author: MR. JUSTICE WEBER MR. JUSTICE SHEEHY,

text:
    TINA D’EWART, Plaintiff and Respondent, v. NANCY NEIBAUER, Director of Hill County Welfare Department, and Davis M. Lewis, Director of the Montana Department of Social and Rehabilitation Services, Defendants and Appellants.
    No. 86-566.
    Submitted on Briefs May 28, 1987.
    Decided Sept. 15, 1987.
    742 P.2d 1015.

      Michael S. Becker, Dept, of SRS, Helena, David Rice, Hill Co, Atty., Havre, for defendants and appellants.
    Steven L. Bunch, Montana Legal Services, Helena, for plaintiff and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

Plaintiff Tina D’Ewart filed an action for declaratory judgment in the District Court of the Twelfth Judicial District, Hill County. The District Court held that Section 46.10.512, A.R.M., was invalid as applied to the plaintiff, holding accrued but unpaid child care costs could be claimed as deductions from gross income when figuring AFDC payments. The Hill County Welfare Department and the Montana Department of Social and Rehabilitation Services (SRS) appeal. We reverse and remand.

The issue is:

Can the AFDC child care deduction found in Section 46.10.512, A.R.M., be applied to child care costs which have accrued but not been paid?

The parties stipulated to the essential facts in this case. Tina D’Ewart is a single parent with three young children. Ms. D’Ewart relies on assistance, in addition to wages she earns, from the Aid to Families with Dependent Children (AFDC) program to provide shelter and other necessities for herself and her children. AFDC is a federally funded welfare program that is administered in Montana by SRS and the respective county welfare departments, in this case the Hill County Welfare Department. The state and county must administer the AFDC program in compliance with and in a manner consistent with federal law and regulations.

A family in which the claimant parent works may receive an AFDC payment if income eligible. Income eligibility for our purposes requires subtraction from income of items called “disregards.” The key “disregard” in this case is the payment made for day care of children of the claimant. Benefits are calculated by “retrospective budgeting.” This means that the computations for the month of January are based upon income and expenses during the month of November.

It is the Hill County Welfare Department’s policy that a child care disregard is allowed for those day care costs actually incurred and paid in the budget month as well as those charges incurred in the month immediately prior to the budget month but paid in the budget month. The disregard of day care costs that were incurred but remain unpaid is not allowed.

After a hearing concerning September 1984 AFDC benefits, the hearing officer concluded that unpaid child care costs should be disregards in the budget month incurred. Ms. D’Ewart then reapplied for benefits. Ms. D’Ewart’s January 1985 and February 1985 AFDC benefits were based on her November 1984 and December 1984 income and expenditures due to the retrospective budgeting process. Her day care costs for November and December were not subtracted from her November and December income because they were not actually paid, but only incurred.

The benefit months at issue are January, February, and April of 1985. The amounts incurred for day care for those three months have not been paid by Ms. D’Ewart. Ms. D’Ewart is asking that the incurred, but unpaid day care costs from the budget months of November and December 1984 and February 1985 be included as disregards. If included as disregards, the amount of benefits due Ms. D’Ewart are:

BUDGET MONTH BENEFIT MONTH AMOUNT
November January $51.00
December February 63.00
February April 33.00
TOTAL: $147.00

Ms. D’Ewart has paid her day care in full every month from March 1985 to the present.

Ms. D’Ewart had a second hearing on March 11,1986. The hearing officer reversed his earlier ruling on the merits, holding day care disregards would only be allowed to the extent actually paid. This decision was appealed to the SRS appeals board which affirmed the decision.

Ms. D’Ewart then filed a petition for declaratory judgment with the District Court. The District Court ruled that Section 46.10.512, A.R.M., was invalid as applied to Ms. D’Ewart and ordered back child care costs paid to her. This ruling in effect held that day care costs incurred but not paid could be disregarded or deducted from a claimant’s income. SRS and the Hill County Welfare Department appealed.

Can the AFDC child care deduction found in Section 46.10.512, A.R.M., be applied to child care costs which have accrued but not been paid?

Section 46.10.512(1), A.R.M., provides in pertinent part:

“When testing net monthly income and determining grant amount, the following disregards are subtracted . . .
“(b) Expenses for the care of each working person’s dependent child . . .
“(i) The amount actually paid in the budget month will be deducted. This amount may include payments for charges incurred in the month immediately prior to the budget month; however, charges incurred but not paid in the budget month will not be allowed under this rule.” (Emphasis added.)

SRS and the Hill County Welfare Department contend that the District Court erred in its declaratory judgment ruling and that Section 46.10.512, A.R.M., is valid and consistent with federal law. The applicable federal statute, 42 U.S.C.A. Section 602(a)(8)(A)(iii), provides in pertinent part:

“A State plan for aid and services to needy families with children must . . .
“(8) (A) provide that, with respect to any month, in making the determination under paragraph (7), the State agency
“(iii) shall disregard from the earned income of any child, relative, or other individual specified in clause (ii), an amount equal to expenditures for care in such month for a dependent child . . .” (Emphasis added.)

The lower court framed the issue as follows:

“The court must determine under 42 USCA 602,(8) (A) (iii) [sic-should read 42 U.S.C.A. 602(a)(8)(A)(iii)] whether or not unpaid but obligated babysitting services should be considered disregardable ‘expenditures’ or whether or not such child care costs are an ‘expenditure’ only to the extent they are actually paid for.”

After discussing the purpose of the AFDC program and accounting principles the District Court held:

“. . . the term ‘expenditure’ was intended by Congress to mean: an outlay, or the creation of a liability, or an asset or expense item; that Congress in the instant case meant ‘expenditure’ for day care to mean either cash payment, or those child care costs which are accrued and obligated but not paid.”

The court then concluded that Section 46.10.512, A.R.M., was inconsistent and more restrictive than 42 U.S.C.A. Section 602(a) (8) (A) (iii) and thus was invalid as to Ms. D’Ewart.

The federal regulation pertaining to this issue, found at 45 C.F.R.233.20(a)(ll)(i)(C), provides:

“For purposes of eligibility determination, the State must disregard from the monthly earned income . . .
“(C) An amount equal to the actual cost, but not to exceed $160 . . . (Emphasis added.)

After consideration of the federal and Montana statutes and regulations pertaining to the AFDC program, we conclude that Montana’s administrative rule on AFDC child care disregards, Section 46.10.512, A.R.M., correctly implements federal congressional intent. Day care costs which have been incurred, but not paid, in the budget month should not be allowed as disregards. Only those child care costs actually paid in the budget month should be deducted.

We reach this conclusion for several reasons. First, our reading of 42 U.S.C.A. Section 602(a) (8) (A) (iii) and 45 C.F.R. 233.20 (a)(11)(i)(C) persuades us that Congress intended only those child care costs actually paid to be deducted. The federal statute itself speaks of “expenditures.” Black’s Law Dictionary 518 (rev. 5th ed. 1979], defines an expenditure as “[s]pending or payment of money; the act of expending, disbursing, or laying out of money; payment.” The federal regulation is even more explicit in its intention when it states, “[a]n amount equal to the actual costs.” The regulation does not mention accrued or incurred costs, but actual costs. “Actual” is defined in Black’s Law Dictionary 33 (rev. 5th ed. 1979) as:

“[r]eal; substantial; existing presently in act; having a valid objective existence as opposed to that which is merely theoretical or possible. Opposed to potential, possible, virtual, theoretical, hypothetical, or nominal. Something real, in opposition to constructive or speculative; ...”

In addition, AFDC eligibility determinations are made using cash basis accounting principles. When figuring AFDC income standards, it is clear the wage or salary must be actually received. See 45 C.F.R. Section 233.20(a)(6)(iii). Thus, it follows that deductions from income must also be actually paid. Our reading of the federal statutes and regulations, along with the definitions of the key terms, convinces us that Congress intended child care costs actually be paid and not simply incurred.

Second, we conclude that Section 46.10.512, A.R.M., correctly incorporates the federal law as intended. The construction of a statute by the person or agency responsible for its execution should be followed unless there are compelling indications that the construction is wrong. Red Lion Broadcasting Company v. F.C.C. (1969), 395 U.S. 367, 381, 89 S.Ct. 1794, 1802, 23 L.Ed.2d 371, 384. As this Court stated in Department of Revenue v. Puget Sound Power and Light Company (1978), 179 Mont. 255, 262, 587 P.2d 1282, 1286:

“When faced with a problem of statutory construction great deference must be shown to the interpretation given the statute by the officers or agency charged with its administration.”

We conclude SRS has correctly interpreted 42 U.S.C.A. Section 602(a) (8) (A) (iii), and hold that Section 46.10.512, A.R.M., is consistent with and implements congressional intent. We also emphasize that the Montana regulation allows child care expenses to be paid in the month they are incurred, as well as in the subsequent month. The A.R.M. is flexible enough to allow a working AFDC mother to increase her working hours, but not be required to pay the increased day care costs until the following month when she receives her additional income from the added hours.

Third, practical considerations convince us that only day care costs actually paid should be allowed as an income disregard. The efficient administration by the State of the AFDC program requires that the money budgeted by the AFDC family for day care expenses is actually spent on the day care expenses. While we do not believe Ms. D’Ewart intended in any way to perpetrate a fraud on the AFDC program, we can see that potential problems could develop if AFDC recipients were allowed to accrue day care expenses (perhaps to a relative or friend) with no intention of ever paying those expenses. Also, if the SRS were required to set up a bookkeeping procedure to record day care expenses incurred months or even years earlier, then the paper work involved could materially increase the complexity of operation.

Ms. D’Ewart argues that the officer’s decision concerning the benefit month of September 1984 barred subsequent adjudication of this matter. At that administrative hearing the position of the SRS and the Hill County Welfare Department was presented not by an attorney but by a social worker at the local level. The controversy involved a small amount of money, and SRS did not appeal the decision to the next administrative level.

At the time of the first hearing, Section 46.10.512(l)(b)(i), A.R.M., provided:

“The amount actually paid in the budget month will be deducted. This amount may include payment for charges incurred in the month immediately prior to the budget month; however, payments in the budget month will not be allowed as a deduction under this rule.”

The regulation was contradictory. It began by providing that the amount actually paid would be deducted, but then stated that payments in the budget month would not be deducted. The inconsistencies were removed by an amendment effective September 26, 1985, which read:

“The amount actually paid in the budget month will be deducted. This amount may include payment for charges incurred in the month immediately prior to the budget month; however, charges incurred but not paid in the budget month will not be allowed under this rule.”

Considering these circumstances and especially the inconsistent A.R.M., we conclude it would be unjust to require the SRS to follow the hearing officer’s initial determination in all subsequent proceedings.

Accordingly, we reverse the District Court’s decision and hold that Section 46.10.512, A.R.M., is valid and applicable as applied to Ms. D’Ewart and other AFDC recipients. We also hold that Section 46.10.512, A.R.M., is consistent and not more restrictive than 42 U.S.C.A. Section 602(a)(8)(A](iii). We remand this case to the District Court for appropriate proceedings.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES GULBRANDSON and McDONOUGH concur.

MR. JUSTICE SHEEHY,

dissenting:

The majority in this case have established a few “disregards” of their own, which in turn ought to be disregarded.

They have disregarded the purpose of AFDC payments, which is to benefit children. The concern of the AFDC program is for children, for their food, clothing, and shelter, to aid their expenses. Any restrictive regulation which reduces AFDC payments reduces benefits applicable to children. The protection of children is the paramount goal of the AFDC program. Rosen v. Hursh (8th Cir. 1972), 464 F.2d 731.

The majority disregarded that their interpretation of the federal statutes and regulations may result in the elimination of any AFDC payments to these children. The earnings of the mother may be such that refusal of the deduction of incurred costs for day care places the mother in an income bracket where she is not eligible to receive AFDC payments on behalf of her children.

Finally the majority have disregarded the work-incentive nature of the federal law permitting the deduction of day care costs. The majority reduce the value of the work-incentive by their decision.

“The AFDC program is designed to provide financial assistance to needy dependent children and the parents or relatives who live with and care for them. A principle purpose of the program, as indicated by 43 U.S.C. 601, is to help such parents and relatives ‘to attain or retain capability for the maximum self-support and personal independence consistent with the maintenance of continuing parental care and protection . . .’”

Shea v. Vialpando (1974), 416 U.S. 251, 253, 94 S.Ct. 1746, 1750, 40 L.Ed.2d 120, 125.

The principle to which we should adhere in this case is that day care expenses reasonably attributable to the earning of income by the parent should be disregarded when incurred. Simpson v. Miller (D.C. Ill. 1982), 535 F.Supp. 1041.

The intent of Congress and the federal agencies to limit deductions for day care to costs actually paid and not incurred costs is not as clear as the majority would make out. The departmental regulations allow the deduction of “(c) an amount equal to the actual cost, but not to exceed $160 ... for the care of each dependent child . . .” 45 C.F.R. 233.20(a)(11)(i)(c).

The term “actual cost” does not necessarily mean “actually paid” costs. It may indeed include incurred costs because incurred costs are as actual as those for which payment has been made. No federal case that I can find applies the majority rule set out here. The United States Supreme Court enunciated in Shea v. Vialpando, supra, that “we read this language as a congressional directive that no limitation, apart from that of reasonableness, may be placed upon the recognition of expenses attributable to the earning of income . . ." 416 U.S. at 260, 94 S.Ct. at 1753, 40 L.Ed.2d at 129. The Supreme Court, in Shea, relied on the congressional history set forth in S.Rep. No. 1589, 87th Cong. 2d Sess. 17-18 (1962):

“Under present law . . . states are permitted, but not required, to take into consideration the expenses an individual has in earning any income (this practice is not uniform in the country and in a substantial number of states full consideration of such expenses is not given.) The committee believes that it is only reasonable for the states to take these expenses fully into account. Under existing law if these work expenses are not considered in determining need, they have the effect of providing a disincentive to working since that portion of the family budget spent for work expenses has the effect of reducing the amount available for food, clothing, and shelter. The bill has, therefore, added a provision in all assistance titles requiring the states to give consideration to any expenses reasonably attributable to the earning of income.” (Emphasis added in original.)

416 U.S. 263, 94 S.Ct. 1755, 40 L.Ed.2d 131.

An incurred cost for day care, though not paid, is an expense reasonably attributable to the earning of income in the case of a working mother.

A weak argument by the majority is that to allow incurred costs in the month in which the day care costs are incurred would result in extra bookkeeping, complex paper work, and inefficient administration. This must be true: if costs of day care, whether incurred or paid for, are disregarded in the month the day care is supplied, the actual cost of day care will always be the amount disregarded. No additional bookkeeping is required under this procedure. There is far more bookkeeping involved in recording monthly paid and unpaid costs of day care, and the accounting of day care costs paid in subsequent months, then there would be in taking “these expenses fully into account” in the month when the expenses are incurred.

Equally weak is the argument that somehow through fraud, a working parent may over a three-month period squander $147 of the children’s benefits. It is entirely consonant with ordinary experience that payment of bills may sometimes be deferred. The legal obligation to pay remains. No fraud is involved in the deferral.

The District Court was correct in its determination, and its order ought to be affirmed.

MR. JUSTICES HARRISON and HUNT concur in the foregoing dissent.


source: Caselaw Access Project

author: MR. JUSTICE HARRISON

license: Public Domain

text:
    In the Matter of the ADOPTION OF R.G.C., a minor child
    No. 86-580.
    Submitted on Briefs Aug. 6, 1987.
    Decided Sept. 15, 1987.
    742 P.2d 471.

      Robert Stafford, pro se.
    Carol Ann Henderson Owen, pro se.
    Murphy, Robinson, Heckathorn & Phillips, Donald Murray, Kalispell, Hash, O’Brien & Bartlett, James C. Bartlett, Kalispell, for respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

R.L.S., the putative father of R.G.C., appeals an order of the District Court of the Eleventh Judicial District. That court ruled his consent would not be required to an adoption of the seven-year-old boy because he had never supported the child, Section 40-8-111(1)(a)(v), MCA, and that the adoption would be in the best interests of the child, as defined by Section 40-6-130, MCA. R.L.S., acting pro se, argues that the court failed to consider his fitness as a parent before determining what was best for the child. We find no error; the child’s best interest is paramount to any concern by R.L.S. We affirm the District Court.

R.L.S. and C.A.C. had a relationship in 1979 in which they had sexual intercourse twice. Several months later C.A.C. told R.L.S. that she was pregnant but did not seek support. The baby was born out of wedlock on July 20, 1980. Although R.L.S. was in Montana until December 1980, he claims he never knew of the child’s live birth until October 1984 when O.K. and L.K., husband and wife, asked him to consent to their adoption of the boy. O.K. and L.K. had obtained C.A.C.’s consent but R.L.S. refused to give his consent. Thus, they resorted to legal action to terminate R.L.S.’s parental rights and to establish that his consent was not needed because he had never provided support for the child.

R.L.S. has failed to supply this Court with a complete transcript of the District Court proceedings as required by Rule 9(b), M.R.App.Civ.P. According to that rule:

“Wherever the sufficiency of the evidence to support... a specific finding of fact by the trial court is to be raised on the appeal by the appellant, he shall be under a duty to include in the transcript all evidence relevant to such . . . finding.”

Where an appellant fails to produce the entire transcript, this Court will not address whether substantial evidence exists to support the appellant’s factual claims. Matter of Adoption of J.M.G. (Mont. 1987), [226 Mont. 525,] 736 P.2d 967, 970, 44 St.Rep. 869, 873. In this case we shall view the District Court’s findings of fact as true and consider only that court’s application of the law to those facts.

The District Court determined that C.A.C. delivered custody of the boy to O.K. and L.K. in August 1984, so that the boy could live with them and be adopted by them; C.A.C. subsequently signed the appropriate adoption forms and was later determined by a District Court to have done so knowingly and voluntarily. When O.K. and L.K. took the boy, he was not well nourished, all his belongings were in one box, and he was introverted and untrusting of adults. Since he has been with O.K. and L.K., he has become well nourished and happy and refers to them as his parents; there has been a tight family bonding. The boy also has done well in school, receiving a certificate that honored him as the child with the best attitude in his kindergarten.

The court interviewed the boy. He told of living in motels and cars with C.A.C. He stated that he preferred to stay with O.K. and L.K. even though he realized C.A.C. was his natural mother. The boy now addresses O.K. and L.K. as his father and mother; they have provided the boy with a clean, comfortable, and suitable home.

The court found that R.L.S. was aware of C.A.C.’s pregnancy, but never bothered to inquire as to the birth of the child or to provide any support for the child. R.L.S. had never seen the boy before this trial. R.L.S.’s objective in this action is not to obtain custody of the boy, but to return the boy to C.A.C. He would take custody of the boy, however, if the court denied custody to C.A.C.

Considering all this evidence, which this Court assumes as true in this appeal, the District Court found that it would be in the boy’s best interests to remain with O.K. and L.K. It terminated R.L.S.’s parental rights under Section 40-6-130, MCA, and determined that his consent to the boy’s adoption under Section 40-8-111(1)(a)(v), MCA, was not required. The District Court then issued an interlocutory decree of adoption.

On appeal, R.L.S. contends the District Court erred by considering the best interests of the child while not considering R.L.S.’s fitness as a father. He also argues that the District Court erred in its application of Section 40-8-111(1)(a)(v), MCA, since that section requires a petition for adoption to have been filed before a court can determine that the parent’s consent is not required.

The District Court’s initial question in a case such as this is whether the consent of the putative father is needed to effect the adoption. If it determines that the putative father’s consent is not required, then the court’s foremost duty is to determine what the subject child’s best interests are. Matter of Adoption of S.T.V. (Mont. 1987), [226 Mont. 18,] 733 P.2d 841, 842, 44 St.Rep. 425, 427; Matter of Adoption of Smigaj (1977), 171 Mont. 537, 539, 560 P.2d 141, 143. Our review indicates that the District Court ruled that the putative father’s consent was not needed because he had failed to support the child. It then determined that adoption would be in the boy’s best interests. We see no error.

R.L.S. argues that Section 40-6-130(1), MCA, sets a standard for review that the District Court ignored. That section reads:

“If the putative father appears at the hearing and requests custody of the child, the court shall inquire into his fitness and his ability to properly care for the child and shall determine whether the father’s parental rights should be given recognition in view of his effort or lack of effort to make provision for the mother while she was pregnant and for the child upon birth .... If the court finds that it would not be in the best interests of the child to grant custody to the putative father, the court shall terminate his rights to the child.” R.L.S. argues that this section requires a finding by the District Court as to the putative father’s fitness as a parent before the court determines what result would be best for the child. To add credence to this argument, R.L.S. cites Matter of Doney (1977), 174 Mont. 282, 570 P.2d 575, as authority for his argument that petitioners must show him to be an unfit parent. It is apparent that R.L.S. misconstrues Montana law since Doney was a question of guardianship, not one of adoption. Doney, 570 P.2d at 577. Additionally, this Court in Matter of M.G.M. (1982), 201 Mont. 400, 654 P.2d 994, said that proof of abuse or neglect was required to terminate a natural parent’s rights in a youth-in-need-of-care proceeding. In M.G.M., the Court specifically distinguished adoption proceedings and said that in adoption proceedings it is proper for the District Court to look at the child’s best interests. Section 40-6-130, MCA, which speaks directly to the best interests of the child, was held to apply strictly to adoption proceedings. M.G.M. 654 P.2d at 997.

The proper test under Section 40-6-130(1), MCA, and the one employed by the District Court in this case, is the best interests of the child. The child’s welfare is of utmost importance; termination of a putative father’s rights to the child does not depend on the factors of abuse or neglect that are so crucial in guardianship cases. Where the District Court concludes, as it did here, that the child’s best interests are not in the putative father, then a plain reading of Section 40-6-130(1) makes it abundantly clear that the putative father loses his rights to the child. We can discern no error in the District Court’s handling of this issue.

R.L.S. then argues that the District Court erred in its application of Section 40-8-111, MCA, which sets out the requirement of the natural parents’ consent in adoption cases.

Section 40-8-111(1)(a)(v), MCA, states:

“(1) An adoption of a child may be decreed when there have been filed written consents to adoption executed by:
“(a) both parents, if living, or the surviving parent of a child, provided that consent is not required from a father or mother:
“(v) if it is proven to the satisfaction of the court that the father or mother, if able, has not contributed to the support of the child during a period of 1 year before the filing of a petition for adoption.” R.L.S. argues that this section was used to determine that his consent to the adoption was not necessary. He argues that the section does not apply to him, though, because it requires that a petition for adoption has been filed, and no petition had been filed in October 1984, when he was asked for his consent. R.L.S. has never paid any support to or for R.G.C., the minor boy. His contention is that a formal petition would have put him on notice of the proceeding, thus allowing him to make support payments. “A statute should not be interpreted in favor of a father who seeks the benefit of parental rights but shuns the burden of parental obligations.” In re Burton’s Adoption (1956), 147 Cal.App.2d 125, 305 P.2d 185, 191; Matter of Adoption of S.L.R. (1982), 196 Mont. 411, 415, 640 P.2d 886, 888; Matter of Adoption of B.L.P. (Mont.1986), [224 Mont. 182,] 728 P.2d 803, 805, 43 St.Rep. 2116, 2119. This statute will not be read to R.L.S.’s advantage.

The putative father’s argument is a circuitous one, which, if adopted, would obliterate the statute. Consider the circumstances attendant in this case: O.K. and L.K. sought the consent of R.L.S. in October 1984 to adopt R.G.C. but he refused; O.K. and L.K. filed a petition for adoption on August 29, 1985; the District Court dismissed that petition as premature on October 8, 1985 since R.L.S.’s rights had not been terminated; the District Court decided on September 23, 1986, that R.L.S.’s consent was not required under Section 40-8-lll(l)(a)(v), MCA. To accept the putative father’s argument would allow any natural parent to thwart a legitimate adoption proceeding merely by refusing his or her consent so that no valid petition for adoption could be filed. This would serve only to vitiate the statute.

The putative father cites Brost v. Glasgow (1982), 200 Mont. 194, 651 P.2d 32, as support for his argument. That case merely requires separate findings on the issues of the need for the parent’s consent aside from findings on the merits of the adoption. Brost, 651 P.2d at 37. The District Court met that requirement.

O.K. and L.K. began an adoption proceeding under Section 40-8-109, MCA, one aspect of which was the paternity issue. In such proceedings, the one-year period of support provisions made for the child should be measured against the commencement of the adoption proceedings under Section 40-8-109, MCA, rather than against the date of the petition for adoption. This rule violates no sense of reasonableness and promotes the intent of the legislature as derived from the statutory scheme it enacted. Statutes should not be construed absurdly when a reasonable construction is possible. Darby Spar, Ltd. v. Department of Revenue (Mont. 1985), [217 Mont. 376,] 705 P.2d 111, 113, 42 St.Rep. 1262, 1264.

Our review shows that the District Court proceeded properly when it determined that consent of the putative father was not required. It then determined the best interests of the child and issued the appropriate orders. Such actions comply with the law in Montana.

“The child’s best interest is one of the most important factors to be considered in determining whether a petition to adopt should be granted . . . Once the statutory requirements for consent to an adoption are met (Section 40-8-111, MCA), the best interest of the child becomes the paramount consideration.”

S.T.V., 733 P.2d at 842.

The District Court considered the question of the putative father’s consent. It determined it was not needed because the putative father had never paid any financial support for the child. Thereafter, the District Court need only determine the child’s best interest. It did this and issued an interlocutory decree of adoption for O.K. and L.K.

We will not disturb this judgment. The District Court is affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES GULBRANDSON, WEBER and McDONOUGH concur.


text:
    HERB BELCHER, Plaintiff and Appellant, v. DEPARTMENT OF STATE LANDS, a political subdivision of the State of Montana, Defendant and Respondent.
    No. 87-07.
    Submitted on Briefs July 1, 1987.
    Decided Sept. 15, 1987.
    742 P.2d 475.

      Datsopoulos, MacDonald & Lind, Edward A. Murphy, Missoula, for plaintiff and appellant.
    John Bobinski, Dept, of Admin., Helena, for defendant and respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

Herb Belcher appeals from an order of the Fourth Judicial District Court, Honorable Douglas G. Harkin presiding, that granted summary judgment under Rule 56(c), M.R.Civ.P., for the defendant, Department of State Lands. Because our review of the record shows that there were no material issues of fact and because the law is squarely behind the defendant, this Court will affirm the judgment of the District Court.

Belcher filed suit against the Department on February 19, 1985, alleging that the Department had acted without just cause when it dismissed him from employment on April 3, 1984. He also claimed that the dismissal was not in accordance with Department policies on discipline and discharge, that the Department breached its contract of employment with Belcher, and by doing so, had breached the covenant to deal fairly with Belcher. In its defense, the Department denied the charges and answered that Belcher had failed to exhaust the grievance procedures available to him.

The Department moved for summary judgment. It asserted that the causes for Belcher’s dismissal were not disputed and that Belcher merely sought to have a jury reconsider his firing. The District Court considered two sets, of briefs and also heard oral arguments on the motion. The ¡^District Court specifically requested Belcher to set out the public policies that he alleged his firing violated. Belcher failed to respond to this request of the court.

The District Court determined that traditional public policy violations were not at issue here. It ruled also that Belcher did not claim he was fired for a reason that violated good faith.

“The basic cause for termination is not in dispute. The court’s role is to determine whether the Department’s procedural handling of this case complied with its written personnel policies. If the termination is in compliance with procedures; the termination is proper” (Emphasis in original.)

District Court Order and Memorandum of October 28, 1986, P.2d citing Nye v. Department of Livestock (1982), 196 Mont. 222, 639 P.2d 498. The District Court concluded that the Department, not the courts, had the responsibility to evaluate Belcher’s performance and to discipline or terminate Belcher. Thus, it granted summary judgment for the Department on October 28, 1986.

In September 1980, Belcher joined the Department as the communications engineer for the Fire Suppression Bureau in Missoula. Later memorandums indicate that as much as 60 percent of the communications engineer’s time was to be spent repairing and installing radios and devising a statewide communications system and design. The remainder of the communications engineer’s time was to be spent with licensing matters, preparation of bid specifications and budget estimates as well as travel and firefighting activity. All of these duties were listed in the position description that was issued in June 1980.

Belcher’s supervisor, Jack Peters, began receiving complaints about Belcher’s work in 1982. The substance of these complaints was that Belcher was not designing radio systems adequately; that he was shirking his responsibility of setting up radio stations by having regional officers do the legwork that he was better qualified for; that the statewide communication plan he had been assigned to write was short, weak, ineffective, incomplete and incomprehensible to the layman; that he had consistently failed to file for the needed licenses with the Federal Communications Commission; and that he had used a state vehicle (on work time) in private projects for profit. A memorandum of punitive discipline requiring Belcher to compensate the state for private use of a state vehicle was issued to Belcher on January 17, 1983. Belcher noted that he reserved the right to respond at a later date and signed the document.

In April 1983, Peters removed Belcher from other work activities so that he could devote full time to preparing the plan. Belcher was told that the communication plan had top priority and that it was essential since Department employees depended on the radios for their lives in emergencies. Peters also began filing memoranda on Belcher’s performance. In a two-month period in late 1983, three separate field officers complained to Peters about incompetence on the part of Belcher in setting up and licensing a communications system near Miles City; in setting up a base station in southwestern Montana that did not allow for a remote control specification; and devising a system near Kalispell that allowed for two radio channels, but since each canceled out the other only one could be used at a time.

These last complaints served as the basis of a notice of corrective discipline issued to Belcher on January 12, 1984. This notice complied with state disciplinary rules by identifying the grounds for the disciplinary action, listing the improvements anticipated, and noting the consequences of failure to comply, including the possibility of termination. The notice required the performance deficiencies be rectified within 60 days and that Belcher submit to weekly evaluations. It required also that Belcher submit a complete Radio Communications Plan and a manual on maintaining and installing radios. Belcher was advised of his right to file a rebuttal; he chose not to file the rebuttal.

Peters met with Belcher on March 5,1984. He warned Belcher that his progress was not sufficient. He conducted a review of Belcher’s actions on March 16 and determined that Belcher’s work remained inadequate. The Radio Communications Plan, which the Department had been expecting from Belcher since he had been hired, was submitted on March 14, 1984. It consisted of 26 pages, eight of them blank forms. It did not include some material that Peters had specifically requested. On March 19, 1984 and at Peters’ request, Belcher filed a memorandum “of things done during the past 60 day[s].” It lists nine tasks, several of which Belcher conceded at deposition would have taken a matter of hours to do. Also listed was revision of the radio plan and revision for the communication plan. The Department, however, still found the plans to be deficient.

On April 3, 1984, Belcher was told by Dennis Hemmer, Commissioner of State Lands, that he was being dismissed. He was notified that he had a right to have an attorney at the meeting and that he had a right to file a grievance. He did not call his attorney, although he had retained legal counsel believing this result was imminent, and did not file the grievance.

This extensive review of the record is necessary since the first question this Court faces is whether the District Court erred in granting summary judgment. Summary judgment under Rule 56(c), M.R.Civ.P., is intended to encourage judicial economy by eliminating unnecessary trials in which no genuine issue of fact is presented. Cereck v. Albertson’s Inc. (1981), 195 Mont. 409, 411, 637 P.2d 509, 510. This Court will uphold summary judgments when the complaining party cannot point to material and substantial facts that would alter the District Court’s decision. If a factual controversy exists, disposition by summary judgment will not suffice. Dare v. Montana Petroleum Marketing Co. (Mont. 1984), [212 Mont. 274,] 687 P.2d 1015, 1019, 41 St.Rep. 1735, 1738. In the midst of a four-day deposition of Belcher, this exchange occurred:

“Q. [By Ms. Mitchell] The allegations of your Complaint says [sic] your termination was without just cause. Why do you think your termination was without just cause? What do you mean?
“A. I believe that I was under such a strain I was unable to perform my duties properly.
“Q. Are you stating that you failed to perform your duties properly?
“A. Under the conditions, yes.
“Q. How do you think the Department of State Lands violated its policy on discharge?
“A. Under the Montana — they call it the MOM manual. I think it is specified a corrective memo is not just cause for termination. I believe it has got to be a disciplinary memo. I think that’s stated in the manual.
“Q. Do you consider, under the Department of State Lands policies, a failure to properly perform the duties of your position just cause for discharge?
“A. Not necessarily.
“Q. But it is a reason for discharge, isn’t it?
“A. Yes.
“Q. Your Complaint says that the Department of State Lands violated a contract of employment. What contract of employment did you have with State Lands?
“A. It is an unwritten contract. I believe in the — for any new employee there is a 6 months’ probationary period and it is more or less understood after 6 months it is a permanent position. I believe that is a common belief of the majority of the people that work for the State.
“Q. Permanent employees can be discharged for failure to properly perform their duties, can’t they?
“A. You can be terminated for any reason.
“Q. Yes or no.
“A. Yes.”

This exchange indicates that no underlying dispute of facts is present. Belcher was not doing his job; he had received notice that his work was not adequate; he failed to rectify the situation, and he was subsequently discharged. It appears to us that no basic question of fact exists for jury determination and Belcher does not raise any specific fact question.

Instead, he raises three issues of law:

• “1. Did the District Court err when it held no action for wrongful discharge or breach of the covenant of good faith would lie if the employer followed proper procedure?
“2. Does termination of state employment without just cause constitute a violation of public policy sufficient to be a wrongful discharge?
“3. Does an employer who has promulgated rules saying that employees will not be discharged except for just cause violate the covenant of good faith and fair dealing if he discharges an employeé without just cause?”

Section 39-31-303, MCA, guarantees the Department certain rights:

“Public employees and their representatives shall recognize the prerogatives of public employers to operate and manage their affairs in such areas as, but not limited to:
“(1) direct employees;
“(2) hire, promote, transfer, assign, and retain employees;
“(3) relieve employees from duties because of lack of work or funds or under conditions where continuation of such work be inefficient and nonproductive;
“(4) maintain the efficiency of government operations;

This statute was held valid where a school district demoted an administrator and reassigned her to classroom activities. Sorlie v. School District No. 2 (1983), 205 Mont. 22, 667 P.2d 400, 404, 40 St.Rep. 1070, 1075.

Because terms of Belcher’s employment contract included the development of a Radio Communications Plan and a Radio Manual, because Department managers instructed him as to what subjects should be included in the manual and plan, because Belcher failed to promptly and properly complete those items, and because Belcher proved to be incompetent in other aspects of his job, the Department exercised its right to dismiss Belcher. Supervisors had issued reprimands, notices of corrective discipline and notices of punitive discipline throughout Belcher’s 43 months of employment. He had the chance to rebut these charges, but chose not to do so. He had the right of grievance, but failed to exercise it. Furthermore, Belcher was unable to show the District Court hat public policies were affected by his dismissal other than his own belief that just cause was violated.

There are many public policy concerns that will trigger a wrongful discharge claim. Examples were discussed in one recent case: dismissal of employee for not perjuring himself; dismissal of employee who files for workers’ compensation; or dismissal of the employee who refuses sexual relationships with employer. Keneally v. Orgain (1980), 186 Mont. 1, 6, 606 P.2d 127, 129. In order to find a public policy concern that would permit Belcher to collect for wrongful termination, this Court would need to add another proscription, the dismissal of state employees who are not performing their duties. In order to constitute a public policy violation, Belcher’s claims would have to “further a state interest in protecting the general public which transcends the employment relationship.” Brinkman v. State of Montana (Mont. 1986), [224 Mont. 238,] 729 P.2d 1301, 1308, 43 St.Rep. 2163, 2171. (Emphasis in original.) Belcher’s claim does not state a public concern; it is a personal matter.

Belcher asserts that Section 2.21.6503(6), A.R.M., in effect when he was dismissed, supports his claim that his dismissal violated public policy. Section 2.21.6503(6), A.R.M. read, “When punitive discipline is necessary, just cause, documentation of facts, and due process are required.” Section 2.21.6507(6) defines just cause as “reasonable, job-related grounds for taking a disciplinary action based on failure to satisfactorily perform job duties . . . “ This Court has held that administrative rules “may be the source of a public policy,” Nye, 639 P.2d at 502 (Emphasis added.); but that public policy is not derived solely from administrative rules. “Public policy violations may conceivably arise on other facts or theories.” Dare, 687 P.2d at 1019.

The facts that Belcher disagreed with his discharge does not mean that the Department’s decision was wrong, Belcher’s right to grievance proceedings under Section 2.21.6503(1), A.R.M., (now found at Section 2.21.6515, A.R.M.) provided his remedy. He failed to use that remedy. In such circumstances, the courts should not interfere. “Whether an employee has performed satisfactorily is to be determined by the employer and not by the courts.” Percival v. General Motors (8th Cir. 1976), 539 F.2d 1126, 1129; see also, Pierce v. Ortho Pharmaceutical Corp. (1980), 84 N.J. 58, 417 A.2d 505, 510-11. This Court will not interfere with the Department of State Lands’ right to manage its affairs and hire employees who will perform their jobs so long as there is a standard for discipline and the Department has abided by it. Summary judgment for the Department on Belcher’s wrongful discharge claim was properly granted.

It is clear from the record, the deposition of Belcher, and Belcher’s own conduct that he knew his job was in jeopardy. The Department repeatedly attempted to help him until the situation was out of control. These particulars represent notice to Belcher that he had to improve or risk discharge. The Department recognized the duty to act in good faith and abided by it. Gates v. Life of Montana (Mont. 1983), 205 Mont. 304, 668 P.2d 213, 215, 40 St.Rep. 1287, 1289.

In Nordlund v. School District No. 14 (Mont. 1987), [227 Mont. 402,] 738 P.2d 1299, 44 St.Rep. 1183, 1186, the covenant of good faith and fair dealing was not breached wherb the employer school district gave the administrator propeTnotice |iis contract would not be renewed, and complied with statutory requirements dealing with school contracts set out in Section 20-4-401, MCA. It was held that “because no breach of the employment contra¿t occurred, it cannot be said that the school board breached the implied covenant of good faith and fair dealing.” Nordlund, 738 P.2d 1299, 44 St.Rep. at 1186.

The case before this Court is similar. The Department of State Lands assigned Belcher to conduct specific duties. Belcher’s work was not adequate and he was warned that it must improve or he would face the prospect of termination. His work performance did not improve and he was discharged. Because the Department followed administrative regulation in warning Belcher about his work, and attempted to assist him, it cannot be said that the Department violated the covenant of good faith and fair dealing when it discharged Belcher. Consequently, Belcher’s claims for breach of the covenant of good faith is deficient and summary judgment for the Department was proper.

We affirm the judgment of the District Court.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES WEBER, GULBRANDSON and McDONOUGH concur.


author: MR. CHIEF JUSTICE TURNAGE MR. JUSTICE McDONOUGH,

text:
    ELLINGSON AGENCY, INC., Plaintiff and Respondent, v. OTTO BALTRUSCH, JR., and Carl Baltrusch, Defendants and Appellants.
    No. 87-44.
    Submitted on Briefs July 1, 1987.
    Decided Sept. 15, 1987.
    742 P.2d 1009.

      Astle & Astle, David L. Astle, Kalispell, for defendants and appellants.
    Jeffrey D. Ellingson, Trieweiler Law Firm, Whitefish, Warden, Christiansen, Johnson & Berg, Stephen C. Berg, Kalispell, for plaintiff and respondent.
   MR. CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Defendants Carl and Otto Baltrusch appeal the judgment of the Eleventh Judicial District Court, Flathead County, which awarded to plaintiff Ellingson Agency, Inc., a broker’s commission, attorney fees and interest in the total amount of $148,308.91 and dismissed defendants’ counterclaim. We affirm in part and reverse in part.

Three issues are presented for our review:

1. Did the District Court err when it granted summary judgment in favor of Ellingson?

2. Did the District Court err when it granted Ellingson’s motion for summary judgment dismissing the Baltrusches’ counterclaim?

3. Did the District Court err when it compounded interest in violation of Section 25-9-205, MCA?

This is an action for a real estate commission based on an exclusive listing agreement between Ellingson Agency, Inc. (Ellingson), and Carl and Otto Baltrusch. Prior to November 6, 1979, the Baltrusch brothers had entered into a contract for deed to purchase the Gibson Shopping Center in Kalispell from Stephen and Patricia Mc-Afee. On November 6, 1979, Carl Baltrusch, representing himself and his brother, signed two exclusive one-year listing agreements with Ellingson covering the sale of the Gibson property. (The listing agreements were identical but covered different portions of the Gibson property; hereinafter, they will be referred to as a singular document.) Marvin Bethea, who was to be the sales agent for the sale, signed the agreement on behalf of Ellingson.

From November 1979 through June 1980, Bethea devoted substantial time and expense attempting to locate buyers for the Gibson property. On January 11, 1980, the Baltrusch brothers received a notice of default from the McAfees requesting the Baltrusch brothers bring current their taxes and special improvement district assessments on the Gibson property or face cancellation or specific performance. In February 1980, the Baltrusch brothers informed Ellingson of McAfees’ notice of default. Ellingson was aware that the Baltrusches were being pressured to transfer title in lieu of foreclosure. However, Ellingson did not inform the Baltrusch brothers that upon transfer in lieu of foreclosure, Ellingson would seek a brokerage fee.

Prior to June 3,1980, the Baltrusches informed Ellingson that they planned to transfer the property in lieu of foreclosure. Ellingson requested that the Baltrusches get a ten-day extension before transferring the property. The Baltrusches deeded the property contingent upon such a ten-day extension. However, Ellingson failed to obtain a buyer.

On June 3, 1980, the Baltrusch brothers by quitclaim deed conveyed the Gibson property back to the McAfees in lieu of cancellation or specific performance and the McAfees released them of all further liability under the contract. On May 4, 1982, Ellingson filed suit against the Baltrusch brothers alleging it was entitled to a commission under the exclusive listing agreement on the conveyance to the McAfees. On September 20, 1983, Ellingson moved for summary judgment. Seventeen months later, on March 25, 1985, the District Court entered summary judgment in favor of Ellingson. The court found the listing agreement to be clear and unambiguous and that Ellingson was entitled to commission on the conveyance of the Gibson property under the terms of the listing agreement. The court awarded Ellingson a commission of $86,862.84 plus interest from June 3, 1980, and costs of suit.

Following summary judgment the District Court granted the Baltrusches leave to amend and file a counterclaim. In the counterclaim, the Baltrusch brothers alleged that Ellingson had violated the Montana Real Estate Brokers and Salesman Act and breached its duty of good faith and fair dealing. The Baltrusches alleged Ellingson knew of the impending return conveyance of the Gibson property but failed in its duty to inform the Baltrusches it would demand a commission on the conveyance. After further discovery, both parties moved for summary judgment on the counterclaim. On August 26, 1986, the court granted summary judgment in favor of Ellingson and dismissed Baltrusches’ counterclaim. Final judgment was entered on October 9, 1986, in the total amount of $148,308.91, which included interest at 10 percent on the amount of judgment entered March 25, 1985. Baltrusches’ motion to alter or amend the judgment was deemed denied, and this appeal followed.

Issue 1

Did the District Court err when it granted summary judgment in favor of Ellingson?

The first issue is whether summary judgment in favor of Ellingson on the issue of its entitlement to a commission was proper. Pursuant to Rule 56(c), M.R.Civ.P., if there is no genuine issue of material fact and the evidence before the court shows the moving party is entitled to judgment as a matter of law, summary judgment is proper. In this instance, the District Court found the exclusive listing agreement to be clear and unambiguous, that Ellingson was entitled to its commission under the contract, and that the Baltrusches raised no affirmative defenses to the contract. We disagree with the District Court that there was no genuine issue of material fact and that Ellingson was entitled to judgment as a matter of law.

The exclusivity provision in the listing agreement executed by the parties provides:

“This listing is an exclusive listing and you hereby are granted the absolute, sole and exclusive right to sell or exchange the said described property. In the event of any sale, by me or any other person, or of exchange or conveyance of said property, or any part thereof, during the term of your exclusive employment, or in the case I withdraw the authority hereby given prior to said expiration date, I agree to pay you the same commission, just the same as if a sale had actually been consummated by you.” [Emphasis added.]

The listing agreement covered the period from November 6, 1979, to November 6, 1980.

On January 11, 1980, the Baltrusches received notice of default from sellers, Stephen and Patricia McAfee. The McAfees continued to pressure the Baltrusches to transfer the property in lieu of foreclosure. The Baltrusch brothers notified Ellingson in February 1980 that the McAfees had served notice of default. The Baltrusches also notified Ellingson that the McAfees were pressuring them to “give the property back.” On June 3, 1980, the Baltrusch brothers transferred quitclaim title to the McAfees in lieu of foreclosure. It appears from the partial transcript of Otto Baltrusch, Jr.’s deposition that prior to June 3, 1980, Ellingson requested that Baltrusches obtain a ten-day extension from McAfees to enable Ellingson to find a buyer for the Baltrusch property. Additionally, it appears that the McAfees by letter dated June 3, 1980, granted a ten-day extension. However, Ellingson was unable to find a buyer.

The District Court found “the Baltrusches conveyed the Gibson property thereby effectively withdrawing the authority of the Ellingson agency to continue to try to sell the property . . .” On review we are presented with the question of whether the District Court erred when it held that a transfer of title in lieu of foreclosure constitutes a sale, exchange or conveyance within the intended meaning of the listing agreement, thereby entitling Ellingson to a commission.

This Court has previously examined exclusive listing agreements identical to the agreement in the present case. In Payne v. Buechler (Mont. 1981), [_ Mont. —,] 628 P.2d 646, 38 St.Rep. 799, the owner unilaterally terminated an exclusive listing agreement, then twelve days later sold the property which had been covered under the agreement. In finding the broker entitled to his commission, we stated:

“. . . once the broker began performance under the written agreement by expenditure of time, efforts and money to attract a purchaser on the owner’s terms, the written agreement became bilateral and binding on both parties. It could not be unilaterally terminated by the owner without payment of the brokers’ commission.”

Payne, 628 P.2d at 650, 38 St.Rep. at 804.

In Nardi v. Smalley (1982), 197 Mont. 321, 643 P.2d 228, this Court held the owner bound by the terms of the exclusive listing agreement and the broker entitled to his commission. In Nardi, the owners executed documents for the sale of the property seventy days after the listing agreement expired but to a buyer found by the broker. The listing agreement provided for the broker’s commission on a sale to a buyer found by the broker, at the agreed price, within ninety days of the termination of the listing agreement. We held the terms of the listing agreement entitled the broker to his commission and that the broker had not breached his fiduciary duty to disclose all material terms.

In John Whiteman & Co. v. Fidei (1954), 176 Pa.Super. 142, 106 A.2d 644, 646, the Superior Court of Pennsylvania held a buyer’s receipt of $1,000 coupled with the transfer of title in lieu of foreclosure constituted a “sale or exchange.” Whiteman was later distinguished by Felbinger and Co. v. Traitoros (1979), 76 Ill.App.3d 725, 31 Ill.Dec. 906, 911, 34 N.E.2d 1283, 1288. In Felbinger, the Illinois Appellate Court held that when an exclusive realtor’s listing contract does not state whether a transfer of title in lieu of foreclosure constitutes a sale, the term sale is susceptible to differing interpretations. Felbinger reversed and remanded the case to the District Court and ordered the court to admit parol evidence of the parties’ intent.

“Where an ambiguous term is used, the intent of the parties will govern its construction and extrinsic evidence can be used to discover that intent.” Adams v. Chilcott (1979), 182 Mont. 511, 517, 597 P.2d 1140, 1144. A court should look at the whole contract and its purpose in determining intent and is not bound by any single provision or expression. Gropp v. Lotton (1972), 160 Mont. 415, 421, 503 P.2d 661, 664-665. When uncertainty in a written instrument exists, the provisions should properly be construed against the party causing the uncertainty. St. Paul Fire & Marine Ins. Co. v. Cumiskey (1983), 204 Mont. 350, 665 P.2d 223, 229, 40 St.Rep. 891.

Implicit in the District Court’s findings of fact and conclusions of law is the finding that it was the intention of the parties to the contract that the terms sale, exchange or conveyance would include a deed in lieu of foreclosure. A sale is defined by Section 30-11-101, MCA, which provides:

“Sale defined. Sale is a contract by which, for a pecuniary consideration called a price, one transfers to another an interest in property.

In the case at hand, the Baltrusch brothers gave up their entire interest in the Gibson property and forfeited all payments made to the McAfees. Accordingly, we hold the Baltrusches’ transfer of title does not constitute a sale pursuant to Section 30-11-101, MCA.

Exchange has been defined as a “contract by the terms of which specific property is given in consideration of the receipt of property other than money.” Capps v. Mines Service (1944), 175 Or. 248, 152 P.2d 414, 416; see also, Section 30-11-112, MCA. Black’s Law Dictionary defines conveyance as a “transfer of title to land from one person, or class of persons, to another by deed.” The District Court found the Baltrusches conveyed the Gibson property, thereby violating the exclusive listing agreement. It is arguable that a technical conveyance occurred when the Baltrusches transferred the property in lieu of foreclosure. However, the record is replete with evidence that the term conveyance had different meanings to respondent and appellants. Both testimony and actions of the parties support this premise.

It follows that the term “conveyance” has no fixed or invariable meaning, but is to be interpreted in accord with the manifest intention of the parties. Parol evidence is therefore necessarily admissible to demonstrate and explain the ambiguity. We have held that “summary judgment is usually inappropriate where the intent of the contracting parties is an important consideration.” Twite v. First Bank (N.A.), Western Montana (Mont. 1984), [214 Mont. 348,] 692 P.2d 471, 472, 41 St.Rep. 2518, citing Fulton v. Clark (1975), 167 Mont. 399, 404, 538 P.2d 1371, 1374.

In the case at bar, the record reflects that the Baltrusches were unaware that a transfer of title in lieu of foreclosure would constitute a conveyance entitling Ellingson to a commission. Respondent Ellingson did not inform the Baltrusches of that fact despite its fiduciary duty to disclose, until the filing of this lawsuit. Lyle v. Moore (1979), 183 Mont. 274, 277, 599 P.2d 336, 338. Therefore, a latent ambiguity exists, and parol evidence is necessary to determine the intention of the parties. Section 28-3-301, MCA. We reverse and remand this issue to the District Court with instructions to vacate summary judgment granted in favor of respondent Ellingson.

Issue 2

Did the District Court err when it granted summary judgment dismissing the Baltrusches’ counterclaim?

After granting respondent Ellingson’s initial motion for summary judgment, the District Court granted appellants leave to amend and file a counterclaim. The Baltrusch brothers alleged in their counterclaim that Ellingson violated its fiduciary duty owed by a broker to a customer to disclose all material facts. On August 26, 1986, the District Court granted Ellingson’s motion for summary judgment against the Baltrusches’ counterclaim.

A fiduciary relation exists between a real estate broker and his client. Carnell v. Watson (1978), 176 Mont. 344, 350, 578 P.2d 308, 312; Lyle v. Moore (1979), 183 Mont. 274, 277, 599 P.2d 336, 337. A real estate broker holds the affirmative duty to disclose all material facts. Flemmer v. Ming (Mont. 1980), 621 P.2d 1038, 1043, 37 St.Rep. 1916.

The District Court, in its August 26, 1986, findings of fact and conclusions of law found that the contract was clear and unambiguous and that Ellingson had “no duty to advise [the Baltrusches].” Earlier, we held that the District Court erred when it found the listing agreement was clear and unambiguous. We conclude there may have been a genuine issue of material fact as to whether Ellingson breached a fiduciary duty to disclose. Rule 56(a), M.R.Civ.P.

The District Court erred when it granted respondent’s motion for summary judgment, thereby dismissing the Baltrusches’ counterclaim. We reverse and remand this issue and instruct the District Court to deny Ellingson’s motion for summary judgment against the Baltrusches’ counterclaim.

Issue 3

Did the District Court err when it compounded interest in violation of Section 25-9-205, MCA?

Although we are not required to review this issue, we choose to address it for judicial economy and to assist the parties in the event of further judicial proceedings involving this issue.

In its March 25,1985, summary judgment order, the court awarded Ellingson its commission of $86,862.84 plus interest at 6 percent on that amount from the date of breach to the date of judgment. The total judgment amount entered on March 25, 1985, was $111,936.45. The second summary judgment dismissing Baltrusches’ counterclaim was entered August 26, 1986. The court found Ellingson entitled to judgment at 10 percent on the $111,936.45 judgment. The Baltrusches contend the interest at 10 percent on the initial judgment, which included a 6 percent interest award, is in violation of Section 25-9-205, MCA. Section 25-9-205, MCA, provides:

“(1) Except as provided in subsection (2), interest is payable on judgments recovered in the courts of this state at the rate of 10 percent per annum and no greater rate. Such interest must not be compounded in any manner or form.
“(2) Interest on a judgment recovered in the courts of this state involving a contractual obligation that specifies an interest rate must be paid at the rate specified in the contractual obligation.”

In this case, Ellingson’s damages were ascertainable on the date of breach, and it was entitled to interest thereon pursuant to Section 27-1-211, MCA. The legal interest rate was 6 percent pursuant to former Section 31-1-106, MCA. The District Court correctly included 6 percent interest from the date of the breach to the March 25, 1985, judgment. Section 25-9-204, MCA; Gallatin Valley Elec. Ry. v. Neible (1919), 57 Mont. 27, 186 P. 689. On that date a judgment amount was entered, and Ellingson was entitled to 10 percent interest on the judgment under Section 25-9-205, MCA. This is not compound interest; rather, it is interest on the judgment, and the District Court did not err in making the ward. See, Ehly v. Cady (Mont. 1984), [212 Mont. 82,] 687 P.2d 687, 696, 41 St.Rep. 1611, 1621.

The method used by the District Court in calculating interest is correct. Summary judgment motions granted by the District Court (1) in favor of respondent Ellingson’s claim and (2) denying appellant Baltrusches’ counterclaim are reversed and remanded with instructions to vacate.

MR. JUSTICES HARRISON, SHEEHY, WEBER, HUNT and GULBRANDSON concur.

MR. JUSTICE McDONOUGH,

dissenting:

I dissent to the majority’s decision on Issues 1 and 2. The terms of the listing agreement entitle Ellingson to a commission upon exchange of the contract property. The pertinent part of the agreement reads: “In the event ... of exchange or conveyance of said property, . . . during the term of your exclusive employment... I agree to pay . . .”. Thus, the outcome of the commission issue depends on whether or not an exchange has occurred. Section 30-11-112, MCA, defines an exchange as follows:

“Exchange is a contract by which the parties mutually give or agree to give one thing for another, neither thing nor both things being money only.”

Here the Baltrusches conveyed their vendee’s or equitable interest in the property to McAfees. In exchange the McAfees released them from substantial monetary payments, due currently and in the future, under the contract. McAfees obtained the property back and Baltrusches obtained the release. Under Montana law, an exchange occurred. They gave one thing for another, neither thing being money. The exchange triggered the commission provided for by the agreement.

The terms of the listing agreement are clear. The signed listing agreement was the final contract between the parties. There is no ambiguity as to its terms. The Baltrusches are experienced businessmen. The admission of parol evidence to determine the intent of the parties violates the parol evidence rule. Any agreement reduced to writing is the final agreement of the parties and if not ambiguous should stand.

As to the second issue, Baltrusches’ counterclaim should have been dismissed. Ellingson did not owe a fiduciary duty as broker to affirmatively disclose to Baltrusches that a commission would be due in event of an exchange or conveyance back to McAfees. The listing agreement already provided for the commission.

A fiduciary duty between broker and seller is breached when the seller is fooled or deceived by the contract or does not understand its content. Nardi v. Smalley (Mont. 1982), 197 Mont. 321, 643 P.2d 228, 39 St.Rep. 606. None of these elements appear here. With the myriad of real estate transactions involving pecuniary sales or exchanges including not only real property but personal and mixed property, and all of the various combinations thereof, an expansion of the fiduciary duty to affirmatively disclose when it is clear in the parties’ written agreement, opens the door to extensive uncertainty of the law. The District Court was correct in dismissing Baltrusches’ counterclaim.


author: MR. JUSTICE HARRISON MR. JUSTICE McDONOUGH,

text:
    JEANNE CLOSE WAGNER, Plaintiff/Appellant, v. EMPIRE DEVELOPMENT CORPORATION d/b/a Billings Neon Sign co., Defendant/Respondent.
    No. 87-047.
    Submitted on Briefs June 25, 1987.
    Decided Sept. 15, 1987.
    Rehearing Denied Oct. 22, 1987.
    743 P.2d 586.
    MR. JUSTICE McDONOUGH dissented and filed an opinion in which MR. JUSTICES HUNT and SHEEHY concurred.
    Boschert and Boschert, Rosemary C. Boschert, Billings, Babich, Bennett and Nicherson, Mark W. Bennett, Des Moines, Iowa,-for plaintiff and appellant.
    Brown, Kaleczyc, Berry and Hoven, Oliver H. Goe, Helena, for defendant and respondent.
    Steven B. Ungar, ACLU, Bozeman, Janice Frankino Doggett, MHRC, Helena, for amicus curiae.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This case is before the Court on appeal from an order of the District Court of the Thirteenth Judicial District in and for Yellowstone County, Montana. The District Court denied plaintiff’s request for attorney’s fees and costs because of a contingency fee agreement. Plaintiff’s motion to alter or amend judgment also was denied. We affirm.

The facts are undisputed. Plaintiff/appellant Jeanne Wagner filed an employment discrimination charge against defendant/respondent Empire Development d/b/a Billings Neon Sign Company claiming Billings Neon had failed to pay her equal pay for equal work. Because Wagner failed to comply with orders of the hearing examiner appointed by the Human Rights Commission, a hearing scheduled for January 14, 1983, was not held until November 28, 1983, two years and thrée months after the charge was filed. Nearly one year after the hearing, the Human Rights Commission issued its final order awarding Wagner $45,749.43 back pay, benefits, and interest. By stipulation of the parties, a petition by Billings Neon for review of the final order was dismissed and the final settlement provided that Billings Neon would pay $48,990.20 to Wagner in two installments. These payments were timely made.

Pursuant to the Commission’s order, Wagner was the prevailing party. A contingent fee agreement with her attorney, Rosemary Boschert, provided that Boschert was to receive 33 Vs % of any award received from Billings Neon. Wagner tendered $16,329.10 to Boschert pursuant to this agreement. Subsequently, Wagner requested attorney’s fees provided for in Section 49-2-505(4), MCA, part of the Montana Human Rights Act. An evidentiary hearing was held and the court denied the request. Wagner appeals.

The issue is whether it was error for the District Court not to award attorney’s fees. Section 49-2-505(4), MCA, provides that “[t]he prevailing party in a hearing [in a contested hearing case] may bring an action in District Court for attorney’s fees. The court in its discretion may allow the prevailing party reasonable attorneys’ fees.” This statute is similar to the federal statute found at 42 U.S.C. Section 1988 which provides that, “the court, in its discretion may allow the prevailing party ... a reasonable attorney’s fee as part of its costs [,]” in a proceeding to enforce certain sections of Title 42, U.S.C., and Title 20 U.S.C.

The purpose of awarding attorney’s fees to prevailing parties in civil rights litigation is to ensure “effective access to the judicial process.” Hensley v. Eckerhart (1983), 461 U.S. 424, 429, n.2, 103 S.Ct. 1933, 1937, n.2, 76 L.Ed.2d 40, 48, n.2. Generally there is agreement that without an attorney’s fee award for successful litigants, meritorious civil rights litigation often would not be brought. A delicate balance must be struck between awarding the attorney who is successful full compensation for her efforts, and awards that are unreasonably high.

We have not previously interpreted Section 49-2-505(4), MCA, and thus are free to adopt or ignore the standard applied by Federal courts when awarding attorney’s fees under 42 U.S.C. Section 1988. The Ninth Circuit applies abuse of discretion to cases arising under 42 U.S.C. Section 1988. Smiddy v. Varney (9th Cir. 1981), 665 F.2d 261, 268; Sethy v. Alameda County Water District (9th Cir. 1979), 602 F.2d 894, 897. Although this is not a Section 1988 action, there is no reason not to apply this standard in our analysis.

“In determining whether the trial court abused its discretion, the question is not whether the reviewing court agrees with the trial court, but, rather, did the trial court in the exercise of its discretion act arbitrarily without the employment of conscientious judgment or exceed the bounds of reason, in view of all the circumstances, ignoring recognized principles resulting in substantial injustice.”

Carkeek v. Ayer (1980), 188 Mont. 345, 348, 613 P.2d 1013, 1015.

The circuit courts are not in agreement on the issue of contingent fee agreements vis-a-vis statutory awards as it relates to adequate and reasonable compensation. We reject the argument that a contingent fee agreement automatically precludes award of the statutory fees. “[A] prevailing plaintiff should ordinarily recover an attorney’s fee unless special circumstances would render such an award unjust.” Hensley v. Eckerhard, supra at 429, 103 S.Ct. at 1937, 76 L.Ed.2d at 48. “A private fee agreement is not itself ‘special circumstances’ which would render an award of fees unjust. Sargeant v. Sharp (1st Cir. 1978), 579 F.2d 645, 649.” Hammer v. Rios (9th Cir. 1985), 769 F.2d 1404, 1408. Such a limitation can result in an overemphasis of the importance of damages and exert an upward pressure on attorney’s fees, thus reducing the litigant’s opportunity for full compensation for his civil rights injury. See Cooper v. Singer (10th Cir. 1983), (en banc), 719 F.2d 1496, 1503. The Cooper Court said that while a contingent fee agreement does not preclude award of attorney’s fees, “the actual fee obligation must reside within the confines of the term ‘reasonableness.’ ” Cooper, at 1504. Additionally, the Ninth Circuit has said that “fee awards should be the rule rather than the exception.” Teitelbaum v. Sorenson (9th Cir. 1981), 648 F.2d 1248, 1251; Ackerley Communications v. City of Salem, Or. (9th Cir. 1985), 752 F.2d 1394, 1396.

The Tenth Circuit requires a lawyer to reduce his contingency fee if it is greater than the statutory fee. Cooper, supra. The Eleventh Circuit does not treat the statutory fee as a ceiling. Pharr v. Housing Authority (11th Cir. 1983) 704 F.2d 1216, 1218. It appears the defendant in Pharr was required to pay the difference between the statutory fee and the contingency fee. The Third Circuit allows counsel to receive the greater of the statutory fee or the contingency fee. If the contingency fee is greater, however, plaintiff must pay the difference between the two fees. Sullivan v. Crown Paper Board Co. (3rd. Cir. 1983), 719 F.2d 667, 668-69. The Fifth Circuit does not permit plaintiff’s counsel to receive a fee award in excess of the contingency fee arrangement. Johnson v. Georgia Highway Express (5th Cir. 1974), 488 F.2d 714, 718. The Second Circuit holds that a claim for services rendered under a contingency fee agreement must be deemed satisfied to the extent counsel receives an award under Section 1988. The court reasoned this result allows “citizens the opportunity to recover what it costs them to vindicate [their] rights in court.” Wheatley v. Ford (2nd Cir. 1982), 679 F.2d 1037, 1041.

In the instant case, counsel has received payment for her services under the contingency fee agreement with Wagner. Although the contingency fee per se is not a special circumstance warranting denial of the statutory fee, Wagner freely contracted with her counsel for an amount each party considered to be a reasonable figure. Further, it appears Wagner recovered the cost of vindicating her rights in court. The circumstances in this case indicate that to grant Boschert more than that for which she contracted would be a grave injustice to Billings Neon, resulting in a windfall to Boschert. “[T]he civil rights statutes should not be construed to provide windfall recoveries for successful attorneys.” Wheatley v. Ford, supra, at 1041.

The District Court found that Boschert caused a hearing continuanee from January 14, 1983 until March 4, 1983 by her failure to provide discovery documents relating to damages and wages claimed by Wagner. The hearing was continued again because of the Human Rights Commission’s budget difficulties. The matter ultimately came on for hearing November 28, 1983, and subsequently the Human Rights Commission ordered Billings Neon to pay to Wagner $45,749.43 in back pay, benefits, and interest for the period of February 18, 1981 through Nov. 28, 1983. Had the hearing been held January 14, 1983, damages awarded to Wagner would have been $28,005.31. Thus Wagner realized more than $17,000 because of the delay, and her attorney benefited to the extent of $7,000. Boschert would benefit further by receiving one-third of the statutory fee.

There is no evidence to support Boschert’s claim for additional attorney’s fees. She did not present competent evidence as to the hours she spent in pursuit of the claim. She did not provide guidance to the court as to proper fee calculation from which a fee could be determined. Boschert did not testify as to the exact nature of the work performed.

The logical starting point for any trier of fact in determining a reasonable attorney’s fee is “the amount and character of the services rendered” and “the labor, time and trouble involved.” Talmage v. Gruss (1983), 202 Mont. 410, 412, 658 P.2d 419, 421; Johnson v. Tindall (1981), 195 Mont. 165, 168, 635 P.2d 266, 268; and First Security Bank of Bozeman v. Tholkes (1976), 169 Mont. 422, 429, 547 P.2d 1328, 1332.

Other factors to be considered by the court in establishing a reasonable fee include:

“[t]he character and importance of the litigation in which the services were rendered, the amount of money or the value of the property to be affected, the professional skill and experience called for, the character and standing in their profession of the attorneys . . . The result secured by the services of the attorneys may be considered as an important element in determining their value.”

Johnson v. Tindall, supra at 168, 635 P.2d at 268.

Although the court is required to look at all these factors “within these guidelines, the amount fixed as attorney fees is largely discretionary with the District Court.” Carkeek v. Ayer, supra at 347, 613 P.2d at 1015.

Section 49-2-505(4), MCA, clearly gives the District Court discretion to award attorney’s fees. There is sufficient evidence Wagner’s counsel was adequately and reasonably compensated for her efforts, whether or not reference is made to federal fee shifting statutes. We do not find the District Court abused its discretion in failing to award statutory attorney’s fees.

The order of the District Court is affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES WEBER and GULBRANDSON concur.

MR. JUSTICE McDONOUGH,

dissenting:

I dissent.

Wagner’s counsel has been adequately and reasonably compensated for her efforts. Who has not been reimbursed for her reasonable attorney fees is Wagner. She is the loser by the majority opinion.

No one disputes that Wagner is the prevailing party in the discrimination action. Wagner has brought this separate action for her attorney fees pursuant to Section 49-2-505(4), MCA, of the Montana Human Rights Act. Such section allows the prevailing party (Wagner) reasonable attorney fees in the District Court’s discretion payable by the other party. The question here is, did the District Court, in not awarding any reimbursement for attorney fees, simply abuse its discretion? It did, and its order should be reversed and the cause remanded.

The District Court’s main reason in its order for not awarding fees is that Wagner was adequately compensated in the settlement amount and not entitled to additional fees. This is, in effect, a determination that Wagner received enough in the settlement to cover her actual damages and attorney fees. It must be remembered the settlement of the discrimination action was voluntarily stipulated to be the parties after negotiations and the action dismissed with prejudice pursuant thereto. Wagner gave Empire a release of all her damages in consideration of the money. The parties determined what all the damages were worth; past, present and future. They specifically excluded from the settlement Wagner’s claim for attorney fees. The order of the District Court arbitrarily included such fees back in the settlement.

I am aware that the agreement between Wagner and her attorney was a contingent fee agreement and Wagner has paid her attorney on the basis of that agreement, but the attorney-client agreement should have no bearing on this case as to whether or not Wagner should recover reasonable fees from Empire. It might under certain circumstances be relevant to determine the amount of such fees or what amount is reasonable.

What Wagner has asked for here is reimbursement for a reasonable amount of hours expended by her attorney multiplied by a reasonable hourly compensation rate which is less than she, Wagner, paid under the contingent fee agreement.

Great import is made by the Court and Empire of the fact that Wagner’s attorney did not supply to Empire’s attorney a statement of damages and wages lost, prior to an administrative hearing in its discrimination action. Such failure to supply allegedly postponed the hearing and thereby increased the damages. Empire stipulated to the settlement and agreed to the amount of damages as negotiated. It should not be allowed to reargue such amount in this action for fees. If this failure on the part of Wagner’s attorney to supply such information had an effect on the amount of time spent by her in the discrimination case, it can be considered, but not otherwise.

Fee awards in these types of cases should be the rule and not the exception. Failure to award attorney fees to the prevailing party, Wagner, on the basis of the reasons given is unjust and an abuse of discretion.

MR. JUSTICES HUNT and SHEEHY concur in the foregoing dissent.