author: JUSTICE WEBER

text:
    IN RE THE MARRIAGE OF CHARLENE KAY SCHMITZ, Petitioner and Appellant, v. ROGER KEITH SCHMITZ, Respondent and Respondent.
    No. 91-465.
    Submitted on Briefs June 11, 1992.
    Decided November 5, 1992.
    49 St.Rep. 919.
    255 Mont. 159.
    841 P.2d 496.

      For Petitioner and Appellant: Gary Ryder, Sidney.
    For Respondent: Loren J. O’Toole, O’Toole & O’Toole, Plentywood.
   JUSTICE WEBER

delivered the Opinion of the Court.

The petitioner, Charlene Kay Schmitz, appeals from the property distribution in this marital dissolution action as determined by the District Court of the Fifteenth Judicial District, Sheridan County. We affirm in part and reverse in part.

The restated issues are as follows:

1. Was the notice of appeal timely filed?

2. Did the District Court err by including petitioner’s workers’ compensation benefits in the marital estate?

3. Did the District Court err in its findings of fact and conclusions of law?

Roger Keith Schmitz and Charlene Kay Schmitz were married on June 18, 1971. Neither party brought any substantial assets to the marriage. Prior to the marriage, Roger served in the military and completed one year of automotive schooling. Charlene had recently graduated from high school.

In 1976, Roger purchased, by means of a contract for deed, a 50% interest in farm/ranch property in Sheridan County, Montana from his uncle. Roger’s father, Joe Schmitz owns the other 50% interest. Both Charlene and Roger were active in fanning and ranching during the 191/2 years of their marriage. The contract for deed was paid off in 1990. Charlene was very active in all aspects of the farm/ranch operation until the time of her injury. The parties also raised two sons during this time.

Charlene began working in 1984 as a part-time nurses-aide at the Culbertson Nursing Home. In February 1986, Charlene suffered a work-related back injury which prevented her from working at the nursing home and limited her activities on the ranch. In the spring of 1986, Charlene was classified as permanently totally disabled for workers’ compensation purposes and began receiving monthly compensation payments of $358.76. These payments continued throughout the time of trial. Because the payments are subject to a 10-year limitation, Charlene will no longer qualify for workers’ compensation benefits after May 1996.

Charlene presently attends Idaho State College with assistance provided under a plan for displaced homemakers. Roger has continued to operate the farm/ranch operation.

In addition to the real property purchased from Roger’s uncle, the parties accumulated livestock, farm and ranch equipment, and numerous other items of personal property. The parties were essentially debt-free until 1987, when they borrowed $80,005.00 from Security State Bank in Plentywood to construct a new residence on the farm. In its Findings of Fact, Conclusions of Law and Order dated May 23,1991, the District Court awarded most of the marital property to Roger. Roger received the real property, the house located on his father’s land, which was built by the parties, all livestock, all farm equipment, and numerous other items of personal property. Charlene received $25,000.00 in cash, a 1982 Citation valued at $800.00, and her workers’ compensation benefits with a present value of $21,127.80, as of the trial date. Roger was ordered to pay the debts associated with the property he received and Charlene was ordered to pay $4,400.00 in debts she incurred as living expenses after leaving the family home and prior to the trial. Roger was awarded physical custody of the one minor child, who is now 18 years of age.

L

Was the notice of appeal timely filed?

Roger contends that the notice of appeal in this case was not filed on time. The resolution of this issue hinges upon the initial period under Rule 59(b), M.R.Civ.R, which provides:

Time for motion. Amotion for a new trial shall be served not later than 10 days after service of notice of the entry of the judgment. Because notice of entry of judgment was served by mail, three days

are added under Rule 6(e), M.R.Civ.P, which provides:

Additional time after service by mail. Whenever a party has the right or is required to do some act... within a prescribed period after the service of a notice ... and the notice or paper is served upon the party by mail, 3 days shall be added to the prescribed period.

Roger contends that adding three days to the prescribed period under Rule 59(b) increases the time to a total of thirteen days and, therefore, the exclusion of Saturdays, Sundays and holidays provided for under Rule 6(a), M.R.Civ.P., cannot apply. Rule 6(a), M.R.Civ.P., provides:

In computing any period of time prescribed or allowed by these Rules, ... the day of the act, event... is not to be included .... When the period of time prescribed or allowed is less than 11 days, intermediate Saturdays, Sundays and holidays shall be excluded in the computation.

We conclude that the prescribed period referred to in the foregoing Rule includes the ten day period allowed for filing a motion under Rule 59(b), M.R.Civ.P., with the result that intermediate Saturdays, Sundays and holidays are excluded from the computation. The District Court granted Charlene and Roger Schmitz a dissolution on May 23, 1991. Roger mailed a notice of entry of judgment to Charlene’s attorney on May 29, 1991. In civil cases, the notice of appeal must be filed within thirty days of the date of the entry of judgment. Rule 5(a), M.R.App.P. Charlene filed a motion for new trial and a motion to amend the court’s findings under Rules 59(a) and 60(b), M.R.Civ.P., which extends the time for filing the appeal.

Rule 59(b), M.R.Civ.P., provides that a Rule 59(a) motion for a new trial must be filed within 10 days after service of notice of entry of judgment. Here the notice of entry of judgment was mailed on May 29,1991. Charlene filed her Rule 59(a) motion for a new trial on June 17, 1991. The day of mailing is excluded under Rule 6(a), M.R.CivR. The combined total of days allowed under Rule 59(b), M.R.Civ.P. and Rule 6(e), M.R.Civ.P. is thirteen days. Counting from May 30 and excluding the intervening Saturdays and Sundays, we determine that the last day for filing a Rule 59(a) motion was June 17,1991, the date Charlene filed her motion for a new trial.

We conclude that Charlene filed her appeal on time.

II.

Did the District Court err by including petitioner’s workers’ compensation benefits in the marital estate?

Charlene receives $358.76 per month in workers’ compensation benefits for an injury classified as a “permanent total disability.” She will receive these payments -until May 1996. Roger presented testimony by a certified public accountant that the present value of Charlene’s future benefit payments at the time of trial was $21,127.80. This figure was included as marital property and distributed to Charlene.

Charlene contends that to include her future workers’ compensation benefits as marital property is error. She argues that to include the figure in the marital estate is speculative because the payments could terminate if she completes the education program or if her physical condition improves.

Charlene presented no evidence at the trial to support any likelihood that she might complete her education program early or that her physical condition could improve. Charlene further contends that her benefits should not be included as part of the marital estate because they are intended to replace her wages. She also argues that including workers’ compensation benefits as a marital asset characterizes them as an assignment of the proceeds and therefore is against public policy.

Property which may be properly included in the marital estate is governed by Sec. 40-4-202, MCA, which provides that district courts “shall ... finally equitably apportion between the parties the property and assets belonging to either or both, however and whenever acquired and whether the title thereto is in the name of the husband or wife or both.” (Emphasis supplied.) When the parties are unable to amicably settle their disputes, Sec. 40-4-202, MCA, provides the district courts with equitable powers to divide their property and assets.

In In re the Marriage of Blankenship (1984), 210 Mont. 31, 682 P.2d 1354, we concluded that a workers’ compensation award could be a marital asset. In two subsequent cases, where a workers’ compensation settlement had been commingled in marital funds we included the same in a marital estate. See In re the Marriage of Bos (1989), 238 Mont. 267, 776 P.2d 841; and In re the Marriage of Jones (1987), 229 Mont. 128, 745 P.2d 350. In In re the Marriage of Cooper (1990), 243 Mont. 175, 179, 793 P.2d 810, 812, we concluded that disability benefits can properly be included in the marital estate as they clearly come within the definition of property “however and whenever acquired.” Workers’ compensation payments are disability payments. In Cooper, the disability payments were included in the marital estate and awarded to the person receiving the same as is true in the present case.

While Sec. 39-71-743, MCA, prohibits attachment or assignment of workers’ compensation benefit payments, we conclude those provisions do not bar classification of workers’ compensation awards as marital property.

We hold that the District Court did not err by including the present value of Charlene’s future workers’ compensation payments as marital property.

III.

Did the District Court err in its findings of fact and conclusions of law?

The District Court adopted Roger’s proposed findings of fact and conclusions of law verbatim. Roger received the couple’s entire one-half interest in the farm/ranch property, all farm equipment, all livestock, the family home and miscellaneous items of personal property. Charlene received a 1981 Chevrolet Citation valued at $800.00, $25,000.00 in cash payable within six months of the trial, and her future workers’ compensation payments. Roger has responsibility for the bulk of the parties’ debts although Charlene was ordered to pay debts in the amount of $4,400.00. Charlene contends that the property valuation and the determination of the amount of debt are not supported by the record and result in an inequitable distribution of the marital estate.

The appropriate standard of review for this issue is whether the District Court’s findings of fact are clearly erroneous, as in Interstate Production Credit Assn. v. DeSaye (1991), 250 Mont. 320, 323, 320 P.2d 1285, 1287, and cited with approval in In re the Marriage of Eschenbacher and Crepeau (Mont. 1992), [253 Mont. 139,] 831 P.2d 1353, 49 St.Rep. 393, 394. The standard is the same whether the District Court prepared its own findings or adopted the findings of one of the parties. The wholesale adoption of one party’s proposed findings and conclusions is not by itself an automatic basis to vacate a judgment. In re the Marriage of Merry (1984), 213 Mont. 141, 149, 689 P.2d 1250, 1254.

Interstate Production Credit Assn, sets forth a three-part test to determine whether the district court’s findings axe clearly erroneous: (1) the Court will review the record to see if the findings are supported by substantial evidence; (2) if the findings are supported by substantial evidence, the Court determines if the trial court has misapprehended the effect of the evidence; and (3) if substantial evidence exists and the effect of the evidence has not been misapprehended, the Court may still find that “a finding is clearly erroneous when, although there is evidence to support it, a review of the record leaves the court with the definite and firm conviction that a mistake has been committed.” Interstate Production Credit Assn., 820 P.2d at 1287.

Substantial evidence is defined as “evidence that a reasonable mind might accept as adequate to support a conclusion; it consists of more than a mere scintilla of evidence but may be somewhat less than a preponderance.” Barrett v. Asarco, Inc. (1990), 245 Mont. 196, 200, 799 P.2d 1078, 1080, citing Black’s Law Dictionary 1281 (5th Ed. 1979); Stanhope v. Lawrence (1990), 241 Mont. 468, 471, 787 P.2d 1226, 1228-29. Charlene specifically contends that the District Court erred by incorrectly calculating the marital debts, by adopting Roger’s expert’s valuations of specific property, and by failing to properly consider maintenance.

1. The marital debts.

The District Court found that Charlene’s debt to Security State Bank was $3,000.00, and that her total personal debt was $4,400.00. By piecing together the fragmented testimony about the bank loans and other debt, it is clear that the District Court’s finding is incorrect and that Charlene’s personal debt which she incurred for living expenses prior to trial is $8,900.00 — $4,500.00 more than the amount in the District Court’s finding.

The District Court also found that Roger owed his father, Joe Schmitz, $22,600.00 for a tractor and a combine which Roger used as trade-ins on new equipment purchased during the marriage. Roger and his father testified as to the claimed loans. Roger’s testimony was inconsistent as to the amount of the loan. He claimed the loan was approximately $22,000.00 and later contradicted that statement. Joe Schmitz testified he thought the loan amount was about $28,000.00 or even more but that he had never made any demand for the money. So far as any payment date is concerned, Roger only testified that there was a verbal agreement that he would pay his father “in due time.” The father testified that he had not made a demand for the money and if Roger did not pay it, it would eventually come out of his estate.

In In re the Marriage of Malquist (1987), 227 Mont. 413, 739 P.2d 482, we addressed a similar situation. In Malquist, the wife attempted to include loans from her mother amounting to $42,000,00 as part of the marital debt. We refused to include the debt on the basis of oral testimony alone, stating:

There is no other evidence in the record, such as a loan agreement, promissory note, canceled checks, or any form of receipt to substantiate the amount, existence or terms of the loans from [the wife’s] mother. Proposed findings of fact and conclusions of law must be sufficiently comprehensive to provide a basis for the trial court’s decision, and must be supported by the evidence presented.

Malquist, 739 P.2d at 484-85, citing In re the Marriage of Benner (1985), 219 Mont. 188, 193, 711 P.2d 801, 805.

The facts in this case are comparable to Malquist. No evidence was presented of a loan agreement, note, check, form of receipt, or existence or terms of loans.

We therefore conclude that the computation of marital debts was substantially incorrect in that the debt owed by Charlene was $8,900.00 as compared to the $4,400.00 awarded by the court. In addition, we conclude that the amount of $22,600.00 could not properly be included as a debt owed by Roger to Joe Schmitz.

2. The property valuations.

Charlene contends that the District Court erred in adopting Roger’s valuations as set forth in his proposed findings of fact. We have reviewed the record with regard to the valuations placed upon the farm and ranch equipment, real property and the home and have concluded that there is substantial evidence in the record to support the District Court’s valuation of those items.

In a similar manner, while there is conflicting evidence, we conclude there is substantial evidence to support the District Court’s evaluation of the cattle.

A significant portion of the personal property owned by the parties was not valued by the District Court. The findings only referred to these assets as “miscellaneous items of personal property with no established value, being household goods, etc.” Both parties introduced evidence relating to this personal property and its values. There is a substantial list of property including such things as a Conklin dealership, Cenex and Nemont stock, capital credits or patronage dividends in GTA, Sheridan Electric Coop and Nemont, a satellite dish, and a water treatment system. Because of the necessity for a remand because of our previously stated conclusions on changes in marital debt owed, we conclude that it will be appropriate on remand for the District Court to more specifically review the items of personal property and value the same. Because of the apparent inability of the parties to divide these assets, we therefore remand so that the District Court may determine the distribution to be made of such personal property.

3. Maintenance.

In view of our remand for redetermination resulting from the change in debt, we conclude that it will be appropriate for the court to reconsider the property distribution and the presence or absence of a need for maintenance on the part of Charlene. Such a determination should be made in accordance with Sec. 40-4-203, MCA.

In connection with that maintenance determination, we point out that the record indicates that Charlene may be unable to support herself in the near future. In addition to the debt of $8,900.00 as previously described, Charlene has shown an obligation of $10,479.20 for lawyer’s professional services and out-of-pocket expenses in connection with this divorce proceeding. As a result, Charlene apparently has approximately $5,000.00 from the cash distribution to assist in application for her needs. We therefore remand to the District Court for reconsideration of the maintenance question at the time it considers the other issues in the proceeding.

We affirm the findings and conclusions of the District Court with the exception of the items specifically mentioned above and with the exception of a potential maintenance award. We remand for further consideration of these items consistent with this opinion.

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


source: Caselaw Access Project

author: JUSTICE HARRISON

license: Public Domain

text:
    FIRST SECURITY BANK OF HAVRE, a corporation, Plaintiff, Respondent and Cross-Appellant, v. RONALD M. HARMON, GERALD W. RIDGEWAY, NORTHERN INSURANCE AGENCY, a corporation, and THE UNITED STATES OF AMERICA, Defendants and Appellants.
    No. 91-584.
    Submitted on Briefs August 13, 1992.
    Decided November 12, 1992.
    49 St.Rep. 955.
    255 Mont. 168.
    841 P.2d 521.

      For Appellants: Douglas C. Allen, Great Falls; and A. Clifford Edwards, Edwards & Paoli, Billings.
    For Respondent: Kathleen H. Richardson, Morrison, Hauge, Ober & Young, Havre.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from the Twelfth Judicial District, County of Hill, the Honorable Leonard H. Langen presiding. Appellant Ronald M. Harmon (Harmon) appeals from an order granting the respondent, First Security Bank of Havre (First Security) summary judgment in its action to collect on a promissory note executed by Harmon on August 3, 1981 in the original amount of $283,242.93. We hold that Harmon’s failure to file a timely notice of appeal prevents this Court from acquiring jurisdiction over his appeal.

BACKGROUND

In 1981, Harmon was the sole owner and stockholder of Big Bud Tractors, Inc., and its wholly owned subsidiary, Big Bud Sales and Services, Inc. (collectively Big Bud). Harmon and Big Bud were indebted to First Security and its correspondent, Seattle First National Bank (Sea-First). In July 1981, to avoid foreclosure, Harmon and Big Bud executed a settlement agreement with the two banks. Under the terms of this agreement, Harmon and Big Bud conveyed all of their assets to First Security and Sea-First. The banks agreed to reconvey these assets after Harmon and Big Bud paid approximately $3 million. Whether this money was paid, and whether the banks were obligated to reconvey the Harmon-Big Bud assets, were unresolved issues between the parties. Harmon contends now that the promissory note executed in August 1981 was part of the July 1981 settlement agreement and represents a “rewriting” of Harmon’s obligation to First Security. First Security contends that the August 1981 promissory note was not part of the settlement agreement.

In April 1982, Harmon and Big Bud filed suit against the two banks in United States District Court for the District of Montana, Great Falls Division (Adversary No. 482-0113). Their allegations included breach of contract, fraud, breach of the implied covenant of good faith and fair dealing, and breach of fiduciary duty. First Security counterclaimed on all promissory notes of Big Bud and Harmon, except for the note at issue in the case before this Court.

Judgment on the federal jury verdict was entered on February 28, 1990. The jury, responding to special interrogatories, found that the banks had not committed fraud or breached their settlement agreement with Harmon and Big Bud; that the banks had breached a fiduciary duty in dealing with Harmon and Big Bud; and that this breach was not a proximate cause of damage to Big Bud or Harmon. The jury also found that First Security was not entitled to recover any money on its counterclaim.

The promissory note on which First Security is now attempting to collect was secured by a trust indenture conveying 3.92 acres of land along U.S. Highway 2 in Hill County. Harmon stated in his District Court brief that this was his “last piece of property not previously conveyed to the Banks.” Harmon had a 52.5 percent undivided interest in this land, having conveyed a 47.5 percent interest to Gerald Ridgeway in 1979.

From 1981 through 1985, Harmon failed to pay property taxes on the indentured property. Under the terms of the note, failure to pay taxes constituted a default, and on November 14,1985, First Security declared that all sums owing on the note were due and payable. As of December 1,1985, Harmon’s debt included the original principal plus $108,211.40 in interest, with interest accruing at the rate of $93.13 per day. On May 30, 1986, First Security filed this collection action seeking, in addition to judgment for the amount of the debt, partition of Ridgeway’s portion of the indentured property and a foreclosure sale of Harmon’s portion.

The Harmon-Big Bud federal case was still pending in April 1988, when Judge Langen held a scheduling conference on First Security’s state court action. The parties agreed then to abate the action until the federal case was tried, though the First Security attorney expressed concern that Hill County would “move for a tax deed” as the unpaid taxes on the property continued to increase. In fact, the county did issue a tax deed in October 1989, and in May 1990 the county quitclaimed the indentured property to a third party.

In June 1990 First Security moved for summary judgment based on the verdict in federal court. After a hearing by conference telephone call in February 1991, Judge Langen ordered that judgment for First Security be entered but not executed on until Harmon’s appeal from the federal court verdict was concluded. The judgment, entered on March 21, 1991, was in the amount of $596,288.03 plus $9,429.89 for attorney’s fees, $204.25 for costs, and interest at 12 percent from and after the date of entry of judgment. With respect to the other defendants, the court found that Ridgeway’s interest was foreclosed by the Hill County tax deed and that the Northern Insurance Agency and the United States (Internal Revenue Service) had disclaimed any interest in the litigation and had been dismissed as parties in September 1986, and April 1987, respectively.

THE DISPOSITIVE ISSUE

The critical issue in this case is whether Harmon’s untimely notice of appeal prevents the Supreme Court from obtaining jurisdiction over the appeal. Finding that it does, we dismiss this appeal without deciding the other issues raised by the parties.

Harmon filed a motion to alter or amend the judgment on March 29, 1991, well within the ten-day limit established by M.R.Civ.P. 59(g). On April 12, 1991, Harmon moved for an extension of time to file a brief in support of his motion to amend. Judge Langen extended the time through April 30, 1991. On April 30, 1991, Harmon again moved for an extension of time to file his brief, and again Judge Langen ordered an extension, this time through May 10, 1991. On May 13, 1991, Harmon filed a third motion for an extension of time, but Judge Langen did not enter a corresponding order. Harmon filed his brief on May 21, 1991.

Under M.R.Civ.P. 59(g), a motion to alter or amend a judgment is deemed denied if the court fails to rule on the motion within forty-five days from the time it is filed. Thus, Harmon’s motion to amend or alter the judgment against him was deemed denied on or about May 15, 1991.

A party must file notice of appeal within thirty days from the date that a motion to alter or amend the judgment is deemed denied. Rule 5(a)(4), M.R.App.P. Applied here, this rule required Harmon to file notice of appeal by June 14,1991. Instead, Harmon waited until July 9, 1991 to move for an extension of time to file a notice of appeal. Judge Langen granted this motion on October 16, 1991, extending the deadline to October 27, and Harmon filed notice of appeal on October 23, 1991.

Under M.R.App.P. 5(a)(5), the court may extend the time for filing a notice of appeal “upon a showing of excusable neglect or good cause,” in response to a motion filed “not later than 30 days after the expiration of the time prescribed by this Rule 5(a). ’’Here, Harmon filed his motion for an extension of time within the prescribed thirty-day limit, but he made no showing of excusable neglect or good cause.

The time limits for an appeal are mandatory and jurisdictional. “An appellant has a duty to perfect an appeal in the manner and within the time limits provided by law. Absent such compliance, this Court does not acquire jurisdiction to entertain and determine an appeal.” Price v. Zunchich (1980), 188 Mont. 230, 235, 612 P.2d 1296, 1299. See Anderson v. Bashey (1990), 241 Mont. 252, 787 P.2d 304 (plaintiff’s motion to reconsider was filed one day too late and therefore failed to suspend the thirty-day limit for filing notice of appeal); Easeley v. Burlington Northern R.R. (1988), 234 Mont. 290, 762 P.2d 870 (plaintiff’s appeal denied because he filed notice of appeal more than thirty days after his motion for reconsideration was deemed denied). Further, the party attempting to appeal is not entitled to notice that a post-trial motion is deemed denied. Mortensen Construe tion Co. v. Burlington Northern, Inc. (1985), 218 Mont. 415, 417, 708 P.2d 1006, 1007.

The court may extend the deadline for filing notice of appeal by no more than thirty days past the prescribed time or ten days from the date of entry of the order granting the motion. M.R.App.P. 5(a)(5). Here, the thirty-day period expired on July 14, 1991. Judge Langen did extend the deadline for only ten days from the date his order granting Harmon’s motion was entered, as the male requires, but his order was entered on October 16, three months after the thirty-day period prescribed by M.R.App.P 5(a)(5) had expired. By then, the court had lost its authority to grant such an extension. Zell v. Zell (1977), 172 Mont. 496, 500, 565 P.2d 311, 313 (“[T]he district court loses its authority to grant such an extension after the additional 30 day period expires.”); Northwestern Nat’l. Ins. Co. v. Agra Steel Corp. (1981), 193 Mont. 437, 439, 632 P.2d 330, 332 (maximum allowable time within which the district court could grant an extension of time for filing notice of appeal expired thirty days after the original thirty-day limit expired).

In his brief supporting the motion, Harmon stated:

[C]ounsel for Harmon were unaware that his pending motion was deemed denied by operation of law on or about May 15, 1991, but were under the impression that the motion was still pending for ruling. This impression was fostered by Plaintiff’s counsel having moved after [May 15] for an extension of time to file a brief in opposition to the motions.

Harmon went on to indicate that it was not until June 14,1991, when First Security filed its brief opposing an extension of time, that he realized his motion had been deemed denied since mid-May.

Failure to timely file notice of appeal is a fatal defect cured only by the “most extenuating circumstances.” Montana Power Co. v. Fondren (1987), 226 Mont. 500, 505, 737 P.2d 1138, 1141. We find no such circumstances here, as Harmon has shown only that he was “unaware” of M.R.Civ.P 59(g).

Under Rule 5, M.R.App.P., Harmon was required to perfect his appeal within the time limits provided by law. Since he has failed to do so, this Court did not acquire jurisdiction to entertain his appeal. Accordingly, it is hereby ordered that this appeal be dismissed as not having been timely filed.

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


author: JUSTICE McDONOUGH

text:
    DELL E. TYLER and RICHARD SHUBERT, d/b/a CABIN BAR AND MOTEL, Plaintiffs and Appellants, v. FIREMAN’S FUND INSURANCE COMPANY, Defendant and Respondent.
    No. 92-076.
    Submitted on Briefs July 30, 1992.
    Decided November 12, 1992.
    Rehearing Denied December 17, 1992.
    49 St.Rep. 958.
    255 Mont. 174.
    841 P.2d 538.

      For Plaintiff and Appellants: Douglas G. Skjelset, Skjelset Law Offices, Missoula.
    For Defendant and Respondent: John E. Bohyer, Crowley, Haughey, Hanson, Toole & Dietrich, Billings.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

This is an appeal by plaintiff Richard Shubert of an order of the Fourth Judicial District Court granting the defendant’s motions for summary judgment on Shubert’s claim for breach of the covenant of good faith and fair dealing and on defendant’s counterclaim for restitution in the amount of $276,381.41. We affirm.

There are two issues on appeal:

1. Did the District Court err in granting defendant’s motion for summary judgment on plaintiff’s claim of bad faith?

2. Did the District Court err in granting defendant’s motion for summary judgment on defendant’s counterclaim for restitution?

The Cabin Bar and Motel, owned by Dell E. Tyler and Richard Shubert as partners, was destroyed by fire. Investigation by the Missoula Fire Department and the insurer, Fireman’s Fund (Fireman’s) followed. Fireman’s did not make payments to the partners for their losses until six months later when Tyler and Shubert threatened to file a bad faith action. Thereafter, Fireman’s paid the partners $276,381.41.

Tyler and Shubert filed a bad faith claim against Fireman’s under the Montana Unfair Trade Practices Act. The defendant filed its initial answer and filed an amended answer after learning that the fire was caused by arson by one of the partners, Dell E. Tyler. Later, the defendant filed a motion for summary judgment on a bad faith claim and on its counterclaim for restitution.

Dell E. Tyler filed a response to defendants’ motion for summary judgment. In this response, he agreed that the bad faith claim should be dismissed as it pertained to him. He also agreed that Fireman’s was entitled to a judgment against him on the issue of restitution. A hearing on the motion for summary judgment as it pertained to Shubert, was held and the District Court issued its order and judgment. Amotion by Shubert to reconsider the judgment concerned only the issue of the restitution counterclaim. The motion was denied and this appeal followed.

“Under Rule 56(c), M.R.Civ.R, summary judgment is proper if the record discloses no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law. (citation omitted.) In reviewing a motion for summary judgment, we view the evidence in the light most favorable to the party opposing the motion, (citation omitted.)” Kaseta v. Northwestern Agency of Great Falls (1992), 252 Mont. 135, 827 P.2d 804, 49 St. Rep. 183, 184.

I.

Shubert contends that there are multiple issues of fact and law present in this case so it was improper for the District Court to grant summary judgment. Moreover, he argues that the District Court erred in awarding summary judgment to Fireman’s on Shubert’s bad faith claim and Fireman’s counterclaim for restitution. Defendant Fireman’s counters that the bad faith claim in settling the insurance claim cannot exist where the cause of the fire was arson and that arson voided the insurance policy. Further, it states that Fireman’s was fraudulently induced to pay the losses and restitution is the appropriate recourse.

Fireman’s cites Woodhouse v. Farmer’s Union Mut. Ins. Co. (1990), 241 Mont. 69, 785 P.2d 192, as determinative of this action. We agree. In Woodhouse, a woman attempted to recover from her insurance company for personal possessions lost in a trailer fire. Patricia Woodhouse was coinsured with her ex-husband on the trailer awarded to him during their divorce action. She still had many possessions in the trailer when her ex-husband intentionally burned the trailer, causing a total loss.

Woodhouse filed a claim for the loss of her possessions but the insurance company concluded that coverage was precluded because the fire had been intentionally set. Farmer’s policy read:

We do not insure for loss caused directly or indirectly by any of the following ... h. Intentional Loss, meaning any loss arising out of any act committed: (1) by or at the direction of an insured; and (2) with the intent to cause a loss.

Woodhouse, 785 P.2d at 193. The Court agreed with Farmer’s that the meaning of the contract was clear. Alan Woodhouse, the ex-husband, was an “insured” and his act was intentional. Therefore, coverage was precluded for him and Patricia, his coinsured.

The policy provision at issue here states:

This entire policy shall be void if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto. (Page 1 of Standard Form Fire Insurance Policy).

The policy also states:

F. Perils Excluded. The property coverage does not insure against loss caused by, resulting from, contributed to or aggravated by:
(11) Any fraudulent, dishonest or criminal acts done by or at the instigation of any insured, partner, or joint adventurer in or of any insured, an officer, director, or trustee of any insured ...

(Page 3 of Commercial Property Coverage Policy).

This language is clear and unambiguous. “The property coverage does not insure against loss caused by... criminal acts done by... any insured, partner ....” Coverage is precluded because of the arson committed by Dell E. Tyler, the partner of Richard Shubert. “An innocent co-partner [can] not recover under a policy where arson was committed by a partner because the language of the policy specifically barred recovery ....” Woodhouse, 785 P.2d at 193.

Fireman’s argues that the bad faith claim is barred because the cause of the fire was arson. We stated in Britton v. Farmer’s Ins. Group (1986), 221 Mont. 67, 73, 721 P.2d 303, 307, “[a]s to the insured ..., the failure of the insurer to comply with Sec. 33-24-102, MCA would be unimportant if in fact Britton had committed arson to cause the loss for then he would not be entitled to coverage in any event.” Here, where the cause of the fire was arson, there can be no bad faith action and the District Court was correct in granting summary judgment to the Defendant.

II.

Fireman’s argues that it is at least as innocent as Shubert and therefore restitution is appropriate. Fireman’s cites McDonald v. Northern Ben. Ass’n. (1942), 113 Mont. 595, 131 P.2d 479, for the proposition that when an insurer has paid a claim for loss under a mistake of fact, it is entitled to recover the amount paid. In McDonald, the plaintiff’s husband obtained a certificate for death benefits from defendant, a mutual benefit association. He maintained in the application that he was in good health and had not consulted a doctor within the past five years, both statements being false. Shortly after McDonald’s death, the defendant made a partial payment to the deceased’s beneficiary, his wife. The beneficiary then brought an action against the defendant for recovery of the rest of the benefits. Defendant answered that the statements given were false. The written application, expressly made a part of the contract stated: “I also agree ... that no liability shall exist against the Ass’n. if any of the answers to the above questions relative to my health on the date below are found to be untrue.” McDonald, 131 P.2d at 483.

The Court concluded that:

[t]here is no doubt that a party is entitled to sue and recover money which he has paid by mistake of fact, or of mingled fact and law, and which the receiver ought not, in equity and good conscience, to retain .... The fact that the second payment of $50 was made after the defendant had some reason to suspect the falsity of the answers to the questions concerning the member’s health, does not affect the defendant’s right to recover the money, not in itself having the elements of an estoppel, or of a waiver, which latter consists of the intentional relinquishment of a known right... and not apparently having caused plaintiff to change her position for the worse so as to entitle her in equity and good conscience to keep the money.

McDonald, 131 P.2d at 486-487.

The partners obtained the insurance proceeds based on a fraud, even though Shubert was unaware of the fraud. Under the insurance contract, the policy was void and the partners were not entitled to any of the payments made on the insurance loss. Fireman’s may recover the money paid for the fraudulent claim.

Shubert argues that he has had a change of circumstances and therefore should not be required to pay restitution to the insurance company. He cites the Restatement of Restitution to support his argument. Section 142, Restatement of Restitution states that:

(1) The right of a person to restitution from another because of a benefit received is terminated or diminished if, after the receipt of the benefit, circumstances have so changed that it would be inequitable to require the other to make full restitution.
(2) Change of circumstances may be a defense or a partial defense if the conduct of the recipient was not tortious and he was no more at fault for his receipt, retention or dealing with the subject matter than was the claimant. (Restatement of Restitution § 142.)

Shubert states in his brief that the insurance “proceeds received from Respondent in this matter were used to discharge the outstanding debts of the partnership,” and therefore are a change of circumstances. However, Comment b to § 142 provides for exceptions to the general rule. Comment b states:

Where money has been paid which the payee has used for the payment of debts incurred prior to its receipt, such payment of debts does not constitute a change of circumstances which would prevent restitution by him.

Under comment b to § 142, the use of the insurance proceeds falls within the exception to “change of circumstances” and this argument falls.

Finally, Sec. 35-10-307, MCA, reads as follows: “All partners are liable ... (2) jointly for all other debts and obligations of the partnership ....” The District Court correctly concluded that Shubert, as a partner, albeit an innocent partner, is liable for restitution for the insurance proceeds.

Shubert argues that laches, waiver and equitable estoppel apply to this case and warrant reversing the District Court judge’s order. These issues were not briefed or argued in the lower court and thus are not appropriate for review. Shubert’s answer to Fireman’s counterclaim claims that his third defense to the counterclaim was laches and his fourth defense was estoppel. Waiver was not even pled by Shubert. Other than these contentions, there is no real argument or discussion regarding these issues. They are not addressed at all by the lower court in its opinion. “This Comb will not consider for the first time on appeal an issue which was not raised in the District Court.” Keller v. Dooling (1991), 248 Mont. 535, 540, 813 P.2d 437, 441. See also Merriman v. Merriman (1991), 247 Mont. 491, 496, 807 P.2d 1351, 1354.

Affirmed.

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


text:
    CLARENCE MENNIS, Claimant and Appellant, v. ANDERSON STEEL SUPPLY, Employer, and EBI/ORION GROUP, Insurer and Respondent.
    No. 92-094.
    Submitted on Briefs August 20, 1992.
    Decided November 12, 1992.
    Rehearing Denied December 10, 1992.
    49 St.Rep. 961.
    255 Mont. 180.
    841 P.2d 528.

      For Claimant and Appellant: Randall O. Skorheim, Overfelt Law Firm, Great Falls.
    For Insurer and Respondent: Susan J. Rebeck, Great Falls.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from the Workers’ Compensation Court, the Honorable Timothy W. Reardon presiding. The Workers’ Compensation Court adopted the Findings of Fact and Conclusions of Law and Proposed Judgment of the hearing examiner granting claimant Clarence Mennis (Mennis) permanent total disability benefits and reasonable attorney’s fees and costs, but denying domiciliary care benefits. Mennis appeals from that part of the judgment which denied domiciliary care benefits. We affirm.

The issue on appeal is whether the Workers’ Compensation Court erred in denying Mennis’ claim for domiciliary care benefits pursuant to Sec. 39-71-704, MCA (1983), and the five part test adopted in Carlson v. Cain (1985), 216 Mont. 129, 700 P.2d 607.

Mennis worked in the metal fabrication shop at Anderson Steel Supply (Anderson Steel) as a fabricator and welder. His duties included producing orders, building door frames, fabricating doors, and modifying doors. On February 22, 1985, three steel door frames fell on him and fractured his cheek bones, broke several teeth, separated his right shoulder, and inflicted a traumatic closed head injury. At the time of the accident Anderson Steel was enrolled under Compensation Plan Two of the Workers’ Compensation Act and EBI Insurance Company (EBI) was its insurer.

When his shoulder had healed satisfactorily, his doctor released him to return to work. Mennis returned to Anderson Steel on April 24, 1985, in the same position he had before the accident. In August 1985, Mennis complained of lightheadedness and headaches to Dr. Person. Dr. Person referred Mennis to Dr. Labunetz, a neurologist at the Great Falls Clinic, who diagnosed Mennis’ condition as “muscle contraction/vascular headaches, post concussive as well as post concussive syndrome.” By March 1986, Dr. Labunetz felt that this condition basically had been resolved. In July 1986, Dr. Labunetz referred Mennis to Dr. Shubat, a clinical psychologist, for biofeedback relaxation therapy to help control some continuing pain and for neuropsychological evaluation. Dr. Shubat diagnosed Mennis as suffering from mixed organic brain syndrome. Dr. Shubat referred Mennis to Charles Bock, a speech pathologist, for cognitive retraining. Mennis also received treatment from Dr. David Bush, a psychologist, from March through June of 1987 for what Mennis perceived as personality changes and declining cognitive performance.

In January 1988, Mennis transferred from the fabricating and welding shop to the sales force at Anderson Steel. The noise, dust, and heat of the shop aggravated Mennis’ problems caused by the injury. Anderson Steel did not create this position to accommodate Mennis; rather, the position came open and Mennis received a transfer.

In September 1988, Mennis did not return to work at Anderson Steel after undergoing a septoplasty to correct a nasal obstruction that was secondary to the injury caused by the accident. Anderson Steel had informed Mennis that it could not hold his job open because it did not know when he would return after the surgery. He has been unemployed since September 13, 1988.

In July 1989, Mennis’ wife Beverly also quit working full time, reducing her hours to six hours a week. She is employed as a legal secretary. Mennis claims she quit working full time at the direction of Drs. Labunetz and Shubat. However, Jeanne Dussault, an independent living specialist who met with the Mennises in March 1990, testified that Beverly had indicated that she wanted to quit working before Mennis’ accident to spend more time with the children, and that she reduced her hours because of her needs and to alleviate the stress she felt from working full time and being a full time homemaker.

In order to investigate Mennis’ claim, EBI hired Allstate Professional Investigators to observe Mennis. Larry Alexander, the investigator assigned to the case, testified at trial that he first observed Mennis on December 19, 1989. On that day he saw Mennis drive his vehicle to his home, pick up the mail, and enter his home. He again observed Mennis on January 11, 1990. On that day he watched Mennis drive his children to and from school and drive his wife to work. Mr. Alexander also observed Mennis depart in his vehicle and later return on foot.

EBI later hired Putman and Associates to do further surveillance of Mennis. Rick Hawk testified that he first observed Mennis from February 21 to February 24, 1990. During that time he observed Mennis driving his vehicle on numerous occasions, washing the interior and exterior of his vehicle, buying groceries for his children’s lunch, and cleaning a storage shed beside his house. Mr. Hawk testified that he never observed a problem with Mennis’ driving. Mr. Hawk also observed Mennis from April 15 to April 18,1990, and saw him drive with no difficulty on those occasions.

Mennis claims that it is necessary for his wife to stay home to provide domiciliary care and that he should receive benefits to pay for her services. The Workers’ Compensation Court denied Mennis’ claim for domiciliary care benefits finding that he failed to meet the five point test adopted in Carlson for allowing domiciliary care. The issue on appeal is whether the Workers’ Compensation Court erred in denying Mennis’ claim for domiciliary care pursuant to Sec. 39-71-704, MCA (1983), and the five part test of Carlson.

This Court will not overturn the findings and conclusions of the Workers’ Compensation Court where there is substantial credible evidence to support them. Nor will this Court substitute its judgment for that of the Workers’ Compensation Court as to the weight of evidence on questions of fact. EBI / Orion Group v. State Compensation Mut. Ins. Fund (1991), 249 Mont. 449, 452, 816 P.2d 1070, 1072 (citing Steffes v. 93 Leasing Co., Inc. (1978) 177 Mont. 83, 86, 580 P.2d 450, 452-453). In this case we are asked to determine whether there is substantial credible evidence to support the Workers’ Compensation Court’s determination that Mennis is not entitled to domiciliary care benefits under Carlson.

Initially, Mennis’ claim to domiciliary care arises out of Sec. 39-71-704(l)(a), MCA (1983), which states:

Payment of medical, hospital, and related services. (1) In addition to the compensation provided by this chapter and as an additional benefit separate and apart from compensation, the following shall be furnished:
(a) After the happening of the injury, the employer or insurer shall furnish, without limitation as to length of time or dollar amount, reasonable services by a physician or surgeon, reasonable hospital services and medicines when needed, and such other treatment as may be approved by the division for the injuries sustained.

Domiciliary care comes within the “such other treatment” language of the statute. This Court adopted a five point test in Carlson to determine whether in-home services are compensable. Those factors are:

(1) The employer knows of the employee’s need for medical services at home resulting from the industrial injury; (2) the preponderance of credible medical evidence demonstrates that home nursing care is necessary as a result of accident, and describes with a reasonable degree of particularity the nature and extent of duties to be performed by the family members; (3) the services are performed under the direction of a physician; (4) the services rendered are of the type normally rendered by trained attendants and beyond the scope of normal household duties; and (5) there is a means to determine with reasonable certainty the approximate value of the services performed.

Carlson, 700 P.2d at 614.

We subsequently reaffirmed the use of that test in Larson v. Squire Shops, Inc. (1987), 228 Mont. 377, 742 P.2d 1003.

Although the Workers’ Compensation Court found that Mennis was permanently totally disabled, it also found that he failed to meet any part of this test, so it denied domiciliary care. As EBI correctly points out, the evidence required to prove permanent total disability is different than that required to justify domiciliary care.

The first element of the Carlson test requires that the employer know of the employee’s need for medical services at home as a result of the accident. In his Petition For Hearing and Amended Petition For Hearing, Mennis sought domiciliary care benefits from the date of his injury. The first indication Anderson Steel had that Mennis claimed a need for domiciliary care came in June of 1989 when EBI’s attorney received a letter from Mennis’ attorney. That letter included copies of letters from Drs. Labunetz and Shubat. In a letter dated May 22, 1989, Dr. Labunetz claimed:

Domiciliary care or supervision would be important and in fact essential. This would be required constantly unless or until he developed a rigid enough program to function with only spot supervision, though this seems unlikely.

In a letter dated May 24, 1989, Dr. Shubat claimed:

It is clearly apparent that Beverly Mennis’s presence in the home is absolutely paramount.... [I]t is still going to require the presence of Beverly in the home to implement these programs in an integrated and consistent manner.

Up to this point, Anderson Steel was justifiably unaware of any need for full time care. As noted previously, Mennis returned to work approximately two months after the accident and worked for approximately two and a half years before not returning after the nasal surgery. His supervisor, Dan Sayre, testified at trial that Mennis had a noticeable sinus problem and complained of the noise, dust, and heat in the shop. These symptoms did not give any indication that Mennis required domiciliary care. Apart from those two problems, Sayre testified that Mennis was a reliable, conscientious worker whose quality of work did not suffer after the accident and who did not require help from others. Nor did Mennis receive any reprimands for his work after the accident.

As evidence that Anderson Steel knew that he needed care, Mennis cites the testimony of his brother-in-law and co-worker, Phillip War-math, who testified that Mennis became forgetful and needed correcting. Warmath’s statements, however, show only occasional difficulty with the job; they are irrelevant to Anderson Steel’s knowledge of a need for domiciliary care.

Mennis’ return to work and his thirty months of continued employment distinguish this case from Carlson, Larson, and Hilbig v. Central Glass Co. (1989), 238 Mont. 375, 777 P.2d 1296, where the claimants were unable to return to work due to the severity of injuries caused by an industrial accident. Although Mennis may have suffered a permanent total disability, that did not automatically put the employer on notice that he also required domiciliary care. Anderson Steel had no knowledge of any need for domiciliary care during the two and a half years Mennis continued to work or for another nine months after that until the doctors made the claim.

The second element of the test requires that the preponderance of credible medical evidence demonstrate that home nursing care is necessary and that the nature and extent of the duties to be performed by the family members be described with a reasonable degree of particularity. There was much testimony regarding whether Mennis needs care. Mennis argues that the opinions of Drs. Shubat and Labunetz establish his need for domiciliary care. Dr. Shubat’s main concerns were that Mennis have structure, have someone to administer his medications, and have someone present during emergencies. However, he admitted that he did not know how Mennis would react in an emergency and that Mennis should be tested and should practice responding to emergencies. Dr. Labunetz admitted that Beverly Mennis could see that Mennis took his medication as directed by administering it in the morning, at lunch, and in the evening when she returned from work.

Dr. Charles Bock found no significant malingering on Mennis’ behalf. He felt that even though Beverly’s personality is such that other people could provide better therapy for Mennis, she had provided an environment on a day-to-day basis that was optimum for dealing with such problems as his short attention span, distractibility, and limited ability to plan and carry out tasks.

Jeanne Dussault, an independent living specialist, stated that a domiciliary caretaker might have helped Mennis learn some basic homemaking skills during the year that she worked with him (March 1989 to February 1990).

Mennis also retained the services of Dr. Lloyd Cripe, a clinical neuropsychologist, to test him and evaluate the other information gathered on him. Dr. Cripe testified in his deposition that a person with the degree of brain dysfunction Mennis suffered typically does not need attendant care. He stated that on the basis of the neuropsychological test results alone, Mennis would not need attendant care. He did add, however, that Mennis’ depression and headaches complicate the situation. In the end, Dr. Cripe deferred to Drs. Shubat and Labunetz on the issue of domiciliary care.

On the other hand, even Dr. Shubat testified that Mennis’ “bad” days only meant that he did not have a good day with his children or with himself. Although Dr. Tompkins of the Montana Medical/Legal Panel did not have an opinion as to whether Mennis needed full time care, he did find that Mennis possessed some functional skills, was purposeful, motivated, cooperative, and able to initiate action.

Dr. Bock felt that it is easier for Mennis to sit back and not deal with the complexities of the day, but he did not order domiciliary care. He testified that Mennis could draw up a schedule for the day with his computer program which broke down chores and activities into small tasks. EBI plausibly argues that structuring the day does not require a trained nursing attendant.

Dr. Bush, a psychologist who treated Mennis from March through June of 1987, testified that at that time Mennis was capable of maintaining himself in the home during the day, and that he found it hard to believe that a person with the type of injury Mennis suffered would decline to the point of total invalidism unless he had medical complications leading to severe damage of the central nervous system. In his June 5,1989, deposition, Dr. Bush was surprised to learn that Mennis requested domiciliary care.

Dr. Lees-Haley, the expert retained by EBI, evaluated Mennis on March 12, 1991, and testified at trial. We note that Mennis made a great effort to discredit Dr. Lees-Haley’s credentials and testing. However, Dr. Lees-Haley’s extensive curriculum vitae was entered into evidence. Dr. Lees-Haley is a board certified vocational expert, a fellow of the American College of Forensic Psychology, and a diplómate of the American Board of Professional Psychology and the American Board of Vocational Experts. Dr. Tompkins testified in his deposition that he felt Dr. Lees-Haley chose reasonable tests. This Court will not substitute its judgment for that of the Worker’s Compensation Court concerning the credibility of witnesses or the weight of their testimony. Smith-Carter v. Amoco Oil Co. (1991), 248 Mont. 505, 510, 813 P.2d 405, 408.

Dr. Lees-Haley found Mennis’ claim that he could not do a number of things implausible because of his objective performances on the tests he and other doctors administered and because of Mennis’ observable behavior on the day he tested him. As part of his evaluation of Mennis’ claim, Dr. Lees-Haley viewed the video surveillance tapes. He testified as follows regarding what he learned from the tapes:

Q. Do you have an opinion on whether or not the videotape behavior of Clarence Mennis was consistent with the cognitive deficits identified by Dr. Shubat?
A. Yes.
Q. What is your opinion?
A. Number one, that he is functioning superior to his functioning as opined by Dr. Shubat. Number two, that he was behaving in a way that was different than Dr. Shubat appears to have believed, based on his own observations and what Mr. Mennis told him. There’s a discrepancy between what you learn about Mr. Mennis from Dr. Shubat’s record and what you learn from the videotape, and my viewing of the videotape is that he is able to move about, ride a bicycle, drive a car, talk with people, read from a loose-leaf notebook. Apparently he takes a car to the doctor’s office [referring to the fact that Mennis took a cab to the Dr.’s office on the day that he was videotaped even though he drove his own car on numerous other occasions that same day]. Putting a variety of things together. But he drove a vehicle with no assistance in the videotape, and he appears to be monitoring children.
I feel that it’s inconsistent. That to say a man is so incapacitated he can’t be left alone himself without a babysitter for him and see him, in fact, supervising children. He drove a car with a child and assumed responsibility for driving a car with a child in the car, and a woman that I correctly or incorrectly interpreted as being Mrs. Mennis .... The ability to move around, ride a bicycle, and drive a car, things like that have some relevance.
Dr. Lees-Haley also found Mennis able to initiate and sustain purposeful activity. He testified as follows:
Q. Do you have an opinion as to whether Clarence Mennis is able to initiate and sustain purposeful activity?
A. Yes, ma’am.
Q. (By Ms. Rebeck) What is your opinion?
A. That he is able to do so.
Q. On what is your opinion based?
A. Broadly on two things. One is that complete lack of evidence that he can’t, and he’s an adult man of normal intelligence. Number two, that when he came with me and met with me in the evaluation, when I met him in person, he walked in and did all sorts of things that are consistent with being able to engage in purposeful activity, ranging from little spontaneous things to self-care things like we ordered lunch. He decided what he wanted, he ate, and he answered the questions. He was able to monitor my questions and bring out information. He was able to go to the phone and call for information unassisted. He was able to maintain his train of thought when I interrupted him to see if he was capable of maintaining his train of thought. He was able to take written tests. He was able to ask appropriate questions about the instructions, to clarify things. He was able to accomplish the tests, to begin and continue and complete the tests, answer my complicated and simple questions, understand the questions, and give answers when he needed to. He didn’t always know them. There were a few times when he said that he didn’t know or didn’t remember or didn’t understand, but I see no reason to believe this gentleman can’t engage in purposeful activity, initiate his own activity. I think he’s doing it. I consider the videotape, driving a child in the car, is hardly the inability to do purposeful and dangerous activity.

We note that the surveillance occurred almost a year after Drs. Shubat and Labunetz claimed in their letters that Mennis required domiciliary care. There is substantial credible evidence supporting the Workers’ Compensation Court’s determination that the need for domiciliary care was not established.

Nor did the request for domiciliary care describe with a reasonable degree of particularity the nature and extent of the duties to be performed by the family members. The Workers’ Compensation Court in its Findings of Fact and Conclusions of Law noted that Dr. Labunetz did not prepare a specific plan stating the medical assistance Mennis needed. We find nothing in the record to the contrary.

As we hold that substantial credible evidence exists to justify the Workers’ Compensation Court’s decision on the first two requirements of the Carlson test, we need not discuss the other elements. The test is clearly a conjunctive test requiring that all elements be satisfied.

Affirmed.

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


text:
    LON GREGORY, Claimant, Respondent and Cross Appellant, v. MICHAEL BAILEY & SONS LOGGING, Employer, and STATE COMPENSATION MUTUAL INSURANCE FUND, Defendant and Appellant.
    No. 92-115.
    Submitted on Briefs August 20, 1992.
    Decided November 12, 1992.
    49 St.Rep. 966.
    255 Mont. 190.
    841 P.2d 525.

      For Appellant and Employer: Lawrence Hubbard, Helena.
    For Respondent and Cross Appellant: Robert K. Ogg, Grenfell & Ogg, Missoula.
   JUSTICE WEBER

delivered the Opinion of the Court.

This is an appeal from a decision by the Workers’ Compensation Court awarding claimant compensation based upon his entire work history with the employer. We affirm.

The issue on appeal is whether the Workers’ Compensation Court erred in unreasonably calculating claimant’s compensation by considering his entire work history with the employer instead of only the immediate preceding four pay periods.

Claimant, Lon Gregory (Gregory) was hired as a backhoe operator and laborer by Michael Bailey and Sons Logging (Bailey) in July 1989. Bailey is in the logging business which involves seasonal work. The crew of approximately 40 employees usually do not work in the spring and fall of the year. Most of these employees return after layoff. Employees are paid by the month.

Gregory worked from July 1989 until mid-February 1990, when seasonal weather conditions prevented work. He returned to work on June 1, 1990. It is uncontested that Gregory was injured during the course of his employment on August 10, 1990. On August 29, 1991, Gregory filed a petition for hearing before the Workers’ Compensation Corut alleging that State Compensation Mutual Insurance Fund (State Fund) improperly calculated his “wages” under Sec. 39-71-123, MCA(1989). Ahearing was held on November 4,1991. While responsibility for the injury was uncontested, the Workers’ Compensation Court had to calculate the average weekly salary for the purpose of determining compensation.

On January 13,1992, the Workers’ Compensation Corut issued its Findings of Fact, Conclusions of Law, and Judgment. The court determined that Gregory’s average weekly wage for purposes of § 39-71-123, MCA (1989), was $312.00 per week, with a resulting temporary total disability rate of $208.10 per week. The court calculated the compensation by using all weekly earnings for the entire length of time in which Gregory worked for Bailey.

The State Fund appeals this determination. Gregory cross-appealed with the State Fund responding to the cross-appeal.

State Fund argues that the Workers’ Compensation Court misapplied Sec. 39-71-123(3), MCA, and that it is appropriate to adjust a claimant’s wage determination to account for the seasonal nature of his employment where the job is not inherently full time. Further, State Fund argues that a term of employment does not end when a break in employment with the same employer occurs because of weather conditions or for other reasons of forced idleness. State Fund, therefore, contends that the actual wages earned over the entire span of employment should include off time.

Gregory argues also that the Workers’ Compensation Court erred in its calculations. Gregory contends that for purposes of determining compensation benefits, the court should have relied on the hourly calculations of subsection (a) of Sec. 39-71-123(3), MCA. Subsection (a) directs that if the “term of employment” for the same employer is less than four pay periods, a full time employee’s wages are computed by multiplying the hourly rate times the number of weekly hours for which the employee was hired to work. Such calculation, argues Gregory, would mean that during those weeks within the preceding four pay periods in which he did not work for Bailey because of the weather, the court should have used the $400 weekly figure to compute his benefits.

This case revolves around the use and interpretation of several statutes. Section 39-71-701, MCA, states:

(1) ... a worker is eligible for temporary total disability benefits when the worker suffers a total loss of wages as a result of an injury and until the worker reaches maximum healing ...
(3) Weekly compensation benefits for injury producing temporary total disability shall be 66 2/3% of the wages received at time of injury ...

Section 39-71-123, MCA, states:

(1) ‘Wages” means the gross remuneration paid in money, or in a substitute for money, for services rendered by an employee ...
(3) For compensation benefit purposes, the average actual earnings for the four pay periods immediately preceding the injury are the employee’s wages, except if:
(a) the term of employment for the same employer is less than four pay periods, in which case the employee’s wages are the hourly rate times the number of hours in a week for which the employee was hired to work; or
(b) for good cause shown by the claimant, the use of the four pay periods does not accurately reflect the claimant’s employment history with the employer, in which case the insurer may use additional pay periods.

The Workers’ Compensation Court determined that pursuant to § 39-71-123(3)(b), MCA, sufficient cause existed for the court to consider additional pay periods beyond the four mentioned in the main body of subsection three. We agree.

The Workers’ Compensation Court concluded that using Gregory’s suggested interpretation and formula would provide him with an average monthly amount of money higher than the total sum of money earned in any of the four preceding months before his injury except one. The court found this to be unfair. Likewise, the Workers’ Compensation Court determined that use of the State Fund’s calculations failed to accurately take into account the seasonal nature of the logging business by including off time. Therefore, for the sake of total fairness, the court considered Gregory’s entire employment history with Bailey which constituted 59 weeks of employment. Of those 59 weeks, Gregory worked 31. The court used the total number of work hours (967) stipulated to by the parties and then divided this number by the actual number of weeks worked (31). This comes to 31.2 hours per week which the court multiplied by $10 per hour, Gregorys regular hourly wage, to equal the sum of $312.00. This sum was then multiplied by 66 2/3 percent for compensation of $208.10 per week. The court determined that this calculation gave consideration to periods when Gregory worked little, offset by periods when he worked a disproportionately high number of hours.

We review a Workers’ Compensation Court’s conclusions of law as to whether the conclusions are correct. Steer, Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 803 P.2d 601. Further, “[a]s long as the rate of disability fairly and reasonably] approximates the wages earned at the time of injury, this Court will uphold the method used by the Workers’ Compensation Court to determine a claimant’s usual hours of employment.” Stuber v. Moodie Implement (1989), 236 Mont. 189, 192, 769 P.2d 1205, 1207. Here, the Workers’ Compensation Court took into account the seasonal nature of the logging business while still basing its calculations on “actual” hours worked within the employee’s total actual work history. We have consistently stated that when calculating compensation, a court should consider the seasonal nature of a job. Infelt v. Horen (1959), 136 Mont. 217, 346 P.2d 556. Yet, precedent also exists for not including periods of forced idleness when computing the average weekly pay. Sandahl v. James A. Slack, Inc. (1987), 225 Mont. 208, 732 P.2d 831.

The record reveals that Gregory worked at a sporadic, seasonal job during 31 out of a total of 59 weeks in which he was employed by Bailey. The record establishes that during his entire employment with Bailey, Gregory worked only a total of 967 hours during these 31 weeks. In its calculations, the court excluded the 18 weeks of forced idleness because of weather. The court then divided the total number of actual hours by the actual number of weeks worked. Such calculation fairly approximates the average weekly salary of Gregory.

Because the court had to consider the seasonal nature of a job and not consider periods of forced idleness, it was required to look to subsection (b) of Sec. 39-71-123, MCA, when considering a fair method of calculations under this set of facts. Gregory’s argument pertaining to subsection (a) is inappropriate under this set of circumstances as reliance on it fails to consider any seasonal aspect of his employment.

We conclude that where sporadic, seasonal work is at issue, it is reasonable when calculating “usual” salary to calculate on a larger scale than four pay periods; therefore, reliance on subsection (b) of Sec. 39-71-123, MCA, is appropriate. Fairness demands that sporadic, seasonal employment be determined in such a way as to “accurately reflect the claimant’s employment history with the employer” as subsection (b) dictates. See, Stuber, 236 Mont. at 192. Further, it is inappropriate when determining compensation for a sporadic, seasonal job, to rely on subsection (a) of Sec. 39-71-123, MCA, as such calculations will be unreasonable and unfair.

We hold the Workers’ Compensation Court did not err in calculating compensation by using claimant’s entire work history with the employer instead of only the immediate preceding four pay periods.

JUSTICES HARRISON, TRIEWEILER, HUNT and McDonough concur.


author: JUSTICE HUNT

text:
    BRIEN M. WEBER and GAYLE L. WEBER, Plaintiffs and Respondents, v. J. GEORGE BROADY RIVERA and MARY VIRGINIA B. RIVERA, Defendants and Appellants.
    No. 92-201.
    Submitted on Briefs August 6, 1992.
    Decided November 12, 1992.
    49 St.Rep. 969.
    255 Mont. 195.
    841 P.2d 534.

      For Defendants and Appellants: Bryan L. Asay, Kelley & Asay, Helena.
    For Plaintiffs and Respondents: John D. Greef, Hamilton.
   JUSTICE HUNT

delivered the opinion of the Court.

Appellants George and Mary Rivera appeal from the decision of the District Court of the Fourth Judicial District, Ravalli County. This dispute arose out of a contract to buy and sell certain land in Ravalli County, Montana. The District Court refused to grant Riveras’ rescission of the contract and awarded respondents, Brien and Gayle Weber, liquidated damages in the amount of $43,000. We affirm in part and reverse in part.

There are two issues before the Court:

1. Was the District Court clearly erroneous in denying Riveras the right to rescind the contract?

2. Did the District Court incorrectly find the liquidated damages clause of the contract valid under § 28-2-721, MCA?

Brien and Gayle Weber listed their ranch property, located in Ravalli County, for sale in June 1990. The Weber family had owned the ranch property since 1911 and had lived in the residence located on the property since 1915. In June 1990, Maty Rivera was shown several properties in the area by a sales representative of a local real estate agency, including the Webers’ ranch property. In July 1990, Mary Rivera travelled from California to Montana with her husband George, to again view several properties in the Ravalli County area. The Weber property was one of the properties the Riveras were to view.

The District Court found that prior to viewing the Weber ranch property, George Rivera questioned the sales representative concerning the water used for the residence located on the property. The sales representative replied that although the water would not “test out,” the Weber family had been using it for three generations and that to the best of their knowledge no one had ever had any problems. Upon arriving at the property, George Rivera asked Brien Weber about the water. Weber replied that his family had been drinking the water for years without any difficulty, but that it would not test out. It is not clear that the actual source of the water was adequately explained to the Riveras. The Riveras deny that at that time they were told the water would not test out.

On July 17, 1990, the same day they both viewed the property, the Riveras made an offer to purchase the property for $430,000. They then signed a form contract provided and required by United National Real Estate, a national company of which the local real estate agency was a member. The Riveras made an initial deposit of $5000 earnest money at the time they signed the contract. Shortly thereafter, the Webers executed the contract. The contract entered into by the parties had a clause which stated that if either party failed to complete the transaction they would be required to pay to the other party ten percent of the purchase price as “liquidated damages.”

In early August 1990, Mary Rivera returned to Montana to obtain water samples for testing. The sales representative told her that she was wasting her time because, as he had previously indicated, the water would not check out. On August 7, 1990, the Riveras received the results of the water tests. The tests indicated the water was contaminated. On August 13,1990, the Riveras communicated to the sales representative their intent that the contract be voided and that the $5000 deposit be returned. The Riveras then received several letters from the Webers’ counsel. The Webers denied making any misrepresentations concerning the quality of the water, but suggested that something could be worked out regarding the costs of putting a well on the property. Additionally, the Webers reiterated that the contract called for a closing date of September 1, 1990, and that they were still willing to close the transaction on that date. The closing did not occur on September 1, 1990.

The Webers brought suit on October 24, 1990, alleging breach of contract and seeking to enforce the liquidated damages clause in the contract. The Riveras filed an answer and counterclaim alleging that the liquidated damages provision was actually an invalid penalty clause. The Riveras raised the affirmative defenses of constructive fraud and mistake of fact. In the counterclaim, the Riveras alleged negligent representation by both the Webers and the sales representative. Abench trial was held on November 22,1991. The District Court entered judgment for the Webers on March 3, 1992. The court concluded that the Riveras had failed to perform their obligations under the contract and awarded $43,000 in liquidated damages. The Riveras took nothing under their counterclaim. The Riveras appeal.

I

Was the District Court clearly erroneous in denying the Riveras the right to rescind the contract?

The District Court found that the Riveras were not entitled to rescind the contract in question. On appeal, this Court will not disturb the District Court’s findings of fact in a bench trial unless they are clearly erroneous. In the Matter of the Mental Health of E.P. (1990), 241 Mont. 316, 787 P.2d 322; Rule 52(a), M.R.Civ.P. This Court will also give due regard to the opportunity of the District Court to judge the credibility of the witnesses. In the Matter of the Mental Health of R.J.W. (1987), 226 Mont. 419, 736 P.2d 110.

The Riveras contend that pursuant to § 28-2-401, MCA, their consent to the contract was neither real nor free because of constructive fraud on the part of the Webers and because of mistake. § 28-2-1711, MCA, allows a party to rescind a contract if that party’s consent was given by mistake or obtained through fraud. The Riveras argue that the quality of the water was misrepresented, either intentionally or unintentionally, prior to the time they entered the contract. They also contend that had they known the true nature of the water on the Weber property they would never have contracted to buy the property. At trial, the parties offered conflicting testimony as to their discussions concerning the water prior to entering the contract.

The Webers and the sales representative testified that prior to entering into the contract, the Riveras were told that although the water would probably not test out, the Weber family had been drinking it without problems for generations. The Riveras testified that they were not given this information -until after they had entered the contract. In fact, the Riveras testified that prior to entering into the contract they were led to believe by the Webers that the water was fine. The record does not indicate that the source of the water was clearly explained to the Riveras. However, it was the quality of the water and not its source, which was the basis for the Riveras’ decision to seek rescission of the contract.

The resolution of this issue depends upon a factual determination as to what was actually said concerning the water quality prior to the execution of the contract. If the Webers did communicate to the Riveras that the water would not test out, then there is no basis upon which to allow the Riveras to rescind the contract.

The District Court resolved this factual dispute in favor of the Webers, finding that they did communicate to the Riveras that the water would not test out. The District Court, having had the opportunity to observe and judge both the demeanor and credibility of the witnesses, was in a position superior to this Court to make such a factual finding. The District Court was not clearly erroneous in finding that the Riveras were not entitled to rescission of the contract.

II

Did the District Court incorrectly find the liquidated damages clause of the contract valid under § 28-2-721, MCA?

The District Court concluded that the Webers were entitled to $43,000 in liquidated damages. On appeal, the Riveras have requested that this Court review this conclusion of law. Our standard of review of questions of law is simply whether the District Court’s interpretation of the law is correct. Schaub v. Vita Rich Dairy (1989), 236 Mont. 389, 770 P.2d 522. The basis for this standard of review is that no discretion is involved when a tribunal arrives at a conclusion of law. The tribunal either correctly or incorrectly applies the law. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 803 P.2d 601.

The contract between the Webers and the Riveras contained a clause which stated that:

It is agreed that if either seller or buyer fails or neglects to perform his part of this agreement he shall forthwith pay as liquidated damages to the other party a sum equal to ten percent of the agreed price of sale.

Based on this clause, the District Court awarded $43,000 in liquidated damages to the Webers. The Webers contend on appeal that the clause was a valid liquidated damages provision under Montana law. The Riveras allege the clause was in reality a penalty clause and is void under existing Montana law. § 28-2-721, MCA, provides that:

(1) Every contract by which the amount of damage to be paid or other compensation to be made for a breach of an obligation is determined in anticipation thereof is to that extent void, except as expressly provided in subsection (2).
(2) The parties to a contract may agree therein upon an amount which shall be presumed to be an amount of damage sustained by a breach thereof when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.

As set out in the statute, a contractual provision in Montana purporting to set out in advance the amount of damages payable upon a breach of the contract is void. However, an exception is provided for situations in which the parties have agreed in advance on an amount of damages because it would be impracticable or extremely difficult to fix the actual damages. This Court has previously explained in interpreting this statute that:

“Whether the forfeiture provision imposed a penalty, or provided for liquidated damages, is to be determined from the language and subject matter of the contract, the evident intent of the parties and all the facts and circumstances under which the contract was made. The most important facts to be considered are whether the damages were difficult to ascertain, and whether the stipulated amount is a reasonable estimate of probable damages or is reasonably proportionate to the actual damages sustained at the time of the breach.”

Morgen and Osgood v. Big Sky of Montana (1976), 171 Mont. 268, 273, 557 P.2d 1017, 1020 (quoting Waggoner v. Johnston (Okl. 1965), 408 P.2d 761, 769).

In this case, the provision for liquidated damages was contained in a form contract prepared and required by United National Real Estate. There was absolutely no attempt on the part of the parties prior to entering the contract to reasonably estimate what the damages might be in the event of a breach. Both the Webers and the sales representative testified that they had no idea how the amount in the provision was even chosen. Pursuant to the provision, the Webers were entitled to $43,000 regardless of whether they were able to resell the property the next week, the next month, or the next year. They would have been entitled to the $43,000 even if they found a subsequent purchaser willing to pay more than the Riveras. In short, the provision provided for a set amount of damages without any regard for or attempt to determine what the actual damages might be.

Despite the lack of any evidence in the record indicating that an attempt was made to reasonably estimate the damages upon breach of the contract, the Webers argue on appeal that it would have been extremely difficult to determine what the actual damages might have been in this situation. The Webers point out that this Court has previously upheld a liquidated damages clause in a similar situation involving a contract for the sale of land. Erickson v. First Nat’l. Bank of Minneapolis (1985), 215 Mont. 350, 697 P.2d 1332. Additionally, the Webers point out that it appears as if the amount of damages specified in the provision approximate those actually suffered. The Webers argue that this weighs heavily in favor of the provision being interpreted as a valid liquidated damages provision. However, any relationship between the amount of actual damages suffered and the amount specified in the provision is merely a fortuitous coincidence and not the result of a reasonable estimate in advance to determine what the damages might be. The fact that the liquidated damage provision in this case may approximate the actual damages suffered, is insufficient by itself to create a valid liquidated damages provision. Our decision in Morgan, along with the applicable statute, makes it clear that other factors must also be considered. In this case, it is clear from the subject matter, the surrounding circumstances, and the intent of the parties that the provision was simply a penalty clause and as such is void under Montana law. This matter must be remanded to the District Court for a determination of the actual damages suffered by the Webers as a result of the breach of contract by the Riveras.

This matter is affirmed in part and reversed in part and is remanded to the District Court for further proceedings consistent with this opinion.

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