author: JUSTICE HUNT

text:
    MARTHA BERLIN and DONALD J. PETERSON, Plaintiffs and Respondents, v. BRETT A. BOEDECKER and BOEDECKER RESOURCES, INC., a Montana corporation, Defendants and Appellants.
    No. 93-315.
    Submitted on Briefs March 10, 1994.
    Rehearing Denied Aug. 18, 1994.
    Decided June 30, 1994.
    51 St.Rep. 569.
    268 Mont. 444.
    887 P.2d 1180.

      For Appellants: Loren J. O’Toole II, O’Toole & O’Toole, Plentywood.
    For Respondents: James A. Manley, Manley Law Office, Poison (for Martha Berlin); Douglas J. Wold, Wold Law Firm, Poison (for Donald J. Peterson).
   JUSTICE HUNT

delivered the Opinion of the Court.

Defendants Brett A. Boedecker and Boedecker Resources, Inc., appeal from a judgment of the Eleventh Judicial District Court, Flathead County, granting respondents Martha Berlin and Donald Peterson damages for their losses in two overriding royalty purchases, and finding that Brett Boedecker breached the parties’ oral contract and his fiduciary duty to respondents, and piercing the corporate veil.

We affirm.

The parties raise the following issues:

1. Was respondents’ action barred by the doctrine of res judicata?

2. Was respondents’ action barred by the doctrine of collateral estoppel?

3. Was respondents’ action barred by the statute of limitations?

4. Were the District Court’s findings of fact supported by substantial credible evidence?

5. Was respondents’ action barred by accord and satisfaction?

6. Did the District Court err when it pierced the corporate veil?

In May 1984, respondent Martha Berlin and her husband, Joe Berlin, lived in Lake County. Martha had investment assets for which Joe acted as her agent. Joe had significant investment experience, but he and Martha had limited experience with investments in oil and gas interests. Previously, the couple had invested in oil wells in Texas. Also at this time, respondent Donald Peterson lived in Flathead County and worked mostly as a fireman. He had substantial experience as a part-time realtor. Previously, Peterson invested in real estate and western art, but had not invested in oil and gas interests.

Appellant Brett Boedecker lived in Glendive and operated through a corporate entity known as Boedecker Resources, Inc. (corporation), a Montana corporation with its principle place of business in Glendive. Brett was an experienced and active investment counselor, landsman, and broker in the field of oil and gas investment interests. He owned approximately 97 percent of the corporation and completely controlled it.

On December 13, 1983, Brett met and entertained the Berlins in Glendive with dinner at his home. Brett’s home contained fine art and projected the appearance of wealth and success. There Brett told the Berlins of his vast experience in the oil and gas business. Brett also stated, “I am Boedecker Resources.”

The next day, Brett took the Berlins to his office and displayed maps and charts indicating his knowledge and associations in the oil and gas industry. Brett discussed with the Berlins the possibility of purchasing net overriding royalties. Respondents testified that Brett represented these investments as more valuable than producing wells or wells being drilled because the investor could avoid responsibility for development costs.

Brett disclosed his past close working relationship with Comdisco, Inc., a New York stock exchange corporation with considerable gas and oil holdings. Brett explained that Comdisco would have first option on any properties or leases available through his or the corporation’s services. He also explained that if Comdisco did not exercise its complete option, he could sell or broker the opportunities to other persons or companies. Brett also represented to the Berlins that he had extensive knowledge of Williston Basin and Sceptre Field in Valley County and believed that those areas had the greatest potential for oil discovery and production. However, at the time of the parties’ first meeting, the wells under production from the Sceptre Fields had been sold to Comdisco. In November 1983, Brett had negotiated and transacted a sale from Exok, Inc., to Comdisco for almost all of the producing oil and gas interests in the Exok properties located in Valley County. Brett did not disclose this fact to the Berlins. The Berlins and Peterson had expressed their interest to Brett for reasonably short-term investments and production of wells.

Respondents entered into four transactions with Brett and the corporation. However, only two formed the basis of this action. The first of the two disputed transactions was the Exok transaction which involved the purchase of certain overriding royalty interests from a Canadian oil and gas company. Brett was to act as respondents’ agent to negotiate the investment. In 1983, Brett’s brother, Brooks Boedecker, was one of several landsmen and employees who received part of a package (the Sceptre package) of undivided royalty interests from Sceptre Resources, Inc., the Canadian oil and gas company. In 1983, that company went out of business and gave overriding royalty interests located in several western states to its landsmen as severance payments. Certain of those employees sold their interests, comprising 70 percent of the package, to Exok for $600,000. Brett knew of this sale price, but did not tell respondents of it.

In the Exok transaction, Brett represented to respondents that he could purchase 1400 prime net royalty acres of overriding royalties out of 700,000 gross acres and 45,000 net royalty acres from the Sceptre package. Brett represented that he was informed of the most valuable 1400 royalty acres, and that if respondents purchased an interest immediately, they would have several months to choose the most valuable 1400 royalty acres out of the 45,000 net acres available. In this transaction, Brett also served as Comdiseo’s agent to locate and negotiate oil and gas interests, for which Comdisco paid Brett a commission.

On December 21, 1983, Brett entered the respondents into what the District Court found was a “secret agreement” with Exok for the purchase of some of the undivided interests in overriding oil and gas royalties of the Sceptre package. Under the agreement, respondents purchased a 1/6 interest in the Exok interests for $53,666, and Brett received a six percent commission. Brett had made this agreement prior to locating respondents as the buyers. The agreement provided, in part, that if Brett could sell by April 8, 1984, for $322,000, Exok would transfer to Brett 20 percent of all their royalties within the State of Michigan. Thereafter, Exok would assign to Brett another 20 percent of 1/2 of the remaining assigned royalties, giving Brett a total of 33.5 percent of all the interests. Subsequently, Brett assigned his interests in the Exok overriding royalties to his corporation, effective May 1, 1984. On June 20, 1985, the corporation performed the December 21, 1983, secret agreement when Brett, as their agent, entered respondents into the agreement with Exok. Because of the assignment by Brett to the corporation, Brett was to receive 8280 net royalty acres and some Michigan royalty acres. In total from this transaction, Brett received 5850 net royalty acres of the original Exok purchase, where respondents received only 90 royalty acres. Brett did not reveal this discrepancy to respondents.

Evidence at trial showed that respondents had relied completely upon Brett’s advice, counseling, and negotiation to their prejudice. The evidence also showed that respondents did not realize the value or potential losses of the interests Brett was buying for them.

The court found that Brett received commissions from respondents, as their agent, and from Exok, the seller. In addition, the court found that Brett had a fiduciary duty as their agent to fully disclose the material facts and considerations to respondents, as purchasers of the Exok interests. The court found that Brett’s transaction with Exok, on behalf of respondents, constituted a clear conflict of interest. The court also found that Brett had determined respondents’ purchase price based on his own need under his agreement with Exok, not by an appraisal and investigation of its fair market value. The court reasoned that Brett failed to use reasonable care in investigating and evaluating the investment or give competent, reliable, and accurate information about the assets. Finally, the court found that Brett’s breach of his fiduciary duty to respondents resulted in their loss of compensatory damages in the amount of $53,666, less $1000 they recovered in royalties.

The second transaction was the Brooks Boedecker transaction which involved respondents’ purchase of certain royalty interests from Brett’s brother, Brooks. At the parties’ original meeting in Glendive, Brett introduced respondents to Brooks. Brooks owned a ten percent interest in the Sceptre package, which was worth $100,000 at the time of its transfer to him. After Brett purchased an interest for respondents in Exok, respondents came into contact with Brooks in Denver, Colorado. Respondents and Brooks entered into an agreement to purchase certain ofBrooks’royalty interests. Testimony conflicted as to whether Brett had advised respondents to contact Brooks. Brooks offered to sell respondents his Sceptre package interest for $500,000. Unaware of the package’s real value, respondents agreed to purchase only 1/2 of the interest for $250,000.

The court found that between the time of the original Exok transfer on October 8, 1983, and the time Brett purchased respondents’ Exok interest, no producing wells had been drilled. Meanwhile, Brett had entered into the secret agreement with Brooks and others. The court found that the sale to respondents by Brooks aided in completing the Exok agreement managed by Brett, thereby meeting its time table. As a result of the Brooks transaction, Brooks received the Michigan overriding royalties and Brett received a commission from respondents in the amount of $15,000. Respondents did not know that Brooks had paid Brett a $15,000 commission for the Brooks transaction.

The court found that Brett and/or the corporation failed to advise respondents that the amount of interest they were purchasing for $250,000 — only a five percent interest in the Sceptre package — sold several months previously for $50,000, five times less than what they had paid. In addition, the court found that Brett had a conflict of interest by reason of the execution of the secret agreement of December 21,1983. There Brett stood to make a pecuniary gain through the agreement. The court also found that Brett demanded a $15,000 commission from Brooks, knowing that respondents had paid a highly inflated price for the Exok transaction. Thereby, Brett improperly had ratified the Brooks transaction without Ms full involvement in the transaction, as respondents’ agent. Finally, the court found that Brett breached Ms contractual obligation and fiduciary duty as respondents’ agent to properly advise them of true and material facts.

The court found that respondents were prejudiced. The Brooks transaction produced no overriding royalties for respondents and they lost $229,233 — $214,233 in cash and art, and $15,000 as a commission to Brett. However, the court found that because respondents entered into the contract with Brooks without at least fully consulting Brett, 50 percent of the damages were attributable to their own actions. The court apportioned 1/2 the damages, or $114,616.50, to Brett and/or the company for the Brooks transaction.

The court also found that the facts reqmred piercing of the corporate veil of Boedecker Resources, Inc. The court found Brett and the corporation jointly and severally liable. The total amount of respondents’judgment was $167,282.50, plus their costs of suit. The court did not award punitive damages against Brett.

ISSUE 1

Was respondents’ action barred by the doctrine of res judicata?

Appellant argues that res judicata should have barred litigation of the action below because the two disputed transactions were the same subject matter of certain testimony by respondent, Peterson, and by respondent Martha Berlin’s husband, Joe Berlin, in a prior trial between the parties. Appellant asserts that respondents already had the opportunity to litigate the two transactions in the prior case, and should not have been allowed to “relitigate” the transactions in the present action.

Res judicata is in the nature of claim preclusion and is a remedy where a claim has been previously litigated. Lancaster v. Department of Justice, Div. of Motor Vehicles (1985), 218 Mont. 97, 99, 706 P.2d 126, 128. This Court recently reaffirmed its long-time holding that a claim may be barred on the basis of the doctrine of res judicata if the following elements are present: (1) the parties or their privies are the same; (2) the subject matter of the action is the same; (3) the issues are the same and relate to the same subject matter; and (4) the capacities of the persons are the same in reference to the subject and to the issues between them. Davis v. Church of Jesus Christ (1993), 258 Mont. 286, 301-02, 852 P.2d 640, 650.

In its order on appellant’s motion for summary judgment and respondents’ motion to amend the complaint, the court found that “for all practical purposes, the parties or their privies were the same and the capacities of the persons were the same in reference to the subject matter and the issues between them.” In addition, the court found that the second and third elements of the Davis test were lacking. The court reasoned that the subject matter in the two actions was not the same, and the issues were not the same or related to the same subject matter. Specifically, the court found that the subject matter of the earlier action between the parties was a written and express contractual relationship pertaining to a Dawson County acquisition program. On the other hand, the court found that the subject matter of the present action was “an oral agreement whereby [appellant] was to act as an advisor or agent [for respondents] for investments in the oil and gas industry generally, and specifically, as to a portion of the Sceptre Package in May of 1984.” For res judicata to bar a subsequent action, there must be a precise identity of the issues. In re Marriage of Stout (1985), 216 Mont. 342, 701 P.2d 729.

The subject matter of the Dawson County action was the parties’ fourth transaction which involved a lease play contract occurring entirely in that county in April through August 1984. At issue in that action was whether appellant, as an individual and corporate officer, breached the parties’ Letter Agreement of July 5, 1984. In addition, that suit alleged that appellant committed fraud and breached his fiduciary duty to respondents.

In contrast, the present action involved the first and third of the parties’ four transactions. The contracts in the two actions were separate and the contracts’ values differed. The locations of the oil and gas interests in the contracts also differed. Finally, the tortious conduct alleged by appellants in the present action differed from that in the fourth transaction, involving a different fraudulent scheme.

Respondent chose not to join the actions, pursuant to Rule 18(a), M.R.Civ.R, and both actions were litigated simultaneously. Appellant did not move to dismiss the Flathead County action. Only after success in the Dawson County suit did appellant argue that judgment affected or barred the Flathead County suit. In the Dawson County suit, appellant objected to respondent Peterson’s and Joe Berlin’s testimony about the prior transactions, the subject of the present suit, on the grounds that it was irrelevant. However, on appeal appellant argues that this testimony raised the issues presented in the present suit, which amounted to actual litigation of these issues. In essence, appellant now argues that the testimony in the Dawson County suit was clearly relevant to the present suit. Appellant’s argument that the Dawson County suit testimony amounted to an opportunity for respondents to litigate the subject matter of the present action is without merit. The court allowed the testimony because it provided a background on the parties’ series of transactions and their relationship.

In like manner, appellant argues that the issues presented in this action are the same because the jury was asked to determine a breach of contract, breach of a fiduciary duty, breach of an implied covenant of good faith and fair dealing, and fraud. Although these theories of recovery were the same as those used in the Dawson County action, they were not related to the same subject matter. The two actions were relevant to one another, however, the issues were not precisely the same. Therefore, the doctrine of res judicata does not apply.

We agree with the District court and hold that respondents’ present action was not barred by res judicata.

ISSUE 2

Was respondents’ action barred by the doctrine of collateral estoppel?

Appellant argues that the issues in the Dawson County case and this case are identical, and that the parties’ or their privies previously had full opportunity to litigate them, and in fact did litigate them. Therefore, he argues that respondents should have been barred from relitigating the issues based on the doctrine of collateral estoppel.

Collateral estoppel is in the nature of issue preclusion. Collateral estoppel may bar an action if: (1) the issue has been decided in a prior adjudication and is identical to the one presented; (2) a final judgment on the merits was issued; and (3) the party against whom the plea is asserted was a party or in privity with a party to the prior adjudication. Anderson v. State (1991), 250 Mont. 18, 21, 817 P.2d 699, 701. We have said that of the criteria required to establish collateral estoppel, identity of issues is the most important and requires that the precise question has been litigated in the prior actions. Stapleton v. First Sec. Bank (1983), 207 Mont. 248, 258, 675 P.2d 83, 89.

The court determined that the issues and the underlying facts raised in the two actions were not identical. The court reasoned that there “can be no question that the transaction forming the basis of the Dawson County case is separate from the “Sceptre Package” and “Brooks” transactions ... [because] those transactions and underlying facts were not necessary to a determination of the Dawson County litigation.” We agree.

The record shows that the subject matter of the two actions and the relationship of the issues to the subject matter were not the same. The Dawson County case involved a written and express contractual relationship pertaining to a Dawson County acquisition program. On the other hand, the subject matter of the present action was an oral agreement between the parties that appellant was to act as respondents’ agent for the investment of their monies in certain oil and gas overriding royalty interests. This agreement affected the Sceptre or Exok transaction of May 1984, and the Brooks transaction, not the Dawson County action.

Although the party against whom respondents pled was the same party in both actions, we conclude that the issue presented here was not identical to the one in the Dawson County case. A final judgment on the merits of this case did not occur there.

We hold that respondents’ action was not barred by collateral estoppel.

ISSUE 3

Was respondents’ action barred by the statute of limitations? Appellant argues that the District Court erred when it allowed joinder of Boedecker Resources, Inc., to the suit, 7V2 years after the transactions in question. Appellant asserts that no statute of limitations exists that could relate back that far in this cause of action. Finally, appellant asserts that because this was respondents’ third suit against Brett Boedecker, there was no valid reason for respondents to have failed to join Boedecker Resources, Inc., as a party so late.

The transactions and their corresponding activities occurred in 1984 and 1985. On December 1, 1986, respondents filed their complaint in this action. On January 6, 1992, three weeks after Brett’s deposition, respondents moved for leave to join the corporation as an additional defendant, pursuant to Rule 15(c), M.R.Civ.P On February 19, 1992, the District Court allowed the joinder of Boedecker Resources, Inc., as a defendant.

The Montana Rules of Civil Procedure include a relation-back doctrine for the amendment of complaints. See Rule 15(c), M.R.Civ.P. A party may amend a complaint to change the party against whom the claim is asserted, and the claim will relate back whenever:

(1) the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, and within the period provided by law for commencing the action against the party to be brought in by amendment; (2) that party has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits; and (3) the party knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.

Rule 15(c), M.R.Civ.P. In addition, “[p]arties may be dropped or added by order of the court on motion of any party of its own initiative at any stage of the action and on such terms as are just.” Rule 21, M.R.Civ.P. (Emphasis added).

We have said that joinder is to be liberally allowed under Rule 21, M.R.Civ.P. White v. Lobdell (1984), 208 Mont. 295, 306, 678 P.2d 637, 642.

Respondents’ amendment to join the corporation satisfied Rule 15(c), M.R.Civ.P. The joined party was involved in the transactions at issue in this action. Brett, acting as Boedecker Resources, Inc., represented that he would be respondents’ agent for purposes of investing their monies in oil and gas interests. Respondents filed their original action within the period provided by law for commencing the action against the party to be brought in by amendment — the corporation. Brett, acting for himself and as an agent for Boedecker Resources, Inc., received notice of the institution of the action, and therefore, was not prejudiced in maintaining a defense on the merits. Because Brett was already a party/defendant, he knew of the lawsuit. The corporation’s dealings with respondents put Brett on notice that the corporation was potentially liable. Brett was on notice that, but for a mistake concerning the identity of the proper party, the action would have been brought against the corporation. Brett had stated to respondents on their first meeting, “I am Boedecker Resources.” The District Court found Brett’s representation was accurate and that respondents had relied on that statement. The record shows that Brett had intermingled the corporation’s assets extensively with his own after entering into the Sceptre package transaction with respondents.

Joinder of the corporation was proper because the amendment related back to the date of the filing of the action, in accord with Rule 15(c), M.R.Civ.R Therefore, we hold that the joinder and the action was not barred by the statute of limitations.

ISSUE 4

Were the District Court’s findings of fact supported by substantial credible evidence?

Appellant seems to argue that substantial credible evidence was not presented at trial to support the trial court’s findings of fact regarding the following:

(1) The “secret agreement”, wherein Brett was to receive an overriding royalty interest in the remaining acreage of the Exok purchase; (2) The failure of Brett and/or the corporation to disclose the sale of production to Comdisco; (3) That appellants did not use reasonable care in evaluating and investigating the Exok interests or in advising respondents; and (4) Brett’s alleged failure to consult respondents in the Brooks transaction.

These contentions involve almost all the issues raised at trial.

Our standard of review of a trial court’s findings of fact is whether the findings are clearly erroneous. Further, we will examine whether: (1) the findings are supported by substantial credible evidence; (2) whether the trial court misapprehended the effect of the evidence; and (3) whether we are left with a definite and firm conviction that a mistake has been committed. Interstate Prod. Credit Ass’n v. DeSaye (1991), 250 Mont. 320, 323, 820 P.2d 1285, 1287. In addition, we will give due regard to the opportunity of the trial court to judge the credibility of the witnesses.

The court’s finding that respondents were unaware of the “secret agreement” is supported by substantial credible evidence.

Martha Berlin and Don Peterson each testified that years after the transaction they found out that Brett was to receive an overriding royalty interest in the remaining acreage of the Exok purchase. They also testified that each would not have entered into the agreement had they known that Brett would have received a substantial windfall from Exok by selling them a small package in a short period of time. The court was entitled to judge respondents’ credibility. Rule 52, M.R.Civ.P.

Substantial credible evidence supports the court’s finding that Brett and/or the corporation failed to disclose the sale of production to Comdisco. This non-disclosure was evidenced by the testimony of Berlin and Peterson. Again, the court was permitted to judge their credibility.

Substantial credible evidence supports the court’s finding that Brett did not use reasonable care in evaluating and investigating the Exok interests or in advising respondents. Two of Brett’s witnesses testified that he used reasonable care in evaluating and investigating the Exok interests or in advising respondents. However, documentary evidence presented at trial showed that Brett conducted no evaluation or process of selection for the acreage he was to purchase for respondents. The record shows that the acreage Brett sold to respondents was pre-selected before Brett became involved in the resale of the Sceptre package to Comdisco and respondents, and that he did not have the opportunity to select the best acreage for respondents.

Finally, substantial credible evidence supported the court’s finding that Brett failed to consult respondents in the Brooks transaction. The record shows that in October 1983, several of the other owners of the 1/10 interest in the Sceptre package had sold their interests for $100,000. The record reflects conflicting testimony as to whether Brett advised respondents to seek out Brooks in Denver for a possible investment. However, respondents testified that Brooks did not inform them of the price for which the other owners of the Sceptre package had sold their interests. Brooks proceeded to offer his 1/10 interest to respondents for $500,000. Respondents purchased 1/2 of Brooks’ interest for $250,000. The record also shows that Brett received commission payments from Brooks as a result of this transaction. The court found that neither Brooks nor Brett, as respondents’ agent, disclosed the interest’s real value to them. Berlin and Peterson testified that had they known of its fair value, they would not have purchased Brooks’ interest. The evidence supports the District Court’s findings.

Review of the record also shows that the court did not misapprehend the effect of the evidence, and we are not left with a definite and firm conviction that a mistake has been committed.

We hold that the District Court’s findings of fact are supported by substantial credible evidence on these issues and are not clearly erroneous.

ISSUE 5

Was respondents’ action barred by accord and satisfaction?

During trial, appellant made a motion based on accord and satisfaction, and the court denied the motion. On appeal, appellant argues that because in 1985 Brooks and respondents had renegotiated the $250,000 purchase in the 1984 Brooks transaction, respondents cannot now maintain a suit against Brett or the corporation regarding that transaction because of an accord and satisfaction between them and Brooks. In 1985, Brooks and respondents renegotiated the Brooks transaction whereby respondents were to receive all of Brooks’ interest, excluding his Michigan interests, for $214,233.

An accord and satisfaction extinguishes only the obligation between the parties to the agreement. See §§ 28-1-1401 and -1402, MCA. Accord and satisfaction in the Brooks transaction occurred between Brooks and respondents in 1984, and again in 1985, upon modification of their contract. The accord and satisfaction occurred only for that transaction, but did not serve to release Brett from his potential liability to respondents as their agent in either the Sceptre or Brooks transactions.

Appellant’s argument has no merit. We hold that respondents’ action was not barred by accord and satisfaction.

ISSUE 6

Did the District Court err when it pierced the corporate veil?

Appellant asserts that the District Court erred when it found that Brett Boedecker was the alter ego of the corporation. Appellant argues that he did not make the corporate decisions alone on all the issues, but collaborated with his wife, who was secretary for Boedecker Resources.

We have defined a two-prong test for piercing the corporate veil. First the trier of fact must find that the defendant was either the alter ego, instrumentality, or agent of the corporation. Drilcon, Inc. v. Roil Energy Corporation, Inc. (1988), 230 Mont. 166, 176, 749 P.2d 1058, 1065. Second, the trier of fact must find evidence that the corporate entity was used as a “subterfuge to defeat public convenience, justify wrong, or perpetrate fraud.” Drilcon, 749 P.2d at 1065.

The District Court found that the actions of the corporation and Brett were interchangeable, as the corporation’s assets were constantly intermingled with Brett’s individual assets. The court found that Brett owned 97 percent of the corporate stock, was its president, and completely controlled the corporation. As a result, the court found that respondents’ remedy was for joint and several liability of the corporation and Brett.

The record shows that the royalties in the Exok transaction were to be assigned to Brett, but the actual roj^alties became assigned to the corporation. In another transaction, Brett transferred certain Flathead County property from the corporation to himself and his wife for no consideration. In addition, Brett told respondents at their first meeting, “I am Boedecker Resources.” The record shows that Brett executed all relevant documents regarding the transactions between the parties, where his wife was involved in none of them. Generally, the record shows that Brett had a continuous course of dealing with respondents where he was in complete control of the corporation, and the gain was for him individually, not for the corporation. The evidence is substantial that Brett was the alter ego of Boedecker Resources, Inc., in all his transactions with respondents.

Finally, the evidence showed that Brett used the corporate entity of Boedecker Resources as a subterfuge to justify wrong and perpetrate fraud against respondents. From his first dealings with respondents while entertaining them in his home, and his impressive display of maps, charts, and associations in the oil and gas industry, Brett perpetrated fraud against respondents.

We agree with the District Court that these actions by Brett were “sufficient enough to demonstrate to [respondents] that Brett and/or the Corporation had not only extensive, but impressive knowledge and association, in the oil and gas industry and was such [as] to justify an expectation of trust and confidence in Brett’s success, knowledge and reliability.” Brett made misrepresentations to respondents that he could choose the most valuable 1400 acres available from the Sceptre package. He misrepresented that the net royalty interests purchased by respondents would be valuable investments. Brett failed to reveal the discrepancy between the 5850 net royalty acres he was to receive from the Exok transaction, and the 90 royalty acres respondents were to receive. Finally, Brett did not disclose to respondents the full value or potential problems and losses of what they were buying.

The record contains substantial credible evidence upon which the District Court concluded that Brett was the corporation’s alter ego and that Brett used the corporate entity to perpetrate fraud against respondents. The court properly determined that Boedecker Resources’ corporate veil should be pierced and that the corporation and Brett should be jointly and severally liable.

We hold that the District Court did not err when it pierced the corporate veil.

Affirmed.

JUSTICES TRIEWEILER, GRAY, NELSON and WEBER concur.


source: Caselaw Access Project

author: JUSTICE NELSON JUSTICE TRIEWEILER

license: Public Domain

text:
    PATRICK STEVENS, Petitioner/Appellant and Cross-Respondent, v. STATE COMPENSATION MUTUAL INSURANCE FUND, STANFORD STEVENS, Defendant, Employer/Respondent and Cross-Appellant.
    Nos. 94-004 and 94-005.
    Submitted on Briefs August 11, 1994.
    Decided December 19, 1994.
    51 St.Rep. 1396.
    268 Mont. 460.
    886 P.2d 962.

      For Appellant: Michael G. Eiselein, Lynaugh, Fitzgerald, Eiselein & Eakin, Billings.
    For Respondent: Michael P. Heringeir, Brown, Gerbase, Cebull, Fulton, Harman & Ross, Billings.
   JUSTICE NELSON

delivered the Opinion of the Court.

This is an appeal and cross-appeal from a Workers’ Compensation Court order concluding that the claimant did not fraudulently obtain workers’ compensation benefits from the State Fund. The Workers’ Compensation Court also concluded that the insurer was not unreasonable in its investigation and termination of the claimant’s benefits. We affirm in part and reverse and remand in part.

We restate the following issues on appeal and cross-appeal:

APPEAL

I. Did the Workers’ Compensation Court err in determining that the claimant, Patrick Stevens (Stevens) was not entitled to a 20 percent penalty fee pursuant to § 39-71-2907, MCA?

II. Did the Workers’ Compensation Court err in determining that Stevens was not entitled to attorneys’ fees pursuant to § 39-71-611, MCA?

III. Did the Workers’ Compensation Court err in failing to award the expenses of the private investigator Stevens hired to defend himself against the claim that he fraudulently obtained workers’ compensation benefits?

IV. Did the Department of Labor and Industry (DOLI) and the Workers’ Compensation Court err when they failed to reinstate Stevens’benefits for 49 days pursuant to § 39-71-610, MCA.

CROSS-APPEAL

I. Did the Workers’ Compensation Court err in determining that Stevens did not fraudulently obtain Workers’ Compensation benefits?

FACTUAL AND PROCEDURAL BACKGROUND

Stevens’ account of his injury provides that he was employed by his father, Stanford Stevens, on October 25, 1990, when he was injured, falling a distance of three feet from a grain drill he was preparing for planting of the winter wheat crop. He experienced increasing pain and complications and went to St. Vincent’s Hospital later that day. An MRI revealed that Stevens had a herniated disc, requiring surgery, which was performed on October 26, 1990.

Stevens’ father/employer had applied for Workers’ Compensation insurance on October 24,1990. The policy became effective on October 25, 1990, the day Stevens was injured. The State Fund assumed liability for the accident and Stevens was paid temporary total disability benefits of $233.33 per week from November 1, 1990 until October 23, 1991. He also received total rehabilitation benefits of $233.33 per week from October 24, 1991 until his benefits were terminated.

On April 22, 1993, Stevens received a letter stating that his benefits would be terminated in 14 days, pursuant to § 39-71-609, MCA. On April 29,1993, Stevens filed an emergency petition seeking a reinstatement of his benefits. The Workers’ Compensation Court held a hearing in Billings, Montana, from August 23 through 25, 1993, on the emergency petition.

Statements by Carolyn Becker, (Becker), Stevens’ ex-wife, to the State Fund had formed the basis for the State Fund’s decision to terminate Stevens’ benefits. Becker had alleged that Stevens had been injured prior to the accident date of October 25, 1990, and that the reported accident was a ruse to obtain medical treatment for Stevens. Her testimony, however, was inconsistent and bears further elucidation.

Becker provided inconsistent testimony during the two investigations conducted concerning the validity of Stevens’ injury, and in her deposition and at the emergency petition hearing. She told Greg Stone, a private investigator hired by the State Fund to conduct the initial investigation, that Stevens had been “injured for a couple days up to one week before having surgery.” She also told Stone that Stevens had never had a back injury prior to this injury at issue. She further related to Stone that she would not testify against Stevens regarding the injury.

However, in her July 27, 1993 deposition, she stated that Stevens had been “laid up” and in great pain for a week to ten days prior to going to the hospital. She further testified that he lay or slept on the floor, night and day, in “a lot of pain,” for the seven to ten day period. She also asserted that Stevens had been injured while fishing in July 1990, when he fell in a hole in the river. She claimed that he “reinjured” his back in October, trying to lift something, although Becker was not clear about what he was trying to lift at the time. Finally, she stated that he had informed her that the reinjury was related to the July fishing accident.

At the August 23 emergency petition hearing, she testified that Stevens had injured his back when they were on a fishing trip in July of 1990. She stated that he reinjured his back in October of 1990 when he bent over to pick something up. She further testified that he had always had a bad back.

In further testimony at the hearing, Becker claimed that in the days immediately preceding October 25, she spoke with Max Thornton, Mary Jane Coley and Layne Coley about Stevens’ back injury, thus proving he was injured prior to the date he professes to have been injured. However, during cross-examination of Becker, Stevens’ attorney impeached her testimony with an obituary from the Billings Gazette and a death certificate which indicated that Layne Coley had died in early August of 1990, months before the alleged conversations about Stevens’ back injury occurred. Becker’s testimony about Stevens’ pre-dated injury was also refuted by both Stevens’ uncle, Harold Patrick Hughes, and Stevens’ father, Stanford Stevens. Stevens’ father testified that when he saw him on October 24, he appeared to be fine and showed no sign of back pain or injury.

Hughes, Stevens’ uncle, testified that he had seen Stevens at the Northern International Livestock Exposition (NILE) cattle show on October 18, 1990, and that he could discern no signs of back injury; “[h]e seemed very normal, no signs of pain.” Although Becker had testified at her deposition that Stevens laid on the floor of their home, except to go to the bathroom, in great pain for seven to ten days prior to his admission to the hospital on October 25, she testified at the hearing that Hughes may very well have seen Stevens at the cattle show because he could do whatever he wanted, “he was up and down, and so on, when I say he basically laid on the floor, it’s when he was doing nothing he was laying on the floor.”

The hearing examiner concluded that Stevens and his uncle were credible witnesses with consistent testimony. He found that Becker’s stories were inconsistent, incredible and appeared to be fabricated. He concluded that the totality of the evidence presented did not justify the termination of benefits and that Stevens was entitled to benefits retroactive to the date of termination. The hearing examiner also concluded that Stevens was not entitled to the 20 percent penalty levied for an unreasonable refusal to provide benefits nor was he entitled to attorneys’ fees because the State Fund “acted reasonably with the evidence it had in its possession.”

The hearing examiner’s Findings of Fact, Conclusions of Law, and Proposed Judgment was filed on December 3, 1993. On that same day, the Workers’ Compensation Court judge filed an order adopting the Findings of Fact and Conclusions of Law of the Hearing Examiner and entered Judgment. This appeal followed.

STANDARD OF REVIEW

The standard of review for findings of the Workers’ Compensation Court is that such findings will not be overturned if there is substantial evidence in the record to support them. Stordalen v. Ricci’s Food Farm (1993), 261 Mont. 256, 258, 862 P.2d 393, 394. ‘Whether an insurer’s conduct is unreasonable is a question of fact.” Lovell v. State Comp. Mut. Ins. Fund (1993), 260 Mont. 279, 288, 860 P.2d 95, 101. See also: Dean v. Austin Mut. Ins. Co. (1994), 263 Mont. 386, 389, 869 P.2d 256, 258.

DISCUSSION

ISSUES I AND II—PENALTY FEE AND ATTORNEYS’ FEES

Issues I and II address whether the Workers’ Compensation Court erred in failing to award a 20 percent penalty fee pursuant to § 39-71-2907, MCA, and attorneys’ fees pursuant to § 39-71-611, MCA, for unreasonably terminating a claimant’s benefits. Section 39-71-2907, MCA, provides in pertinent part:

(1) When payment of compensation has been unreasonably delayed or refused by an insurer, either prior or subsequent to the issuance of an order by the workers’ compensation judge granting a claimant compensation benefits, 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, and such a finding constitutes good cause to rescind, alter, or amend any order, decision, or award previously made in the cause for the purpose of making the increase provided herein.

Section 39-71-611, MCA, provides in pertinent part:

(1) The insurer shall pay reasonable costs and attorney fees as established by the workers’ compensation court if:
(a) the insurer denies liability for a claim for compensation or terminates compensation benefits;
(b) the claim is later adjudged compensable by the workers’ compensation court; and
(c) in the case of attorneys’ fees, the workers’ compensation court determines that the insurer’s actions in denying liability or terminating benefits were unreasonable.

Issues I and II must be decided based upon a determination as to whether the insurer was unreasonable in terminating benefits; if it was unreasonable, a penalty fee and attorneys’ fees may be awarded pursuant to §§ 39-71-2907, and 39-71-611, MCA, respectively.

The Workers’ Compensation Court concluded that the insurer had a reasonable basis for believing that Stevens was not injured on-the-job and was not, therefore, entitled to benefits. We must determine whether substantial evidence supports this conclusion. If the insurer was reasonable in its investigation of the claim, there is no basis upon which to award the penalty fee or attorneys’ fees. If, however, there is not substantial evidence to support the Workers’ Compensation Court’s conclusion that the insurer’s actions were reasonable, this Court must overturn the Workers’ Compensation Court’s decision and an award of a penalty fee and attorneys’ fees will be warranted.

Previous case law lends assistance in determining whether, in the instant case, the insurer provided a reasonable review and evaluation of the evidence prior to terminating Stevens’ benefits. Our case law provides that “an insurer has a duty to make at least a minimal investigation of a claim’s validity in light of the relevant statutes. Absent such investigation, denial of a claim for benefits is unreasonable.” Lovell, 860 P.2d at 101. See also; Gaumer v. Montana Dept. of Highways (1990), 243 Mont. 414, 421, 795 P.2d 77, 81.

Lovell involved an action arising out of the State Fund’s decision to terminate the benefits of Mr. Lovell when it learned that he was receiving Social Security benefits. The Workers’ Compensation Court concluded, and this Court agreed, that even a cursory investigation would have revealed that Lovell received Social Security benefits due to his alcoholism, not because of the injury at issue. The Lovell Court farther stated that in that case, the State Fund’s failure to fulfill its duty to investigate served as a sufficient basis to conclude that State Fund’s actions were unreasonable. Moreover, this Court stated that “[p]ayment of unreasonably withheld benefits ‘on the courthouse steps’ does not negate the insurer’s potential liability for a penalty for unreasonable delay of benefits. To conclude otherwise would render the ‘unreasonable delay” provisions of the penalty statute moot.” Lovell, 860 P.2d at 102. (Citation omitted.)

With the Lovell principles in mind, we analyze whether the insurer was unreasonable in terminating benefits in the instant case. First, a basic timeline of the events of the case proves helpful. On October 28,1992, an anonymous hotline tip call was placed to the State Fund, stating that the claimant was working. Approximately one month later, Greg Stone was hired to investigate the claim and about one month after Stone was assigned to the case, he delivered his report to the State Fund. Visser testified that he did not read Stone’s report but that he was familiar with what was in the report.

On February 24, 1993, Nancy Butler sent a letter to Robert Fairchild, Bureau Chief of the Montana Criminal Investigation Bureau (MCIB), asking for an investigation into Stevens’ claim. Tom Woods was assigned to investigate the claim and on March 26,1993, Fairchild wrote to Visser, stating that the investigation had been completed and a copy of Woods’report was enclosed.

Visser did not read Woods’ report before he sent a reply letter to the MCIB, relating the total amount paid by the State Fund to date for Stevens’ claims and enclosing, for return, Woods’ report. Visser stated that he did talk to Woods, but only once, and only about whether Woods had a witness who would testify against Stevens.

Visser provided the following testimony:

Q. And you didn’t know what was in Mr. Woods’ report because you read it — because you hadn’t read it. The only way you knew what was in the report was from whatever conversation you had with Mr. Woods about what was in his report, right?
A. Right.
Q. Okay. And you talked, before you made this decision to terminate Mr. Stevens’ benefits, you talked to Mr. Woods one time, and one time only, am I right?
A. Regarding whether or not there was going to be a witness, yes. Q. Well, and that’s all you talked to him about?
A. Right.
Q. You didn’t talk to him about what was in his report other than are we going to have a witness or not, before you made the decision to terminate?
A. We knew whether or not we had a case if we had a witness. And that was the only issue.
Q. My point is, can you answer this yes or no, did you know, either from reading or talking to Mr. Woods, what it was that Mrs. Stevens was going to say?
A. I had heard that she was going to testify that the claimant was injured prior to coverage being obtained.

When Visser learned that Woods did have a witness who would testify about the falsity of the claim, he decided to terminate benefits; the date of the decision to terminate was April 21,1993. On April 22, 1993, Stevens received notice via letter that his benefits were being terminated.

Visser testified that he never spoke with Becker about her testimony to determine whether she was a credible witness despite the fact that he knew the witness was the claimant’s ex-wife. Visser provided the following testimony:

Q. So at the time you made the decision [to terminate Stevens’ benefits], you didn’t know whether you had or whether you didn’t have a credible witness?
A. When I made the decision, we knew we had a witness who was willing to testify that claimant’s injury did not occur on that date. It’s not my job to judge whether or not that testimony is credible.
Q. And so at the time you made the decision you didn’t know whether she was credible or not, did you?
A. At the time I made the decision, I knew she was going to testify that the injury did not occur on the date that the claimant said it did.
Q. Mr. Reporter, may I have my question read back. (Question read.)
Q. Yes or no?
MR. HERINGER: I think he responded to the question as posed.
MR. EISELEIN: I don’t think so.
THE COURT: I will allow the question. You may answer the question.
THE WITNESS: We knew we had somebody that was going to testify. That, combined with the fact that the claimant had the coverage on the 25th, claimed the injury on the 25th, that was enough reason to terminate benefits.
Q. (By Mr. Eiselein:) I will try it one more time. Did you know on the 21st of April of ’93 whether or not Carolyn Becker was credible or not?
THE WITNESS: I knew she was going to testify. How credible she was or was going to be is not for me to decide.
Q. (By Mr. Eiselein:) Who is it up to to decide?
A. That’s His Honor’s job, not mine.

Visser further testified at the hearing that his sole basis for terminating Stevens’ benefits was the fact that there was a witness who would come forward and testify that the injury occurred before October 25, 1990. As stated in the cited testimony above, he did not concern himself with the credibility of the witness’ testimony.

Additionally, Visser testified that he never interviewed, nor did he know if either of the investigators ever interviewed, Stevens’ surgeon, Stevens’ father/employer, or Stevens, himself. Neither did Visser know if anyone had requested an opportunity to speak to Stevens’ through his attorney in an attempt to verify or question the fraud claim. Visser simply did not conduct any investigation other than determining that there was a witness who would testify that the injury occurred prior to October 25, 1993.

A cursory investigation would have revealed that there was “bad blood” between Becker and Stevens as well as the entire Stevens’ family. If he had interviewed Stevens’ surgeon, Dr. Meyer, he would have realized that the injury was more consistent with Stevens’ version of events than Becker’s version. Dr. Meyer also could have informed Visser that Stevens was straightforward and consistent in providing information about the injury to all medical personnel involved in his treatment and recovery. Moreover, testimony from Stanford Stevens and Harold Hughes would have revealed that witnesses had observed Stevens prior to October 25 and he appeared pain-free and injury-free at that time. Visser failed to avail himself of opportunities to validate the fraud allegations.

Several problems, in fact, exist in State Fund’s handling of this case. First, the State Fund ordered two investigations into a possible fraud perpetrated by Stevens but Visser never read the reports. Second, he failed to evaluate the credibility of the “star” witness in the case by interviewing her about her proposed testimony. Third, he did not seek to validate her allegations through interviews with other witnesses or Stevens, himself. Fourth, if Visser felt that it was not his job to judge the credibility of the “star” witness, his recourse should have been to petition the Workers’ Compensation Court to terminate Stevens’benefits.

Having made the determination to investigate, it was incumbent upon Visser to base his decision to terminate on a reasoned evaluation of the evidence, including a review of the investigative reports, an evaluation of the credibility of the “star” witness and further investigation into possible testimony from other available witnesses. Visser only determined whether there was a witness who would testify that a fraud had been perpetrated against the State Fund; no evaluation was conducted as to the merit or validity of her proposed testimony.

In determining whether there is a reasonable basis for denying a claim, we conclude that there must be a reasoned review of all available evidence in the case. The review of the evidence should be followed by an impartial evaluation of the evidence reviewed. Only after such review and evaluation is the insurer in a position to decide whether to:

1. close the file if the evidence clearly does not support a claim of fraud;
2. conduct further investigation if the review and evaluation suggests that is necessary;
3. petition the Workers’ Compensation Court for a termination of the benefits where the weight of the evidence is inconclusive or where witness’ credibility is an issue; or
4. terminate the benefits where substantial evidence exists that a fraud has occurred.

In the instant case, a reasonable review and evaluation were not conducted; essentially, no review and evaluation were conducted. The failure to provide even a minimal review and evaluation once the investigations were concluded rises to the level of unreasonable conduct by the State Fund and mandates a reversal of the Workers’ Compensation Court’s conclusion that the State Fund was reasonable in terminating Stevens’benefits. Gaumer, 795 P.2d at 81; Stordalen, 862 P.2d at 395; Lovell, 860 P.2d at 101-102. We hold that substantial evidence did not exist to support the Workers’ Compensation Court’s conclusion that the State Fund’s termination of benefits in the instant case was reasonable. Because the actions of the insurer were unreasonable, an award of a penalty pursuant to § 39-71-2907, MCA, and attorneys’ fees pursuant to § 39-71-611, MCA, is warranted and should be assessed on remand. We reverse the Workers’ Compensation Court on Issues I and II and remand for proceedings consistent with this opinion.

ISSUE III—COSTS

Stevens argues that he should have been awarded the costs of the investigator he hired to defend against the fraud claim. Section 25-10-201, MCA, is a general statute which governs the award of costs and was made applicable to workers’ compensation cases in Baeta v. Don Tripp Trucking (1992), 254 Mont. 487, 493-94, 839 P.2d 566, 570. Section 25-10-201(9), MCA, provides in pertinent part that included in the costs which may be awarded to a party are “such... reasonable and necessary expenses as are taxable according to the course and practice of the court or by express provision of law.” Section 25-10-201(9), MCA. Therefore, our task is to determine whether the cost of a private investigator is taxable according to the course and practice of the Workers’ Compensation Court or by express provision of law.

In the instant case, in its Order Awarding Costs, the Workers’ Compensation Court judge stated that expenses for Stevens’ private investigator would be disallowed because “it [was] not an expense otherwise taxable ‘according to the course and practice of the court or [by] express provision of law,”’ citing § 25-10-201(9), MCA. The Workers’ Compensation Court here expressly stated that it was not within the course and practice of the court to award the costs of a private investigator. We must defer to the Workers’ Compensation Court in its determination of its own course and practice and therefore, we cannot premise an award of costs on this basis.

Our next step is to determine whether an express provision of law mandates an award of costs for the services of a private investigator. It is the rule in Montana that statutory authority must exist in civil cases for any award of costs. Masonovich v. School Dist. No. 1 (1978), 178 Mont. 138, 140, 582 P.2d 1234, 1235. In the present case, no statutory authority was cited by Stevens nor did this Court locate any statutory authority which would support an award for the costs of a private investigator in this case.

Kadillak v. Mont. Dept. of State Lands (1982), 198 Mont. 70, 79, 643 P.2d 1178, 1184, further provides that “the list of items [in section 25-10-201, MCA,] is exclusive except as to cases taken out of its operation by special statute, by stipulation of the parties or by rule of court,” quoting Roseneau Foods, Inc. v. Coleman (1962), 140 Mont. 572, 580, 374 P.2d 87, 91. As stated above, there is no special statute applicable here nor any rule of the Workers’ Compensation Court which lends support to such an award; nor was there any evidence that the parties stipulated to an award of such costs. Therefore, we hold that the Workers’ Compensation Court did not err in disallowing an award for the costs of Stevens’ private investigator.

ISSUE IV—§ 39-71-610, MCA

Finally, Stevens argues that the DOLI and the Workers’ Compensation Court erred in failing to reinstate his benefits for forty nine days, pursuant to § 39-71-610, MCA. Because we affirm the Workers’ Compensation Court’s judgment that Stevens received a compensable industrial injury and is entitled to benefits retroactive to the date of termination, we do not reach this issue.

CROSS-APPEAL

ISSUE I—SUBSTANTIAL EVIDENCE

The State Fund cross-appeals the issue of whether the Workers’ Compensation Court erred in concluding that Stevens did not fraudulently obtain workers’ compensation benefits. The State Fund argues that overwhelming and substantial evidence establishes that Stevens did commit a fraud upon the State Fund.

In addressing this issue, we are guided by the principles of our standard of review for findings of fact made by the Workers’ Compensation Court. This Court cannot substitute its judgment for that of the trial court as to the weight of the evidence on questions of fact. Wood v. Consolidated Freightways, Inc. (1991), 248 Mont. 26, 28, 808 P.2d 502, 504. “Where there is substantial evidence to support the Workers’ Compensation Court, this Court cannot overturn the decision.” Wood, 808 P.2d at 504. (Citations omitted.) This Court will not substitute its judgment for that of the Workers’ Compensation Court in matters of witness credibility and the weight of their testimony. Nave v. State Comp. Mut. Ins. Fund (1992), 254 Mont. 54, 58-59, 835 P.2d 706, 709. (Citation omitted.) Finally, it is not this Court’s responsibility to determine whether sufficient evidence supports a contrary finding. Houts v. Kare-Mor Inc. (1993), 257 Mont. 65, 68, 847 P.2d 701, 703. Therefore, our review entails a determination of whether substantial evidence supports the decision of the Workers’ Compensation Court.

The decision of the Workers’ Compensation Court that the claimant did not fraudulently obtain compensation benefits and that his benefits should be retroactively reinstated is supported by substantial evidence in the record. Stevens, himself, consistently maintained that he was injured when he fell from a grain drill on October 25, 1990. A telephone call placed by Becker with investigator Woods listening in, intended to place Stevens in a position to reveal a fraud upon the State Fund, revealed no evidence of fraud. Further, Stevens’ surgeon testified that Stevens’ account of his injury remained consistent to the various medical personnel he encountered throughout his treatment and recovery.

The hearing examiner concluded that “[a]fter observing the demeanor of the claimant and having read [his deposition testimony] and noting no inconsistencies in the claimant’s deposition testimony and corroboration by other witnesses, the Court finds the claimant to be a credible witness.” The factfinder is in the best position to observe the demeanor and credibility of the witnesses, and in the instant case, the hearing examiner felt that Stevens’ account was credible. Nave, 835 P.2d at 709.

Stevens’ account of his injury is supported by the testimony of other witnesses. Although Becker had testified at the hearing that Stevens was injured prior to October 25, 1990, witnesses who observed him shortly before that date testified that he appeared fine and they observed no signs of pain or injury in Stevens. Stevens’ uncle, Harold P. Hughes, testified that he had seen Becker at a cattle show and he showed no signs of a disabling back injury. The hearing examiner, whose findings of fact and conclusions of law were adopted by the Workers’ Compensation Court, found Stevens’ uncle to be a credible witness. Stevens’ father also testified by deposition that he had seen Stevens in the days before October 25,1990, and he could not discern any problems with pain or injury in his son.

Moreover, Dr. Meyer testified that the injury was much more consistent with Stevens’ account of the accident than Becker’s story that he was injured when he bent over to “pick something up.” The Workers’ Compensation Court concluded that “[t]he record clearly supported] the conclusion of the hearing examiner that petitioner is entitled to benefits and was not guilty of fraud.” We agree.

Although it is not this Court’s responsibility to determine whether there is substantial evidence to support a contrary finding, we point out that the basis of the State Fund’s conclusion that Stevens committed fraud was the testimony of a witness who was determined by the hearing examiner to have been discredited. Further, in regard to her testimony, the Workers’ Compensation Court judge stated that “Carolyn Becker’s inconsistent stories, bias, and fabricated story of a conversation with a deceased individual were fatal to the fraud allegations against petitioner.”

Becker testified at the hearing that she spoke with Layne Coley about her husband’s injury during the week before he entered the hospital on October 25,1990. However, her testimony was impeached through the admission of a death certificate and an obituary, both declaring that Coley had died in August of 1990, months before the alleged conversations about Stevens’ back injury were to have occurred. Moreover, as stated above, other witnesses testified to observing Stevens during the week before the October 25, 1990 hospital admission date and finding him in good health. The trier of fact can take into account inconsistent statements and other evidence which contradicts a witness’ statements in determining witness credibility. Nave, 835 P.2d at 709. In this case, Becker’s inconsistent statements rendered her testimony tainted and her allegations meritless.

After reviewing all the evidence and assessing the witnesses’ demeanor and credibility, we conclude that substantial credible evidence exists to support the Workers’ Compensation Court’s conclusion. We hold that the Workers’ Compensation Court did not err in its determination that Stevens did not commit fraud. We further hold that Stevens’ benefits should be reinstated retroactive to the date when they were terminated.

AFFIRMED IN PART AND REVERSED AND REMANDED IN PART.

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

JUSTICE TRIEWEILER

specially concurring in part and dissenting in part.

I concur with the majority’s resolution of Issues I, II, IV, and V.

I dissent from the majority’s conclusion under Issue III that claimant had no right to reimbursement for the costs he reasonably incurred in an effort to recover benefits which were unlawfully terminated unless those costs are provided for in § 25-10-201, MCA.

Claimant’s right to recover costs in this case is governed by the provisions of the Workers’ Compensation Act. The provision of that Act which relates to claimant’s right to recover costs is correctly identified by the majority as § 39-71-611, MCA, which provides in relevant part that:

(1) The insurer shall pay reasonable costs and attorney fees as established by the workers’ compensation court if:
(a) the insurer denies liability for a claim for compensation or terminates compensation benefits;
(b) the claim is later adjudged compensable by the workers’ compensation court....

As noted in the majority opinion, those conditions have been satisfied in this case. The only question was whether the costs claimed by claimant were “reasonable.”

In Baeta v. State Compensation Mutual Insurance Fund (1992), 254 Mont. 487, 839 P.2d 566, this Court acted as a legislature, rather than a court, by adding qualifications to a claimant’s right to recover costs that are not provided for in the Workers’ Compensation Act. In doing so, that decision relied on prior cases which discussed costs in the context of district court litigation, rather than Workers’ Compensation Court litigation. It also relied on § 25-10-201, MCA, which is a rule of civil procedure. Although we have, in the past, looked to the Rules of Civil Procedure for guidance where the Workers’ Compensation Act does not deal with a subject, see Moen v. Peter Kiewit & Sons’ Co. (1982), 201 Mont. 425, 434, 655 P.2d 482, 486, the Workers’ Compensation Court is not otherwise bound by the Rules of Civil Procedure. In this case, the Workers’ Compensation Act did cover the subject of costs which can be awarded to a successful claimant. The only limitation placed on those costs that may be recovered is that they be reasonable.

I would reverse Baeta and follow the Workers’ Compensation Act, rather than irrelevant rules of civil procedure. For that reason, I dissent from that part of the majority’s opinion which refuses to do so.

Furthermore, after reviewing the arguments of the parties, I conclude that claimant’s claim for costs incurred to hire an investigator was reasonable and that under the terms of the Act he should have been reimbursed for those costs.

For these reasons, I would reverse that part of the judgment of the Workers’ Compensation Court which denied claimant’s costs, and I dissent from that part of the majority opinion which holds otherwise.

JUSTICE HUNT joins in the foregoing concurring and dissenting opinion.


author: JUSTICE TRIEWEILER

text:
    ROBERT C. BARTHULE, Plaintiff and Respondent, v. ROBERT KARMAN, Defendant and Appellant.
    No. 94-147.
    Submitted on Briefs November 17, 1994.
    Decided December 20, 1994.
    51 St.Rep. 1423.
    268 Mont. 477.
    886 P.2d 971.

      For Appellant: John A. Hauf, Hauf & Forsythe, Billings.
    For Respondent: John Houtz, Attorney at Law, Forsythe.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Plaintiff Robert C. Barthule filed a complaint in the District Court for the Sixteenth Judicial District in Rosebud County in which Robert Karman was named as the defendant. Barthule alleged that he suffered an injury while working for Karman at a time when Karman was uninsured in violation of Montana’s workers’ compensation laws. The jury returned a verdict in Barthule’s favor and awarded him $35,000 as damages. Karman appeals from the judgment entered pursuant to the jury’s verdict. We affirm the judgment of the District Court.

The issues on appeal are restated as follows:

1. Did the District Court err when it denied Karman’s motion to change venue from Rosebud County to Yellowstone County?

2. Did the District Court have subject matter jurisdiction of Barthule’s independent cause of action against his uninsured employer?

3. Was Barthule’s claim barred by the statute of limitations?

4. Was there substantial evidence to support the jury’s verdict?

5: Did the District Court abuse its discretion when it refused to give Karman’s proposed jury instruction number 11?

6. Did the District Court abuse its discretion when it refused Karman’s proposed special verdict form?

FACTUAL BACKGRO UND

In December 1990, Barthule began working as a ranch hand for Karman in Yellowstone County. Trial testimony indicated that it was a common practice for ranch hands to help neighboring farmers gather and brand cattle, hay, and perform other farm operations.

Barthule had, on several occasions, assisted neighbors while employed by Karman. For several days from July 16 to July 20, 1991, Barthule helped roundup cattle on the neighboring King Ranch. Barthule testified that on July 20, 1991, the last day of the roundup, he injured his knee. Barthule testified that he was riding in the back of a pickup while chasing a bull. The pickup struck and rolled over the top of the bull. As a result, Barthule was thrown forward. Afterward, he jumped out and helped remove the bull from under the truck. Barthule stated that he injured his knee either when: he fell in the truck; jumped out of the truck; or was trying to remove the bull from under the truck. Other witnesses recalled the incident differently and some did not recall that Barthule injured his knee at the time or in the manner Barthule testified.

After Barthule injured his knee, he quit working for Karman and was paid for the work he had completed. A copy of Barthule’s last paycheck indicated that it was paid for work performed during two-thirds of July 1991. Karman admitted that he was not insured against workers’ compensation claims during that period of time.

After initial treatments were less than satisfactory, Barthule eventually underwent a total knee replacement. He filed a claim with the uninsured employers’ fund and received benefits of over $8000 before payments were discontinued. On December 18, 1992, Barthule filed a complaint in District Court against Karman for failing to maintain workers’ compensation coverage.

While considering proposed jury instructions, the District Court decided to give Karman’s proposed jury instruction number 10, but rejected his instruction number 11. The court also refused to submit Karman’s special verdict form to the jury. After trial, the jury returned a unanimous verdict for Barthule and awarded him $35,000 as damages. Additional facts are added as necessary to decide the issues below.

ISSUE 1

Did the District Court err when it denied Karman’s motion to change venue from Rosebud County to Yellowstone County?

The denial of a motion to change venue is a legal conclusion which we review to determine whether the district court correctly applied the law. Carter v. Nye (1994), [266 Mont. 226], 879 P.2d 729, 730. On January 21, 1993, Karman filed his motion to change venue on the basis that Rosebud County was an improper location. Barthule filed a response and an affidavit which stated that he had lived in Rosebud County for 15 of the last 16 years and was employed in and resided in Rosebud County at the time he filed his complaint. After a hearing, on March 2, 1993, the court denied Karman’s motion.

Barthule filed an independent cause of action against Karman for failing to maintain insurance as required by Montana law. Section 39-71-515, MCA. Section 39-71-516, MCA, provides that an independent cause of action under § 39-71-515, MCA, must be brought in the district court in the district where the claimant resides or the alleged violation occurred. Section 25-2-201(1), MCA, provides, in relevant part, that the court must grant a motion to change venue if the county designated in the complaint is not the proper county.

Karman argues that despite what Barthule stated in his affidavit, Barthule resided in Mussellshell County. Khrman bases his argument on a Mussellshell County address Barthule listed on a form filed with the Department of Labor and Industry before his complaint was filed in District Court. The alleged injury occurred in Yellowstone County, hence, Barthule argues venue is improper in Rosebud County.

Venue is proper in either the county where Barthule resided at the time his complaint was filed, or where the alleged violation occurred. A defendant may not change venue to a different county when a suit may be commenced in more than one county and the plaintiff files in one of the permissible locations. See Melroe v. Doyle (1989), 239 Mont. 524, 525, 781 P.2d 1134, 1135. Based on the affidavit and pleadings, Rosebud County was one of the permissible locations for venue. Therefore, we conclude that the District Court did not err when it denied Karman’s motion to change venue.

ISSUE 2

Did the District Court have subject matter jurisdiction of Barthule’s independent cause of action against his uninsured employer?

When we review a motion to dismiss based on lack of subject matter jurisdiction, the relevant inquiry is whether the complaint states facts that, if true, would vest the district court with subject matter jurisdiction. Stanley v. Holms (1994), [267 Mont. 316], 883 P.2d 837, 838 (citing United States Natl. Bank of Red Lodge v. Dept. of Revenue (1977), 175 Mont. 205, 209, 573 P.2d 188, 190). This determination is a question of law, therefore, we must determine whether the District Court’s interpretation of the law is correct. In re Marriage of Barnard (1994), 264 Mont. 103, 106, 870 P.2d 91, 93.

The District Court denied Karman’s motion to dismiss, which was based on his claim that the court lacked jurisdiction. On appeal, Karman argues that the Workers’ Compensation Court had exclusive jurisdiction. He relies on cases that interpret statutes other than those involved in the present case, or cases that existed prior to the time the statutes at issue were enacted. He also contends, based on the language in § 39-71-508, MCA, that because Barthule initially pursued a claim with the uninsured employers’ fund he could not later pursue an action in district court because all remedies must be pursued at the same time.

An employee has several options for bringing claims against an uninsured employer pursuant to § 39-71-508, MCA. That statute provides:

An employee who suffers an injury arising out of and in the course of employment while working for an uninsured employer as defined in 39-71-501... may pursue all remedies concurrently, including but not limited to:
(1) a claim for benefits from the uninsured employers’ fund;
(2) a damage action against the employer in accordance with 39-71-509;
(3) an independent action against an employer as provided in 39-71-515; or
(4) any other civil remedy provided by law.

(Emphasis added.) This action was brought pursuant to § 39-71-515, MCA. Karman argues that the “concurrently” language in § 39-71-508, MCA, requires that a claimant file all of the optional claims at the same time, and that a worker may not pursue a claim against the uninsured employers’ fund, and if dissatisfied, later pursue any of the other remedies. The plain language of the statute suggests otherwise.

Section 39-71-508, MCA, provides several options and states that an employee may pursue them concurrently, which allows, but does not require, a concurrent pursuit of remedies. Legislative history also supports a conclusion that the remedies were designed to increase an injured employee’s options against an uninsured employer without making them mutually exclusive. Minutes, Legislative Hearing on HB '529 before Senate Judiciary Committee, March 18, 1985 at 1-2. We, therefore, conclude that the language of § 39-71-508, MCA, does not require a claimant to file and pursue all claims at exactly the same time, and that receipt of benefits from the uninsured employers’fund does not bar a later district court action.

In a related argument, Karman argues that the District Cotut did not acquire jurisdiction because Barthule did not file all pleadings with the Department of Labor and Industry as required by § 39-71-517, MCA. That section requires an injured employee to serve all pleadings on the department, whether or not the department is a party to the action. Karman pointed out Barthule’s failure to comply with this requirement in a pretrial motion. Barthule subsequently served all pleadings on the Department and the record reflects that the Department acknowledged service. The Department indicated that the State would not be a party to the action.

The purpose of this statute is to ensure that the State is aware of its right to subrogation. That purpose was satisfied, even though the papers were not served at the same time they were filed in the District Court. In addition, § 39-71-517, MCA, does not specify that failure to serve papers will divest a court of jurisdiction. We affirm the District Court’s conclusion that it had subject matter jurisdiction.

ISSUE 3

Was Barthule’s claim barred by the statute of limitations?

The question of which statute of limitations applies to the facts in this case is a question of law which we review to determine whether the district court’s interpretation of the law was correct. Barnard, 870 P.2d at 93. Karman relies on § 39-71-601, MCA, which states that “all claims must be forever barred unless ... presented in writing to the employer, the insurer, or the department... within 12 months from the date of the happening of the accident....” (Emphasis added.) It appears from the record that Barthule did file a claim with the Department within 12 months from the date of his injury, and therefore, complied with § 39-71-601, MCA. However, Karman argues that Barthule’s complaint in District Court also had to be filed within 12 months pursuant to this section, and that since it was not, it is barred as untimely.

Section 39-71-601, MCA, does not prescribe the time period within which claims must be filed in a district court. We have previously recognized that the independent cause of action authorized by § 39-71-508, MCA, is ordinarily considered a negligence action, but strict liability may apply in certain situations. Boehm v. Alanon Club (1986), 222 Mont. 373, 376, 722 P.2d 1160, 1162. Therefore, the tort statute of limitations of three years applies and was satisfied. Section 27-2-204, MCA. We conclude that Barthule’s claim was not barred by the statute of limitations.

ISSUE 4

Was there substantial evidence to support the jury’s verdict?

Our standard of review for a jury’s verdict is whether there is substantial credible evidence in the record to support it. Interstate Prod. Credit Ass’n v. DeSaye (1991), 250 Mont. 320, 322-23, 820 P.2d 1285, 1287.

In support of his contentions that the verdict was not supported by substantial evidence, Karman cites to testimony which would have supported a finding that Barthule’s injury was not work related; and that the consequences of any injury were not permanent. However, it is within the province of the jury to resolve conflicts in testimony and decide the ultimate issues in the case. See Lackey v. Wilson (1983), 205 Mont. 476, 478-79, 668 P.2d 1051, 1053.

In Courser v. Darby School Dist. (1984), 214 Mont. 13, 692 P.2d 417, we held that the following factors should be considered to determine if an injury is work related:

Controlling factors repeatedly relied upon to determine a work-related injury include: (1) whether the activity was undertaken at the employer’s request; (2) whether employer, either directly or indirectly, compelled employee’s attendance at the activity; (3) whether the employer controlled or participated in the activity; and (4) whether both employer and employee mutually benefitted from the activity. The presence or absence of each factor, may or may not be determinative and the significance of each factor must be considered in the totality of all attendant circumstances.

Courser, 214 Mont. 13, 692 P.2d at 419 (citation omitted). We reiterated this test in Dale v. Trade Street, Inc. (1993), 258 Mont. 349, 355, 854 P.2d 828, 831-32.

Considering the totality of circumstances, there was substantial evidence in the record from which the jury could decide that Barthule was an employee for Karman and suffered a compensable work related injury during the scope of his employment. Barthule testified that he injured his knee when he was thrown forward in the pickup, when he jumped out of the pickup, or possibly when he struggled with the bull. Art Korenko also testified that Barthule injured his knee while wrestling with the bull and that he thought the bull kicked Barthule. Other witnesses observed his swollen knee after the injury.

Testimony also indicated it was a common practice for ranch hands to assist neighboring ranchers in various duties, and indicated that a ranch hand is still considered an employee of his original employer when doing so. In this situation, the ranch hand is paid by his or her employer, not the rancher who received assistance. Barthule had previously assisted other ranchers but was paid by Karman. Karman paid Barthule for work for two-thirds of July, which indicates Karman considered Barthule an employee during the time Barthule injured his knee.

Although Karman did not force Barthule to attend the roundup, Karman was present and did not object to Barthule’s presence, or ask Barthule to leave the King Ranch roundup. Finally, testimony indicated that ranchers benefit from helping each other out, and Barthule benefited because he was paid for his activity. This evidence was sufficient to satisfy the totality of the circumstances requirement.

In order to prove the elements of a claim brought pursuant to § 39-71-515(2), MCA, Barthule had to prove the following:

(2) In such an action, prima facie liability of the uninsured employer exists if the claimant proves, by a preponderance of the evidence, that:
(a) the employer was required by law to be enrolled under compensation plan No. 1, 2, or 3 with respect to the claimant; and
(b) the employer was not so enrolled on the date of the injury or death.

Karman hired Barthule to work as his employee and was required to enroll in one of the plans for workers’ compensation insurance. The evidence from the record set forth above established that Barthule was Karman’s employee and was injured within the scope of his employment. Karman admitted that he was not insured on the date of that injury. We conclude, therefore, that there was substantial evidence to support the jury’s verdict on the issue of liability.

Karman also argues that if Barthule received an injury, that injury was not a permanent injury, and therefore, not compensable. However, there was evidence that as a result of his injury Barthule was precluded from running, jumping, riding horses, or doing ranch work. At the end of his healing period, his physician concluded that he sustained permanent physical impairment. We conclude that there was substantial evidence to support the finding and conclusion that Barthule’s injury was permanent and compensable.

ISSUE 5

Did the District Court abuse its discretion when it refused to give Karman’s proposed jury instruction number 11?

Our standard of review for discretionary trial court rulings is whether the district court abused its discretion. Hislop v. Cady (1993), 261 Mont. 243, 247, 862 P.2d 388, 390. It is not reversible error for a district court to refuse an offered instruction unless the refusal affects the substantial rights of the party who proposed the instruction. Cottrell v. Burlington Northern R.R. (1993), 261 Mont. 296, 306, 863 P.2d 381, 387.

The District Court refused Karman’s proposed instruction number 11. That instruction was based on language from Courser, as set forth above, but did not include the totality of circumstances language. The court questioned the parties about their preference between Karman’s proposed jury instructions number 10 or number 11. The court believed that number 10 was a more accurate statement of the law, and gave number 10 instead of number 11. We agree.

Instruction number 10 set forth the elements Barthule had to prove by a preponderance of evidence, including: (1) that he was an employee working for Karman; (2) that he was injured and suffered a disability as a result; (3) that the alleged injury arose out of and was within the scope of his employment; and (4) that the injury caused a temporary or permanent disability for whichhe was entitled to recover compensation. Karman’s proposed instruction number 11 was patterned after language in Courser, but omitted the totality of circumstances language from that opinion, and therefore, was an incomplete statement of the law. Because instruction number 10 was given and adequately summarizes Barthule’s statutory burden of proof, and because number 11 was not complete, we hold that the District Court did not abuse its discretion when it refused Karman’s proposed instruction number 11.

ISSUE 6

Did the District Court abuse its discretion when it refused Karman’s proposed special verdict form?

Our standard of review of a discretionary trial court ruling is whether the district court abused its discretion. Montana Rail Link v. Byard (1993), 260 Mont. 331, 337, 860 P.2d 121, 125. Karman offered a special verdict form that Barthule objected to on the basis that it was confusing. The District Court stated that it believed the form was argumentative and too confusing. Instead, the court used a more simple general verdict form.

The use of a special verdict form is discretionary with the court. Rule 49(a), M.R.Civ.P.; Kinjerski v. Lamey (1981), 194 Mont. 38, 41, 635 P.2d 566, 567. The general verdict form, in combination with the court’s instructions, adequately presented all of the relevant issues to the jury without the danger of confusion that could have been caused by Karman’s proposed verdict form. Therefore, we conclude the District Court did not abuse its discretion by its choice of verdict forms.

We affirm the judgment of the District Court.

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


author: JUSTICE HARRISON

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. KATHLEEN FAY SCHINDLER, Defendant and Appellant.
    No. 94-241.
    Submitted on Briefs October 20, 1994.
    Decided December 20, 1994.
    51 St. Rep. 1421.
    268 Mont. 489.
    886 P.2d 978.
    For Appellant: Gregory W. Duncan; Harrison, Loendorf & Poston, Helena.
    For Respondent: Hon. Joseph P. Mazurek, Attorney General, Patricia J. Jordan, Ass’t Attorney General, Helena.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Kathleen Fay Schindler (Schindler) appeals the Fifth Judicial District Court’s dismissal of her appeal from Justice Court and the court’s denial of her motion for reconsideration. We reverse and remand this matter to the District Court.

On March 4, 1994, Schindler was found guilty in Justice Court of the misdemeanor offenses of assault and criminal mischief. The Justice Court entered what it considered a final judgment and adjourned.

On March 14, 1994, Schindler’s counsel sent, via facsimile (fax), a Notice of Appeal to the Sheriff’s office. The Sheriff’s office was authorized to accept faxes for the court. Schindler alleges the fax was sent at 4:54 p.m. and completed transmission at 4:56 p.m. Respondent State of Montana (State) alleges the fax was received at 5:01 p.m.

On April 8,1994, the State filed a motion to dismiss, alleging that the appeal was not filed on time. On April 27,1994, the District Court dismissed the appeal, stating only that the notice of appeal was untimely. Schindler filed a motion for reconsideration which was denied on May 11,1994. This appeal followed.

The sole issue on appeal is whether Schindler timely filed the notice of appeal from Justice Court to District Court.

The State primarily relies on § 46-17-311, MCA, to determine that Schindler’s appeal was not filed on time. Section 46-17-311, MCA, provides in part:

(1) Except for cases in which legal issues are preserved for appeal pursuant to 46-12-204, all cases on appeal from the justice’s or city court must be tried anew in the district court and may be tried before a jury of six selected in the same manner as for other criminal cases. ...
(2) The defendant may appeal to the district court by filing written notice of intention to appeal within 10 days after a judgment is rendered following trial. ...

The State relies on State v. Arthur (1988), 234 Mont. 75, 761 P.2d 806, for its contention that Schindler’s notice of appeal was not filed on time. In Arthur, the defendant’s conviction took place on November 18 and the ten-day time limit for notice of appeal fell on a Saturday. Arthur, 761 P.2d at 807. As a result, we applied § 1-1-307, MCA, and held that the defendant had until Monday, November 30 to file. The notice was mailed on November 30 and received on December 1. Arthur, 761 P.2d at 807. We concluded that a written notice of appeal had to be physically filed within 10 days after judgment and that the defendant’s mailed notice of the appeal was not filed on time. Arthur, 761 P.2d at 809; see § 46-17-311, MCA (1987). Our 1988 holding in Arthur, however, is not applicable to the present case because of the change in the method for computing the time limit for filing notices of appeal from Justice and City Courts.

On February 9, 1990, we adopted the Montana Justice and City Court Rules of Civil Procedure. Our Montana Justice and City Court Rules of Civil Procedure appear in Volume 4 of the Montana Code Annotated, commencing at page 1179. Rule 6 provides in part:

A. COMPUTATION. When the computation of any period of time prescribed or allowed by these rules is by order of a court or by any applicable statute, the day of the act, event, or default after which the designated period of time begins to run may not be included. The last day of the period so computed must be included unless it is a Saturday, Sunday, or legal holiday, in which event the period runs until the end of the next day that is not a Saturday, Sunday, or legal holiday.
B. EXTENSION. When by these rules, by a notice given under these rules, or by order of a court an act is required or allowed to be done at or within a specified time, the judge for cause shown may extend the period if a motion is made before the expiration of the period originally prescribed or extended by previous permission of the court or after expiration of the specified period if failure to act was the result of excusable neglect.
C. ADDITIONAL TIME AFTER SERVICE BY MAIL. Whenever a party has the right or is required to do an act or take a proceeding within a prescribed period after service of a notice or other paper and the notice or other paper is served by mail, 3 days must be added to the prescribed period.

The foregoing rule, however, is not determinative.

In addition to the foregoing Rules of Civil Procedure, this Court adopted the Montana Uniform Rules for Justice and City Courts (Uniform Rules) which became effective June 1, 1993. These rules appear in Volume 4 of the Montana Code Annotated, commencing at page 1198. Rule 1 provides as follows:

Rule 1. Scope of Rules.
(a) These rules, together with the Montana Justice and
City Court Rules of Civil Procedure, govern the practice in all justice and city courts of the state of Montana.

Further, Rule 21, establishes the following time computation:

Rule 21. Time computation.
(a) Time shall be computed as provided under Rule 6 of the Montana Justice and City Court Rules of Civil Procedure.
(b) When the period of time prescribed or allowed is ten days or less, intermediate Saturdays, Sundays, and legal holidays shall be excluded.

We hold that Rule 21 of the Uniform Rules applies to the instant case. Section 46-17-311, MCA, provides ten days to file a notice of appeal. As a result, intermediate Saturdays, Sundays, and legal holidays shall be excluded from the time computation.

The Justice Court sentenced Schindler on March 4, 1994. Therefore, Schindler had until March 18, 1994 to file her notice of appeal. This is ten days from the fourth, excluding Saturdays and Sundays. Based on either party’s factual contentions, the notice was filed before March 18th. The parties’ arguments about the date and time the fax was sent, received, or filed are irrelevant. Therefore, the notice of appeal was filed on time.

Reversed.

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