author:
JUSTICE McDONOUGH JUSTICE HUNT
      JUSTICE WEBER

text:
    IN RE THE MATTER OF THE ESTATE OF DOROTHY E. MORRIS, Deceased, LINDA WELLS, MARY ELIZABETH DUBOIS, DONNA JUNE WOOD, BETTY SUE MATNEY, BILL E. WOOD AND MAY NA MORRIS GAGE, Appellants, v. ROBERT W. THOMPSON, Respondent.
    No. 91-225.
    Submitted May 5, 1992.
    Decided Aug. 19, 1992.
    49 St.Rep. 739.
    838 P.2d 402.
    254 Mont. 368.

      For Appellants: Marc G. Buyske, Anderson, Beatty & Buyske, Shelby.
    For Respondent: Donald R. Marble, Marble Law Office, Chester.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

This is an appeal from an order of the Ninth Judicial District, Toole County, requiring state inheritance taxes from the estate of Dorothy Morris to be apportioned pursuant to §72-16-603, MCA. The appellants contend that the language of the will provides an alternative method of apportionment which should govern. The respondent, Robert Thompson, has cross-appealed on the issue of attorney fees. We reverse on the apportionment question and affirm on the attorney fees.

There are two issues for our review:

1. Did the District Court err in determining that the testamentary intent, as expressed in the will of Dorothy Morris, was not sufficiently clear so as to overcome the statutory directive as to apportionment of state inheritance taxes?

2. Did the District Court err in denying Thompson’s request for attorney fees?

Dorothy Morris, a widow, who had no surviving descendants, died testate on December 29, 1988. The Last Will and Testament of Dorothy Morris was informally admitted to probate by order of the District Court. The will provided that after the payment of certain expenses and specific bequests the residue of the estate was to be divided between two groups of beneficiaries, the Thompson heirs and the Morris heirs. The Thompson heirs represent the only blood relatives of the decedent, while the Morris heirs are relatives of the deceased husband of the decedent. On the Thompson side, there are twenty beneficiaries and on the Morris side there are seven beneficiaries.

The Thompson heirs, as blood relatives of the decedent, are entitled to an exemption and their inheritances are taxed at a lower rate. The Morris heirs would not receive the exemption and would be taxed at a higher rate. The Morris heirs contend that the taxes should be paid first and the remainder of the residue should then be equally divided between the two groups. The Thompson heirs petitioned the court requesting that the residue should be equally divided between the two groups and that the state inheritance taxes should then be apportioned to each individual according to § 72-16-603, MCA. The District Court agreed with Thompson and ordered apportionment pursuant to § 72-16-603, MCA. Additionally, the District Court denied Thompson’s request for attorney fees. The Morris beneficiaries appealed the decision of the District Court concerning apportionment and the Thompsons cross-appealed on the issue of attorney fees.

Montana’s statutory scheme for apportionment of state inheritance taxes is found at § 72-16-603, MCA, which states:

(1) Except as provided in subsection (3) and unless the will otherwise provides, the tax shall be apportioned among all persons interested in the estate. The apportionment is to be made in the proportion that the value of the interest of each person interested in the estate bears to the total value of the interests of all persons interested in the estate. The values used in determining the tax are to be used for that purpose.
(2) If the decedent’s will directs a method of apportionment of tax different from the method described in this part, the method described in the will controls.
(3) If the liabilities of persons interested in the estate as described in this part differ from those which result under the federal estate tax law, the liabilities imposed by the federal law control and the balance of this part applies as if the resulting liabilities had been prescribed in this part.

The statute places the burden of the inheritance tax on the recipients of the decedent’s bounty. The Thompsons argue that -under subsection 1 of the statute, all state inheritance taxes should be paid by the residuary beneficiaries in the proportion that the value of the interest of each person interested in the residuary estate bears to the total value of the interests of all persons interested in the estate. However, subsection 2 of the statute allows the tax burden to be shifted and taxes to be apportioned by an alternative method if the will so provides.

The question before the Court is whether the will provides a method of apportioning state inheritance taxes different from that set out in the statute. As such, the issue presented is a question of law and our review will be plenary. We will decide if the District Court’s determination as to law is correct. Steer Inc. v. Department of Revenue (1990), 245 Mont. 470, 803 P.2d 601.

The significant provisions of the will relating to payment of the taxes are as follows:

SECOND
I direct my Personal Representative hereinafter named to pay all of my just debts, my funeral expenses, the expenses of administering my estate, and all taxes both State and Federal which become payable by reason of my death, out of my estate.

Paragraphs THIRD and FOURTH provided for specific bequests to various people and are not at issue in this case. The FIFTH paragraph states as follows:

I direct my Personal Representative to convert all the remaining assets of my estate to cash, and after payment of the items mentioned at Paragraph Second above, and the specific legacies mentioned in Paragraph Third and Paragraph Fourth above, I hereby give and devise the residue of my estate as follows:
1. The one half thereof unto the grandchildren, living at the time of my death, of the following: [the Thompson grandchildren]
2. The remaining part thereof unto the children, living at the time of my death, of the following: [the Morris grandchildren]

The District Court relied on a Wyoming case, In Re Ogburn’s Estate (Wyo. 1965), 406 P.2d 655, for its finding that Dorothy Morris’s will was insufficient to show her intent to bypass the statutory apportionment provisions of the state inheritance taxes. In Ogburn, the disputed language in the will stated: “I direct the payment of all my just debts, taxes, funeral expenses and expense of administration of my estate.”

The Wyoming Supreme Cornt initially set out the distinction between federal estate taxes and state inheritance taxes. According to the Wyoming Court, because federal estate taxes are a tax on the privilege of transferring an interest in the property upon death it is generally considered an obligation of the estate. However, state inheritance taxes are an obligation upon the recipients of the testatrix’s bounty. The Wyoming Court then held that the statement “all my ... taxes ... of my estate” referred only to federal estate taxes and was not sufficiently clear and unambiguous to include state taxes as well. The Wyoming Court concluded that the will was ambiguous and did not provide for an alternative method of apportioning state taxes because it failed to expressly provide the testators’ intent to include state as well as federal taxes.

In the instant case, the District Court determined that the language in the will might have been sufficient to shift the burden of the federal estate taxes, but was not sufficiently clear to shift the burden of the state inheritance taxes to the residuary estate. Considering the entire will, we disagree. Dorothy Morris refers specifically to “all taxes both State and Federal which become payable by reason of my death”. This provision explicitly refers to all state taxes, which become payable by reason of her death, which language is missing in the will in Ogburn. State inheritance taxes are clearly a state tax which becomes payable as a result of Dorothy Morris’s death. The District Court’s reliance on Ogburn is misplaced. We conclude that the language of the will is clearly sufficient so as to include state inheritance taxes.

The intention of the testatrix is to be ascertained from the words of the will which are to be taken in their ordinary and grammatical sense. In re the Estate of Delong (1990), 242 Mont. 15, 788 P.2d 889. The plain and clear language of the will indicates that the specific bequests, costs of administration, and all state and federal taxes are to be paid first. The remainder of the residuary estate is to be equally divided between the two families. The intent of the testatrix must be found from all parts of the will which are to be construed in relation to each other so as, if possible, to form one consistent whole. Estate of Evans (1985), 217 Mont. 89, 704 P.2d 35.

Looking first at Paragraph Second, as stated above, we conclude that it was Dorothy Morris’s expressed intent to have the estate pay all state taxes which include inheritance taxes. Moving then to Paragraph Fifth, Dorothy Morris provides clear instructions regarding the calculation and distribution of the residue of her estate, and how the amount of distribution to each side of the family is to be calculated. First, the personal representative is instructed to convert the residuary estate to cash. Second, the personal representative is instructed to pay the items listed in paragraph second. Third, Dorothy Morris clearly instructs the personal representative that “after payment of the items listed in Paragraph Second above (the state inheritance tax included) and after payment of the specific legacies of paragraphs third and fourth, the personal representative is then to divide the amount of the residue one-half to the Thompson heirs and the remaining one-half to the Morris heirs.

Reading Paragraphs Second and Fifth together, we conclude the will clearly and unambiguously demonstrates that Dorothy Morris intended and directed the amount of the residue of her estate to be calculated, divided and distributed after payment of the state inheritance taxes. To calculate and compute in accordance with Thompson’s position, the personal representative would omit the amount of all of the state inheritance taxes from the deductions to be paid first in Paragraph Fifth, then divide the balance of the residue 50 percent to the Thompson devisees and the remaining 50 percent to the Morris devisees, and then deduct from each devisee his/her proportionate share of the state inheritance tax. However, Dorothy Morris provided an alternative method.

Clear and unambiguous provisions in a will expressing the intent of the decedent can shift the tax burden from those upon whom the statute imposes it. §72-16-603(2), MCA. The respondent argues that the will fails to specifically mention apportionment, non-apportionment or the controlling statute and therefore fails to properly express any intent to shift the tax burden. However, an express reference to §72-16-603, MCA, is neither mandated by the statute nor necessary to clearly and unambiguously state a desire for an alternative method of apportionment. The will need only provide direction for “a method of apportionment of tax different from the method described” in the statute. §72-16-603(2), MCA. When the will so directs, “the method described in the will controls”. §72-16-603(2), MCA.

We conclude that the will of Dorothy Morris by not only designating the shares and the beneficiaries, but by also mandating how to calculate each of these shares, provides a clear and unambiguous method of apportionment that is an alternative to the method provided by statute. Therefore, the method described in the will is controlling and the District Court is reversed.

II.

Did the District Court err in denying Thompson’s request for attorney fees?

The District Court denied Thompson’s request for attorney fees on the grounds that neither case law nor statutes had been cited which would permit an award of attorney fees in this situation. Thompson relies on §72-12-206, MCA, which provides:

When the validity or probate of a will is contested through court action, the fees and expenses must be paid by the party contesting the validity or probate of the will, if the will in probate is confirmed. If the probate is revoked, the costs must be paid by the party who resisted the revocation or out of the property of the decedent, as the court directs.

The instant case does not involve the validity or probate of a will and as such, we agree with the District Court that §72-12-206, MCA, does not apply. The District Court is affirmed in its denial of attorney fees.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON and GRAY concur.

JUSTICE HUNT

dissenting.

I dissent. I would affirm the order of the District Court in which the court determined that the language in the will was not sufficiently clear so as to override the statutory directive in § 72-16-603, MCA, concerning the apportionment of state inheritance taxes.

Under the common law, the residuary estate was obligated to pay the death taxes. Appellants argue that in this situation the residuary estate should pay the state inheritance taxes. This would greatly benefit appellants in that they can avoid paying at the higher rate which would be required if all the heirs paid the state inheritance taxes at their individual rates. However, the legislature, for good reason, has changed the method of payment of taxes that existed under the common law. They provided, in § 72-16-603, MCA, that:

(1) Except as provided in subsection (3) and unless the will otherwise provides, the tax shall be apportioned among all persons interested in the estate. The apportionment is to be made in the proportion that the value of the interest of each person interested in the estate bears to the total value of the interests of all persons interested in the estate.
(2) If the decedent’s will directs a method of apportionment of tax different from the method described in this part, the method described in the will controls.

The strong policy arguments in support of this change in the common law were explained in the case of New York Trust Co. v. Doubleday (Conn. 1956), 128 A.2d 192. In Doubleday, the testator’s children from a previous marriage sought to benefit from his widow’s marital exemption by paying taxes out of the residuary estate prior to dividing it between the parties. This is exactly what appellants are attempting to do in this situation. In finding in favor of apportionment, and allowing the widow the full value of her exemption, the court stated:

Only through the allocation of the entire amount of the marital allowance to the value of the widow’s bequest will the intent as well as the spirit of the proration statute be met, for the statute is based on the equitable principle that the estate taxes should be borne by those whose bequests contribute to the tax burden and, conversely, that all those whose legacies do not in any way create or add to that burden should not be required to bear it.

Doubleday, 128 A.2d 196-97.

While § 72-16-603(2), MCA, permits the results argued for by appellants in this case, it is clear that the direction of the statute in favor of apportionment and the policy reasons which led to the enactment of the statute, require clear and unambiguous language to override the statutory directive in favor of apportionment. The language in this will which appellants contend expresses the testatrix’s desire to avoid apportionment pursuant to § 72-16-603, MCA, is less than clear and unambiguous.

The language in this will is similar to the language in the will in In Re Ogburn’s Estate (Wyo. 1965), 406 P.2d 655. In Ogburn, the will read “I direct the payment of all my just debts, taxes, funeral expenses and expense of administration of my estate.” Ogburn, 406 P.2d at 657. The Wyoming Court initially set out the difference between federal estate taxes and state inheritance taxes. Federal estate taxes are taxes upon the estate for the privilege of transferring the property upon death. State inheritance taxes are not taxes upon the estate at death, but rather are taxes which are the burden of the recipients of the testatrix’s bounty. Under this analysis the phrase in the will “all my just ... taxes” was construed to include only the federal estate taxes. The language used was simply insufficient to override the apportionment statute as to the state inheritance taxes. The Wyoming court stated that:

Practically all of the cases agree that a directive against apportionment should be expressed in clear and unambiguous language .... In case of doubt the burden of the taxes must be left where the law places it. [Citation omitted.] It has been said that a sufficient tax clause should expressly state “(1) what gifts or beneficiaries are freed of the burden of taxes, (2) what taxes are affected, and (3) where the burden of taxes is shifted.”

Ogburn, 406 P.2d at 657-58.

The District Court found that this criteria was not met and that the intent of the testatrix was not clear from the language used in the will. The will states that the personal representative is directed to pay “all taxes both state and federal which become payable by reason of my death, out of my estate.” State inheritance taxes are imposed upon the recipients of the property for the privilege of receiving that property.

There is no language in the will that clearly and unambiguously sets forth any authority on the part of the personal representative to pay taxes other than by apportionment. When, as here, there is ambiguity and doubt as to the intent of the testatrix, the burden of the state inheritance taxes should remain were the law places it. It appears that the majority opinion here requires a surviving spouse to show that any bequest to any other person is not to be apportioned, rather than the other way around — the other way around being the intention of the legislature to change the common law that required that inheritance taxes be paid from the residual estate.

I would affirm the District Court.

JUSTICE WEBER

dissenting:

I agree with the reasoning of the dissent of Justice Hunt. I believe additional comments are appropriate.

The key holding of the majority opinion is the following conclusion: We conclude the will clearly and unambiguously demonstrates that Dorothy Morris intended and directed the amount of the residue of her estate to be calculated, divided and distributed after payment of the state inheritance taxes.

In substance the majority concludes that the residue is to be calculated, divided and distributed after payment of the Montana inheritance taxes. That conclusion ignores the factual necessity of both dividing and calculating before distribution of the residue can be accomplished. Federal estate tax is levied against the entire estate and therefore can be paid and deducted prior to any computation of the residue. In contrast, the Montana inheritance tax is levied upon the share passing to each of the twenty-seven individual residuary devisees.

We agree that the personal representative can be properly required to pay the just debts, funeral expenses, and expenses of administration as well as the estate taxes before any computations are required with regard to the residue. All of those can be paid without any division of the residuary estate or calculation. However, when it comes to the Montana inheritance tax, that no longer is true. Under the Montana inheritance tax, the residue must be divided and the tax computed before the Montana inheritance tax can be paid.

I suggest that the only reasonable method to be followed is that after payment of the just debts, funeral expenses, expenses of administration and the federal estate tax, the personal representative must make the following division and calculations:

1. Divide the amount on hand in the estate at that point so that one-half will be listed as going to the Thompson grandchildren, and the remaining one-half to the Morris grandchildren.

2. Divide the one-half going to the Thompson grandchildren into twenty equal parts. Next calculate the Montana inheritance tax which is due from each of such twenty grandchildren.

3. In a similar manner, divide the remaining one-half between the seven Morris grandchildren. Then calculate the Montana inheritance tax due from each of those seven grandchildren, taking into consideration both the exemption and the tax rates.

I suggest that it is only after a division and calculation as above described that the Montana inheritance taxes can be paid. Once those Montana inheritance taxes have been calculated, such taxes properly may be paid by the estate. Distribution then would follow to each of the twenty-seven residuary legatees based upon the share attributable to each less the Montana inheritance tax paid for that person.

I concur in the conclusion by Justice Hunt that essential fairness requires the type of division described above and adopted by the District Court. It is unfair to require a tax to be paid by persons who are not actually receiving the property as is proposed by the majority opinion. Such action is not contemplated by the statute.

I would affirm the District Court.

JUSTICE TRIEWEILER concurs in the foregoing dissent.


source: Caselaw Access Project

author: JUSTICE HUNT

license: Public Domain

text:
    PATRICIA HANLEY, Plaintiff and Appellant, v. SAFEWAY STORES, INC., SCOTT LANG, and DOUGLAS ROSSO, Defendants and Respondents.
    No. 91-409.
    Submitted on briefs June 4, 1992.
    Decided Aug. 21, 1992.
    49 St.Rep. 755.
    838 P.2d 408.
    254 Mont. 379.
    For Plaintiff and Appellant: Wade J. Dahood, Knight, Dahood, McLean & Everett, Anaconda.

      For Defendants and Respondent: James M. Ragain and Kyle A. Gray, Holland & Hart, Billings.
   JUSTICE HUNT

delivered the opinion of the Court.

Plaintiff/appellant Patricia Hanley brought suit against Safeway and two of its security employees for alleged wrongful conduct committed during an interrogation which led to appellant’s discharge from employment. The District Court granted respondents’ motion for summary judgment on the grounds that various claims asserted by appellant were preempted by federal labor law. Appellant moved the District Court for a reconsideration. Following the denial of that motion, appellant brought this appeal. We reverse and remand.

The only issue before the Court is whether the District Court erred in granting summary judgment for respondents on the basis that appellant’s claims were preempted by federal labor law?

Appellant was a member of the United Food and Commercial Workers Union Local #4-R in Butte and was an employee of respondent Safeway. At the time of appellant’s discharge from employment, there was a collective bargaining agreement in effect between appellant’s union and Safeway. Appellant was discharged by Safeway after 25 years of employment for allegedly violating their work rules regarding the proper procedure for recording customer sales. Apparently, the proper procedure to be followed when an impatient customer would leave the correct change for a purchase and then leave the store, was to finish the checkout in progress, then immediately record the money set aside as the next complete customer transaction. Appellant was aware of this procedure. In the spring and summer of 1988, Safe way’s security personnel conducted blind checker tests at the Butte store in which appellant was employed. The security personnel would leave the exact change for an item and then leave the checkstand without waiting for the sale to be rung through. Respondents allege that upon later checking the register tape it appeared that in seven out of eight such blind tests appellant failed to properly record the transactions.

The parties offer different versions of what transpired next. According to Safeway, appellant met with two of Safewa/s security personnel, respondents Rosso and Lang, regarding the alleged improper handling of customer transactions. After some discussion with the security personnel, appellant wrote and signed a letter admitting that she failed on occasion to record customer transactions. In the letter, appellant indicated that she would set aside the money and use it at the end of her shift to make certain the till total came out correctly. Appellant denied appropriating any of the money for personal use. This letter also indicated that appellant’s admission had “been written freely by me without any threats, promises or coercion and is the most truthful letter I can write.”

Appellant’s recollection of this event varies from that given by the security personnel. Appellant states that she was directed to a back room where the security personnel interrogated her concerning the alleged improper customer transactions. Appellant denied the charges and attempted to leave the room but was forced by the security personnel to sit back down. Appellant alleges that she was threatened with criminal action, coerced to make a confession, and promised that if she did confess no farther action would be taken. Appellant states that after being alone in the room for over an hour with the security personnel that they dictated a confession which she wrote down and then signed. The following day appellant was discharged. Appellant contends the signed confession was false.

Following her discharge, appellant contacted her local union president, Junie Best, who filed a grievance on behalf of appellant. Safeway denied the grievance. The Union never sought arbitration as provided for in the collective bargaining agreement.

Approximately a year and one-half after the discharge from employment, appellant brought suit against respondents in State District Court. On appeal, appellant argues that the suit brought in District Court was for damages resulting from false imprisonment, emotional distress, unlawful restraint, intimidation, employer misconduct, and slander. Upon motion of respondents, the District Court granted summary judgment indicating that the claims brought by appellant were preempted by federal law. Appellant brought this appeal contending that the claims were not preempted and that the District Court erred.

The only issue which this Court is addressing on appeal is whether the District Court erred in granting summary judgment for respondents on the basis that appellant’s claims were preempted by federal labor law.

A district court may grant summary judgment “when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law.” Sherrodd, Inc. v. Morrison-Knudsen Co. (1991), 249 Mont. 282, 284, 815 P.2d 1135, 1136; Rule 56(c), M.R.Civ.P. Upon reviewing a grant or denial of a motion for summary judgment, this Court applies the same standard as the district court.

Respondents argue that appellant’s state-law tort claims are preempted by § 301 of the Labor Management Relations Act of 1947 (LMRA), 61 Stat. 156,29 U.S.C. § 185(a) [hereinafter § 301]. Section 301 of the LMRA provides that:

Suits for violation of contracts between an employer and a labor organization representing employees in an industiy affecting commerce as defined in this Act, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.

The power of Congress to preempt state law is well established. This power is derived from the Supremacy Clause of Article VI of the Federal Constitution. Gibbons v. Ogden (1824), 9 Wheat 1, 6 L. Ed. 23. Congressional action of legislating and preempting state law in the field of labor relations is long established. NLRB v. Jones and Laughlin Steel Corp. (1937), 301 U.S. 1, 57 S.Ct. 615, 81 L. Ed. 893. The rationale for federal preemption in the field of labor relations was explained by the United States Supreme Court in their decision in Teamsters v. Lucas Flour Co. (1962), 369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593, wherein the Court stated:

The dimensions of § 301 require the conclusion that substantive principles of federal labor law must be paramount in the area covered by the statute. Comprehensiveness is inherent in the process by which the law is to be formulated ... requiring issues raised in suits of a kind covered by § 301 to be decided according to the precepts of federal labor law.
The importance of the area which would be affected by separate systems of substantive law makes the need for a single body of federal law particularly compelling. The ordering and adjusting of competing interests through a process of free and voluntary collective bargaining is the keystone of the federal scheme to promote industrial peace. State law which frustrates the effort of Congress to stimulate the smooth functioning of that process thus strikes at the very core of federal labor policy. With due regard to the many factors which bear upon competing state and federal interests in this area [citations omitted], we cannot but conclude that in enacting § 301 Congress intended doctrines of federal labor law uniformly to prevail over inconsistent local rules.

Lucas Flour (1962), 369 U.S. at 103-04.

It is clear from the foregoing that federal labor law must preempt state law to the extent that the state law pertains to an “area covered by the statute [§ 301].” However, it is equally clear that federal law does not preempt all state laws which might be considered to be associated with labor law. The United States Supreme Court recently explained that:

Congress did not state explicitly whether and to what extent it intended § 301 of the LMRAto preempt state law. In such instances courts sustain a local regulation “unless it conflicts with federal law or would frustrate the federal scheme, or unless the courts discern from the totality of the circumstances that Congress sought to occupy the field to the exclusion of the States.” [Citation omitted.]

Allis-Chalmers Corp. v. Lueck (1985), 417 U.S. 202, 208-09, 105 S. Ct. 1904, 1910, 85 L. Ed. 2d 206, 213-14.

While Congress did not explicitly state to what extent § 301 preempted state labor law, the language in § 301 indicates that it applies to “[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce....” The United States Supreme Court has interpreted this language on numerous occasions and these decisions clearly set out general principles which clarify the extent of preemption under § 301.

In Lueck, the Court found that a state-law claim for the bad faith handling of an insurance claim was preempted by federal law because the matter was covered by the collective bargaining agreement. In a later decision, the Court succinctly described the test set out in Lucas Flour and applied in Lueck, stating that:

[I]f the resolution of a state-law claim depends upon the meaning of a collective bargaining agreement, the application of state law (which might lead to inconsistent results since there could be as many state-law principles as there are States) is preempted and federal labor law principles — necessarily uniform throughout the Nation — must be employed to resolve the dispute.

Lingle v. Norge Division of Magic Chef, Inc. (1988), 486 U.S. 399, 405-06, 108 S. Ct. 1877, 1881, 100 L. Ed. 2d 410, 418-19. Lingle involved a claim brought in state court in which an employee, working under a collective bargaining agreement, alleged that she had been discharged for exercising her rights under the state’s workers’ compensation laws. The Court in Lingle held that the state-law claim was not preempted by federal labor law. The United States Court of Appeals for the Seventh Circuit had earlier ruled that the state-law claim was preempted by § 301. The United States Supreme Court agreed with the Court of Appeals that “the state-law analysis might well involve attention to the same factual considerations as the contractual determination [under the CBA] of whether Lingle was fired for just cause.” Lingle, 486 U.S. at 408. However, the Court did not agree with the Court of Appeals’ “conclusion that such parallelism renders the state-law analysis dependent upon the contractual analysis.” Lingle, 486 U.S. at 408. The state law remedy and claim were independent of the collective bargaining agreement for § 301 preemption purposes because the state-law claim could be resolved without construing the collective bargaining agreement. Lingle, 486 U.S. at 407. The Court concluded by noting that preemption under § 301:

[Mjerely ensures that federal law will be the basis for interpreting collective bargaining agreements, and says nothing about the substantive rights a State may provide workers when adjudication of those right does not depend upon the interpretation of such agreements.

Lingle, 486 U.S. at 409.

This test has been followed in the Ninth Circuit Court of Appeals which stated in relation to federal preemption under § 301:

First, section 301 preempts state law claims which are founded on rights created by a collective bargaining agreement. [Citations omitted.] Second, section 301 preempts state law claims which are “substantially dependent on analysis of a collective bargaining agreement.” [Citations omitted.]

Stikes v. Chevron USA, Inc. (9th Cir. 1990), 914 F.2d 1265, 1268.

It appears from the arguments in the briefs of both parties, that they accept as correct the foregoing discussion on the extent of federal preemption under § 301. It is the position of respondents that the claims raised in the State District Court suit by appellant are governed by the provisions of the collective bargaining agreement and are therefore preempted by federal law. Respondents argue that appellant should have sought remedy for the alleged wrongful acts by first exhausting all available sources of remedy under the collective bargaining agreement and then by filing a timely suit in Federal District Court.

Respondents contend that while appellant’s complaint was artfully drafted so as to avoid any mention of the collective bargaining agreement, the gravamen of the complaint is that in discharging appellant, Safeway breached the collective bargaining agreement. Respondents cite to Hyles v. Mensing (9th Cir. 1988), 849 F.2d 1213, 1216, wherein it was stated that in order:

To determine whether section 301 preempts a state tort claim, we do not look to how the complaint is cast. Rather we inquire whether “the claim can be resolved only by referring to the terms of the CBA.”

It is clear that through the artful drafting of a complaint almost any breach under the collective bargaining agreement could be restated as an independent state-law tort claim. Clearly, the question of preemption must be decided on the substantive independence of the state-law claims from the collective bargaining agreement, and not from the fact that counsel was able to present the claims without reference to the collective bargaining agreement.

This Court recently reconsidered the issue of § 301 preemption in light of the Supreme Court’s decision in Lingle. In Foster v. Albertsons, Inc. (Mont. 1992), [254 Mont. 117,] 835 P.2d 720, [49 St.Rep 638] this Court clarified that a state-law claim is preempted by § 301 only where its resolution requires construing the collective bargaining agreement. In the present case a decision on the merits of appellant’s claims may be made by the trier of fact without reference to or interpretation of the collective bargaining agreement. The State of Montana has a substantial interest in regulating the conduct alleged in this case and such interests may be protected without interfering with the federal regulation of labor law.

On appeal, respondents raise several questions concerning the other claims appellant alleges to have asserted before the District Court. Respondents contend that several of the claims raised by appellant on appeal were not included in the original complaint and that other claims included in the complaint do not state an independent tort under Montana law. Inasmuch as the District Court granted summary judgment based on federal preemption, these issues were not addressed below and are not properly before this Court at this time. The question of whether certain claims were properly pled in the complaint, or whether they may be added by amendment, as well as the question of whether in fact appellant has attempted to bring claims which do not state an independent tort ■under Montana law, must be decided by the District Court on remand. In light of our holding that appellant’s claims are not preempted by federal labor law, the District Court’s granting of summary judgment for respondents must be reversed.

Reversed and remanded for further proceedings consistent with this opinion.

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


author: JUSTICE TRIEWEILER JUSTICE HARRISON

text:
    PACIFICORP, an Oregon Corporation, Petitioner and Appellant, v. THE DEPARTMENT OF REVENUE OF THE STATE OF MONTANA and THE STATE TAX APPEAL BOARD OF THE STATE OF MONTANA, Respondent and Cross-Appellant.
    No. 91-242.
    Submitted May 21, 1992.
    Decided Aug. 27, 1992.
    49 St.Rep. 774
    838 P.2d 914.
    254 Mont. 387.

      For Petitioner and Appellant: Terry B. Cosgrove argued, Luxan & Murfitt, Helena; Milo E. Ormseth argued and Peter R. Jarvis, Stoel, Rives, Boley, Jones & Grey, Portland, Oregon.
    For Respondent and Cross-apellant: David Woodgerd argued, Dept, of Revenue, Helena.
    For Amicus Curiae: Benjamin Frederick Miller, California Franchise Tax Board, Multistate Tax Affairs Bureau, Sacramento, California; Pauli Mines, Multistate Tax Commission, Washington, D.C.; and John L. Alke, Hughes, Kellner, Sullivan & Alke, Montana Taxpayer’s Association, Helena.
   JUSTICE TRIEWEILER

delivered the opinion of the Court.

The Montana Department of Revenue (DOR), defendant and respondent in this Court, pursuant to Rule 23(h), M.R.App.P., appeals from two final orders of the District Court of the First Judicial District, Lewis & Clark County. The District Court reversed the State Tax Appeal Board’s (STAB) admission of eight documents into evidence based on PacifiCorp’s attorney-client privilege, and remanded the case to STAB for a new hearing. Appellant PacifiCorp cross-appealed from an order of the District Court which upheld STAB’s denial of PacifiCorp’s motion to compel the DOR to produce audit report documents generated by the Multistate Tax Commission.

The Montana Taxpayers Association (MTA) filed an amicus curiae brief supporting PacifiCorp’s position. The Multistate Tax Commission (MTC) and the California Franchise Tax Board (FTB) submitted amicus curiae briefs in support of the DOR’s position. We affirm in part and reverse in part.

The issues on appeal are:

1. Did the District Court err in affirming STAB’s decision that the audit reports performed by California for MTC at the request of Petitioner are not subject to discovery?

2. Did the District Court err when it found that PacifiCorp did not waive its attorney-client privilege by producing eight documents during discovery?

3. Did the District Court err when it remanded this case to STAB for a new trial, based on the finding that eight documents were privileged and improperly admitted into evidence?

On October 6, 1986, the parties submitted an agreed statement of facts, which is summarized as follows:

PacifiCorp is the parent of an affiliated group of corporations engaged in business within Montana. The DOR conducted an audit covering PacifiCorp’s corporation license tax returns from 1974 to 1979. On November 5, 1982, PacifiCorp filed amended returns for refunds for the years 1971 through 1979. In a letter dated June 3, 1983, the DOR informed PacifiCorp of a proposed additional tax assessment for the tax years 1974 to 1979, and also denied PacifiCorp’s refund claims.

On June 28, 1983, PacifiCorp protested the deficiencies asserted in the DOR’s June 3, 1983, letter. On June 29, 1983, PacifiCorp also filed a complaint with STAB appealing the DOR’s denial of refunds. On August 2, 1983, pursuant to stipulation of the parties, STAB ordered that the refund appeal be held in abeyance pending a final decision on the tax deficiency protest.

The DOR obtained tax audit reports on PacifiCorp from tax authorities in Oregon, Idaho, and California, and determined that Montana was treating PacifiCorp’s Montana operations differently than the other states.

PacifiCorp contacted MTC and requested that it review the proposed assessment of additional taxes by Montana. The MTC is an association of about 20 states including Oregon, Idaho, California, and Montana. The MTC’s amicus curiae brief states that the purpose of the Multistate Tax Compact is to facilitate the following:

1. Equitable tax apportionment of multistate businesses,
2. Uniformity among various state tax systems,
3. Avoidance of duplicative taxation,
4. Discussion of apportionment disputes,
5. Avoidance of state judicial procedures by providing an informal forum for dispute resolution,
6. Taxpayer convenience,
7. Good relations between taxpayers and the state.

In response to the request, MTC requested California to conduct a special audit of PacifiCorp and to provide reports to MTC and its members.

Both Montana and California are signatories to an Agreement on Exchange of Information between MTC members stating:

6. No information obtained pursuant to this Agreement shall be disclosed to any person not authorized by the laws of the undersigned states.

On May 3, 1985, the DOR sent PacifiCorp its final notice of additional tax due and denied all refund claims. On May 31, 1985, PacifiCorp appealed to STAB the DOR’s additional tax assessment. This appeal was combined with the pending claim filed with STAB in 1983.

On July 15, 1985, PacifiCorp filed its first interrogatories and request for production of documents. Included within the request for production was a requirement that the DOR identify any and all documents which were “used, reviewed, created or considered by the Department which played any part in the Department’s decision that Western and Resource did not constitute a unitary business with Pacific.” The DOR identified and produced the audit report which its staff produced. However, the DOR identified, but refused to produce the Oregon and MTC audit reports.

On November 21, 1985, PacifiCorp filed with STAB a motion to compel the DOR to produce the documents which it identified but failed to produce. The DOR’s brief of January 7, 1986, opposed the motion to compel and directed PacifiCorp to request the documents directly from the individual states. On May 14, 1986, STAB denied the motion to compel.

PacifiCorp attempted to obtain copies directly from the states. Oregon provided copies of its audit report. The FTB provided certain portions of the requested information, but did not release any portions from the first & second audit reports (1981 and 1982) which included the following:

1. Opinions, recommendations, judgments, or analysis in the audit narrative;

2. Proprietary-type of information about the internal decision making process which it thought the taxpayer could use to manipulate the system (audit guidelines, audit criteria, operational criteria, and memos);

3. Third-party information, unrelated to the taxpayer; or

4. Protest hearing reports.

The FTB also withheld the entire third report dated May 24,1984, and state that a fourth report dated May 29, 1985, had not been specifically requested by PacifiCorp. Its letter explained that the undisclosed audit information was confidential under California law and would not be given to the taxpayer (PacifiCorp). The 1984 and 1985 reports from FTB were given to Oregon, Montana, Idaho, and MTC.

The letter also stated that FTB was providing the following information from the first and second reports (1981 & 1982):

1. Returns, reports, etc., that had been furnished to the department by the taxpayer;

2. The factual data contained in audit narratives and supporting workpapers; and

3. Authority relied upon to make adjustments.

PacifiCorp also attempted to obtain audit reports directly from MTC, but MTC refused to provide copies.

On June 12,1986, PacifiCorp filed a petition for judicial review. It sought an order reversing STAB and allowing discovery of the audit reports. The District Court found that it lacked jurisdiction and that a review would have to await final agency action. STAB entered judgment for the DOR on February 28,1989. On November 22,1989, the District Court reversed and remanded this decision due to unlawful ex parte procedures on the part of STAB and the DOR. On March 15,1990, STAB once again entered judgment for the DOR. PacifiCorp appealed to the District Court, and the parties agreed to resolve the discovery and evidentiary issues before reviewing the merits. The District Court found the information in the audit was privileged under § 15-1-601, MCA, and affirmed STAB’s ruling. This is the basis of PacifiCorp’s cross-appeal.

During discovery, PacifiCorp inadvertently produced eight documents in response to the DOR’s request. PacifiCorp moved to exclude the documents under the attorney-client privilege, but STAB admitted the documents, finding that PacifiCorp had waived its privilege. The District Court found that the eight documents were protected by the attorney-client privilege and remanded the case back to STAB for consideration without benefit of the information found in the documents.

I.

Did the District Court err in affirming STAB’s decision that the audit reports performed by California for MTC at the request of Petitioner are not subject to discovery?

There is no dispute that the availability of the MTC audit report is governed by Article VIII, § 6, of the Multistate Tax Compact. Section 6 is adopted by and set forth in § 15-1-601, MCA:

Information obtained by any audit pursuant to this article shall be confidential and available only for tax purposes to party states, their subdivisions, or the United States. Availability of information shall be in accordance with the laws of the states or subdivisions on whose account the commission performs the audit and only through the appropriate agencies or officers of such states or subdivisions.

The dispute concerns the interpretation of the above statute, particularly the meaning of the second sentence. The District Court found that the first sentence precludes a party state from distributing the MTC audit report to the taxpayer.

The DOR maintains that the first sentence authorizes dissemination of MTC audit information to the member states, their subdivisions, or the United States for tax purposes only. The DOR contends that such disseminated information must remain confidential because the first sentence establishes a statutory privilege for information obtained during an MTC audit. The DOR argues that the second sentence, regarding availability, does not defeat the privilege because it refers to dissemination to a state’s taxing authority for tax purposes only. We disagree.

We conclude that the first sentence does not preclude the state from distributing the audit to the taxpayer. Although the first sentence of the statute provides that the audit information is confidential, the second sentence provides that it will be available according to state law. The second sentence states that the laws of each state or subdivision “on whose account the audit is performed” govern the availability of the audits. Montana was provided the report as a state “on whose account” the audit was performed, thus, the MTC audit is a Montana audit. The second sentence allows discovery of the audit report pursuant to Montana law. See Multistate Tax Com’n v. Merck & Co., Inc. (Or. 1980), 617 P.2d 1371, 1375, where the Oregon Supreme Court held that an MTC audit is essentially an Oregon audit performed under Oregon law by its agent, MTC. Montana disclosure laws apply. California privilege laws are not applicable, except in tax litigation arising in California.

The DOR contends that public disclosure would undermine MTC’s ability to function as an informal forum for issue resolution. The DOR’s inconsistent disclosure practices belie this argument. The DOR admitted during oral argument that MTC audits supporting Montana tax assessments are often released to the taxpayer. There is no logical basis for releasing the information in some cases, but not in others. Given the inexplicable disparate treatment, arguments that disclosure will undermine MTC or Montana’s participation are not persuasive.

Because MTC derives powers from and on behalf of its member states, it exercises no more power than the states already possess. Kinnear v. Hertz Corp. (Wash. 1976), 545 P.2d 1186. The MTC’s audit information is not subject to any greater burden of confidentiality than Montana law commonly imposes on tax information gathered by the DOR. Any further “confidentiality” violates Montana’s constitutional right to know provision.

Constitutional Considerations

The District Court did not discuss PacifiCorp’s right to know under Article II, § 9, of the Montana Constitution, nor did it address the right to privacy asserted by the DOR under Article II, § 10 of the Montana Constitution.

Article II, § 9, of the Montana Constitution is the law of this State and gives PacifiCorp the right to examine these public documents unless some individual privacy interest is threatened.

The DOR compares its refusal to disclose information obtained from MTC with the refusal of the state auditor in Belth v. Bennett (1987), 227 Mont. 341, 740 P.2d 638, to provide information received from a multistate insurance regulation association on the basis that the information was privileged under Montana statute. In Belth, a newspaper was trying to obtain information about an insurance company. We held in Belth that a state agency can assert the privacy interest of another. In Belth, the statute allowed the state auditor to withhold information because the insurance company’s right to privacy outweighed the public’s right to know. The instant case, however, is not a situation where a citizen is attempting to obtain a file about another taxpayer; here, the taxpayer is requesting its own file. The privacy exception within the right to know clause only applies when a member of the public is requesting information about someone else. The State cannot assert the privacy right of the person requesting the disclosure. If so, the State could circumvent the individual’s right to know.

The DOR also contends that it is claiming the right to privacy for MTC and its members. It asserts that because California and MTC have not waived their privilege, Montana cannot disclose the information. The DOR points out that in Belth we held that corporations may assert the right of privacy because the right is not limited to individuals. The DOR explains that the MTC is analogous to a corporation, not a government agency, because it is an organization comprised of members. However, MTC’s amicus brief supporting the DOR contradicts the DOR by stating that the MTC is “properly classified as an instrumentality of state government,” and in this capacity “represents the executive branch of member states.”

PacifiCorp’s right to know prevails because no individual or corporate privacy is involved. Montana, California, and MTC cannot assert the right to privacy. They are not “individuals” under Montana law — they are government entities. The only privacy interest implicated here is the taxpayer’s. We hold that MTC audit reports are subject to discovery under § 15-1-601, MCA, consistent with PacifiCorp’s constitutional right to examine public documents.

II.

Did the District Court err when it found that PacifiCorp did not waive its attorney-client privilege by producing eight documents during discovery?

PacifiCorp invoked the attorney-client privilege pursuant to § 26-1-803(2), MCA, for eight documents produced during discovery. Rule 503, M.R.Evid., provides that waiver of a privilege occurs if “the holder of the privilege voluntarily discloses or consents to disclosure of any significant part of the privileged matter,” unless the disclosure itself is privileged.

PacifiCorp’s production of eight attorney-client documents was in response to a voluminous document request covering thousands of documents. Montana law has not yet addressed whether inadvertent production in large document cases constitutes waiver. Application of the test for waiver of the attorney-client privilege outlined in State v. Statczar (1987), 228 Mont. 446, 743 P.2d 606, requires consideration of two elements: (1) the element of implied intention; and (2) the element of fairness and consistency. Statczar 743 P.2d at 610. We will consider the element of implied intention first.

In Statczar, we defined waiver as “the intentional or voluntary relinquishment of a known right or conduct which implies relinquishment of a known right.” This is consistent with the Commission Comments to Rule 503, M.R.Evid., which provide that subjective intent is not the only factor for determining waiver — conduct can also constitute waiver. The Comments also state that knowledge is not a required element for waiver. Here, it is clear that PacifiCorp did not have knowledge of the inadvertent production of the documents until later. However, we still must determine whether PacifiCorp’s conduct at any time implied relinquishment of a known right.

In Kuiper v. District Court (1981), 193 Mont. 452, 460, 632 P.2d 694, 698, we stated that if no legal action is taken to protect against wide dissemination of the materials, voluntary relinquishment of the right could be found. Here, wide dissemination did not occur, and PacifiCorp immediately requested the return of the documents as soon as it became aware of the production. PacifiCorp took prompt reasonable steps to protect its privilege. PacifiCorp objected to any use being made of these documents and refused to permit questions to be asked about them as soon as the issue arose during depositions. Voluntary relinquishment was not established by lack of legal action in this case.

Moreover, the mere inadvertent production itself is not enough to establish voluntary relinquishment of a known right. Mendenhall v. Barber-Greene Co. (N.D.Ill. 1982), 531 F. Supp. 951, 954.

We are taught from first year law school that waiver imports the “intentional relinquishment or abandonment of a known right.” Inadvertent production is the antithesis of that concept.

Mendenhall at 955. See also, United States v. Zolin (9th Cir. 1987), 809 F.2d 1411, 1417 (secretary’s delivery of tapes under the mistaken impression that they were blank did not waive privilege because the disclosure was “sufficiently involuntary and inadvertent as to be inconsistent with a theory of waiver”), aff’d in relevant part and vacated in part (1989), 491 U.S. 554, 109 S. Ct. 2619, 105 L. Ed. 2d 469. Because PacifiCorp did not voluntarily relinquish a known right, an implied intention to waive the privilege cannot be found.

In addition to considering the element of implied intention, we must also consider the element of fairness and consistency. Statczar 743 P.2d at 610. In this case, PacifiCorp objected to use of the documents from the first time they were referred to during discovery. The DOR knew well in advance of trial that use of the documents was an issue, and therefore, should not be surprised or unprepared because of their exclusion. Fairness and consistency are served by the exclusion of the privileged documents.

Accordingly, we affirm the District Court’s conclusion that PacifiCorp did not waive its attorney-client privilege when it inadvertently produced eight documents during discovery.

ni.

Did the District Court err when it remanded this case to STAB for a new trial, based on the finding that eight documents were privileged and improperly admitted into evidence?

When reviewing conclusions of law by an agency, Workers’ Compensation Court, or a trial court the standard of review is whether the tribunal's conclusions are correct. “The reasoning for simply determining if the court’s conclusions are correct 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 v. Dept. of Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601, 603. We find that the District Court correctly applied the law.

The District Court’s review of STAB’s agency findings is governed by § 2-4-704(2), MCA. The District Court properly noted that the statute allows reversal of an agency decision “where such decision violates constitutional or statutory provisions or is affected by other error of law.” See § 2-4-704(2)(a)(i) and (iv), MCA. The District Court found that the admission of the eight documents violated PacifiCorp’s statutory right to claim the attorney client privilege pursuant to § 26-1-803, MCA.

We must determine whether the above statutory violation prejudiced substantial rights of the appellant. Section 2-4-704(2), MCA. If substantial rights were prejudiced, then reversal is appropriate. See Frasceli v. State Dept. of Revenue (1988), 235 Mont. 152, 766 P.2d 850.

The test of prejudicial error requiring reversal is whether there is a reasonable possibility the inadmissible evidence might have contributed to the verdict.

Brodniak v. State (1989), 239 Mont. 110, 779 P.2d 71 (quoting State v. Gray (1983) 207 Mont. 261, 268, 673 P.2d 1262, 1266).

After reviewing the record, we conclude that there is a reasonable possibility that the eight privileged documents contributed to STAB’s decision. We hold that admission of the eight documents prejudiced substantial rights of PacifiCorp, and did not constitute harmless error.

We affirm the District Court’s conclusions that PacifiCorp did not waive its attorney-client privilege and that remand to STAB was necessary. We reverse the District Court’s conclusion that the MTC audit was not discoverable under Montana law.

This case is remanded to the State Tax Appeal Board for further proceedings consistent with this opinion.

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

JUSTICE HARRISON

dissenting.

I totally disagree with the majority’s reasoning in this opinion and therefore dissent to its holding herein.

       Article II, § 9, of the Montana Constitution, provides:

        Right to Know: No person shall be deprived of the right to examine documents or to observe the deliberations of all public bodies or agencies of state government and its subdivisions, except in cases in which the demand of individual privacy clearly exceeds the merits of public disclosure.

       Article II, § 10, provides:

        Right to Privacy. The right of individual privacy is essential to the well-being of a free society and shall not be infringed without the showing of a compelling state interest.

        See also In re Grand Jury Proceedings (4th Cir. 1984), 727 F.2d 1352, 1356 (efforts taken to rectify error and extent of disclosure are factors in determining waiver); FDIC v. Ernst & Whinney (E.D.Tenn. 1991), 137 F.R.D. 14 (prompt objection and request for return of documents).


text:
    IN RE THE MARRIAGE OF TAMMIE LYNN CLINGINGSMITH, Petitioner and Respondent, and LARRY EDWARD CLINGINGSMITH, Respondent and Appellant.
    No. 92-035.
    Submitted on briefs May 28, 1992.
    Decided Sept. 1, 1992.
    49 St.Rep. 794.
    838 P.2d 417.
    254 Mont. 399.

      For Respondent and Appellant: J. Dennis Corbin, Brown, Huss & Corbin, Miles City.
    For Petitioner and Respondent: IMarvin L. Howe, Simonton, Howe & Schneider, Glendive.
   JUSTICE HUNT

delivered the opinion of the Court.

This is an appeal by the husband from the findings of fact, conclusions of law, and decree of dissolution entered in the Seventh Judicial District Court, Dawson County, Montana. We affirm.

We frame the issues before this Court as follows:

1. Did the District Court err in failing to comply with the requirements of § 40-4-215, MCA, which relate to investigations and reports used in the determination of custody disputes?

2. Were the District Court’s findings of fact, conclusions of law, and decree of dissolution concerning the custody determination sufficiently comprehensive and based upon substantial evidence?

3. Was it an abuse of discretion for the District Court to establish child support in accordance with the current guidelines without considering the unique financial circumstances of the appellant?

Appellant Larry Edward Clingingsmith and respondent Tammie Lynn Clingingsmith were married in Glendive, Montana, on September 10, 1983. The parties are the parents of two minor children. Respondent is the mother of another minor child from a previous marriage. The parties resided in Glendive throughout their marriage. Appellant was a farmer who leased land upon which he grew crops, as well as assisting in his family’s ranching operation. In late 1988, appellant enrolled his leased property in the Conservation Reserve Program (CRP) and went to work for Crisifulli Pump Company of Glendive. During the marriage, respondent occasionally worked outside the home, but primarily took care of the children.

Respondent filed for a dissolution of marriage on June 6, 1990. After filing for dissolution, respondent and the children moved to Dickinson, North Dakota. Initially, respondent had exclusive custody of the children while in Dickinson. However, the parties later agreed to a temporary shared custody arrangement pending the trial of the matter. The trial was originally scheduled for December 13,1990. At the request of the parties, that trial date was vacated and reset for April 25, 1991.

Prior to trial, the District Cotut appointed counsel to represent the interests of the children. Counsel for the children moved the court for an order directing the parties to obtain home studies pursuant to § 40-4-215, MCA. The District Court ordered that “each of the parties arrange for custodial home studies to assist in determining which custody arrangement would best serve the interests of the minor children.”

A two day trial began on April 25, 1991. In her petition for dissolution, respondent requested that she be granted sole custody of the children with reasonable visitation rights to appellant. Appellant sought a joint custody arrangement, with primary residency being with him. At the conclusion of trial, the District Court ordered the parties to submit amended proposed findings of fact and conclusions of law. Following the trial, counsel for the children filed proposed findings of fact and conclusions of law in which he recommended joint custody with primary residency to appellant. The court also permitted additional time for appellant to supplement the record with a home study, since appellant had been unable to obtain a home study prior to trial.

On August 16, 1991, the District Court entered it findings of fact, conclusions of law, and decree of dissolution. The court awarded the parties joint custody of the minor children, and granted primary physical residential custody to respondent and secondary rights to appellant. The court ordered appellant to pay child support in the amount of $515.64 per month. The court made a division of the marital property which is not contested on appeal. Appellant failed to supplement the record with a home study, as allowed by the court, prior to the decision of August 16,1991. Following the decision of the court, appellant made several motions for a new trial, or in the alternative to alter or amend the court’s judgment. These motions were denied by the court on November 1, 1991, and this appeal followed.

On appeal, the attorney ordered by the District Court to represent the children filed a brief in support of his position. Respondent then filed a motion to strike the brief of the children. Respondent characterized the brief filed by the children’s attorney as an amicus curiae brief which could only be filed upon the written consent of all parties, or by leave of this Court. The attorney for the children responded to the motion to strike, pointing out that he was appointed as counsel for the children and was not an amicus curiae. However, in light of our decision in this case, respondent’s motion to strike the brief need not be addressed.

I

Did the District Court err in failing to comply with the requirements of § 40-4-215, MCA, which relate to investigations and reports used in the determination of custody disputes?

The first issue raised by respondent involves a question 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.

On March 20, 1991, approximately one month prior to the scheduled trial date, the District Court, pursuant to a motion by the attorney for the children, entered an order directing that each of the parties arrange for custodial home studies to assist in determining which custody arrangement would best serve the interests of the minor children. On appeal, appellant argues that the District Court erred by failing to follow the requirement in § 40-4-215, MCA, that the report be provided to all counsel ten days prior to the trial. Appellant contends that he did not receive a written copy of the home study report until the morning of trial. The individual who prepared the home study testified at trial concerning the information contained in the home study. While the report itself was not allowed into evidence by the District Court, appellant contends the testimony by the author of the report was inappropriate and is grounds for reversal of the custody determination made by the District Court.

It is apparent from the record that both parties experienced difficulties in attempting to have home studies completed in such a short time period. Respondent was able to obtain a home study shortly before trial, while appellant was not. Respondent alleges on appeal that prior to trial the parties stipulated that the trial should proceed with only respondent’s home study and that appellant should be able to supplement the record with a home study obtained at a later date. Respondent further contends that this stipulation waives any right appellant may have had to object to the home study. Appellant denies that any stipulation occurred. The record is inconclusive as to whether the parties actually entered into the alleged stipulation.

Regardless of any stipulation, appellant has waived his right to allege error on appeal by failing to make a timely and specific objection at the time of trial. Rule 103, M.R.Evid. provides in part that:

(a) Effect of erroneous ruling. Error may not be predicated upon a ruling which admits or excludes evidence unless a substantial right of the party is affected, and
(1) Objection. In case the ruling is one admitting evidence, a timely objection or motion to strike appears of record, stating the specific ground of objection, if the specific ground was not apparent from the context....

Upon reviewing the transcript of the testimony of the individual who prepared the report, it is evident that appellant did not object until the witness was well into her testimony. When appellant did make objections later in the testimony, it was primarily on the basis that particular questions were leading or that the answers would constitute hearsay. Most of these objections were sustained. Appellant objected to the introduction of the report into evidence on the basis that it was cumulative of the oral testimony presented. The District Corut did not allow the report in on the basis that it contained improper hearsay. At no point did appellant object on the basis that he had not received the home study report in a timely fashion pursuant to § 40-4-215, MCA. Appellant’s objections were neither timely nor based on the correct grounds, and as such will not be considered by this Court on appeal. Rule 103, M.R.Evid.; Linden v. Huestis (1991), 247 Mont. 383, 807 P.2d 185.

II

Were the District Court’s findings of fact, conclusions of law, and decree of dissolution concerning the custody determination sufficiently comprehensive and based upon substantial evidence?

Appellant contends the District Court erred in awarding the parties joint custody of the children with primary physical residential custody with respondent and liberal visitation rights to appellant. Appellant had requested joint custody with primary residency with him. Appellant argues that the findings of the District Court were insufficiently comprehensive and that the findings and conclusions were not based on substantial evidence. Appellant presented as a separate issue the question of whether the District Court’s failure to refer to the recommendation of the children’s attorney is grounds for reversal of the custody determination. The attorney for the children had recommended primary residency should be with appellant.

Section 40-4-212, MCA, requires custody determinations be made in accordance with the best interests of the children as determined by the District Court after considering the following criteria:

(a) [T]he wishes of the child’s parent or parents as to his custody;
(b) the wishes of the child as to his custodian;
(c) the interaction and interrelationship of the child with his parent or parents, his siblings, and any other person who may significantly affect the child’s best interest;
(d) the child’s adjustment to his home, school, and community;
(e) the mental and physical health of all individuals involved;
(f) physical abuse or threat of physical abuse by one parent against the other parent or the child; and
(g) chemical dependency, as defined in 53-24-103, or chemical abuse on the part of either parent.

This list is not all inclusive. This Court has suggested that the parents’ ability to cooperate in their parental roles and the geographical proximity of the parents’ residences are at least two additional factors which should be considered. In re Custody and Support of B.T.S. (1986), 219 Mont. 391, 395-96, 712 P.2d 1298, 1301.

When reviewing custody issues, this Court must first determine if the factors set out in § 40-4-212, MCA, were considered by the district court. In re Marriage of Jacobson (1987), 228 Mont. 458, 743 P.2d 1025. While it is encouraged, the trial court need not make specific findings on each of the factors. However, failure to at least consider all of the statutorily mandated factors is error. In re Marriage of Speer (1982), 201 Mont. 418, 654 P.2d 1001. The custody determination must be based on substantial evidence relating to the statutory factors and must be set forth explicitly in the findings. In re Marriage of J.J.C. and P.R.C. (1987), 227 Mont. 264, 739 P.2d 465. The findings should, at a minimum, set forth the “essential and determining facts upon which the District Court rested its conclusion on the custody issue.” In re Marriage of Cameron (1982), 197 Mont. 226, 231, 641 P.2d 1057, 1060.

Upon reviewing the District Court’s extensive findings of fact concerning the custody issue, it is clear the District Court considered all of the required statutory criteria and based the custody decision on the best interests of the children. The court’s findings of fact explicitly set forth the essential and determining facts upon which it based its conclusions. The findings and conclusions were based on substantial evidence.

Appellant is correct that the District Court failed to mention the recommendation of the children’s attorney that primaiy residency be with appellant. However, the failure to discuss why this recommendation was not followed is not grounds for reversal. While some discussion of the recommendation of the children’s attorney would have been appropriate, specific reference to the recommendation was not required. Appellant has presented no authority for his position that the recommendation of the children’s attorney must be specifically discussed. The requirement is that the findings explicitly state the essential and determining facts upon which the conclusion rests. The findings in this case clearly satisfy that requirement.

Ill

Was it an abuse of discretion for the District Court to establish child support in accordance with the current guidelines without considering the unique financial circumstances of the appellant?

Our standard of review in reviewing child support is that a presumption exists in favor of the district court’s determination, and this Court will reverse the district court’s determination only if there was an abuse of discretion. In re Marriage of Sacry (Mont. 1992), [253 Mont. 378,] 833 P.2d 1035, 49 St. Rep. 452.

Section 40-4-204(3)(a), MCA, provides in part that:

Whenever a court issues ... an order concerning child support, the court shall determine the child support obligation by applying the standards in this section and the uniform child support guidelines adopted by the department of social and rehabilitative services ... unless the court finds by clear and convincing evidence that the application of the standards and guidelines is unjust to the child or to any of the parties or is inappropriate in that particular case.

Appellant alleges that the District Court abused its discretion in this instance by calculating his child support obligation without first deducting from his income certain alleged business expenses. The District Court followed the applicable standards and guidelines in determining child support in this case and did not abuse its discretion in not deducting the alleged business expenses.

Affirmed.

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


author: JUSTICE GRAY

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. JOHN HEMBD, Defendant and Appellant.
    No. 91-314.
    Submitted on briefs June 4, 1992.
    Decided Sep. 1, 1992.
    49 St.Rep. 788.
    838 P.2d 412.
    254 Mont. 407.

      For Defendant and Appellant: John Hembd, Pro Se, Deer Lodge.
    For Plaintiff and Respondent: Marc Racicot, Attorney General, George Schunk, Assistant Attorney General, Helena; Dennis Paxinos, County Attorney, Dale Mrkich, Deputy County Attorney, Billings.
   JUSTICE GRAY

delivered the Opinion of the Corut.

The defendant, John Hembd (Hembd), appeals his second conviction of robbery with a handgun following a jury trial in the Thirteenth Judicial District Court, Yellowstone County. We affirm.

The issues on appeal are:

1. Whether the District Court erred in allowing bank teller Linda Esman to identify the defendant?

2. Whether the District Court properly instructed the jury?

3. Whether Hembd’s sentence was valid?

4. Whether Hembd was denied effective assistance of counsel?

5. Whether the District Court erred in denying Hembd’s motion to dismiss based on the lack of a speedy trial?

6. Whether the District Court erred in denying Hembd’s motion to disclose the informants’ identity?

7. Whether there is sufficient evidence in the record to support the defendant’s conviction?

On December 28,1988, Dianne Bexell-Paul, a teller at the Security Federal Savings Bank in Billings, was robbed at gun point while at her window in the bank. The robber escaped on foot with $4,390. Bexell-Paul and the teller next to her, Linda Esman, gave similar descriptions of the perpetrator to authorities. Informants later identified Hembd as the robber to the Federal Bureau of Investigation and the Billings Police Department.

On January 11, 1989, Hembd was charged by information with felony robbery. A jury trial was held on March 20, 1989, and the jury returned a guilty verdict on March 22, 1989. Hembd was subsequently sentenced to twenty-five years in the Montana State Prison with an additional five years for use of a handgun in the commission of the offense.

Hembd appealed that conviction on March 31, 1989. The State cross-appealed certain rulings made during the course of trial. Subsequently, the State moved the Montana Supreme Court to remand the case with instructions to vacate the judgment of conviction. On January 23,1990, this Court reversed the defendant’s conviction and remanded the case for a new trial.

The second trial was held on April 29 and 30, 1991, and on April 30,1991, Hembd was again found guilty by a jury. He was sentenced to twenty-five years in the Montana State Prison with an additional five years for the use of a weapon. On September 25, 1991, counsel for Hembd filed an Anders brief with motion for leave to withdraw. Anders v. California (1967), 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493. We provided Hembd with an opportunity to respond to his attorney’s Anders brief and he responded via letter dated February 25, 1992. On March 24, 1992, this Court granted Hembd’s counsel’s motion to withdraw and directed the State of Montana to respond. Hembd filed supplemental arguments on June 17, 1992.

I.

Whether the District Court erred in allowing bank teller Linda Esman to identify the defendant?

Although Hembd objects to this testimony on appeal, it was not objected to by Hembd’s counsel during the trial. The general rule is that failure to object to alleged error at trial results in waiver of the right to challenge such error on appeal. State v. Howie (1987), 228 Mont. 497, 744 P.2d 156. When substantial rights of a defendant are involved, lack of timely objection does not preclude us from exercising our jurisdiction to examine any error at the trial court level. State v. Sadowski (1991), 247 Mont. 63, 805 P.2d 537. However, this plain error doctrine is invoked only in extraordinary circumstances when it is necessary to ensure a fair trial. State v. Voegele (1990), 243 Mont. 222, 793 P.2d 832. The record herein does not contain any extraordinary circumstances calling the plain error doctrine into play. Therefore, because counsel did not raise this objection at trial, we will not consider it on appeal.

II.

Whether the District Court properly instructed the jury?

Hembd asserts that the District Court gave “bad instructions.” At trial, Hembd’s attorney objected only to the State’s instruction #2 because it was duplicative of the court’s instruction #3. The court ruled that it was not duplicative and gave the instruction.

The instruction objected to was a “credibility and weight” instruction. The court’s instruction directed the jury to decide the issues of fact and to perform this task without bias, passion, or prejudice. It provided the jury with guidelines regarding all evidence, including testimony as well as documents, exhibits, and stipulations.

The District Court gave both instructions to the jury. It is within the prerogative of the trial court to determine which instructions are necessary. State v. Smith (1986), 220 Mont. 364, 715 P.2d 1301. On review, we determine whether instructions, as a whole, fully and fairly present the applicable law of the case. State v. Goodwin (1991), 249 Mont. 1, 813 P.2d 953.

We conclude that the District Court was correct that the two instructions were not duplicative. Having reviewed all the instructions, we conclude that, as a whole, they fully and fairly presented the case to the jury.

III.

Whether Hembd’s sentence valid?

Trial judges are granted broad discretion to determine the appropriate punishment. State v. Carson (1984), 208 Mont. 320, 677 P.2d 587. On appeal we will not review a sentence for mere inequity or disparity. State v. Almanza (1987), 229 Mont. 383, 746 P.2d 1089. The general rule regarding sentencing is that a sentence within the statutory guidelines does not violate the constitution. State v. Dahms (Mont. 1992), 825 P.2d 1214, 49 St.Rep. 106. Hembd was sentenced to twenty-five years for robbery pursuant to § 45-5-401, MCA; the sentence was within the 40-year maximum statutory sentence for robbery. We hold that Hembd’s sentence is not unconstitutional and did not constitute an abuse of discretion.

IV.

Whether Hembd was denied effective assistance of counsel?

Hembd argues on appeal that because his counsel did not raise the issue of Linda Esman’s identification at trial, he has been denied effective assistance of trial counsel. This Court has adopted a two part test in determining whether a party has been denied effective assistance of counsel.

To demonstrate that counsel’s performance was deficient, defendant must prove that counsel’s performance fell below the range of competence reasonably demanded of attorneys in light of the Sixth Amendment. Second, the defendant must demonstrate that the counsel’s deficiency was so prejudicial that the defendant was denied a fair trial.

State v. Aills (1991), 250 Mont. 533, 535, 822 P.2d 87, 88; quoting Strickland v. Washington (1984), 466 U.S. 668, 687, 104 St.Ct. 2052, 2064, 80 L.Ed.2d 674, 693.

In the case at bar, the first prong of the test is not satisfied. Hembd’s single allegation on appeal is that his attorney failed to object to Linda Esman’s identification at the second trial; he does not assert any basis for a conclusion that Esman’s testimony was inadmissible. “In any case presenting an ineffectiveness claim, the performance inquiry must be whether counsel’s assistance was reasonable considering all the circumstances.” Aills, 822 P.2d at 89; citing Strickland, 466 U.S. at 688, 104 S.Ct. at 2065, 80 L.Ed.2d at 694.

Linda Esman was standing at a teller window near that of Dianne Bexell-Paul when Bexell-Paul was robbed at gun point; both Esman and Bexell-Paul were eyewitnesses to the crime and gave similar descriptions of the robber to the police. Defense counsel chose to cross-examine Esman at some length regarding discrepancies in her initial description of Hembd and her identification at trial rather than objecting to her testimony. In judging counsel’s representation of Hembd, we will not second-guess counsel’s trial tactics. State v. LaValley (1983), 203 Mont. 393, 661 P.2d 869. We conclude that counsel’s representation was reasonable and within the range of competence required by the Sixth Amendment. The first prong of the Strickland test not being satisfied, we hold that Hembd received effective assistance of counsel.

V.

Whether the District Court erred in denying Hembd’s motion to dismiss based on the lack of a speedy trial?

Hembd argues on appeal that he was denied a speedy trial. He contends that the delays in bringing his case to trial must be charged to the State. The State asserts, and the court agreed, that Hembd was responsible for much of the delay and that the remainder of the delays were caused by the court’s congested calendar. Finding no prejudice to the defendant, the court denied Hembd’s motion for dismissal based on the lack of a speedy trial.

Defendants in criminal trials are guaranteed the right to a speedy trial by the Sixth Amendment to the United States Constitution and by Article II, Section 24, of the Montana Constitution. We analyze four factors in determining whether a defendant’s right to a speedy trial has been violated: length of delay, reasons for delay, assertion of the right by the defendant, and prejudice to the defendant. State v. Heffernan (1991), 248 Mont. 67, 70, 809 P.2d 566, 568.

Length of Delay

If the delay is lengthy it is presumptively prejudicial and further inquiry is warranted. Heffernan, 248 at 70, 809 P.2d at 568. Here, 461 days elapsed between the reversal of Hembd’s first conviction and his second. We have previously stated that a delay of 200 days will usually trigger the full speedy trial analysis. State v. Dahms (Mont. 1992), 825 P.2d 1214, 49 St.Rep. 106. Therefore, we will analyze the remaining speedy trial factors.

Reasons for Delay

A careful review of the record reveals that Hembd’s successful motions to vacate trial dates delayed the trial by 240 days, leaving 241 days of unavoidable delay grounded in institutional considerations of the District Court. “Delay inherent in the system is chargeable to the State.” State v. Harvey (1979), 184 Mont. 423, 434, 603 P.2d 658, 667. However, institutional delay weighs less heavily against the State than purposeful delay. Heffernan, 248 Mont. at 73, 809 P.2d at 570. Nothing in the record before us reflects any purposeful delay by the State.

Assertion of the Right

Hembd satisfied the third element of the test by moving to dismiss the action on speedy trial grounds on June 15, 1990.

Prejudice to Defendant

This Court has identified three factors which indicate prejudice to a defendant: 1.) pretrial incarceration; 2.) anxiety and concern; and 3.) impairment of defense. Heffernan, 248 Mont. at 74, 809 P.2d at 570. Applying these factors to the case before us results in a conclusion that Hembd was not prejudiced by the delay.

Hembd’s incarceration on a separate charge negates any prejudice arising from being incarcerated awaiting trial. Further, he does not assert that the delay exacerbated his anxiety and concern. Finally, Hembd makes no showing that his defense was impaired by that delay. We hold that the District Court did not err in denying Hembd’s motion to dismiss based on the lack of a speedy trial.

VI.

Whether the District Court erred in denying Hembd’s motion to disclose the informants’ identity?

Hembd argues on appeal that he should have been permitted to see the informant; he does not specify which of the two informants he means. We note that Hembd moved for identification of the FBI informant prior to trial and that the motion was denied. No specific error in that ruling is raised and our review does not disclose error.

With regard to Hembd’s assertion regarding disclosure of the identity of the informants, he does not suggest how disclosure could have aided his alibi or mistaken identity defenses. He asserts only that if he could see the informant he could determine if the informant looked like him and could have actually committed the crime and subsequently blamed Hembd. Hembd’s assertion that the informants may have provided information to throw law enforcement investigators off the track of the actual perpetrator constitutes mere speculation and conjecture. Conjecture is an insufficient cause to support disclosure of an informant’s identity. State v. McLeod (1987), 227 Mont. 482, 740 P.2d 672.

VII.

Whether there is sufficient evidence in the record to support the defendant’s conviction?

The standard of review for sufficiency of the evidence in criminal cases is whether “evidence, when viewed in a light most favorable to the prosecution, would allow a rational trier of fact to find essential elements of the crime beyond a reasonable doubt.” State v. Beach (1991), 247 Mont. 147, 150, 805 P.2d 564, 566.

Hembd was found guilty of robbery. Robbery is defined in pertinent part, as follows:

(1) A person commits the offense of robbery if in the course of committing a theft he:
(b) threatens to inflict bodily injury upon any person or purposely or knowingly puts any person in fear of immediate bodily injury

Section 45-5-401, MCA.

The evidence in this case was substantial as to each element. Two eyewitnesses testified that it was Hembd who robbed the bank, two informants notified authorities that it was Hembd who robbed the bank, and a video exists of the robbery. The robbery was committed at gunpoint and the robber escaped with over $4,000. Bexell-Paul and Esman testified that they were afraid that the robber would shoot them. A rational trier of fact could have found each element of the offense proved beyond a reasonable doubt. Therefore, we hold that there is sufficient evidence in the record to support defendant’s conviction.

Affirmed.

JUSTICES HARRISON, TRIEWEILER, HUNT and WEBER concur.