author: JUSTICE WEBER JUSTICE TRIEWEILER, JUSTICE GRAY,

text:
    IN THE MATTER OF PAUL GROVER MATT, III, Petitioner.
    No. 91-312.
    Submitted on Briefs October 17, 1991.
    Decided April 2, 1992.
    Rehearing Denied May 21, 1992.
    49 St.Rep. 279.
    252 Mont. 345.
    829 P.2d 625.

      For Appellant: Carey E. Matovich, Matovich, Addy and Keller, Billings.
    For Respondent: Andrew P. Suenram, Attorney at Law, Dillon.
   JUSTICE WEBER

delivered the Opinion of the Court.

Petitioner Paul G. Matt, III, appeals from the final decision of the State Bar of Montana Committee on Character and Fitness refusing to certify petitioner to this Court for admission to the State Bar of Montana. We affirm the decision of the Committee.

We restate the issues for our review as follows:

1. What is the proper standard of review for the Court to apply to a decision of the Committee on Character and Fitness?

2. Did the Committee on Character and Fitness conclude that Mr. Matt is unfit to practice law in the State of Montana?

3. Did the Committee on Character and Fitness violate petitioner’s constitutional right to due process?

On February 28, 1990, Paul G. Matt, III (Mr. Matt), filed his application for certification for admission to the State Bar of Montana. As the rules require, the application was referred for review to the State Bar’s Committee on Character and Fitness (Committee). The Committee investigated and held three hearings. The first hearing, on June 27, 1990, was informal. Based on that hearing the Committee denied Mr. Matt’s certification. Subsequently, a formal reconsideration hearing was held before the Committee on October 11,1990. After the hearing, the Committee notified Mr. Matt by letter that they were still in the process of deliberating regarding Mr. Matt’s Application for Admission and that pursuant to Rule 4(g) of the Committee’s Rules of Procedure, it was considering items discussed in the formal hearing as well as additional items not discussed at the formal hearing but previously submitted in the record. Rule 4(g) provides that the Committee is not bound by the formal rules of evidence.

The Committee gave Mr. Matt the option of producing evidence regarding these additional factors in one of four ways: (a) a formal hearing held at the State Bar of Montana (State Bar) office; (b) a formal hearing held via conference call; (c) written argument; or (d) letting the record stand as stated in the transcript of the informal hearing. Mr. Matt, through his counsel of record, opted for a continuation of the formal hearing held at the State Bar office. A continuation of the formal hearing was held on February 13, 1991. On May 23, 1991, the Committee issued its Findings of Fact and Conclusions of Law denying certification of Mr. Matt to the Clerk of the Supreme Court for admission to the State Bar. Mr. Matt has petitioned this Court for review of the Committee’s denial of his certification.

I

What is the proper standard of review for the Court to apply to a decision of the Committee on Character and Fitness?

This Court issued new rules regarding admission to the State Bar, effective January 17,1991. Rules for Admission to the Bar ofthe State of Montana (1991), 247 Mont. 1. Those new rules provide the following standards for the Committee to follow.

Section IV:

3. Standard of Character and Fitness. Every applicant for the Montana Bar Examination must be of good moral character. It shall be the responsibility of the applicant to demonstrate to the satisfaction of the Committee that the applicant would, if admitted to practice law in Montana, be able to act in accordance with the standards set forth in the Montana Rules of Professional Conduct, fairly, honestly, reasonably, and with unquestionable integrity in all matters in which he or she acts as an attorney at law.
4. Investigation of Applicants. The Committee shall process the applicant’s Application and Questionnaire and, where necessary, otherwise investigate and make a determination of the character and fitness of each applicant to take the bar examination ....
7. Committee Hearings, Rules of Procedure & Appeals. Any problems that arise in the processing of an applicant’s Application and Questionnaire may be discussed in informal communications between the Committee and the applicant. From time to time, substantial issues will arise which will require formal trial and hearing before the Committee which may result in the Committee’s disapproving the applicant’s application and finding a lack of appropriate character and fitness to take the bar examination or be admitted to practice in Montana .... The Rules of Procedure provide for a hearing process before the Committee and also provide for a manner of appeal to the Montana Supreme Court by an applicant who contests the final rulings of the Committee.

We also recently set forth the applicable standard of review for this Court to apply to a decision of the Committee on Character and Fitness in In the Matter of Kenneth J. Pedersen (1991), [250 Mont. 325,] 820 P.2d 1288, 48 St.Rep. 988. In that regard, we stated:

The Montana Constitution provides that this Court has the power and obligation to regulate the admission of attorneys to the Montana Bar. Mont. Const, art. VII, § 2, cl. 3. The Committee on Character and Fitness assists this Court in fulfilling its obligation to regulate the admission of attorneys in Montana. However, the ultimate decision regarding the admission of attorneys in Montana rests exclusively with this Court. Upon reviewing a final decision of the Character and Fitness Committee we will conduct an independent review of the entire record to determine if the Committee erred. When the facts are admitted and uncontested, as they are in this case, we will give due consideration to the inferences drawn by the Committee, including inferences concerning rehabilitation and mitigation. Consideration will be given to the recommendation of the Committee as to whether the applicant is of the requisite good moral character and fitness to be admitted to the Montana Bar. The Committee will have heard testimonial evidence and will have had the opportunity to observe the demeanor and judge the credibility of the applicant or other witnesses. However, inasmuch as we are designated by the Montana Constitution to ultimately make this decision, we will affirm the Committee’s recommendation if we determine it was correct, and we will reverse if we determine the Committee erred. Our review will be in accordance with the existing standards for admission, taking into consideration the whole record. (Emphasis added).

Pedersen, [250 Mont. 325,] 820 P.2d at 1290.

II

Did the Committee on Character and Fitness conclude that Mr. Matt is unfit to practice law in the State of Montana?

The Committee Rules of Procedure, adopted in 1987, specifically placed the on the applicant to prove that he possessed “good moral character”. In contrast, in 1988, this Court adopted Rules for Admission to the Bar (1988), 234 Mont. 1, 9, which provided that “good moral character shall be presumed by the Committee on Character and Fitness”. The current 1991 Rules for Admission to the Bar adopted by this Court are consistent with the original 1987 Committee Rules in providing that the of proof is on the applicant to establish good moral character. See Pedersen, 820 P.2d at 1292.

In the initial hearing the Committee placed the of proof on Mr. Matt to establish his good moral character. To that extent the Committee erred because the first two hearings were governed by the 1988 Rules for Admission to the Bar in which good moral character was to be presumed by the Committee. By the time of the third hearing, the rules had changed, and the could be placed on Mr. Matt.

We note that in Pedersen the of proof was also improperly placed on the applicant. This Comb concluded that because the Committee specifically found that past conduct of the applicant would cause a reasonable person to believe he would be unable or unwilling to act in accordance with the standards set forth in the Montana Rules of Professional Conduct, the Committee’s decision to deny the applicant’s admission was justified. There is one significant difference between this case and Pedersen. In Pedersen, the facts were uncontested. In this case, there is a significant amount of conflict in the interpretation of Mr. Matt’s testimony regarding his past actions. For that reason, we will discuss the conflicting testimony in detail.

In our review of the testimony and evidence, we will begin with the understanding that the good moral character of Mr. Matt is presumed. Mr. Matt maintains that he has established his good moral character and fitness to practice law in the State of Montana. He submitted with his application several letters from judges, attorneys and clients, attesting to his good moral character and fitness to practice law. He also submitted certifications from the bars of Colorado and Nebraska stating that he was a member in good standing at both Bars.

The Committee maintains that Mr. Matt failed to meet his of proof. It contends that it reviewed extensive regular investigation materials, post regular investigation materials, and conducted three hearings with Mr. Matt present, and unanimously concluded that Mr. Matt was untruthful in his testimony before the Committee, and thus, failed to prove his good character.

A significant portion of the questioning of and testimony by Mr. Matt concerned an incident which occurred ten years ago in the State of Nebraska while Mr. Matt was a member of the Nebraska State Bar. The Committee made extensive findings of fact, of which the following are pertinent.

1. In June 1981, Mr. Matt was charged by the Counsel of Discipline of the Nebraska State Bar Association with Misconduct as a lawyer. The charges stemmed from Mr. Matt being charged in 1980 by the Lancaster County Attorney (Nebraska) for conspiracy to possess cocaine.
2. Matt completed a pre-trial diversion program and the criminal charges against him were dismissed.
3. The Committee on Inquiry of the First Judicial District of the State of Nebraska prepared formal charges against Mr. Matt. Upon review of the charges, the Disciplinary Review Board recommended that the Supreme Court of Nebraska issue a reprimand to Mr. Matt.
4. The Nebraska Supreme Court declined to accept the recommendation and upon de novo review, suspended Mr. Matt from the practice of law for one year. The Supreme Court’s decision is reported in State, ex rel. v. Paul G. Matt, III, 213 Neb. 123, 327 N.W.2d 622 (1982).
5. Mr. Matt subsequently applied for and obtained reinstatement to the Nebraska State Bar in January 1984. In addition, he applied for and was admitted to the Colorado State Bar.
11. Mr. Matt has lead this Committee to believe his involvement in this matter was minimal. The Nebraska Supreme Court opinion demonstrates that Mr. Matt’s role in this incident was much more involved, to the point of determining the amounts of cocaine that would be sold and arranging the sale. The Committee finds that by downplaying this incident, Mr. Matt was not candid with the Committee regarding his involvement in the alleged conspiracy.
12. Mr. Matt testified at the June 27,1990, hearing that he did not get anything out of the transaction with Gierlich, that he was not using drugs and he hadn’t ever used drugs.
13. The Nebraska Supreme Court in its opinion states “the record reflects that prior to the events on March 1980, the Respondent had occasionally used marijuana personally and had purchased marijuana more than once from Gierlich who was a close personal friend.” State v. Matt, 213 Neb. 123, 327 N.W. 2d 622, 623, (1982).
14. Mr. Matt was untruthful in the application process before this Committee. His misrepresentations are material to the issues before the Committee and lead the Committee to doubt his candor in other areas as well. (Emphasis supplied.)

On his application, Mr. Matt gave the following explanation for the charges that were filed against him in Nebraska.

This inquiry by the Nebraska State Bar Association resulted from charges being filed against me by the Lancaster County Attorney’s Office in March of 1980 for conspiracy to possess cocaine. These charges were dismissed at the State’s cost in May 1981 when it was accepted that I was not a part of the conspiracy. The charges were filed because of two telephone conversations I had with a close friend of mine in early March of 1980.1 had not seen this friend for three or four months. She asked me if I knew where she might obtain some cocaine, and I told her I did not. She made further inquiries and asked if I knew anyone in Omaha. I told her that possibly the fellow living with my girlfriend in Omaha might know of someone. The telephone conversation was intercepted by law enforcement officers since my friend’s live-in boyfriend was under surveillance. She was followed and ultimately arrested after the authorities charged that she purchased cocaine from the fellow in Omaha. (Emphasis supplied.)

At the first hearing before the Committee, Mr. Matt testified regarding the cocaine dealings as follows:

A. [T]he essence of the charges by the State Bar, or the inquiry by the State Bar was because of charges filed against me by the Lancaster County Attorney’s office, as I set forth. That was based on a close friend of mine who I hadn’t seen for four, five, six months calling me and asking me if she could find some drugs, and I said no. She wanted to know where she could find some cocaine, and I said no.
She then asked me, “What about Omaha?" I was living in Lincoln, and I had a girlfriend in Omaha who lived with a fellow that she also knew named Curt.... I knew he knew a lot of people; he was the head maitre d’ of a restaurant. My girlfriend lived in the same house with him; and I said, “Well, why don’t you try Curt.“ So when I talked to my girlfriend, I asked Curt if he could help Judy, and he said, Probably. So I had Judy call him.
... She later was arrested, and because she had called me, they had charged me; and I went through a year of investigation and procedure with the Lancaster County Attorney’s office until they realized that I was not part of anything. I was not getting anything out of it, I wasn’t using drugs, I hadn’t ever used drugs, I wasn’t involved in getting anything out of Judy’s situation, and it was just a bad mistake on my part, obviously, to even comply with her request after I said no in the first place.
Q. What did you have to do in the pretrial diversion?
A. I had to do, I think 100 hours of community work, I had to read a couple books and make a report, and I had to talk to a member of the probation office, I think every month.
So after this was cleared up, then the Bar Association could look into it, and at that point, they did. The Council on Discipline sent me a letter; they then had a full hearing in which there was seven members who had all the records of the Lancaster County Attorney and all the records of all the investigations.... They decided, after that, that due to all those circumstances and all the evidence they had, a reprimand was the appropriate discipline in my situation.
That was then sent to the Attorney General, who complied with it... I then went to the Supreme Court for approval. The Supreme Court, without looking at any new evidence, just looking at exactly what took place as far as the transcript of my testimony and the evidence there, decided that that wasn’t appropriate and that I should be suspended for a year, and they then did that.

(Emphasis added).

At the second hearing, Mr. Matt testified he himself made the phone call to “Curt” and then called Judy back the next day.

Q. And then it’s my understanding of your testimony in the last hearing that you told her about this guy named Curt who was living with your girlfriend.
A. I told her no, and then she asked me, “What about Omaha?”...
Q. Then did you call Curt and ask if he could help Judy?
A. Judy called me on a Friday. I said that I’d check with Curt if I saw Shirley. Then Saturday morning, I saw Judy’s note and thought, “Oh, that’s right, I said I’d check with Curt,” and then I called Curt. So it was the next morning.
Q. So the transaction actually involved a couple phone calls.
A. One phone call there, and then I called Judy back. (Emphasis added).

As pointed out by the Committee, the Nebraska Supreme Court pinion detailed Mr. Matt’s involvement in the cocaine transaction, he opinion stated:

The formal charges allege that on or about March 7, 1980, the respondent received a telephone call at his law office from a personal friend, Judy Gierlich. Gierlich asked the respondent where she could obtain some cocaine. The respondent first told her that he did not know, but on further questioning agreed to contact a friend of his in Omaha, Nebraska, concerning the availability of cocaine and then recontact her.
On or about March 8, 1980, respondent called Gierlich at approximately 10:15 a.m. and told her that he had talked to the friend in Omaha and had been told that anything was available. At approximately 10:28 a.m. on the same day respondent received a telephone call from Gierlich. Respondent asked Gierlich what quantity of cocaine she intended to purchase. Respondent then gave the telephone number of the person in Omaha to Gierlich and advised her that he would also call again “to make sure there’s no problem."
The record reflects that prior to the events in March 1980 the respondent had occasionally used marijuana personally and had purchased marijuana more than once from Gierlich, who was a close personal friend. His conduct here was motivated by his friendship with Gierlich and he receive no remuneration for his efforts.
The Disciplinary Review Board recommended that the court issue a reprimand ....
The recommendation was not accepted by this court and the matter was referred to a referee. The referee considered the matter solely upon the record a the hearing before the Committee on Inquiry.... [T]he referee ... recommended that respondent be suspended from the practice of law for a period of 1 year, and that readmission be denied unless respondent made a satisfactory showing of rehabilitation from usage of controlled substances.
The referee specifically found that as a result of respondent’s efforts Judy Gierlich was able to illegally purchase a controlled substance and respondent’s personal acquaintance in Omaha was able to sell a controlled substance, and respondent knew, or had reason to know, that such would be the result of his efforts. (Emphasis supplied.)

State v. Matt (Neb. 1982), 327 N.W.2d 622.

Without contradiction, the record establishes that the Committee was correct in finding that Mr. Matt was untruthful in stating that he hadn’t ever used drugs. The record clearly supports the finding that Mr. Matt attempted to lead the Committee to believe his involvement in the drug transaction was minimal, and that Mr. Matt was not candid with the Committee. The dissents focus on the number of phone calls made by Mr. Matt as being irrelevant. We have not emphasized the number of phone calls as being significant. The key aspect is that Mr. Matt consistently attempted to minimize his involvement in the drug transaction and in the use of drugs. We point to one additional factor. The Committee had the opportunity to examine and observe Mr. Matt during the course of three separate hearings and had the corresponding opportunity to observe his demeanor and to judge his credibility. While we are required to make an original review of the record, we may consider the opportunity on the part of the Committee to evaluate the demeanor and to judge the candor of Mr. Matt. We do not have that opportunity. Our review of the record causes us to adopt the same findings as are above set forth on the part of the Committee.

As a result of its findings, the Committee reached the following conclusion:

5. Mr. Matt has made false statements including omission to the Committee. He has failed to exhibit candor in the admissions procedure.

We affirm and adopt that conclusion.

In its conclusions the Committee stated that Mr. Matt had failed to carry his of proving that he possessed good moral character. As previously pointed out, this was improperly placed upon Mr. Matt with regard to the first two hearings. After our review of the record, we do not find that Mr. Matt was adversely affected in any way by the initial placement of the burden of proof upon him. Mr. Matt was competently represented by counsel who vigorously presented witnesses and arguments in his behalf, both before the Commission and before this Corut. We conclude that Mr. Matt had an adequate opportunity to present all information in his behalf and presented the same in considerable detail. We therefore affirm the conclusion by the Committee that Mr. Matt’s conduct was not mitigated by any of the factors or circumstances which are contained in the record. After Mr. Matt’s testimony in the course of the three separate hearings, the Committee concluded that it did not believe he could act fairly, discreetly, honestly, reasonably and with unquestionable integrity in all matters in which he would act as an attorney at law as required by Rule 3(a) of the Rules of Procedure of the Committee on Character and Fitness.

Notwithstanding the findings on the part of the Committee with regard to untruthfulness and lack of candor, Mr. Matt argues that the denial of his admission to practice is a double jeopardy penalty for a “mistake” he made ten years ago. We point out that the application signed by Mr. Matt stated:

5. I understand that if I have furnished significantly false or incomplete information, my application may be summarily rejected. ... (emphasis added).

We conclude the record clearly establishes Mr. Matt’s knowledge that he was required to furnish complete information, and that he failed to furnish such complete information. Mr. Matt is not being penalized for his “mistake” of ten years ago. He is being penalized for his present failure to give truthful and complete information to the Commission.

The dissents raise as an issue the Committee’s conclusion that Mr. Matt violated Rule 8.2 of the Montana Rules of Professional Conduct, when in response to the Committee’s request that he speculate as to the reasons the Nebraska Supreme Court imposed the penalty, he suggested that it was the ill feelings towards Mr. Matt on the part of Chief Justice Krivosha which afforded a reason. At subsequent hearings Mr. Matt continued his attack on Chief Justice Krivosha. In view of the request by the Committee that Mr. Matt speculate as to the reasons for the conduct of the Nebraska court, we have concluded that we will not rule upon the issue regarding Justice Krivosha. We have concluded that we will disregard the Krivosha issue, and determine whether or not the record is otherwise sufficient to affirm the conclusion of the Committee.

In accordance with the standards set forth in Pedersen, we have reviewed the entire record and we have concluded that without regard to the Krivosha issue, the record supports the unanimous decision of the Committee. We hold that Mr. Matt is unfit to practice law in the State of Montana.

Ill

Did the Committee on Character and Fitness violate petitioner’s constitutional right to due process?

Mr. Matt maintains that he was denied his basic right to due process in violation of the Fourteenth Amendment to the United States Constitution and Art. II, Section 17 of the Montana Constitution. In support of this contention, he maintains that the scope of review at each of the three hearings was much more broad than he had reasonably expected from the notice he received prior to each hearing. The Committee maintains that Mr. Matt was afforded proper due process under Rule 4(g) of the Rules of Procedure of the Committee on Character and Fitness (1987).

This issue was most recently addressed by this Court in Pedersen, 820 P.2d at 1291. In that case, this Court discussed the right to practice one’s chosen profession.

Prior to the 1972 Constitution, it was already recognized that the power to regulate the admission of attorneys in Montana was a matter peculiarly within the inherent power of this Court. Goetz, v. Harrison (1969), 153 Mont. 403, 404, 457 P.2d 911, 912.
However, this power is subject to limits imposed by the Federal Constitution. As the United States Supreme Court has said: “A State cannot exclude a person from the practice of law or from any other occupation in a manner or for reasons that contravene the Due Process or Equal Protection Clause of the Fourteenth Amendment.”
Schware v. Board of Bar Examiners (1957), 353 U.S. 232, 238-39, 77 S.Ct. 752, 756, 1 L.Ed.2d 796, 801. Those bodies charged with investigating and making decisions upon an applicant’s character and fitness to practice law in a particular jurisdiction must afford the applicant adequate due process of law.... The Court added that the right to engage in the practice of law is not and should not be a matter of grace and favor. Willner v. Committee on Character and Fitness (1963), 373 U.S. 96, 83 S.Ct. 1175, 10 L.Ed.2d 224. In a concurring opinion in Willner, Mr. Justice Goldberg discussed the due process requirement in these cases:
“The constitutional requirements in this context may be simply stated: in all cases in which admission to the bar is to be denied on the basis of character, the applicant, at some stage of the proceedings prior to such denial, must be adequately informed of the nature of the evidence against him and be afforded an opportunity to rebut this evidence.”

Willner, 373 U.S. at 107.

Rule 4(g) of the Rules of Procedure of the Committee on Character and Fitness of the State Bar of Montana provides:

(g) The Committee shall not be bound by the formal rules of evidence. It may in its discretion take evidence in other than testimonial form, having the right to rely upon records and other materials furnished to the Committee in response to its request for assistance in its inquiries. The Committee may in its further discretion determine whether evidence to be taken in testimonial form shall be taken in person at the hearing or upon deposition, but all testimonial evidence shall in either event be taken under oath. A complete stenographic record of the hearing shall be kept, and a transcript may be ordered by the Applicant at the Applicant’s own expense.

In this case, the initial evidence was provided by Mr. Matt with his application for admission and the accompanying questionnaire. He had access to the complete investigative file of the Committee and the complete transcripts of each hearing for his own review. At each successive hearing, the Committee’s questions became more detailed and specific. Such questioning was the logical result as more information was disclosed during the course of the proceedings.

We point out that as discussed under Issue II, the Committee erred in imposing the burden of proof on Mr. Matt. However, we conclude that he was in no way prejudiced or misled by that error. He received proper notice of the hearings and had every opportunity to appear and participate in those hearings.

We conclude that the record does not establish that Mr. Matt was deprived of due process in any manner in the hearings before the Committee. We further conclude that he was adequately informed of the nature of the evidence against him and was afforded an opportunity to rebut that evidence. The requirements in Pedersen were met.

We hold the Committee did not violate Mr. Matt’s constitutional right to due process.

Affirmed.

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

JUSTICE TRIEWEILER,

dissenting:

I dissent from the opinion of the majority. The history of this matter indicates that the State Bar of Montana Committee on Character and Fitness decided early on not to certify the petitioner for admission to the Bar, and then over a long period of time groped unsuccessfully for reasons until it found one which petitioner was never given an opportunity to defend against. From the beginning this was a rejection looking for a reason.

The petitioner was denied the right to practice law in Montana for making inconsistent statements about his prior involvement in a drug transaction. However, any reasonable interpretation of his statement compels the conclusion that they were in no way inconsistent.

The petitioner was also denied admission for stating that he had never used drugs, when in fact a ten-year-old Nebraska Supreme Court decision refers to earlier use of marijuana. However, petitioner was never given the slightest prior indication that his immaterial statement regarding the use of drugs was one of the possible bases under consideration by the Committee for rejecting his application. He was asked no questions about that statement and never given an opportunity to reconcile that statement with the Supreme Court decision. How can the majority possibly conclude under those circumstances that he received adequate notice of the complaint against him and an opportunity to respond?

In order to fully understand just how unfair this result is to the petitioner, it is necessary to set out the chronology of events that led to the rejection of his application.

Paul Matt, III, was admitted to the practice of law in the state of Nebraska in 1971. He was admitted to practice in the state of Colorado in 1987.

At the time of his application for admission to practice in the state of Montana on February 28, 1990, he had been practicing law for 19 years, except for the period of his suspension, and had never had a client grievance filed against him in either state.

With his application, Matt submitted letters attesting to his good moral character from two judges, eight attorneys, and four non-attorneys, including two former clients. The attorneys included close working associates and former employers. Although one former employer stated that his firm declined to hire Matt on a full-time basis because of his prior disciplinary experience, even he attested to Matt’s good moral character. In all the voluminous documentation that was submitted to the Committee on Character and Fitness, no person other than the Committee members questioned Matt’s honesty, integrity, or competency to practice law.

In March 1980, Matt had been charged with conspiracy to deliver cocaine. However, he at no time admitted guilt and was never convicted of any crime. After completion of a pretrial diversion program, those charges against him were dismissed. As a result of those charges, Matt was investigated by the Disciplinary Review Board of the Nebraska State Bar Association. After its investigation, that board recommended to the Nebraska Supreme Court that it issue a reprimand. That recommendation, however, was rejected by the Supreme Court and Matt was suspended from the practice of law in Nebraska from December 17, 1982, until he was reinstated on January 26, 1984.

In his application to practice in Montana, Matt reported the previous disciplinary proceeding and made a general statement of the basis for those proceedings. A Committee credit check on Matt also disclosed a prior lien by the federal government for income taxes that were due. Based on these two pieces of information, the Committee wrote to Matt on May 7, 1990, and advised him that the Committee had serious concerns about the disciplinary action in Nebraska and his neglect of financial responsibility. It advised him that for that reason the Committee could not certify him as fit to practice law in Montana. It also advised him that if he wished, he could appear personally before the Committee.

Matt exercised his right to a hearing and it was conducted on June 27, 1990. At that time, he was advised that the Committee was primarily concerned about the primary disciplinary action in Nebraska, the tax lien, and other matters that it would bring up later.

Matt explained that the tax liens were imposed based on an agreement with the IRS that he initiated himself, and that they had been fully satisfied and discharged in 1988. He also provided the Committee with copies of the lien releases.

He was questioned about his prior involvement in two civil lawsuits. He explained that one had been resolved and the other had been dismissed without any settlement.

When he was asked about the basis for the disciplinary action in Nebraska, he admitted that a friend asked him to help her find drugs; that he made a call to a person who could provide her with drugs; and that he made another call to his friend to refer her to the seller. That was the essence of what he did wrong. Whether there were two calls involved, or three calls involved, is really immaterial.

Matt explained that after being charged he was put in a pretrial diversion program, that he completed it successfully, and that the charges against him were dismissed. He also explained that after investigation the disciplinary committee of the Nebraska Bar recommended that he be reprimanded by the Supreme Court, but that the Supreme Court rejected that recommendation and suspended him for a year. He was asked by the Committee to speculate why the Supreme Court did not follow the Nebraska Committee’s recommendation, and he speculated that it may have been because of hard feelings on the part of the chief justice with whom he had previously had an unpleasant adversarial relationship as an attorney.

At the first hearing, Matt was also questioned about a dispute that occurred with the purchaser of a home which he was renting. Apparently he had 30 days remaining on his rental agreement and the purchaser wanted him to move out immediately after she purchased the building. He refused to do so.

Following that hearing, on August 1, 1990, the Committee wrote to Matt and notified him that pursuant to Section 4(b) of the Committee’s rules, he was denied certification as fit to practice law in Montana. The Committee gave the following reasons:

Section 3(c)(1) Unlawful conduct, as evidenced by the conspiracy to deliver cocaine charge.
Section 3(c)(3) Making of false statements including omissions as evidenced by your omission regarding the above charge when being hired at Branny, Hillyard and Kudla, and also by the misinformation you gave concerning your relationship with Judge Krivosha, and
Section 3(c)(13) Disciplinary action by a lawyer disciplinary agency or other professional disciplinary agency of any jurisdiction as evidenced by your suspension in Nebraska.

In other words, the Committee’s original decision was based on its conclusion that when Matt responded to their request that he speculate about the reason for his suspension by the Nebraska Supreme Court, he misrepresented that he had an unpleasant prior adversarial relationship with its chief justice. They also concluded that when he was subsequently hired to work for a law firm in Colorado he made false statements by failing to advise that firm of his prior disciplinary experience in Nebraska. Finally, the Committee concluded that it was appropriate to continue punishing Matt for the error in judgment which led to his previous punishment by the Nebraska Supreme Court ten years earlier.

Matt was advised that under the Committee’s rules he could request reconsideration and would be granted a formal hearing. He made that request and the formal hearing was conducted on October 11, 1990.

At the second hearing, Matt introduced the complete file of the divorce case in which he and the former chief justice represented opposing parties. The records disclose a long, difficult struggle by Matt to discover documents which related to the financial condition of Krivosha’s client. Between 30 and 40 letters were exchanged during Matt’s effort to discover the information. Finally, he moved to compel discovery of the documents. Krivosha’s response to that motion termed it frivolous and harassing. However, the motion was ultimately granted and the divorce was resolved in a manner favorable to Matt’s client. It was only three years later that the question of Matt’s suspension came before the Nebraska Supreme Court with Matt’s former adversary then sitting as chief justice. It is not surprising that when invited by the Committee to speculate about the reason why the Supreme Court departed from custom and ignored its own disciplinary board’s recommendation, Matt gave the answer that he did.

Matt also explained the circumstances under which he went to work for the Branny, Hillyard firm. At that time, he had moved to Colorado where he was studying to take the Colorado bar examination. He did not apply for a position as an attorney with the Branny, Hillyard firm, but only a clerkship. By then he had already been reinstated in Nebraska. He did not feel that his prior disciplinary proceeding was relevant to his application because he was not being considered for a position as a practicing attorney.

Nearly one year later, in October 1987, he was notified that he successfully passed the bar, and at that point one of the partners in the firm offered him a regular job. Before accepting the job, he explained to that partner that he had been involved in the prior disciplinary proceeding in Nebraska and submitted a memorandum to the entire firm explaining what had happened. As a result of that knowledge, the offer of a job with the firm was withdrawn. However, even though he was not given a position as an associate, he remained with the firm as a clerk for another 14 months. He explained that when he applied for the clerkship position he was not asked about any prior problems and did not feel they were relevant because he was not applying for a position as an attorney.

At the second hearing, he was again examined about the drug transaction. He again explained that he had been requested by a friend to locate drugs for her. He called an acquaintance in another town. Then he called his friend back. His testimony was basically the same as it was at the first hearing. Furthermore, it was not Matt who characterized his series of conversations as “a couple of phone calls. It was the Committee member who questioned him. The point is that he explained the basic essence of the transaction. Whether it involved two or three telephone calls was totally irrelevant.

Following the second hearing, the Committee notified Matt that in addition to the matters with which it was previously concerned, it also wanted to consider the tax lien, the dispute that occurred while he was a tenant, and the two civil lawsuits with which he had been involved as possible bases for denying his certification. Therefore, a third hearing was set for February 13, 1991.

At the third hearing, Matt responded to the additional issues raised by the Committee. He explained that after he moved to Montana he had rented a home with an agreement that he could remain there until March 31. Shortly after the first of March the home was sold and the purchaser wanted him to move out immediately. He objected based on his rental agreement with the prior owner, but as an accommodation to the purchaser, eventually moved out on March 25, nearly a week early.

He pointed out again at the third hearing that the tax liens that had been placed against him in 1984 were not based on an audit, but in response to his voluntary acknowledgment that he owed taxes which he was unable to pay. He immediately entered into an agreement to pay the money in installments and satisfied the terms of the agreement in 1988. He explained that while he had been named a defendant in two civil suits based on business transactions, one had been fully settled to the apparent satisfaction of the parties, and the other had been dismissed, apparently for the reason that it had no merit in the first place.

No mention was ever made at the third hearing regarding the discrepancy in Matt’s earlier testimony about drug use and the contradictory remarks reported in the Nebraska Supreme Court’s decision found at State v. Matt (Neb. 1982), 327 N.W.2d 622. In fact, when the counsel for the Committee indicated that the decision would be made part of the record, she made the following remarks:

I don’t have any further questions at this time, but I do have, going back to discussions we had in the previous hearing, an opinion from the Northwestern Reporter that involves your dismissal from the — or your suspension from the Bar there, in Nebraska. I don’t have any questions to ask you about it, because it doesn’t contain anything that you didn’t tell us about, but I would like to submit a copy of that to the Committee for their file.
... To Paul’s credit, I mean, I think that it pretty much goes along with what he has told the Committee, and it doesn’t give any indication why the Court didn’t go along with the recommendations of the finder of fact, whatever he was called, the special master. [Emphasis added.]

Not only was Matt not given notice that the Nebraska Supreme Court decision would form the basis of the Committee’s finding that he had been untruthful; not only was he denied an opportunity to explain the discrepancy; but he was led to believe, at the only time when he could have refuted the Committee’s finding, that the Committee considered the decision, in all important respects, consistent with his prior testimony. Therefore, Matt offered no further evidence at that time.

On May 22,1991, the Committee found that Matt lacked sufficiently good moral character for admission to the State Bar of Montana and listed three reasons:

1. The Committee found that his version of the number of telephone calls involved in the drug transaction for which he was disciplined in Nebraska was inconsistent by one telephone call with the chronology reported in the Supreme Court’s decision and that he was, therefore, not candid with the Committee.

2. The Committee found that contrary to his testimony on June 27 to the effect that he had not previously used drugs, he had purchased and used marijuana on more than one occasion.

3. The Committee found that when, in response to its invitation, he speculated about why the Nebraska Supreme Court had not followed its own board’s recommendations and blamed Chief Justice Krivosha, his speculation violated Rule 8.2 of the Montana Rules of Professional Conduct. Rule 8.2 provides that:

(a) A lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer, or public officer, or of a candidate for election or appointment to judicial or legal office.

After a thorough review of the record, and the incredible series of proceedings conducted by the Committee, I strongly disagree with the Committee’s findings and conclusions.

First, whether Matt had two conversations, three conversations, or twenty conversations with his friend for whom he arranged the purchase of illegal drugs, the number is totally immaterial. The essence of what he did wrong was arrange for a friend to purchase illegal drugs. He admitted that she called him. He admitted that he then contacted someone from whom she could purchase drugs, and that he then called her back to refer her to the seller. Whether there was another call involved makes absolutely no difference, and the fact that Matt may have omitted mentioning a third call over ten years after the fact indicates nothing to me about any intention on his part to mislead the Committee.

Second, the Committee had no right to reject Matt’s application on the basis of a misstatement which he was never even advised was the subject of concern to the Committee. The Committee’s rules provide for notice; they provide for hearing; and they provide for reconsideration after an applicant is notified of the reasons for his rejection. In this case, Matt availed himself of every opportunity to be heard, and every time he was advised of another reason that the Committee was considering for rejecting his application, he was able to offer satisfactory evidence that the reason had no merit. Apparently frustrated by this process, the Committee simply decided to convict him of something which he had no prior notice of and no opportunity to rebut. How does the majority reconcile this with its prior decision in the Matter of Kenneth J. Pedersen (Mont. 1991) 250 Mont. 325, 48 St.Rep. 988, wherein it stated that:

Those bodies charged with investigating and making decisions upon an applicant’s character and fitness to practice law in a particular jurisdiction must afford the applicant adequate due process of law.... The court added that the right to engage in the practice of law is not and should not be a matter of grace and favor. Willner v. Committee on Character and Fitness (1963), 373 U.S. 96, 83 S.Ct. 1175, 10 L.Ed.2d 224. In a concurring opinion in Willner, Mr. Justice Goldberg discussed the due process requirement in these cases:
The constitutional requirements in this context may be simply stated: in all cases in which admission to the Bar is to be denied on the basis of character, the applicant, at some stage of the proceedings prior to such denial, must be adequately informed of the nature of the evidence against him and be afforded an adequate opportunity to rebut this evidence.

Willner, 373 U.S. at 107. [Emphasis added.]

Matter of Pedersen, [250 Mont. 325,] 820 P.2d 1291, 48 St.Rep. at 989-90.

In this case, Matt was given no notice that a basis for denial of his application would be his statement that he had never consumed drugs, and he was afforded no opportunity to explain or reconcile the apparent contradiction in that statement and the statements made by the Nebraska Supreme Court. Denying his application on the basis that he had been untruthful to the Committee, therefore denied him due process of the law.

Finally, I find it simply preposterous that the Committee invited Matt to speculate about why the Nebraska Supreme Court rejected its disciplinary committee’s recommendation, and then when he did so, used that speculation against him. The denial of his application on that basis is wrong for several reasons. First of all, he merely-expressed an opinion, he did not make a statement that he knew to be false or with reckless disregard of the truth. Second, based upon the documentation subsequently provided by Matt, and Krivosha’s apparently misinformed denial that he had ever even handled a case against Matt, it would appear that his opinion had some basis in fact. By no stretch of the imagination did the opinion which the Committee expressly solicited violate Rule 8.2 of the Montana Rules of Professional Conduct.

For these reasons I dissent from the majority opinion. I would reverse the decision of the Committee on Character and Fitness. Whether Matt had the burden of proof or not, he has proven by more than a preponderance of the evidence that he is possessed of satisfactory moral character to practice law in the state of Montana.

A thorough review of this record can lead to only one conclusion. That is that both the Committee on Character and Fitness, and the majority of this Court, are bent on punishing Matt for an indiscretion committed over ten years ago — one for which he has already been punished and forgiven by the state of Nebraska and the state of Colorado. It is regretful that this applicant can never be forgiven in the state of Montana.

JUSTICE GRAY,

concurring in part and dissenting in part:

I concur with the majority opinion as to issue one and I also concur with portions of that opinion as to issue two. I respectfully dissent as to issue three.

The Committee on Character and Fitness grounded its conclusion that Mr. Matt was unfit to practice law in Montana on Mr. Matt’s supposed violation of Rule 8.2 of the Montana Rules of Professional Conduct, as well as his lack of candor and untruthfuliiess. The majority first correctly distances itself from the Committee’s findings on the Rule 8.2 violation. It then concludes that it can affirm the Committee based on Mr. Matt’s lack of candor and untruthfulness. I cannot agree.

Even considering the Committee’s ability to observe Mr. Matt’s demeanor and judge his credibility, it is my view that the record does not support a conclusion that Mr. Matt attempted to lead the Committee to believe that his involvement in the Nebraska drug transaction was minimal. Mr. Matt appeared before the Committee numerous times and was forthcoming in responding to all inquiries. Any minor discrepancies between bis recollection of the events that took place a decade or more before these proceedings and the findings of the Nebraska Supreme Court cannot seriously or fairly be characterized as an attempt to mislead; much less do any such discrepancies support the majority’s “key aspect ... that Mr. Matt consistently attempted to minimize his involvement in the drug transaction ...” (Emphasis added.) The failure of both the Committee and the majority of this Court to present specific record support for this nebulous basis for prohibiting Mr. Matt from being admitted to practice law in Montana highlights the fact that no such support exists.

This leaves as the sole ground of support for the Committee’s action, and this Court’s affirmance, only one statement made by Mr. Matt: the statement having to do with his drug use. That statement is characterized by both the Committee and the majority as an assertion by Mr. Matt that he had never used drugs. First, I am not convinced that this statement even rose to the level of an affirmative statement about his drug use. My reading of the paragraph of Mr. Matt’s testimony at the June 27, 1990 hearing relied on by the majority suggests that the statement regarding drug use was merely a characterization of the ultimate opinions of the county attorney’s office investigating the conspiracy with which Mr. Matt was charged, rather than an affirmative statement by Mr. Matt that he had never used drugs. Second, if this statement were an affirmative statement of lack of drug use and if it had been inquired into and indicated to be a concern, and if Mr. Matt subsequently had failed to persuade the Committee that the statement did not reflect a lack of candor, I would agree that it would provide a sufficient basis for a conclusion that Mr. Matt is unfit to practice law in Montana. But none of that occurred. For these reasons, I cannot agree that the Committee “properly’ concluded that Mr. Matt is unfit to practice law here.

This leads directly to my dissent from the majoritys conclusion that Mr. Matt’s constitutional right to due process was not violated. The majority correctly notes that the Committee’s questions logically became more detailed and specific at each successive hearing. A fair reading of the record requires a corresponding conclusion that Mr. Matt addressed the Committee’s concerns, to the extent those concerns were revealed to him, in a direct and responsive manner. Nothing that occurred reasonably could have alerted Mr. Matt to Committee concern over one statement — particularly one statement at the initial hearing which was not relied on by the Committee in its original refusal to certify Mr. Matt — in a very voluminous record. In light of Committee counsel’s remark at the third hearing that he had no questions about the Nebraska Supreme Court opinion relating to Mr. Matt’s suspension from the Nebraska Bar “because it doesn’t contain anything you didn’t tell us about..., the Committee’s failure to give Mr. Matt an opportunity to respond to its concern regarding the one statement that he had never used drugs constituted a denial of his constitutional right to be “adequately informed of the nature of the evidence against him and be afforded an opportunity to rebut this evidence.” In the Matter of Kenneth J. Pedersen (Mont. 1991), [250 Mont. 325,] 820 P.2d 1288, 1291, 48 St.Rep. 988, 989-90, citing Mr. Justice Goldberg’s concurring opinion in Willner v. Committee on Character and Fitness (1963), 373 U.S. 96, 107, 83 S.Ct. 1175, 1182, 10 L.Ed.2d 224, 232.

I would reverse the Committee’s action to the extent it was based on the Rule 8.2 violation or an attempt to mislead, vacate that portion of the Committee’s findings and conclusions based on Mr. Matt’s statement that he had never used drugs, and remand to the Committee for further proceedings relating solely to the statement about past drug use and for a final decision as to whether Mr. Matt is possessed of sufficient moral character to practice law in Montana.


source: Caselaw Access Project

author: JUSTICE McDONOUGH JUSTICE WEBER

license: Public Domain

text:
    IN RE THE MARRIAGE OF MARY B. LASKEY, Petitioner and Respondent, and FREDERICK H. LASKEY, Respondent and Appellant.
    No. 91-335.
    Submitted on Briefs January 23, 1992.
    Decided April 10, 1992.
    49 St.Rep. 322.
    252 Mont. 369.
    829 P.2d 935.
    For Appellant: Michael S. Smartt, Great Falls.
    For Respondent: Joan E. Cook, Miller & Cook, Great Falls.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Frederick K. Laskey appeals from an order of the Eighth Judicial District Court, Cascade County, modifying the decree of dissolution. We reverse.

The sole issue on appeal is whether the District Court erred in modifying the decree of dissolution as to the family home and as to the husband’s military pension.

Frederick H. Laskey and Mary B. Laskey were married September 22, 1971. The parties have four children, three of which are minors. The parties separated in March of 1985 and entered into a written separation agreement dated June 21, 1985. The husband’s military pension was not specifically mentioned in the agreement.

The pertinent part of the separation agreement reads as follows:

Section Three
Property Division
The parties have heretofore divided the properties, both real and personal, which they owned either together or separately, as follows:...
3. House at 3716 2nd Avenue South, Great Falls, Montana, is to remain in joint tenancy but that wife is to be given a power of attorney so that she has the option to sell the house with the proceeds to be divided equally;...
Section Four
Release of Property and Estate Rights
Each party hereby waives, relinquishes, and releases all right and claim in or to the property of the other, including all rights of dower and curtesy...
Section Eight
Independent Representation by Counsel
In connection with her status, rights, privileges, duties, and obligations, and the preparation of this agreement, the wife has been independently represented by and has had the benefit of the counsel and advise of Scott M. Radford, a member of the Bar of the State of Montana and State of California. The husband has not sought counsel and has done this knowingly and voluntarily.
Section Nine
Modification
This agreement is to be modified only by written agreement signed by both parties.

The separation agreement was incorporated into the decree of legal separation on August 15, 1985. The Honorable Judge Bradford, in this decree, found the parties made a reasonable division of their property. Section 40-4-201, MCA (1985), governs separation agreements. It provides in part:

(2) In a proceeding for dissolution of marriage or for legal separation, the terms of the separation agreement, except those providing for the support, custody, and visitation of children, are binding upon the court unless it finds, after considering the economic circumstances of the parties and any other relevant evidence produced by the parties, on their own motion or on request of the court, that the separation agreement is unconscionable.

In 1989, the husband filed a petition for dissolution. Notice of entry of decree was entered and served on July 11,1990. The District Court, in its findings of fact, found that husband’s military pension was not specifically included in the separation agreement but that it was included within the general terminology of the separation agreement.

Wife subsequently filed a motion for reconsideration. On reconsideration, the District Court found that the absence of any mention of the military pension was intentional and did not constitute a waiver or relinquishment of the pension by the wife. The District Court based this finding on the fact that wife’s attorney advised her that she had a vested interest in the pension and that mention of the military pension was not required.

The District Court awarded the wife 50 percent of the military pension accrued during the marriage. In regards to the family home the court ruled that the trial date would be the date to determine the equity of the family home. The court divided the equity in the house equally between the parties at the time of sale. The wife was to pay the husband his share at the time of sale, and the property was to be sold no later than six months following the date the youngest child of the marriage reaches majority.

Our standard of review is whether or not the District Court abused its discretion in applying Rule 60(b)(6), M.R.Civ.P., to the motion for reconsideration. Marriage of Lorge (1984), 207 Mont. 423, 430, 675 P.2d 115, 118.

The District Court, in relieving wife of its prior judgment, relied on Rule 60(b)(6), M.R.Civ.P. Rule 60(b)(6) provides:

On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding for the following reasons:
(6) any other reason justifying relief from the operation of the judgment.

Section 40-4-208(3), MCA (1991), governs modification of property dispositions; it provides:

The provisions as to property disposition may not be revoked or modified by a court, except:
(a) upon written consent of the parties; or
(b) if the court finds the existence of conditions that justify the reopening of a judgment under the laws of this state.

Under § 40-4-201(3), MCA, which governs separation agreements, the standard that would justify reopening the judgment is unconscionability.

Wife is not arguing that the separation agreement is unconscionable. She asserts that since the military pension was not mentioned in the agreement, her entitlement to it has yet to be decided. Recently, we reviewed a similar case involving a separation agreement which did not specifically mention the military pension. Patzer v. Patzer, 234 Mont. 34, 792 P.2d 1101. Mrs. Patzer did not claim the agreement was unconscionable. Patzer at 38, 792 P.2d at 1103. She also argued that the district court did not consider the military pension because it was not mentioned in the separation agreement. Patzer at 36-37, 792 P.2d at 1102. We said that a separation agreement did not have to mention every single item of property the parties hold at the time of their dissolution. Patzer at 38, 792 P.2d at 1103.

The military pension was part of the marital estate when the separation agreement was drafted and signed. The wife was aware at the time of the agreement that her husband would receive a military pension. The wife has presented no facts evidencing unconscionability, nor has she alleged the agreement was unconscionable.

In Patzer, we affirmed our position that military pensions are marital assets subject to equitable distribution. Patzer at 37, 792 P.2d at 1103 citing In re Marriage of Miller (1980), 187 Mont. 286, 609 P.2d 1185. In 1981, the United States Supreme Court held that federal law precluded state courts from dividing military retirement pay pursuant to state community property or equitable distribution laws. McCarty v. McCarty (1981), 453 U.S. 210, 69 L.Ed.2d 589, 101 S.Ct. 2728. However, the United States Congress essentially overturned that decision in 1983, allowing the states to apply the law of their respective jurisdictions. See 10 U.S.C. § 1408 (1983). As noted, the separation agreement was signed in 1985.

In Patzer, as here, the separation agreement stated it was a full and final settlement of their property rights. Patzer at 38, 792 R2d at 1103. The separation agreement signed by the Laskeys in Section Four above, recited each party’s relinquishment to the property of the other. While the language of the Laskey separation agreement is not as strong as the wording of the Patzer agreement, it accomplishes the same finality regarding property not specifically mentioned therein.

For the reasons set forth above, we conclude that it was reversible error for the District Court to reopen the decree absent a finding of ■unconscionability as required by statute. Therefore we reverse the order of the District Court and remand for proceedings not inconsistent with this opinion.

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

JUSTICE WEBER

dissenting:

I agree with the majority holding that under § 40-4-201(3), MCA, which covers separation agreements, the standard that would justify reopening the judgment is unconscionability. In substance the majority appears to conclude that because the wife is not arguing that the separation agreement is unconscionable, it is proper to conclude the court’s order modifying the dissolution decree was reversible error on the part of the District Court.

The Findings of Fact Conclusions of Law and Order, dated December 21, 1990, on the part of the District Court, pointed out that the motion to reconsider came on for hearing on December 19,1990, and that Mrs. Laskey and her counsel were present but that no appearance was made by Mr. Laskey or his counsel. Mrs. Laskey presented witnesses and the court made the following pertinent findings of fact and conclusions:

FINDINGS OF FACT
3. That the Legal Separation proceedings were never intended to serve as a complete legal division of the parties’ marital assets.
4. During the proceedings to obtain a Legal Separation, Mr. Rad-ford [Mrs. Laskey’s attorney] informed Mrs. Laskey that she was entitled to a portion of Mr. Laskey’s pension. It was Mr. Radford’s understanding that the military pension was controlled by federal statute and that it was not required that the military pension be specifically mentioned as a divisible marital asset in the Separation Agreement.
5. That the absence of any mention of the military pension was intentional and did not constitute a waiver or relinquishment of Mr. Laskey’s military pension as a marital asset.
10. Mr. Laskey has offered to give Mrs. Laskey the entirety of the marital real property as well as increased child support should she waive the receipt of his military pension. This offer was never accepted.
11. That at no time did Mrs. Laskey receive a marital asset which would have served as adequate consideration for a waiver of rights to a share of her husband’s military pension.
18. That as of this date, the military pension of Mr. Laskey has not been divided between the parties, nor has the real property accumulated by the parties located at 3716 2nd Ave. South, Great Falls, Montana.
CONCLUSIONS OF LAW
3. That facts of this case presented at hearing clearly justify this court using its discretion to equitably relieve Petitioner [Mrs. Laskey] from the operation of the ruling made by this Court on June 7, 1990.
4. That Petitioner, Mary B. Laskey has not relinquished or waived her right to her husband’s military pension.
5. That there was a lack of adequate consideration present for such a contract of waiver or relinquishment to have been effected.
6. That the real property of the parties accumulated during the marriage, as well as the Respondent’s military pension have yet to be divided between the parties in the dissolution proceeding.”

The District Court based its conclusions of law on Rule 60(b)(6), M.R.Civ.P. Notwithstanding any statements made in the Separation Agreement, the uncontradicted findings of fact on the part of the District Court establish that Mrs. Laskey understood she was entitled to a portion of the pension and that it was not required that the military pension be mentioned in the Separation Agreement; that the absence of a mention of the military pension was intentional and did not constitute a waiver on the part of Mrs. Laskey; and that Mrs. Laskey did not receive adequate consideration for a waiver of her rights as to the military pension. The District Court concluded that such facts clearly justified using its discretion to “equitably relieve” Mrs. Laskey from the operation of the ruling previously made. We note that the previous ruling on the part of the District Court was its holding that the military pension had been waived due to the language of the Separation Agreement which is the position taken by the majority opinion.

While it is true that the District Court did not use the term unconscionable, it did conclude that it was justified in using its discretion to equitably relieve Mrs. Laskey from its previous ruling. The majority opinion states that Mrs. Laskey has presented no facts evidencing unconscionability. I conclude the following findings of fact of the District Court evidence unconscionability: The absence of any mention of the military pension was intentional and did not constitute a relinquishment of claim to the military pension; Mrs. Laskey’s understanding through her attorney that the military pension need not be mentioned in the Separation Agreement; and at no time did Mrs. Laskey receive adequate consideration for a waiver of her rights in the military pension. I would therefore affirm the District Court.

The majority opinion relies on the Patzer case. There are a number of factual distinctions between the two cases. In the Patzer case, the District Court considered a separation agreement as a part of the dissolution proceeding and specifically found the agreement was not unconscionable. In the present case, the separation agreement was entered into in 1985 and the dissolution took place in 1990. There was no finding of the absence of unconscionability in the present case as was present in Patzer. I therefore do not find the Patzer holding controlling.


author: JUSTICE McDONOUGH JUSTICE TRIEWEILER

text:
    DON EDGAR BURRIS (DOROTHY M. BARNHART, ET AL., (Claimants), Claimant and Appellant, v. EMPLOYMENT RELATIONS DIVISION/DEPARTMENT OF LABOR & INDUSTRY, Defendants and Respondents.
    No. 91-243.
    Submitted on Briefs October 31, 1991.
    Decided April 15, 1992.
    49 St.Rep. 326.
    252 Mont. 376.
    829 P.2d 639.

      For Appellant: Don Edgar Burris, Attorney at Law, Billings.
    For Respondent: Claren Neal, Department of Labor and Industry, Helena.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Don Edgar Burris appeals from the judgment of the Workers’ Compensation Court which held that the Department of Labor and Industry had authority to regulate attorney fees and that Burris did not show any injury under his constitutional claims. We affirm.

The issues on appeal are whether the Department of Labor and Industry has the authority to regulate attorney fees under § 39-71-613, MCA (1987), and whether § 39-71-613, MCA (1987), is unconstitutional.

Attorney Don Edgar Burris entered into attorney retainer agreements with respect to three separate clients between July 17, 1989 and January 31, 1990. All three agreements provided that Burris be retained on a contingency fee basis. Burris submitted the attorney retainer forms provided by the Department of Labor and Industry to the Employment Relations Division (ERD) as required by the statute. However, he included 8m attachment titled, “Attorneys Fee Contract RE: Workers’ Compensation.” The contract provided fees of $250.00 per hour or a contingency of twenty-five percent for cases that do not go before the Workers’ Compensation Court, or thirty-three and one-third percent for cases that go before the Workers’ Compensation Court. The fees provided in Burris’ attached contract were higher than those allowed by law. The ERD subsequently denied the approval of the attorney retainer forms.

Burris appealed ERD’s decision and a hearing followed which resulted in affirmance of ERD’s decision. Burris next appealed to the Workers’ Compensation Court. The Workers’ Compensation Court affirmed the decision of the Hearings Bureau of the Department of Labor and Industry (the Department). This appeal follows.

Whether attorney fees can be regulated is controlled by statute and therefore is a question of law. The standard of review utilized by this Court when reviewing decisions of the Workers’ Compensation Court is:

When an issue raises only questions of law, this court is free to reach its own conclusions ... Doig v. State Comp. Ins. Fund (1991), 248 Mont. 50, 61, 809 P.2d 12, 13, citing Solheim v. Tom Davis Ranch (1984), 208 Mont. 265, 272, 677 P.2d 1034, 1037-1038. In reviewing conclusions of law we will determine if the lower court’s or agency’s interpretation of the law is correct. See also Steer, Inc. v. Dept. of Revenue, (1990), 245 Mont. 470, 803 P.2d 601, 603.

The Workers’ Compensation Court found that § 39-71-613, MCA, granted the Department authority to require an attorney to submit a contract of employment, on a form provided by the Department, stating the terms of the fee agreement. The court further found that the Department had authority to regulate attorney fees in any workers’ compensation case.

Section 39-71-613, MCA (1987), provides:

(1) When an attorney represents or acts on behalf of a claimant or any other party on any workers’ compensation claim, the attorney shall submit to the department a contract of employment, on a form provided by the department, stating specifically the terms of the fee arrangement between the attorney and the claimant.
(2) The administrator of the division [now the Department of Labor and Industry] shall regulate the amount of the attorney’s fee in any workers’ compensation case. In regulating the amount of the fee, the department shall consider:
(a) the benefits the claimant gained due to the efforts of the attorney;
(b) the time the attorney was required to spend on the case;
(c) the complexity of the case; and
(d) any other relevant matter the department may consider appropriate.
(3) If an attorney violates a provision of this section, a rule adopted under this section, or an order fixing an attorney's fee under this section, he shall forfeit the right to any fee which he may have collected or been entitled to collect. (Emphasis added.)

The Workers’ Compensation Judge relied on our decision in Wight v. Hughes Livestock Company, Inc. (1983), 204 Mont. 98, 664 P.2d 303, in its determination that the Department had the authority to regulate attorney fees. There we said:

The concern of the legislature, the spirit of the Workers’ Compensation law are one and the same: that the cost of repairing a worker’s injuries or replacing his lost earning capacity shall be the burden of the industry, and not that of the injured worker. It is from that viewpoint that the Workers’ Compensation Court or Division should determine the reasonableness of attorneys fees and exercise discretion in regulating the same.

Wight at 108, 109, 664 P.2d at 309.

We hold that the Workers’ Compensation Court is correct in its application of the law.

The more difficult issue is whether § 39-71-613, MCA, denies due process of law and equal protection of the law. Specifically, Burris argues that his constitutional rights are being violated because the Department regulates the fees of only claimants’ attorneys and not defense attorneys, impairing his right to contract. This, he argues, is in contravention of the statute which provides, “When an attorney represents or acts on behalf of a claimant or any other party ...” (Emphasis added.) Burris argues that the statute is unambiguous. He maintains the statute needs no interpretation, that “any other party” means defense attorneys.

The Workers’ Compensation Court found that Burris did not set forth a factual or legal analysis to support his constitutional claims, nor did he show any injury resulting from the legislation regulating attorney fees. We agree.

Burris first argues he was denied due process. When a due process claim is involved, the initial question is whether due process is required and if so, how much? The Supreme Court has stated, ‘When protected interests are implicated, the right to some kind of prior hearing is paramount.” Board of Regents v. Roth (1971), 408 U.S. 564, 569-570. Burris was given a hearing by the Department, by the Workers’ Compensation Court and now by this Court. Thus, Burris received due process.

Burris also argues that the Department’s regulation of claimant’s attorneys and not defense attorneys in workers’ compensation cases violates equal protection. Suffice to say that there is no suspect class involved, nor is a fundamental right involved. Thus the strict scrutiny test does not apply.

Nor do these issues fall under the middle tiered analysis. This Court has employed the middle tiered analysis in cases involving the constitutionally protected interests of education and welfare. Meech v. Hillhaven West, Inc. (1989), 238 Mont. 21, 45, 776 P.2d 488, 502.

The question is whether the statute and its application is rationally related to a legitimate government interest. Meech at 45,776 P.2d at 502. Section 39-71-105, MCA (1987), declares the public policy behind the workers’ compensation law:

(1) It is an objective of the Montana workers’ compensation system to provide, without regard to fault, wage supplement and medical benefits to a worker suffering from a work-related injury or disease. Wage-loss benefits are not intended to make an injured worker whole; they are intended to assist a worker at a reasonable cost to the employer. Within that limitation, the wage-loss benefit should bear a reasonable relationship to actual wages lost as a result of a work-related injury or disease.
(2) A worker’s removal from the work force due to a work-related injury or disease has a negative impact on the worker, the worker’s family, the employer, and the general public. Therefore, it is an objective of the workers’ compensation system to return a worker to work as soon as possible after the worker has suffered work-related injury or disease.

We hold that § 39-71-613, MCA, and the Department’s application of the statute to a claimant’s attorney’s fee is rationally related to the government’s legitimate interest in protecting the claimant’s net benefits in workers’ compensation cases. The Act is essentially for the protection of the injured worker and his dependents, and protection from impaired fee agreements is rationally related thereto, regardless of any interpretation or implementation by the Department of the words “any other party.”

For the foregoing reasons, the judgment of the Workers’ Compensation Court is affirmed.

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

JUSTICE TRIEWEILER

dissenting.

I dissent from the opinion of the majority.

The Division of Workers’ Compensation’s efforts to limit the availability of attorneys who will represent injured workers by artificially limiting claimants’ ability to pay those attorneys without any comparable limitation on the rights of employers or insurers, clearly violates the Equal Protection Clause of Article II, Section 4, of the Montana Constitution.

I do not agree that when the State arbitrarily and selectively interferes with the right of a litigant to contract and pay for the services of an attorney that that interference does not deserve middle-tiered scrutiny under the Equal Protection Clause. However, for purposes of this discussion, let’s assume that the majority’s favorite level of scrutiny, the rational basis or “almost anything goes” test applies. The Department of Labor’s blatant discrimination against claimants and their attorneys does not even pass that minimal level of scrutiny.

The problem with the majority’s conclusion is that it is based upon blind acceptance of the Department of Labor’s bald assertion that these limitations on fee agreements between claimants and their attorneys are for the benefit of injured workers. A brief review of recent history in the area of attorney fee regulation discloses that nothing could be further from the truth.

The Division of Workers’ Compensation was given the statutory authority to regulate claimant’s attorney fees in 1975. Section 39-71-613, MCA(1975). Pursuant to that authority, the Division of Workers’ Compensation enacted 24.29.3801, ARM, which until 1987 allowed attorneys to enter into fee agreements with injured workers for contingent fees ranging from 25 to 40 percent, depending on whether the case was resolved prior to trial, following trial, or on appeal. Attorneys were only allowed to recover fees when benefits were recovered due to the efforts of the attorney. Attorneys were not permitted to recover a fee for benefits that had never been disputed.

Furthermore, where benefits were denied or the amount was disputed, and the claimant later prevailed, the insurer who denied his benefits was responsible for payment of his fees. (Sections 39-71-611, MCA (1973), and 39-71-612, MCA (1975).) In Wight v. Hughes Livestock, Inc. (1983), 204 Mont. 98, 664 P.2d 303, we held that the purpose of these statutes was to assure that claimants whose benefits had been wrongfully denied would eventually receive the net amount of benefits they had been entitled to -under the law without having to deduct costs and attorney fees incurred to collect those benefits. We held that in order to further that purpose, claimants could recover the full amount of their contingent fee under § 39-71-611, MCA, so long as that fee had been approved by the Division of Workers’ Compensation.

Had the Department of Labor or its Division of Workers’ Compensation been truly concerned about protecting injured workers from paying excessive attorney fees or protecting the best interests of the worker, as it righteously claims in this case, that would still be the law. Attorneys would be precluded from recovering a fee unless the benefits had been recovered due to the attorney’s effort. However, when the attorney’s efforts were necessary to recover benefits to which the claimant had been entitled in the first place, the insurer who wrongfully denied them would be responsible for the full amount of attorney fees and costs incurred so that the claimant’s net recovery would equal the benefits to which he was lawfully entitled.

Instead, the Division of Workers’ Compensation requested an amendment to the Workers’ Compensation Act in the very next legislative session following the Wight decision. That amendment became § 39-71-614, MCA (1985), and limited the amount of attorney fees that a claimant could recover from an insurer to an amount based upon an hourly rate. The effect was that even though the claimant’s contract with his attorney may call for a contingent fee, he would, in most cases, be precluded from recovering the full amount of that fee, even when the fee had been necessitated by the wrongful denial of his claim. So much for the Division of Workers’ Compensation’s concern for the workers’ best interests. However, the Department of Labor’s and the Division of Workers’ Compensation’s concern for the best interests of workers did not end in 1985. In 1987, it advocated massive amendments to the Workers’ Compensation Act which were ultimately passed, based upon its lobbying efforts. Those amendment drastically reduced benefits that could be recovered by injured workers. See §§ 39-71-701, -702, -703, and -741, MCA (1987). In addition, those same Division-sponsored amendments made it much more difficult for claimants to recover attorney fees and costs, even when it was necessary to retain an attorney because their benefits were wrongfully denied. Both § 39-71-611 and -612, MCA, were amended to require that before attorney fees could be recovered, claimant must prove that the denial of his benefits was unreasonable.

At the same time, the Division of Workers’ Compensation was lobbying through substantial cuts in workers’ benefits and severe restrictions on the ability of workers to recover attorney fees from insurers, it proposed amending 24.29.3801, ARM, to further restrict the fees that claimants could pay attorneys. The modified rule provided as follows:

(3) Except as provided in subsection (7), an attorney representing a claimant on a workers’ compensation claim who plans to utilize a contingent percentage fee arrangement to establish the fee with the claimant, may not charge a fee above the following amounts:
(a) For cases that have been settled without an order of the Workers’ Compensation Judge or the Supreme Court, twenty percent (20%) of the amount of compensation payments the claimant receives due to the efforts of the attorney.
(b) For cases that go to a hearing before the Workers’ Compensation Judge or the Supreme Court, twenty-five percent (25%) of the amount of additional compensation payments the claimant receives from an order of the Workers’ Compensation Judge due to the efforts of the attorney.
(4) The fee schedule set forth in subsection (3) does not preclude the use of other attorney fee arrangements, such as the use of a fee system based on time at a reasonable hourly rate not exceeding $75 per hour, but the total fee charged may not exceed the schedule set forth in subsection (3) except as provided in subsection (7). When such fee arrangement is utilized, the contract of employment shall specifically set forth the fee arrangement, such as the amount charged per hour.

Hearings were held on the proposed amendment to the Division’s administrative rule regarding attorney fees and opposition was virtually unanimous. However, in spite of that response to the proposal, it was adopted by the Division of Workers’ Compensation.

Although the Department of Labor’s self-serving representation in this case is that the further restriction of claimants’ attorney fees was for the benefit of injured workers, the real purpose is more evident from the declaration of public policy that accompanied the Division’s 1987 amendments to the Workers’ Compensation Act. That declaration is found, in part, in § 39-71-105(3), MCA (1987), which states:

(3) Montana’s workers’ compensation and occupational disease insurance systems are intended to be primarily self-administering. Claimants should be able to speedily obtain benefits, and employers should be able to provide coverage at reasonably constant rates. To meet these objectives, the system must be designed to minimize reliance upon lawyers and the courts to obtain benefits and interpret liabilities. [Emphasis added.]

In other words, the purpose for the limitations on attorney fees that have been challenged by the claimant’s attorney in this case was simply to eliminate attorneys from the process of resolving workers’ compensation disputes. The problem from a constitutional perspective is that the only class of attorneys so effected were those attorneys who represent claimants. There were no similar restrictions on the rights of employers or insurers to pay their attorneys any amount the market would bear.

The brief point is this: If the Department of Labor or its Division of Workers’ Compensation was honestly concerned about injured workers having to take money from their already inadequate disability benefits to pay for attorney fees, they would not have gone to the great lengths they have to erode the opportunity for claimants to recover fees from insurers who have wrongfully denied their benefits. Therefore, history demonstrates that there is no basis in fact for that concern and it cannot serve as the rational basis for discriminating against claimants as opposed to employers or insurers.

If, on the other hand, the real purpose for the Department of Labor’s and its Division of Workers’ Compensation’s efforts to restrict attorney fees is to eliminate attorneys from the workers’ compensation system, then it has done so selectively and unfairly. It has eliminated only those attorneys who represent claimants. Claimants are the parties to a workers’ compensation dispute who are in the most need of representation. Therefore, eliminating the claimant’s attorney, while leaving sophisticated insurance companies, and sometimes large corporate employers, free to hire the best attorney they can find, has no rational basis as this Court has previously defined that concept.

In Meech v. Hillhaven West, Inc. (1989), 238 Mont. 21, 776 P.2d 488, we cited with approval the following standard for judging whether class legislation passes the rational basis or “almost anything goes” test:

“The test of the constitutionality of class legislation is whether the classification has some reasonable, just and practical basis and whether the law operates equally upon every person within the class ....”

Meech, 776 P.2d at 502, (quoting Reeces v. Ille Electric Co. (1976), 170 Mont. 104, 551 P.2d 647).

Who can question that the calibre of services available from the legal profession are, as in every other profession, related to the amount that can be paid for those services? How can it be argued that it is “reasonable or just” to arbitrarily limit the quality of services available to those in most need of legal services when no similar limitation is placed on those parties who are already most sophisticated in the workers’ compensation laws.

There is no rational basis for the Department of Labor’s concerted efforts to leave injured workers without representation, other than the unjust and unreasonable purpose of being able to dictate who does and does not receive disability benefits. The regulations which are challenged in this case are part of a concerted effort by the Department of Labor and the Division of Workers’ Compensation to place the burden of that Division’s mismanagement on injured workers — those members of society who are least able to bear that burden.

For these reasons, I conclude that the Division of Workers’ Compensation’s discriminatory regulation of attorney fees found in 24.29.3802, ARM, has no rational basis, and therefore, violates the Equal Protection Clause of Article II, Section 4, of the Montana Constitution. I would reverse the judgment of the Workers’ Compensation Court.

JUSTICE HUNT concurs in the foregoing dissent of JUSTICE TRIEWEILER.