources. While this Court should not impose unnecessarily onerous requirements, we must require trial courts to provide sufficient findings on dispositive matters to enable us to properly exercise our appellate review. It is my view that the District Court’s opinion on remand does not meet the intent of our original remand; nor does it provide sufficient findings for the appropriate exercise of appellate review by this Court.

In this instance, the void left by the District Court results in an opinion by this Court that does not — because it cannot, based on the trial court’s opinion — apply the statutory requirements for entitlement to maintenance in determining whether the District Court erred in awarding maintenance. Rather than remand a second time, the Court apparently prefers to “find a way” to affirm and finally be done with this case. As a result, the Court’s opinion at very least appears to ignore the legislatively-enacted policy that maintenance is disfavored in Montana and to undercut the clear statutory requirements for entitlement to maintenance. I disagree that it is appropriate to do either. I would remand for the entry of findings adequate to support the District Court’s conclusion that Marcia is entitled to maintenance.


author: JUSTICE WEBER

text:
    MARIE DOTING, Plaintiff and Respondent, v. FRANK J. TRUNK, JR., and PATRICIA A. TRUNK, Defendants and Appellants.
    No. 93-124.
    Submitted on Briefs June 10, 1993.
    Decided July 13, 1993.
    50 St.Rep. 826.
    259 Mont. 343.
    856 P.2d 536.

      For Appellants: John C. Brown, Cok & Wheat, Bozeman.

      For Respondent: J. David Penwell, Bozeman.
   JUSTICE WEBER

delivered the Opinion of the Court.

This case concerns the dissolution of Frank J. Trunk and Son Partnership (the Partnership). On June 16,1988, respondent Marie Doting (Doting) initiated this action by filing a petition to dissolve the Partnership. The District Court subsequently ordered a dissolution of the Partnership and ordered that the winding up be completed within 60 days and that the Partnership be terminated after that time.

We previously addressed this dissolution and termination in Doting v. Trunk (1992), 253 Mont. 350, 833 P.2d 1028 (Doting I)- In that opinion, we affirmed the District Court’s decision which ordered a dissolution of the Partnership further concluding that the Partnership could not be terminated until the winding up of partnership affairs was completed.

On October 30,1992, Doting again petitioned the District Court to terminate the Partnership. The District Court ordered that the Partnership be terminated and instructed that the Partnership’s assets be distributed to the partners. Appellants Frank J. Trunk, Jr. and Patricia A. Trunk (the Trunks) appeal this decision of the District Court which provides for termination of the Partnership.

The sole issue for our review is whether the District Court prematurely terminated the Partnership.

At time of the first appeal, the Partnership still owned assets, including real property, and was responsible for delinquent taxes for a 16-acre parcel of real property situated in Gallatin County. Other partnership matters had also not been settled; in particular, complex partnership tax returns needed to be filed and other administrative duties remained concerning money held in a trust account for the partners.

At the time of the hearing on Doting’s second petition to terminate the Partnership on November 24, 1992, the Partnership owned but three assets. They are as follows:

1. The Bronson contract receivable. On September 30, 1981, the Partnership sold the King Arthur’s Mobile Home Park located in Bozeman, Montana to Clark Bronson for $1,365,000.00. The Partnership receives payments in the amount of $9,321.31 per month on this contract with a balloon payment due on October 1,2001. Mr. Bronson subsequently assigned the contract to King Arthur Partners who in turn sold the mobile home park to Gary and Lorreta Oakland, d/b/a Oakland Holding Company, on March 1,1984. The contract from King Arthur Partners to Oakland was amended on March 25, 1988, and now provides for a final balloon payment on March 1, 1996. It is possible that the balloon payment due on March 1, 1996 on the Oakland contract could effect the Bronson contract, in which case the final balloon payment would likely be paid to the Partnership on March 1, 1996, the same date the Oakland contract comes due. Payments are received by an escrow agent and distributed to the parties.

2. The Kapinos contract receivable. On November 1, 1983, the Partnership sold highway frontage real property to Mr. and Mrs. Kip Kapinos for $150,000.00. The Partnership receives payments of $965.05 per month with a balloon payment due on November 1,1993.

3. The Cook contract receivable. On October 2, 1992, the Partnership sold 4.88 acres to Gene Cook for $75,000.00, with the Partnership carrying $35,000.00 on a contract for deed. The Partnership receives an annual payment of $7,000.00 on this contract, with a balloon payment due on October 2,1997. Payments on the Cook contract are also distributed directly to the partners by an escrow agent.

At the time of the November 24, 1992 hearing, the proceeds from the Bronson contract and the Cook contract were being distributed directly to the partners. The proceeds of the Kapinos contract were being accumulated by Philip Bailey, a Certified Public Accountant who was ordered by the District Court to manage the financial affairs of the Partnership during the winding up process. This money has been kept in a Partnership trust account to pay Partnership debts and expenses incurred during the winding up process. At the time of the hearing the balance in that account was $17,167.00. Mr. Bailey had held these funds in trust because the Partnership had been liable for $27,196.34 in unpaid property taxes on a 16-acre parcel of real property. In October 1992, this parcel was sold by Gallatin County at a public tax auction sale which canceled the property tax debt.

Mr. Bailey testified that after he had completed the 1992 tax returns for the Partnership, any further tax returns would not be complex and coiild easily be handled by others. With the delinquent property taxes effectively eliminated, the Partnership had no further debts. Therefore, the District Court granted Doting’s petition and ordered Mr. Bailey to distribute all but $2000.00 of the accumulated proceeds in the trust account equally between the Trunks and Doting and also ordered that all future payments on the Kapinos contract be distributed equally between the Trunks and Doting. The court further authorized Bailey to draw from the remaining $2000.00 to pay for his services in preparing the 1992 Partnership tax return and then to distribute the remaining proceeds from the trust account. The District Court ordered that the affairs of the Partnership would be decreed wound up and the Partnership terminated on the date of the final distribution to the partners from that trust account.

Did the District Court err by prematurely terminating the Partnership?

The Trunks now argue that Montana law does not allow the District Court to terminate the Partnership and decree that its affairs are wound up until all payments due the Partnership on the three contracts receivable have been received. As stated in the above facts, that date could be as early as October 2,1997 when the Cook contract should be paid in full, or it could continue until October 1, 2001 by the terms of the Bronson contract.

The Trunks contend that § 35-10-602, MCA, and Doting I require that a partnership must continue until all receivables are received. Section 35-10-602, MCA, provides:

On dissolution the partnership is not terminated but continues until the winding up of partnership affairs is completed.

Section 35-10-602, MCA, is taken from the Uniform Partnership Act (UPA) which has been adopted in Montana and nearly all other states. See Annotations, Compiler’s Comments to Title 35, Chapter 10.

We alluded to this statute in our first opinion in this case, stating: Under the UPA, the partnership will continue in existence solely for the purpose of winding up until all receivables have been received and payables have been paid.

Doting I, 833 P.2d at 1033. The Trunks contend that Doting I, interpreting § 35-10-602, MCA, mandates that the Partnership shall continue in existence solely for the purpose of winding up Partnership affairs until all the receivables discussed above have been received.

The District Court concluded that the winding up was sufficiently completed so that termination of the Partnership was proper. We review a district court’s conclusions of law to determine whether the interpretation of the law is correct. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 803 P.2d 601. The Trunks ask that the District Court order be reversed, the Partnership be reinstated and ordered to exist until all receivables have been received. The Trunks argue that this is the law of the case and must be followed.

This argument has no merit. Our comment in Doting I, stating that the Partnership will continue in existence until all receivables have been received is not the law of the case. When this Court states in an opinion a principle or rule of law necessary to the decision, such statement becomes the law of the case and controls throughout its subsequent progress, both in the trial court and upon subsequent appeal. Zavarelli v. Might (1989), 239 Mont. 120, 124, 779 P.2d 489, 492. Our statement in Doting I was not such a principle or rule of law necessary to that decision. In fact, it merely discussed procedures to be followed by the District Court after we concluded that the specific issue being addressed was moot.

We have not previously interpreted § 35-10-602, MCA, to determine whether all the Partnership’s receivables must be received in order for the Partnership to be wound up and terminated. For the reasons stated below, we now modify the above-quoted statement from Doting I and hold as follows: In general, a partnership will continue in existence under the UPA solely for the purpose of winding up until all receivables have been received and payables have been paid. The appropriate time for terminating a partnership and declaring that its affairs are settled will be determined by the district court under the particular facts of each case.

Originally, the Partnership was created to operate a mobile home park. That purpose has long since been extinguished; at the time of the hearing, all property had been sold and all debts had been paid, except the final expense for preparation of the 1992 partnership tax return, which was provided for in the District Court’s order. The Partnership conducts no business. Now that all the property has been sold, the partners’ sole involvement is receipt of distributions of payments on the contracts for deed, yet the Trunks argue that the Partnership existence must continue. Doting seeks to terminate the Partnership and terminate her business relationship with the Trunks.

We note that any partner may obtain a winding up by the court for good cause. Section 35-10-609, MCA. This is what Doting has done in this case. Doting contends that the termination was proper because there is no purpose in continuing the existence of the Partnership now that the 1992 tax return has been filed and remaining funds have been distributed to the parties. The relationship between the Trunks and Doting during these appeals, and prior to Doting’s original petition, has been strained. Doting wishes to have nothing more to do with the Trunks and wants to remove any possibility of further exposure to liability which may result from the continuing Partnership.

We emphasize here that all partners have a duty to settle the Partnership affairs. 59A Am. Jur. 2d Partnership § 1102 (1987); 68 C. J.S. Partnership, § 355 (1950). When a partnership is dissolved and the winding up process is begun, partners have a duty to act in the best interests of the partnership. Generally the best interests of the partnership will be served by winding up the partnership affairs as quickly as possible. Winding up will often require property valuations, prosecuting and defending partnership lawsuits, paying debts and collecting receivables.

At this point none of these actions are required in this case. The three contracts for deed constituting the sole assets of the Partnership are the results of sales of Partnership property. These contracts for deed are not presently in default nor are they in danger of default. However, any action which may arise in the future as a result of a default does not have to be taken by the Partnership, it can rather be prosecuted by the parties as owners in common.

In a pre-UPA Montana case, all debts of the partnership had been paid, but the property remained an asset of the partnership. This Court stated:

The law is well settled that when the partnership is settled and the debts are paid, the real estate of the partnership retains its character as such and is held by the owners as tenants in common. We announced this rule as early as 1887... “The rule [ceases] when the partnership is settled and its debts are paid. The partners then hold their real estate as tenants in common, relieved of any trust in behalf of the partnership. The weight of American authorities sustains this doctrine.”

In re Perry’s Estate (1948), 121 Mont. 280, 290, 192 P.2d 532, 537 (citations omitted). Nothing in the UPA dictates a different result here from that of Perry’s Estate, which allows property to be held as tenants in common after partnership affairs are settled.

We have looked to our sister states for their handling of winding up and termination under the UPA in similar situations. Cases are uncommon where one or more partners wishes to keep a partnership alive after all partnership affairs are essentially settled. A Pennsylvania case, however, which was decided after the enactment of the UPA in Pennsylvania, stated that its result would have been the same if decided prior to the UPA as it was under the UPA. See Faust v. Heckler (Pa. 1948), 58 A.2d 147. The Pennsylvania court declared that a tenancy in partnership under the UPA, whereby the partners held real property, would revert to tenancy in common upon dissolution and termination. Faust, 58 A.2d at 149.

In Karber v. Karber (Ariz. 1984), 701 P.2d 1, 3, the Arizona Court of Appeals interpreted the UPA provision requiring partners to “wind up partnership affairs according to law” as meaning that payments to creditors other than partners must first be made, then claims of partners other than repayment of capital and profit, then advancements made by partners, followed by amounts owing to partners in respect to capital, and finally any remaining profits to be distributed. Section 35-10-612(2), MCA, provides the same. In order to effect the distribution of partnership funds during the winding up process in accordance with § 35-10-612(2), MCA, a final accounting is necessary so that all claims and demands arising between the partners can be settled as a result of the accounting. As stated by the Idaho Supreme Court: “[A] final account is the one great occasion for a comprehensive and effective settlement of all partnership affairs.” Arnold v. Burgess (Idaho 1987), 747 P.2d 1315, 1320 (quoting Weidlich v. Weidlich (Conn. 1960), 157 A.2d 910).

We have previously stated that “winding up of partnership affairs” is the process of settling partnership affairs after dissolution. Doting I, 833 P.2d at 1033. See also Weisbrod v. Ely (Wyo. 1989), 767 P.2d 171, 174 (generally the winding up encompasses the liquidation of partnership assets, collection and payment of debts and distribution of the surplus to the partners).

Here, the final accounting has been completed and all partnership debts have been covered. The only remaining partnership “affair” consists of the escrow agents’ pro rata distributions to the partners when payments are received on the contracts for deed. The District Court has determined that the Trunks are to receive 50% and Doting is to receive 50% of these payments. Thus, the sole question is whether this partnership’s winding up is sufficiently completed so that the Partnership can be terminated.

The UPA is to be construed so as to effect its general purpose to make uniform the law of those states which enact it. 1 Rowley on Partnership § 4.4 (2d ed. 1960); § 35-10-104(4), MCA. Generally, in an action to terminate a partnership, a court will order that partnership assets be sold and the proceeds from the sale be distributed according to the statutory priorities. Arnold, 747 P.2d at 1320. Courts have held, however, that alternative distributions of partnership property may also effect a termination. In Arnold, for example, the trial court affirmed a winding up which ordered a money judgment instead of a liquidation sale. Arnold, 747 P.2d at 1323.

We conclude there is no reason to require the Partnership to continue. The UPA has no requirement which would mandate sale of all assets instead of a distribution such as the court has ordered here. This Court has previously held that when construing statutes, the interpretation should be reasonable to avoid absurd results. Department of Highways v. Midland Materials Co. (1983), 204 Mont. 65, 71, 662 P.2d 1322, 1325. The Trunks’ argument for an interpretation of the statute forcing a partnership to continue simply for receiving payments on sold assets could lead to an absurd result. Contracts for deed, for example, can extend for many years.

We agree with the following quote from the Oregon Supreme Court: ... There is no express provision in [the UPA] which establishes liquidation by sale as the exclusive mode of distributing partnership assets after dissolution.... Courts, both prior and subsequent to adopting the UPA, have, under certain circumstances, relied upon their equitable powers to distribute partnership assets without resort to sale.
In Rinke v. Rinke, 330 Mich. 615, 48 N.W.2d 201, 207 (1951), a suit for dissolution of a partnership, the Michigan Supreme Court ... interpreted the [UPA] by stating
“* * * [t]he decree of the trial court provided for dividing the assets of the partnerships rather than for the sale thereof and the distribution of cash proceeds. Appellants insist that such method of procedure is erroneous and not contemplated by the [UPA]. * * * Construing together pertinent provisions of the statute leads to the conclusion that it was not the intention of the legislature in the enactment of the [UPA] to impose a mandatory requirement that, under all circumstances, the assets of a dissolved partnership shall be sold and the money received therefor divided among those entitled to it, particularly so, as in the case at bar, where there are no debts to be paid from the proceeds. The situation disclosed by the record in the present case is somewhat unusual in that no one other than the former partners is interested in the assets of the businesses. In view of this situation and the nature of the assets, we think that the trial court was correct in apportioning them to the parties. * * *”
The position taken by the Michigan Supreme Court is not an isolated one.
“* * * [j]n some circumstances and in jurisdictions where the [UPA] is in effect, surplus assets have been apportioned among the partners, and apart from the act distribution of the surplus partnership stock in kind has sometimes been made by the court in cases where there were no firm debts and a division in kind could be fairly and equitably made. * * *” (Footnotes omitted.) 1 Rowley on Partnership, § 38.0, at 737.

Nicholes v. Hunt (Or. 1975), 541 P.2d 820, 827-28 (emphasis supplied). Like the case referred to in Nicholes, other than the Trunks and Doting, no one is interested in the assets of this business. In this case, we conclude that a distribution of the surplus to the partners and settling partnership affairs does not require that all receivables be received by the partnership.

We further conclude that the winding up of partnership affairs should be completed within a reasonable time. We reach this conclusion also by reference to other courts’ interpretations of the UPA. For example, the Kansas Court of Appeals has interpreted the equivalent of § 35-10-607(l)(a), MCA, part of the UPA, as follows:

We interpret [the UPA statute] as contemplating that the “winding up” of partnership affairs be accomplished within a reasonable time, and that under the facts of the instant case such reasonable time has long since passed. In any event such time could not logically extend beyond the time limits of [statute of limitation for actions of creditors with no notice of dissolution].

Daniels Trucking Inc. v. Rogers (Kan. App. 1982), 643 P.2d 1108,1111. See also Tucker v. Ellbogen (Colo. App. 1989), 793 P.2d 592 (the winding up partner has the affirmative fiduciary duty to wind up partnership affairs as expeditiously as possible and so as not to cause waste until the partnership assets have been divided and the liabilities have been satisfied); Gibson v. Dueth (Iowa 1978), 270 N.W.2d 632 (winding up usually entails the time necessary for the partners to finish old business, collect and pay debts, and finally distribute remaining assets to the partners).

We agree with the Kansas court that partnership affairs ought to be wound up within a reasonable time. In a case such as ours where a contract for deed may continue for a number of years, it is not reasonable to force the parties to remain partners where they may be subject to liability by acts of other partners for many years into the future. All Partnership debts have been paid in this case and no lawsuits are pending. The Trunks have not presented a convincing reason for continuing the Partnership.

Without a convincing reason for continuing a partnership, § 35-10-602, MCA, does not require that every transaction be completed before a partnership can be terminated. A partnership should be wound up within a reasonable period of time according to the circumstances of each case. Under the circumstances of this case, an effective settlement or winding up of all Partnership affairs has been achieved. Any action which may become necessary in the future to collect on defaulted contracts can be taken by the parties as owners in common, rather than as tenants in partnership.

We hold the District Court did not err when it determined that Partnership affairs had been wound up and ordered that termination of the Partnership would be effective with the date of Mr. Bailey’s final distribution to the parties from the trust account.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON, NELSON and HUNT concur.