author: MR. JUSTICE WEBER

text:
    In re the MARRIAGE OF MARY LOU HALL, Petitioner and Appellant, and ARNOLD ALOYSIUS HALL, Respondent and Respondent.
    No. 86-560.
    Submitted on Briefs June 4, 1987.
    Decided Aug. 5, 1987.
    740 P.2d 684.

      Morales & Volinkaty, Richard Volinkaty, Missoula, for petitioner and appellant.
    Hartelius & Ferguson, Channing J. Hartelius, Great Falls, for respondent and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

The District Court for the Twelfth Judicial District, Hill County, apportioned the parties’ property and debts after a dissolution had been entered, denied a maintenance award, and directed the parties to pay their own attorney fees. Wife appealed. We affirm.

The issues are:

1. Did the District Court err in its apportionment and distribution of the marital estate?

2. Did the District Court err in its denial of maintenance and attorney fees to wife?

The parties were married in 1962. A decree of dissolution, reserving all other issues, was entered on September 20, 1985. The parties have three children from their marriage. Neither child custody nor child support is an issue in this case.

The District Court found that the husband had been employed by Burlington Northern as a laborer at $11.00 per hour from which he averaged about $1,400 per month. Wife has been a licensed practical nurse from which she has earned approximately $8.35 per hour. The wife has completed her registered nurse’s course and upon passing her qualifying examinations, she will be able to earn approximately $11.00 per hour, or $21,000 per year. The District Court further pointed out that in any event she could return to employment as a licensed practical nurse with prospective earnings of $15,000 per year and could anticipate increased earnings because of her education.

The parties accumulated a marital estate consisting of real and personal property with a value of approximately $401,600. The marital debts are approximately $368,600, leaving the net value of the marital estate at roughly $33,000. Much of the marital estate consists of tracts of farm and ranch land.

The court decreed that the items in the possession of the wife, which totaled $16,810 in value, would be given to her, and the items in possession of the husband, which totaled $4,065 in value, would be given to him. In addition, the remainder of the property in the marital estate, valued at $368,000, would be given to husband as long as he assumed full responsibility for the debts of the marriage, which totaled approximately $368,000.

The court found that since 1985 the farming enterprise has not been in operation due to a lack of operating funds. Regarding the distribution of the farm property, the court stated:

“17. Since the time adopted for the valuation of the marital estate, the market value of the estate property has continued to decline and the interest on estate obligations has continued to accrue. If the real estate should be ordered sold, there is a good possibility that the proceeds of the sale would be insufficient to satisfy the obligations of the estate, leaving a deficiency for the parties to pay out of their future earnings. Respondent has offered to assume the estate obligations if the property is apportioned to him. He would apply for a farm disaster loan in the expectation of refinancing and getting reestablished in the farming business. If he is unsuccessful, foreclosure and sale of the property is likely to ensue.
“18. It would be of benefit to petitioner to be relieved of responsibility for payment of estate obligations. Since it appears unlikely that a present sale of the property would result in any net money distribution to either party, adoption of respondent’s proposal is a reasonable alternative.”

Finally, the court found that it was not necessary to award maintenance to either party, that no child support payments needed to be paid by wife to husband (custody of the parties’ one minor child was given to husband), and that each party would be responsible for his or her own attorney fees. Wife appealed.

I

Did the District Court err in its apportionment and distribution of the marital estate?

Wife contends that the District Court awarded all of the income producing property to the husband and that the husband received the only asset which could be used to receive any substantial loans or financing. Wife further asserts that the court failed to consider the opportunity of each party to acquire capital assets and future income when it apportioned the marital estate. Finally, the wife maintains that the court failed to give adequate weight to her contribution as a homemaker and wage earner during the marriage and that the court failed to properly consider the $15,000 in unsecured debts which she has. For these reasons, wife believes the court erred in its property distribution.

Section 40-4-202, MCA, covers the division of property in marital dissolutions. As pointed out in In Re Marriage of Hundtoft (Mont. 1987), [225 Mont. 242,] 732 P.2d 401, 402, 44 St.Rep. 204, 205, our function is limited:

“At the outset, we yet again repeat that this Court’s function on appeal is extremely limited. Section 40-4-202, MCA, is of necessity a flexible statute which vests a good deal of discretion in the district court. Given the infinite varieties of factual situations presented by parties to dissolution proceedings, trial judges must enjoy the latitude to address each case individually, with an eye to its unique circumstances. (Citation omitted.)”

As stated by this Court, our functions are as limited as the District Court’s functions are broad. We have concluded that in a property distribution review in marriage dissolution, this Court will reverse a district court only upon a showing that the district court has acted arbitrarily or has committed a clear abuse of discretion, resulting in either instance in substantial injustice. See In Re Marriage of Hundtoft and cites therein. We choose not to use the phraseology “without employment of conscientious judgment or exceeded the bounds of reason” from Hundtoft because it does not assist in reviewing the actions of the lower court.

In its 13 page findings of fact, conclusions of law and decree, the District Court carefully analyzed the assets and liabilities of the parties and their relationships. After a review of the transcript, we conclude that the wife has failed to show that the court in any manner committed a clear abuse of discretion or acted arbitrarily.

The analysis of the District Court shows that the farmland has been declining in value while the obligations against the land have been continuing to grow. The District Court recognized there was a possibility of a deficiency judgment if the farm real estate were sold. The court also recognized that it was important that the wife be relieved of any obligations to pay any of the indebtedness against the farm real property, and included those provisions in its decree. Finding neither abuse of discretion or arbitrary action, we affirm the property distribution by the District Court.

II

Did the District Court err in its denial of maintenance and attorney fees to wife?

Wife contends that the court erred in not awarding her maintenance and attorney fees. Section 40-4-203(1), MCA, sets forth the factors to be weighed when considering a maintenance award:

“In a proceeding for dissolution of marriage or legal separation or a proceeding for maintenance following dissolution of the marriage by a court . . . the court may grant a maintenance order for either spouse only if it finds that the spouse seeking maintenance:
“(a) lacks sufficient property to provide for his reasonable needs; and
“(b) is unable to support himself through appropriate employment or is the custodian of a child whose condition or circumstances make it appropriate that the custodian not be required to seek employment outside the home.”

In order to meet the statutory requirements, the wife was required to prove that she lacked sufficient property to provide for her reasonable needs and that she was unable to support herself through appropriate employment. The District Court found that if she passed her registered nurse examination, she would be able to earn approximately $21,000 per year, and in any event could earn $15,000 per year as a licensed practical nurse, with anticipated increased earnings because of her additional education. Because the wife failed to prove inability to support herself, we conclude that she has failed to prove herself entitled to maintenance under the statute.

The second issue is whether the court erred by failing to award wife attorney fees. Section 40-4-110, MCA, provides in pertinent part:

“The court from time to time, after considering the financial resources of both parties, may order a party to pay a reasonable amount for . . . attorney’s fees.”

The District Court stated: “Since neither party is better able to pay attorney fees than the other, each should be responsible for his or her own attorney fees.” The record supports the conclusion on the part of the District Court. We affirm the denial of attorney fees.

The District Court is affirmed in full.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, SHEEHY and McDONOUGH concur.


source: Caselaw Access Project

author: MR. JUSTICE HUNT

license: Public Domain

text:
    PENNY WILSON and Joan Clos, Plaintiffs and Appellants, v. JOHN DOE and the State of Montana, Defendants and Respondents.
    No. 87-40.
    Submitted on Briefs May 7, 1987.
    Decided Aug. 7, 1987.
    740 P.2d 687.
    Dowling Law Firm; Thomas F. Dowling, Helena, for plaintiffs and appellants.
    Keller, Reynolds, Drake, Sternhagen & Johnson; William Sternhagen, Helena, for defendants and respondents.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

This is an appeal from the First Judicial District, Lewis and Clark County, Montana, from an order granting defendants’ motion for judgment on the pleadings on the basis that plaintiff did not state a cause of action.

We affirm.

On February 8, 1985, Joan Clos was driving east on U.S. Highway 12 approximately four miles east of Helena, Montana. A car driven by Mike Wilson was following the Clos vehicle. Penny Wilson was a passenger in this second car. A State of Montana snowplow was headed east on the same highway in front of the two cars. Highway 12 was snowpacked and icy. The complaint of Penny Wilson and Joan Clos alleges that the unknown snowplow operator, John Doe, caused a cloud of snow while operating the snowplow, which enveloped both the Clos and the Wilson vehicles.

Joan Clos decelerated when her visibility was obscured and was able to avoid going off the road or hitting anything. Mike Wilson, whose vision was also impaired, was unable to avoid running into the rear of the Clos vehicle, causing damage to the vehicles and injury to the plaintiffs.

The plaintiffs both settled with Mike Wilson, but wish to also bring charges against the State of Montana and the driver of the snowplow, John Doe, for causing a cloud of snow wilson which allegedly caused the collision. The State of Montana joined Mike as a third party defendant alleging that his actions were the sole cause of the accident. The District Court granted defendants’ motion for judgment on the pleadings, finding that the snowplow driver was merely performing the duties of his job and cannot be held to have acted negligently.

From this order, the plaintiffs appeal.

The sole issue which this Court must address on appeal is whether the District Court erred by holding that the snowplow driver was not negligent and granting defendant’s motion for judgment on the pleadings.

Rule 12(c), M.R.Civ.P., allows that “[a]fter the pleadings are closed, but within such time as not to delay the trial, any party may move for judgment on the pleadings.”

“In considering a motion on the pleadings, the trial court is required to view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the non-moving party.” Wright and Miller, Federal Practice and Procedure. Section 1368 (1969).

Plaintiffs’ complaint charges negligence against the State of Montana and the driver of the snowplow for creating a cloud of snow while maintaining the highways. The question which we must address is whether, based on the pleadings, the plaintiffs stated a cause of action upon which relief can be granted. Is the creation of a snow cloud, caused by the operation of a State snowplow, negligence?

“The mere happening of an accident is insufficient evidence of negligence.” Erickson v. Perrett (1976), 169 Mont. 167, 171, 545 P.2d 1074, 1077.

In Montana, the term “negligence” is defined as “a want of the attention to the nature or probable consequences of the act or omission that a prudent man would ordinarily give in acting in his own concerns.” Section 1-1-204(4), MCA.

Neither the complaint, nor the amended complaint of plaintiffs allege any negligent action by the operator of the snowplow, except that as a result of the operation of the snowplow, there was a “sudden cloud of loose snow” which obstructed the vision of the drivers of vehicles following the plow.

In Merithew v. Hill (1958), 167 F.Supp. 320, a Federal District Court of Montana considered whether the creation of a snow cloud by a truck being driven on the snowy highway constituted negligence. In deciding that a snow cloud, in itself, did not constitute negligence, the court pointed out that, “[s]now clouds are hazards which are not infrequently encountered in driving in sub-zero weather on snow packed highways.” 167 F.Supp. at 326.

In the instant case, plaintiffs were following a snowplow. It was entirely forseeable that the operator would drop the blade and begin to plow the snow and ice from the road and that a cloud of snow may arise from such plowing. See Erickson, 545 P.2d at 1078.

The complaint fails to allege any negligent actions on the part of the State or its employee in the operation of the snowplow.

Therefore, the order of the District Court granting judgment on the pleadings for defendants, John Doe and the State of Montana is affirmed.

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


author: MR. JUSTICE GULBRANDSON MR. JUSTICE HUNT

text:
    CHARLES STERNS, Appellant, v. WALTER DUDLEY and Montana State Compensation Insurance Fund, Respondents.
    No. 86-555.
    Submitted on Briefs March 12, 1987.
    Decided Aug. 11, 1987.
    741 P.2d 407.

      Ian Christopherson, Missoula, for appellant.
    Mike Greely, Atty. Gen., Clay R. Smith, Asst. Atty. Gen., Helena, for respondents.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Charles Sterns appeals a Workers’ Compensation Court order which awarded him 200 weeks of permanent partial disability benefits. The issues on appeal are: (1) whether the court correctly concluded that Sterns is not permanently totally disabled; (2) whether the court erred in failing to award 500 weeks of permanent partial disability benefits to Sterns; (3) whether the court erred in refusing to impose a 20% penalty upon respondent Montana State Compensation Insurance Fund (State Fund) for insurer unreasonableness; and (4) whether the court erred in failing to award Sterns his costs and attorneys’ fees. We affirm.

In 1984, Sterns suffered two separate, compensable industrial injuries while working for Walter Dudley as a “faller.” Basically, Sterns’ job was to cut down trees and help to prepare them for transportation to lumbermills. In the first accident, in January 1984, Sterns suffered an injury to his lower back and left hip when a tree top fell on him. He received temporary total disability benefits for a relatively short period after that injury and he eventually returned to his job. In June 1984, Sterns suffered another injury when his chain saw kicked back and cut into the middle finger of his left hand. He also received temporary total disability benefits after that accident. Sterns returned to work after the second accident but after several months on the job, he quit work on the advice of his doctor. He has not worked since October 1984. After a dispute between Sterns and the State Fund, Sterns petitioned the Workers’ Compensation Court for a hearing, mainly to determine whether or not he was permanently totally disabled. Following discovery and a hearing, the hearings officer filed his proposed judgment in October 1986. The Workers’ Compensation Court adopted the hearings officer’s findings of fact and conclusions of law and, in October 1986, entered judgment in accordance with the proposed judgment. The court ruled that Sterns was not entitled to permanent total disability benefits, that Sterns was entitled to 200 weeks of permanent partial disability benefits, and that Sterns was not entitled to a 20% penalty. The court also refused to award costs and attorneys’ fees to Sterns. This appeal followed.

The standard of review is clear as to the first issue; i.e., whether the court erred in ruling that Sterns is not permanently totally disabled.

“Our function in reviewing a decision of the Workers’ Compensation Court is to determine whether there is substantial evidence to support the findings and conclusions of that court. We cannot substitute our judgment for that of the trial court as to the weight of evidence on questions of fact. Where there is substantial evidence to support the findings of the Workers’ Compensation Court, this court cannot overturn the decision.” (Citations omitted.)

Brewington v. Birkenbuel, Inc. (Mont. 1986), [222 Mont. 505,] 723 P.2d 938, 940, 43 St.Rep. 1458, 1461. Section 39-71-116(13), MCA, defines a permanent total disability as:

“[a] condition resulting from injury as defined in this chapter that results in the loss of actual earnings or earning capability that exists after the injured worker is as far restored as the permanent character of the injuries will permit and which results in the worker having no reasonable prospect of finding regular employment of any kind in the normal labor market. Disability shall be supported by a preponderance of medical evidence.”

In Metzger v. Chemetron Corp. (Mont. 1984), [212 Mont. 351,] 687 P.2d 1033, 1035, 41 St.Rep. 1788, 1790, we elaborated on the statutory definition and stated,

“To establish the existence of no reasonable prospect of employment in the normal labor market, a claimant must introduce substantial credible evidence of (1) what jobs constitute his normal labor market, and (2) a complete inability to perform the employment and duties associated with those jobs because of his work-related injury.”

At the hearing on his petition, claimant testified to the continuing effects from both his work-related injuries. From the first injury, claimant testified that he still suffers from pain and numbness in the lower back and hip region. He also testified that sitting or riding in a car for extended periods aggravates his back injury. Dr. Sousa, an orthopedic surgeon who examined Sterns, diagnosed his back condition as a neuropraxia of the cutaneous nerves in the lumbar region. He described the condition, in layman’s terms, as a stretching or bruising of the nerves in the skin. Dr. Sousa made no objective findings of injury, felt that Sterns had no impairment rating for his back injury and stated that this injury had reached maximum healing. Dr. Russo, a neurologist, also examined Sterns and described the back injury as a subjective complaint with no objective findings. He stated that the injury could conceivably limit Sterns’ ability to lift heavy objects.

Sterns’ second injury involved a chain saw cutting into his left middle finger. The injury required surgery and resulted in a loss of range of motion or flexibility with the finger. Dr. Sousa assigned an impairment rating of 56% for the finger, 11% for the left hand, 10% for the upper extremity and 6% for the whole man. Sousa described the “whole man” impairment rating as a 6% whole man permanent partial impairment based upon the AMA guidelines. (Emphasis added.) Doctors Russo and Sousa generally agreed that Sterns should avoid any employment which requires repetitive heavy gripping of the left hand. Since his high school days seventeen years ago, Sterns had worked almost exclusively as a timber faller in the Missoula and Thompson Falls area.

There is extensive evidence, some of it conflicting, bearing on the issue of permanent total disability. Because substantial credible evidence supports the lower court’s ruling, we affirm the court’s determination that Sterns is not permanently totally disabled. We agree that he has not established by a preponderance of the credible evidence that he has no reasonable prospect of finding regular employment of any kind in the normal labor market.

In September 1985, the Missoula Community Hospital Rehabilitation Center (Rehab Center) conducted a five-day vocational rehabilitation evaluation of Sterns. The Rehab Center’s report (1) considered Sterns a competent worker capable of training successfully for a large number of occupations, (2) stated that he appears to have the potential of functioning effectively in a variety of occupations, and (3) rated Sterns as above-average in work speed, accuracy, intellectual functioning, academic skills and clerical aptitude. The International Rehabilitation Associates, Inc. (IRA) conducted a labor market survey to determine Sterns’ vocational opportunities in the Thompson Falls area. IRA considered those vocations listed as possibly appropriate for Sterns by the Rehab Center. IRA conducted an extensive survey and concluded that “[w]hile the job market in the Thompson Falls are [sic] appears depressed, there are, in fact, vocational opportunities for an individual with [Sterns’] documented physical and mental capabilities ...”

Norm Johnson, a counselor for the Montana Job Service in Missoula, testified for the claimant and stated that Sterns, after his injury, could compete in 10% of the labor market in a three county area surrounding Thompson Falls. Johnson also testified (1) that in his counseling work, jobs are classified as light duty work, sedentary work or heavy duty work; (2) that he believed Sterns could handle some jobs entailing light duty work and some entailing sedentary work; (3) that based on Sterns’ disability, Johnson believed Sterns could perform certain jobs in lumber manufacturing, the retail trade industry and the service industry; and (4) that Sterns obviously is not that unemployable. This testimony, the testimony of Sterns’ own witness, supports a conclusion that he is not permanently totally disabled. Given the above cited evidence, we defer to the lower court’s ruling that Sterns has not shown by a preponderance of the evidence a complete inability to perform the jobs which constitute his normal labor market.

The second issue is whether the lower court erred in awarding claimant 200 weeks of permanent partial disability benefits rather than 500 weeks. Claimant elected to proceed under Section 39-71-703, MCA, in computing his permanent partial disability benefits. That statute provides:

“(1) Weekly compensation benefits for injury producing partial disability shall be 66 2/3% of the actual diminution in the worker’s earning capacity measured in dollars, subject to a maximum weekly compensation of one-half the state’s average weekly wage.
“(2) The compensation shall be paid during the period of disability, not exceeding, however, 500 weeks in cases of partial disability. However, compensation for partial disability resulting from the loss of or injury to any member shall not be payable for a greater number of weeks than is specified in 39-71-705 for the loss of the member.”

The lower court awarded claimant permanent partial benefits under the second sentence of Section 39-71-703(2), MCA, which provides compensation for injury to a member and refers to the injury scheduled under Section 39-71-705, MCA. Section 39-71-705, MCA, provides a 200 week benefit period for the loss of one hand. The lower court reasoned that claimant’s finger injury affected the use of claimant’s entire hand and, therefore, it awarded 200 weeks of benefits. Claimant argues that his disability resulted also from his back injury and that he should not be limited to the Section 39-71-705, MCA, scheduled benefits for one hand. He argues that he is entitled to 500 weeks of benefits under the first sentence of Section 39-71-703, MCA. We disagree. Sterns elected to proceed under Section 39-71-703, MCA, which compensates a claimant for his actual diminution in earning capacity. The evidence in this case established that Sterns’ loss of earning capacity resulted from his finger injury and the resulting inability to effectively use his left hand. Sterns did not establish what loss of earning capacity, if any, he experienced from his back injury. Moreover, there was substantial credible evidence tending to show that Sterns suffered no loss of earning capacity from the back injury. We note that after his back injury he returned to his former job after only two weeks and worked apparently without difficulty until he injured his finger. Moreover, the Rehab Center’s report states that;

“[Sterns] reported that he occasionally continues to experience low back pain, however, he did not consider this to be a vocational handicap. He referred only to his recent hand injury . . .”

Moreover, Dr. Sousa testified by deposition that from his evaluation of the back injury, he saw nothing objective which would prevent Sterns from being employed.

Finally, claimant’s own evidence tended to show that his loss of earning capacity resulted from his finger injury. The lower court properly awarded him benefits for that loss. Because substantial credible evidence supports the lower court’s ruling, we will not second guess the determination that claimant suffered no loss of earning capacity from his back injury.

The third issue is whether the court erred in refusing to impose a 20% penalty on the insurer. Section 39-71-2907, MCA, authorizes the workers’ compensation judge to increase a claimant’s award by 20% when payment of compensation has been unreasonably delayed or refused by the insurer. Claimant argues that the insurer unreaonably refused to concede that he was permanently totally disabled. We have already upheld the ruling that claimant was not permanently totally disabled and, therefore, we affirm the lower court’s refusal to impose the 20% penalty.

Lastly, claimant asserts that the lower court erred in failing to award him his costs and attorneys’ fees. Sterns bases his assertion upon Section 39-71-612, MCA, which allows a claimant costs and attorneys’ fees in certain cases if the claimant is successful in a dispute with the insurer. Sterns has been unsuccessful below and on appeal and he is not entitled to costs and attorneys’ fees under that section.

Affirmed.

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

MR. JUSTICE HUNT

dissenting:

I dissent.

The record shows that the claimant is receiving temporary total benefits for his injury. The Workers’ Compensation Court has ordered these reduced to 200 weeks of permanent partial disability benefits. The majority of this court mistakenly agrees with that conclusion.

The record shows that claimant has spent his adult life as a logger. Dr. Albertson, the treating physician concluded “that it was unsafe for claimant to work as a sawyer.” That is also the conclusion of Dr. Russo and Dr. Sousa. That is the testimony of the claimant. Claimant has spent his entire working life as a logger. He is now totally disabled from doing that work. He is without any new knowledge or skills to take the jobs that various work experts say are available to him. He is required to prove “by a preponderance of the credible evidence” that he cannot find a job in his area that is, according to the testimony of the state job expert, depressed. He has reported to the job service for work but has not found a job. He sought retraining and has been accepted at the University of Montana in accounting. But because he has not proven “by a preponderance of the credible evidence” he cannot find a five dollar an hour job to replace his $15.35 an hour job, he only qualifies for 200 weeks of “permanent partial disability.” I cannot agree.

I would reverse the judgment of the Workers’ Compensation Court and send this back for a determination that the claimant is totally disabled and remains so until he is able to perform work he has been trained to do.

MR. JUSTICE SHEEHY concurs in the dissent of MR. JUSTICE HUNT.


text:
    FRANCIS J. BUTORI, JR., Claimant and Appellant, v. BRUCE METCALF SPORTSMAN 66, Employer, and State Compensation Insurance Fund, Defendant and Respondent.
    No. 87-100.
    Submitted on Briefs May 21, 1987.
    Decided Aug. 11, 1987.
    740 P.2d 1126.
    Leonard J. Haxby, Butte, for claimant and appellant.
    Hughes, Kellner, Sullivan & Alke; Stuart Kellner, Helena, for defendant and respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

This is an appeal from the Workers’ Compensation Court, State of Montana. Claimant alleges error by the court in holding that defendant State Compensation Insurance Fund (State Fund) is entitled to 50 percent subrogation against his entire third party recovery.

We affirm this order of the Workers’ Compensation Court.

The issues presented on appeal are:

1. Whether the Workers’ Compensation Court erred in deciding that the State Fund is entitled to assert its subrogation right against the employee’s entire third party settlement, including the economic and non-economic damages received.

2. Whether the Workers’ Compensation Court calculated the amount of the State Fund’s subrogation correctly.

The following facts were stipulated to by the parties and adopted by the Workers’ Compensation Court:

1. That the employer, Bruce Metcalf Sportsman 66, is enrolled under Compensation Plan No. 3 of the Workers’ Compensation Act, and its insurer is the State Compensation Insurance Fund.

2. That on June 22,1981, claimant received an injury arising out of and in the course of his employment as a service station helper when his legs were pinned between two customers’ automobiles. Claimant’s actual weekly wage at the time of the injury was $107.20 per week.

3. That the insurer accepted liability for the claim and has paid claimant the following disability benefits:

a. On July 15, 1981, for the period from and including June 22, 1981 through July 14,1981, temporary total disability benefits at the rate of $71.46 per week, totaling $235.37;

b. On December 21,1982, for the period from and including March 10, 1982 through April 13, 1982, temporary total disability benefits at the rate of $71.46 per week, totaling $357.30.

c. On January 16, 1984, pursuant to Dr. Buehler’s whole man impairment rating of 5 percent, claimant was paid $893.25, which represented 25 weeks permanent partial disability benefits at claimant’s permanent partial rate of $71.46, reduced by 50 percent to partially satisfy defendant’s subrogation interest in claimant’s third party settlement.

4. That from the time of the accident through December 6, 1983, defendant paid claimant’s medical expenses in the amount of $2,133.21.

5. That on December 27, 1983, claimant settled his third party claim against the driver of the automobile that struck him. In settlement of that claim, Travelers Indemnity Company, the third party’s automobile liability insurer paid claimant the sum of $26,000, from an automobile liability insurance policy with bodily injury limits of liability for one person of $500,000.

6. That on January 10, 1984, claimant’s attorney reimbursed defendant in the sum of $1,362.94, which represented defendant’s 50 percent subrogation interest in both the temporary total disability benefits of $592.67 paid claimant and the medical expenses of $2,133.21 paid for claimant.

7. That since being reimbursed by claimant, defendant has paid medical expenses of $618.36, which is equal to the total medical expense of $1,236.72 incurred by claimant during that period of time, reduced by 50 percent to satisfy defendant’s subrogation interest in claimant’s third party settlement.

8. That defendant elected not to participate in the cost of claimant’s third party action and waived 50% of its subrogation rights in claimant’s third party settlement.

9. In settling his third party claim, claimant incurred attorney fees and costs totaling $6,500.

10. With the exception of the $1,362.94 payable to the State Fund, the $26,000 was paid entirely for pain and suffering, non-economic loss.

The subrogation rights of Workers’ Compensation insurance carriers upon third party recovery has a straightforward history in Montana case law.

The statutorily given right of subrogation has been recognized as constitutional and as being in furtherance of equity and justice.

“When as here, a worker, in the course of his employment is injured by the act or omission of one other than his employer or co-employee, his injury, because it was incurred in the course of his employment, gives rise to an obligation on the part of his employer or his employer’s insurer, to provide the workers with benefits under the Workers’ Compensation Act. The employer or insured in that case is called upon to make payments to the worker which really should be the burden and the responsibility of the third-party tortfeasor. It is a doctrine as old as equity that when a party is burdened by a debt or obligation that in natural justice, equity and good conscience should be paid by another, that party is subrogated to the rights of his payee to the extent of the payments made, as against the responsible party.”

Brandner v. Travelers Ins. Co. (1978), 179 Mont. 208, 587 P.2d 933,

936-937; See also Skauge v. Mountain States Tel. & Tel. Co. (1977), 172 Mont. 521, 565 P.2d 628.

When claimant elects to pursue a third party action, Sections 39-71-412 and 39-71-414, MCA, govern.

If the insurer elects to participate in the cost of the third party action the insurer is entitled to full subrogation for the amount which has been or will he paid to claimant. Section 39-71-414(1), MCA. Tuttle v. Morrison-Knudson Co., Inc. (1978), 177 Mont. 166, 580 P.2d 1379.

If the insurer elects not to participate, the insurer is entitled to 50 percent of the amount paid or owed to claimant for up to two-thirds the amount of claimant’s recovery. Section 39-71-414(2)(c), MCA.

Occasions in which this right of subrogation has been limited by this Court are few. In Fisher v. Missoula White Pine Sash Co. (1974), 164 Mont. 41, 518 P.2d 795, this Court held that the statutory language did not differentiate between a survival action and a wrongful death action. In Swanson v. Champion International (1982), 197 Mont. 509, 646 P.2d 1166, the Fisher ruling was distinguished as no longer applicable after the 1977 amendment to the Workers’ Compensation subrogation statute was enacted.

“[UJnder the present statutory scheme,. . . and because of the intrinsic differences that exist now and have always existed in the source and effect of recoveries made in survival actions as distinguished from wrongful death actions, the subrogation rights of the employer or its insurer under the Workers’ Compensation Act do not extend to recoveries made under wrongful death claims.”

646 P.2d at 1173.

The other distinguishable situation in which subrogation by the Workers’ Compensation insurance carrier is limited is “in a case of reasonably clear liability, where a claimant is forced to settle for the limits of an insurance policy which, together with claimant’s Workers’ Compensation award, do not grant full legal redress to claimant . . .” Hall v. State Compensation Fund (Mont. 1985), [218 Mont. 180,] 708 P.2d 234, 237, 42 St.Rep. 1502, 1505. See also Skauge, 565 P.2d at 632.

The case before this Court embraces none of the distinguishable facts which would negate or infringe upon the subrogation rights of the State Fund. Butori was not killed as a result of the industrial accident at issue. Consequently, there is no question concerning wrongful death versus survival actions. Nor is there an issue of Butori not having been “made whole.” Butori settled his third party action for $26,000 on a policy with a $500,000 liability limit. The $1,362.94 portion of the settlement was designated as the subrogated amount payable to the State Fund for prior benefits paid. The remainder of the $26,000 was designated as non-economic loss damages, compensating Butori for pain and suffering. These designated amounts were agreed upon by the settling parties. However, “[w]hen subrogation is considered, neither the court nor the Workers’ Compensation Court or Division should be bound by the allocations so made between private counsel.”

Swanson, 646 P.2d at 1175.

Further, as discussed above, the only occasions in which this Court has allowed an infringement on the rights of subrogation for a Workers’ Compensation insurance carrier are when there is a wrongful death recovery or when claimant has not been made whole. More specifically, the only time this Court has differentiated between economic and non-economic losses is when the death was instantaneous, thereby barring a survival action. In such a situation, the Workers’ Compensation Court can determine the value of the economic damages contained in the settlement or judgment and award such amount as subrogation to the insurance carrier.

“By ‘economic damages’ we refer to those elements of damages in a wrongful death case that would have their source in the earnings of the decedent, and recompensed medical and burial expenses paid partly or wholly by the subrogating carrier.”

Swanson, 646 P.2d at 1174.

Appellant has not demonstrated that he falls under any of these extenuating circumstances. Therefore, we affirm the order of the Workers’ Compensation Court in holding that the State Fund is entitled to 50 percent subrogation of appellant’s entire third party settlement.

The second issue of whether the Woroers’ Compensation Court correctly calculated the amount of subrogation is resolved by a review of the applicable formula and its application by the Workers’ Compensation Court.

The record shows that the Workers’ Compensation Court correctly utilized the statutorily designed formula as outlined in Brandner, 587 P.2d at 938, 939:

(1) Amount of recovery $26,000
(2) Attorney fees and costs 6,500
(3) Net recovery after fees and costs 19,500
(4) Claimant’s minimum entitlement Va X $19,500 6,500
(5) Insurers maximum recovery 50% (>/2 X $26,000) 13,000
(6) Sum of (4) and (5) 19, [5] 00

The net recovery of $19,500 is sufficient to provide claimant with his minimum statutory entitlement of $6,500.

(7) Insurer maximum entitlement 13,000
(8) Recapitulation Amount of Recovery Cost and fees Claimant’s entitlement $26,000 $26,000 $ 6,500 6,500 13,000 $26,000
(9) Benefits paid to date Temporary Total Disability Total Medical (impairment 5%) Total $ 235.37 357.30 $ 592.67 $2,133.21 1,786.50 $3,919.71 $4,512.38 (agreed fact 3a) (agreed fact 3b) (agreed fact 4) (agreed fact 3c)
(10) Insurer share of payments to date (50% of $4,512.38) $ 2,256.19

This calculation, taken directly from the judgment of the Workers’ Compensation Court, provides that Butori receive at least one-third of the net recovery, less claimant’s proportionate share of fees and costs. This amount is required by Section 39-71-414(2)(d), MCA, when the insured party initiates a third party action without insurer participation. The Workers’ Compensation judge held further that:

“Claimant is entitled to any credit for amounts previously reimbursed to insurer for its subrogation claim. In addition, the insurer may reduce future benefits by 50 percent until $13,000 is paid, at which time full benefits are restored.”

Butori cannot claim that he is being inadequately recompensed. He is being paid monthly henefits from the State Fund which cover his medical expenses and disability benefits. In addition, he will receive at least $6,500 as damages recovered from his third party action.

The court’s calculations ensure that Butori will receive a minimum amount, but does not limit his recovery to only one-third of the entire amount received. The State Fund is entitled to 50 percent subrogation of amounts paid to claimant up to $13,000. If State Fund’s obligations to Butori never total $26,000, he will receive the remainder of the recovery amount. The court correctly calculated the subrogated amount of appellant’s third party recovery.

We affirm the judgment of the Workers’ Compensation Court.

MR. JUSTICES HARRISON, SHEEHY, GULBRANDSON and McDonough concur.


author: MR. JUSTICE HUNT MR. JUSTICE GULBRANDSON,

text:
    STATE OF MONTANA, ex rel. Loren S. VRANISH, H. Lee Tower, Gallatin-Madison Ranch Co., a Montana corp., C. Dale and Loretta Collins, Al Dyksterhouse, Henry Dyksterhouse, et al., Relators, v. The DISTRICT COURT OF THE FIRST JUDICIAL DISTRICT of the State of Montana, In and For the COUNTY OF LEWIS AND CLARK and the Honorable Henry Loble, Presiding Judge, and D.A. Davidson & Co., Inc., Respondents.
    No. 86-571.
    Submitted May 26, 1987.
    Decided Aug. 12, 1987.
    741 P.2d 412.

      Luxan & Murfitt, Michael J. Mulroney argued, Helena, for relators.
    Hooks & Budewitz, Patrick F. Hooks argued, Townsend, Dorsey & Whitney, Edward J. Pluimer, Minneapolis, Minn., for respondents.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

This is an original proceeding before the Montana Supreme Court. Relators are applying for a writ of supervisory control regarding an order issued by the District Court of the First Judicial District on September 30, 1986 denying their claim for punitive damages. We deny the application for a writ of supervisory control.

The issues in the application are:

1. Should relators be estopped from requesting Count 1 be treated as a separate and distinct common law fraud claim for punitive damages purposes where respondents allege relators have previously represented to the trial court that Count 1 is a statutory claim under the Montana Securities Act for statute of limitations purposes?

2. Did the trial court correctly rule that Count 1 of relator-plaintiffs’ complaint was a statutory claim under the Securities Act and that it should be treated as such for all purposes under the litigation?

3. Did the trial court err when it dismissed relator’s punitive damages claim for Count 3?

Relators filed their original complaint in February, 1982, and amended it in March, 1982 and December, 1983. The complaint is related to a 1976 purchase of limited partnership interests in a tax shelter known as Energy and Utility Coal Investments, Inc.

To avoid lengthy and potentially unnecessary discovery, both parties agreed that the statute of limitations issue should be settled prior to commencing discovery. On May 23,1986, relators moved the trial court for a ruling that an eight-year statute of limitations applied to Count 1 of their second amended complaint because it was part of a statutory claim under the Securities Act of Montana, Section 30-10-307, MCA. The trial court found that Count 1 of the amended complaint is a claim brought under the Securities Act and ordered that the eight-year statute of limitations in Section 27-2-202(1), MCA, is applicable to all three counts.

Respondent D. A. Davidson filed two subsequent motions which were orally argued. The first motion sought clarification of the statute of limitations applicable to Count 1 and requested the Court to treat Count 1 consistently for all purposes in the litigation.

The second motion requested the dismissal of plaintiff’s punitive damages claim since D. A. Davidson alleges the order found Counts 1 and 2 to be Security Act claims and Count 3 to be a breach of contract claim also under the Securities Act with the result that no punitive damages were recoverable.

On September 30, 1986, the District Court granted both of respondents’ motions and relators appeal the second motion denying the punitive damages claims as to Counts 1 and 3 but not as to the second count.

Relators bring this original proceeding for a writ of supervisory control on the dismissal of their punitive damages claim. The case is properly before this Court as this appears to be the only adequate remedy available to relators because the question of damages would necessitate a complete retrial of the matter.

Relators argue that their complaint is a civil securities action alleging common law fraud and mistake and a violation of Section 30-10-307, MCA, in connection with respondent’s sale to relators of limited partnership interests in a coal tax shelter. In their application, they claim Count 1 of the amended complaint charges common law fraud on the part of the defendant; Count 2 charges securities law violations; and Count 3 charges breach of contract with the later two counts incorporating by inference the allegations of the preceding counts. They argue it was error to dismiss their punitive damages claim with respect to the common law fraud alleged in Count 1 and with respect to their breach of contract allegation in Count 3.

Relators contend the trial court erred in concluding that since the action included the statutory claim, all counts were limited in recovery to the remedy provided by the Civil Securities Act under Section 30-10-307, MCA, which does not provide for punitive damages. They argue here that Thiel v. Taurus Drilling Ltd. 1980-11 (Mont. 1985), [218 Mont. 201,] 710 P.2d 33, 41 St.Rep. 152, did not limit the eight-year statute of limitations period to just statutory claims. Instead they argue Thiel holds that the eight-year statute of limitations covers “civil actions” brought pursuant to Section 30-10-307, MCA, and that Count 1 of this action is part of just such a “civil action” brought pursuant to this statute.

The Thiel case dealt primarily with the question of which statute of limitations should apply to an action in a securities case. In that case this Court stated:

“It is, of course, possible to allege several individual causes of action based upon the same injury. A court may be obligated to segregate plaintiffs various claims and apply separate statutes of limitations to each. Multiple periods of limitation could apply to the same case. Construing this theory of election of remedies with reference to statute of limitations, the United States Supreme Court has stated:
“ ‘. . . If the choice of statute of limitations were dependent upon the particular facts or the precise legal theory of each claim, counsel could almost always argue, with considerable force, that two or more periods of limitations should apply to each Section 1983 claim. Moreover, under such an approach, different statutes of limitations would be applied to the various Section 1983 claims arising in the same State, and multiple periods of limitations would often apply to the same case. There is no reason to believe that Congress would have sanctioned this interpretation of its statute. Wilson v. Garcia (1985), 471 U.S. 261, 105 S.Ct. 1938, 1946, 85 L.Ed.2d 254.’
“We appreciate the logic of this analysis and see no reason why it should not be followed in securities cases, where claims of fraud, statutory violation, breach of fiduciary duty, and breach of contract may all spring from the same injury.”

Thiel at 38.

Relators contend the Thiel court in essence sanctioned statutorily provided punitive damages from Section 27-1-221, MCA, for a fraud count, such as their Count 1, when it specifically recognized that different periods of limitation should not be applied to different counts. Under this analysis they contend: (1) there may be different counts in a civil securities action; (2) each count carries an eight-year statute of limitations; and, (3) plaintiffs, in such actions, are entitled to the damages each count provides if they met the requisite burden of proof.

While we believe these final three contentions do have merit, we note respondent’s contentions paint a different picture of the controversy. Respondent argues the relators should be estopped from now claiming Count 1 is a separate and distinct common law fraud claim after having successfully argued below that Count 1 is not such a claim but is part of a statutory claim brought pursuant to the Securities Act.

To address this issue we must consider both the August 18, 1986 Order which allowed relators to utilize an eight year statute of limitation and which found that Count 1 was brought under the Securities Act and the September 30, 1986 Order which dismissed relators punitive damages claim under Count 1.

Relators’ memorandum supporting its motion for an eight-year statute of limitations read as follows:

“Count One of Plaintiffs Second Amended Complaint in this action is part of a civil action brought pursuant to Section 30-10-307 M.C.A. and is thus covered by the eight-year limitation period. (Emphasis in original.)”

The District Court found:

“Count One is a claim brought under the Securities Act. Therefore, in accordance with Thiel the eight-year limitations period of Section 27-2-202(1), MCA, is applicable to Count One of plaintiffs’ Second Amended Complaint.”

Relators now say:

“Count One of the Second Amended Complaint charges common law fraud on the part of the defendant.”

Relators represented to the trial court that Count 1 was a statutory claim and the court found it to be characterized as such. A court will consider those issues placed before it by the parties. Relators are estopped from now arguing Count 1 is not a statutory claim but a common law fraud claim.

Further, we find no error by the trial court in the characterization of Count 1 as a statutory claim. The trial court recognized that each count could be interpreted as sounding in contract, tort or statutory violation but found the essence of Count 1 was the alleged violation of the Montana Securities Act. It correctly concluded Count 1 could not be characterized as one claim for statute of limitations purposes but characterized as another type of claim for damages purposes. This Court has previously found it is imperative to characterize and treat each claim consistently for all purposes in the litigation. Israelson v. Mountain Tractor Co. (1970), 155 Mont. 69, 467 P.2d 149.

So long as this rule is applied consistently for all relevant purposes, the benefits and burdens of pursuing or defending a certain theory are fairly distributed in accordance with the law. We find no error on this issue.

Since we have found no error in the characterization of relator’s Count 1 as a statutory claim we further conclude that the eight-year statute of limitations applies to this case and relators are not entitled to seek punitive damages under their Securities Act claims.

Relators third argument is that the trial court erred in dismissing their claim for punitive damages under Count 3 of their second amended complaint. In that count, relators assert a breach of contract and argue that the defendant violated an implied covenant of good faith and fair dealing in connection with that breach. They contend the trial court erroneously and prematurely ruled on the punitive damages claim with respect to Count 3. They further contend that discovery was not complete and facts were not yet developed on this count so the decision which held punitive damages were not available in this action effectively dismissed Count 3 as well as Count 1 discussed above.

D.A. Davidson, in contrast, argues that the trial court did not err when it held that Count 3 was also a claim brought pursuant to the Montana Securities Act. They claim that while either characterization of Count 3 as a breach of contract case or as a statutory violation is plausible, the outcome would be the same under both characterizations because relators would be entitled to an eight-year statute of limitations but could not seek punitive damages.

They contend Count 3 has never been a claim for breach of the implied covenant of good faith and fair dealing but is solely a breach of contract claim, the two being entirely different claims.

In its analysis of Count 3, the District Court concluded that the Count was brought under the Securities Act of Montana, as well as pursuant to principles of common law fraud and for damages for breach of a contractual obligation. The District Court further pointed out that in Count 3, the plaintiffs incorporated both Counts 1 and 2, which both constitute Securities Act claims. For these reasons, the District Court concluded that Count 3 was a claim brought pursuant to the Securities Act in the same manner as was true with Counts 1 and 2. We approve that analysis by the District Court. We also point out that to the extent that Count 3 is classed as a breach of contract claim, punitive damages are not recoverable under Lemley v. Allen (1983), 203 Mont. 37, 659 P.2d 262.

Section 30-10-307, MCA, which is a part of the Securities Act, provides that any person who offers or sells a security in violation of specified sections or offers or sells a security by means of fraud or misrepresentation is liable for the consideration paid for the security, together with interest at 10 percent, costs and reasonable attorney fees, less the amount of any income received on the security. If there is a sale of a security by means of fraud, as alleged in the pleadings, it specifically comes under the provisions of Section 30-10-307, MCA, which allows recovery only of the consideration paid for the security plus interest, costs and attorney fees. This is a specific legislative limitation on the right of recovery of damages in such a transaction. We have concluded that the complaint essentially sets forth claims under the Securities Act. That was the basis for application of the eight-year statute of limitations. We conclude that it would be inconsistent to allow the plaintiff to remain in court under the eight-year statute of limitations because the claims are under the Securities Act and yet disregard the limitation upon damages set forth in the same Securities Act.

We affirm the holding of the District Court in its dismissal of the punitive damages claim as to Count 3.

Relator’s writ of supervisory control is denied.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, WEBER and SHEEHY concur.

MR. JUSTICE GULBRANDSON,

concurring:

I concur with the result, but not with all that is said in the foregoing decision.


author: MR. JUSTICE HUNT MR. JUSTICE SHEEHY,

text:
    ROBERT LEIKAM, Claimant and Appellant, v. EDSON EXPRESS, Employer, and Home Insurance Company, Defendant and Respondent.
    No. 87-15.
    Submitted on Briefs April 16, 1987.
    Decided Aug. 12, 1987.
    740 P.2d 1130.
    Vernon E. Woodward, Billings, for claimant and appellant.
    James, Gray & McCafferty, Randall H. Gray, Great Falls, for defendant and respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

Claimant, Robert W. Leikam, appeals from an order of the Workers’ Compensation Court denying his motion to enter judgment in his favor after the parties stipulated to defendant’s liability and to vacate trial.

We affirm the order of the Workers’ Compensation Court.

The issues presented for review by claimant in this case are:

1. Whether the Workers’ Compensation Court erred in denying claimant’s motion for entry of judgment.

2. Whether claimant is entitled to an award of attorney fees pursuant to Section 39-71-611, MCA.

The facts in this case are undisputed.

Appellant, Robert Leikam, was a long distance truck driver for Ed-son Express from 1981 through early 1986. On September 20, 1984, Leikam suffered a low back injury while unloading washing machines.

Leikam timely reported his injury to his employer and filed a claim for compensation. The insurance carrier, Home Insurance Company (hereinafter Home), accepted liability for the injury. Leikam continued working after the accident until he lost his job on January 16, 1986 for reasons not related to his Workers’ Compensation claim.

Between the date of the injury and February of 1986, Leikam visited a chiropractor many times for treatment. Home compensated Leikam for these treatments.

In March, 1986, claimant saw Dr. James T. Lovitt, a Billings Montana orthopedic surgeon who advised him that he could no longer work as a result of his industrial accident. He informed Home of this new development and requested that Home begin paying temporary total disability benefits to him.

Home denied the claim, requesting additional medical examinations before complete medical benefits and temporary total disability benefits would be paid. Claimant filed a petition with the Workers’ Compensation Court. As discovery developed, Home agreed to place Leikam on temporary total disability benefits, on a non-acceptance basis, pending further investigation.

On July 14, 1986, the parties filed a final pre-trial order which listed the following issues to be resolved by the Workers’ Compensation Court.

1. Is the Claimant currently temporarily totally disabled as a result of the September 22, 1984, industrial injury?

2. If so, what, if any, temporary total disability benefits is the Claimant entitled to?

3. Is the Claimant entitled to any penalty pursuant to Section 39-71-2907, MCA?

4. Is the claimant entitled to reasonable attorney’s fees and costs?

5. Is the Defendant estopped from denying acceptance of this claim?

The case was initially scheduled for trial on July 22, 1986, but was continued until November. On July 29, counsel for both parties had a lengthy telephone conversation with a neurologist from Billings who had treated Leikam upon referral by his primary treating physician. As a result of this phone conversation, Home stipulated to liability for the September 22, 1984 injury and agreed to retroactively pay all temporary total disability benefits arising therefrom. The November trial date was vacated. Subsequent to the parties’ stipulation, Leikam moved the Workers’ Compensation Court for entry of judgment pursuant to the stipulated agreement.

On December 26, 1986, the Workers’ Compensation Court entered its order denying Leikam’s motion for entry of judgment and dismissing the petition sua sponte. The order was based on a lack of jurisdiction to enter judgment when there was no longer any dispute.

Claimant appeals from this order alleging: 1) that the Workers’ Compensation Court does have jurisdiction to enter judgment and 2) should award claimant attorney fees, costs and a 20% penalty provided for by Section 39-71-2907, MCA.

The second issue of whether claimant is entitled to an award of attorney fees and/or a penalty is dispositive in this case.

Regardless of whether or not we hold that the Workers’ Compensation Court did have jurisdiction to enter judgment pursuant to the parties’ stipulation, the outcome would be the same as to attorney fees. Entering judgment pursuant to a stipulation does not amount to a judgment of compensability as required by Section 39-71-611, MCA:

“In the event an insurer denies liability for a claim for compensation or terminates compensation benefits and the claim is later adjudged compensable by the workers’ compensation judge or on appeal, the insurer shall pay reasonable costs and attorneys’ fees as established by the workers’ compensation judge.”

In Lasar v. Oftedal & Sons (Mont. 1986), [222 Mont. 251,] 721 P.2d 352, 353, 43 St.Rep. 1239, 1240, this Court held that where there is a situation in which the insurer does not deny liability for a claim or terminate benefits the claimant is not entitled to attorneys fees and costs under Section 39-71-611, MCA. Home accepted liability for Leikam’s claim and did not terminate his benefits.

Adjudication of a Workers’ Compensation claim as compensable is a prerequisite to allowance of attorney fees pursuant to this statute. Cosgrove v. Industrial Indemnity Co. (1976), 170 Mont. 249, 254, 552 P.2d 622, 624.

“If an insurer denies liability for a claim for compensation, the insurer is liable for attorney’s fees if the claim is later adjudged compensable by the Workers’ Compensation judge. It is clear from the language of the statute that there must be an adjudication of compensability before an award of attorney’s fees is authorized.”

Yearout v. State Compensation Insurance Fund (Mont. 1986), [222 Mont. 65,] 719 P.2d 1258, 1259, 43 St.Rep. 1063, 1065.

In this case, there was no adjudication of compensability. The parties settled their compensation dispute before the trial date, vacating the trial. As we stated in Yearout, 719 P.2d at 1260, the proper forum for redress of this sometimes harsh result is the Legislature. Other alternative remedies may be available to claimant.

The decision of the Workers’ Compensation Court is affirmed.

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

MR. JUSTICE SHEEHY,

dissenting:

I dissented in Yearout, 719 P.2d at 1260-1261, and I dissent here for the same reasons.

The practice of insurers in the state (and it is a practice) to force employees to obtain attorneys in order to get their rightful benefits, and then to confess liability at or near the time of trial ought to be condemned by us and prohibited by the assessment of penalties and attorney fees. This Court reads Section 39-71-611, MCA too narrowly when it requires an actual adjudication before it will assess the penalties.

The intent and purpose of the Workers’ Compensation Act is to make some provision to the worker for his economic loss brought about by his injuries. Rarely does he recover the whole amount of his loss. When a recalcitrant insurer delays and denies his benefits, and forces him to the Workers’ Compensation Court to obtain his rights, at that point he should be entitled to the penalties if his cause is just. Our refusal of those penalties is another economic loss to the worker because he must then bear the expense of his litigation. I cannot believe that result is what the legislature intended.


author: MR. JUSTICE WEBER MR. JUSTICE GULBRANDSON,

text:
    SHARON HULETT, Plaintiff and Respondent, and Montana Human Rights Commission, Intervenor and Respondent. v. BOZEMAN SCHOOL DISTRICT NO. 7, Defendant/Petitioner and Appellant.
    No. 86-576.
    Submitted on Briefs April 16, 1987.
    Decided Aug. 13, 1987.
    740 P.2d 1132.

      Donald E. White, Bozeman, for defendant/petitioner and appellant.
    Hilley & Loring, Emilie Loring, Great Falls, Janice Frankino Doggett, Human Rights Com’n, Helena, for plaintiff and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

Bozeman School District No. 7 appeals a Gallatin County District Court award granting Sharon Hulett damages for discriminatory hiring practices under an anti-nepotism policy. We affirm.

The issues are:

1. Did the lower court correctly affirm the Human Rights Commission’s ruling thab.Sharon Hulett had taken reasonable steps to mitigate her damaged from 1978 to 1980 and during the 1984-85 school year?

2. Is Sharon Hulett’s claim barred by laches?

In January.'1978 Sharon Hulett applied for an elementary teaching position with Bozeman School District No. 7 (School District). She was not hired. In April of that year, she filed a complaint with the Montana Human Rights Commission (Commission), charging that the School District refused to hire her for a teaching position because of her marital status. Her husband was the principal of an elementary school in the district. The School District had an anti-nepotism policy which prohibited the hiring of spouses of administrators.

A hearings examiner heard the complaint in September 1981. The examiner found against the School District, since marital status is recognized as a protected class in Montana. He ordered that Sharon Hulett be hired, and awarded her back wages. The full Commission held a hearing in May 1982 and upheld the examiner’s findings.

The School District petitioned for judicial review of the Commission’s order. The District Court upheld the finding on liability and reversed on the question of damages. It remanded the case to the Commission for further consideration of Sharon Hulett’s obligation to mitigate damages.

The Commission reheard the case in November 1984. It concluded that Sharon Hulett had taken reasonable actions to mitigate her damages, and ordered that she be hired for the next available teaching opening and that she be awarded back pay. The School District again appealed. The District Court, after oral argument, generally affirmed the Commission’s order except for modifying the damage award by subtracting damages for a period of time between 1980 and 1984 during which Sharon Hulett was a graduate student at Montana State University. The court determined that Sharon Hulett was not available for employment during that time. It also found that the School District failed to mitigate its damages by refusing to hire her until September 1985. The District Court awarded Sharon Hulett total damages of $71,247.

I

Did the lower court correctly affirm the Commission’s ruling that Sharon Hulett had taken reasonable steps to mitigate her damages from 1978 to 1980 and during the 1984-85 school year?

The School District argues that Sharon Hulett failed to take reasonable steps to mitigate her damages because she did not apply for teaching positions in schools in communities surrounding Bozeman. It says the Commission’s conclusion that she met her duty to mitigate her damages is clearly erroneous under the standard established for the duty to mitigate damages. That standard has been defined as the duty to do what an ordinarily prudent person would do under the circumstances. Harrington v. Holiday Rambler Corp. (1978), 176 Mont. 37, 42, 575 P.2d 578, 581.

The Commission made extensive findings of fact with regard to Sharon Hulett’s attempts to secure employment in schools and in other positions. Commission’s Findings of Fact No. 3 and No. 7 are illustrative:

“3. During the Fall of 1979, Charging Party [Hulett] applied for employment at clothing stores, jewelry stores, flower shops, doctor’s offices, dentist’s offices, the Gallatin County Superintendent of Schools, at Montana State University and again with Respondent. In each event, she was unable to find employment. Charging Party renewed her application with the Respondent each year.
“7. Charging Party was reluctant to apply to rural schools for teaching because they paid much less than the Respondent and would involve lengthy commuting to work. The rural positions would have required expenditures for an all weather vehicle, and additional child care arrangements and expenses beyond what would have been required had she been able to teach in Bozeman.”

Sharon Hulett testified that she worked off-and-on in various teaching-related capacities during the periods in question, and her wages from that employment have properly been deducted from the damages awarded to her. She testified that in the last period of time with which we aré concerned, 1984-85, because her children were older and she had moved from Bridger Canyon to the City of Bozeman, she had submitted written job applications to several of the school districts in the area surrounding Bozeman. At that time, both Sharon Hulett and the School District were aware that the District Court had affirmed the Commission and ordered the School District to offer Sharon Hulett the first available teaching job.

We have reviewed the testimony of Sharon Hulett and the other evidence, and conclude that there is substantial credible evidence to support the findings of the Commission. We affirm the holding of the District Court that the conclusion on the part of the Commission that Sharon Hulett had met her burden on mitigation of damages for 1978 to 1980 and 1984-85 was not arbitrary or capricious.

The School District further contends that the damages awarded for the 1984-85 school year have been miscalculated by a failure to deduct Sharon Hulett’s actual wages earned in 1984 and by the use of the M.A. pay scale rather than the B.A. pay scale for the same year. The findings of fact show that Sharon Hulett’s income in 1984 was earned from January through July of that year. Since that income was earned prior to the 1984-85 school year, those sums are not properly deductible from what she would have earned during the school year. Further, we do not accept the School Board’s argument that if Sharon Hulett had been employed by them she would not have earned her M.A. degree. Full time employment would not have prohibited Sharon Hulett from earning her M.A. in evening classes or summer school. Therefore, it is not error to use the M.A. pay scale. We hold that damages have been correctly calculated.

II

Is Sharon Hulett’s claim barred by laches?

The School District argues that Sharon Hulett is guilty of laches and has failed to prosecute her claim in a timely fashion. Specifically, it points to the delay between the filing of the claim with the Commission in April 1978 and the decision of the Commission in January of 1982.

“The doctrine of laches applies when a party has been negligent in asserting a right, and where there has been an unexplained delay of such duration as to render enforcement of the asserted right inequitable.” Peterson v. Hopkins (Mont. 1984), [210 Mont. 429,] 684 P.2d 1061, 1066, 41 St.Rep. 1140, 1146. The record shows that Sharon Hulett was denied a position with the School District in January of 1978. She filed her complaint with the Commission in April 1978. The matter was delayed until fall of 1979, pending a decision on the School District’s separate but controlling petition for a writ of prohibition preventing the Commission from investigating any cases involving the District. Shortly after that petition by the School District was denied, Sharon Hulett filed an amended complaint. In 1980, the matter was investigated, certified for hearing, argued for summary judgment, and set for hearing. The hearing set for March 1981 was canceled because the Commission was without funds due to legislative action. The hearing date was reset, hearing was held in August 1981, and decision rendered in January 1982.

While the delays in this action have been extensive, especially when compounded with the additional delays suffered since the January 1982 decision, it does not appear that any negligence on the part of Sharon Hulett has caused the delays. They rather arose as the result of one bureaucratic or legal snafu after another. There are no unexplained delays. We hold that the doctrine of laches does not apply.

We do wish to express to the parties, to the District Court, and to the Commission our genuine concern about the extreme length of time it has taken to dispose of the issues presented here. A total of nine years has elapsed since Sharon Hulett’s claim arose. The delays found here, while not the fault of any one body, cumulatively result in a potential injustice to all parties. ,

Affirmed.

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

MR. JUSTICE GULBRANDSON,

dissenting:

I respectfully dissent to that portion of the majority opinion affirming the monetary award of $71,247.00, plus entitlements in the form of fringe benefits.

In my view, the testimony of the plaintiff herself demonstrates that the finding of the Commission that plaintiff had met her burden on mitigation of damages should not be affirmed. The plaintiff testified that, in effect, she applied to no school district outside of Bozeman, even though one of the principals had approached plaintiff about an application, and unrefuted evidence showed there were many teaching vacancies within ten miles of Bozeman during the period in question, and that a high percentage of teachers in those schools lived in Bozeman.

To the plaintiff’s credit, she gave candid reasons for her failure to apply for a teaching position, including the reason that the rural schools paid about $2,000 to $4,000 less than the defendant school district. A most revealing reason given by the plaintiff for her failure to apply was the following:

“The other thing, too, is that definitely through all this, I was probably naive enough to think that all this was going to be resolved fairly quickly, and that within a year or so, [it] would be taken care of and I would be teaching in Bozeman, and, you know everything would be just fine.”

It is my opinion, based on the entire record, that the evidence shows that the plaintiff failed to exercise reasonable diligence in mitigating her damages and therefore the monetary award should be reduced by the amount she could have earned had she exercised reasonable diligence in applying for a teaching position.


author: MR. JUSTICE GULBRANDSON MR. JUSTICE SHEEHY,

text:
    BUTTE-SILVER BOW LOCAL GOVERNMENT, and the Chief Executive Officer and the Council of Commissioners of Butte-Silver Bow Local Government, a political subdivision of the State of Montana, Appellants, v. ARNOLD OLSEN, District Judge of the District Court of the Second Judicial District of the State of Montana, In and For the County of Silver Bow, Respondents.
    No. 86-559.
    Submitted June 17, 1987.
    Decided Aug. 14, 1987.
    Rehearing Denied Oct. 22, 1987.
    743 P.2d 564.

      Goetz, Madden & Dunn, James H. Goetz argued, Bozeman, for appellants.
    R. Lewis Brown argued, Butte, for respondents.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Butte-Silver Bow appeals the denial of its motion for reconsideration of an order setting the salaries of court personnel in Silver Bow County District Court. The issues on appeal are:

(1) whether the District Court had inherent powers to set the salaries of. certain court staff by a sua sponte and ex parte judicial order;

(2) whether the issue on appeal is moot.

We reverse.

In 1983, the employees of Butte-Silver Bow organized a union to represent their interests in collective bargaining negotiations. The agreement to organize incorporated a job classification system but also provided for review of the system by a union-management committee. The purpose of the review process was to lay the groundwork for a revised job classification system that would more accurately reflect the requirements of each position. Salaries would then be adjusted accordingly. A point system was used to rate each employee, and interviews and surveys were conducted. The committee then met to classify each employee under the revised system with the understanding that dissatisfied employees could appeal their new classifications.

Between 1984 and 1986, the committee reached agreement on reclassification with many employees, but an impasse remained with eight district court employees. An independent professional consultant hired to resolve the dispute favored reclassifying certain court personnel at a grade higher than that proposed and endorsed an appeals process for those dissatisfied with their reclassifications. The entire reclassification process was part of the negotiations for a two year collective bargaining agreement. A May 1986 union vote favored the reclassification of court deputies at the proposed lower grade. In at least two other union meetings, members were told of the appeal process in regard to reclassification. Negotiations continued to the point where the government offered a 10.4% salary raise over two years: 4.8% for 1986-87, 5.6% for 1987-88. No salaries were to be reduced. While negotiations continued, Judge Olsen entered an ex parte order on August 8, 1986, granting a 10.2% salary increase for 1986-87 to the eight members of the court staff.

The court gave two reasons for its action. First, that the government failed to submit the budget to the District Court as required by local ordinance and Montana law, and second, that the budget preparation worksheet was inadequate because it was not line itemized as to salary figures and recipients. To avoid a contempt citation, Butte-Silver Bow included the eight salary increases in its 1986-87 budget but noted that the increases were subject to final disposition of the order. A motion for reconsideration was filed on August 11, 1986. On September 22, 1986, Judge Olsen set the hearing on the motion for reconsideration for September 23, 1986. That same day the union voted 23-7 to accept the government’s contract which included the revised classification scheme. Minutes of the meeting indicate that the court deputies protested the union’s acceptance of the classification system. After the September 23 hearing, the judge denied the motion for reconsideration, concluding:

“[a]s a matter of fact, that by some plan, conspiracy, or mistake, the union and management leadership determined to demote and denigrate the employees of the Judges and the Clerk of Court, and by that action demoralized these personnel of the Court system.”

Another union vote was taken in October 1986 due to some confusion about the September 1986 contract ratification vote. At that meeting, the union, for a second time, voted to accept the revised classification system. Inadvertently, Butte-Silver Bow has been paying court staff salaries pursuant to the contract agreed to by itself and the union, not at court-ordered levels.

The first issue is whether the District Court had inherent powers to set the salaries of certain court staff by a sua sponte and ex parte judicial order. We begin by referring to our statement in Board of Com’rs. v. Eleventh Jud. Dist. Court (1979), 182 Mont. 463, 470-71, 597 P.2d 728, 732:

“We admonish the District Courts to use the statutorily implied funding power we recognize here-with judicious restraint. The constantly changing demands upon the judicial system must be worked out in a spirit of independent identity and balance among legislative, executive, and judicial branches of government by reasonable interaction tempered with respect for the limitations of their power.”

Inherent judicial power to compel funding in Montana should only be used when an emergency arises or when the established methods for providing funding have failed. State ex rel. Hillis v. Sullivan (1913), 48 Mont. 320, 137 P. 392. The Washington Supreme Court addressed this issue in Matter of Salary of Juvenile Director (1976), 87 Wash.2d 232, 552 P.2d 163, 173:

“If separation of powers has as a basic element the preservation of the rule of law, court decisions must not be biased in favor of court funding . . . These considerations, as well as recognition that inherent power derives from the need to protect the functioning of an independent branch, have led courts to set a high standard for the application of inherent power in funding matters. The burden is on the court to show that the funds sought to be compelled are reasonably necessary for the holding of court, the efficient administration of justice, or the fulfillment of its constitutional duties. (Citations omitted.) In addition, it is generally recognized, as stated in the oft-quoted case State ex rel. Hillis v. Sullivan, 48 Mont. 320, 329, 137 P. 392 (1913), that inherent power is to be exercised only when established methods fail or when an emergency arises.” (Citation omitted.) (Emphasis in original.)

After reviewing the record, the court concluded:

“In the present controversy, there is a fundamental failure of proof by respondent Superior Court. No evidence in the record supports by a preponderance of the evidence — let alone by a clear, cogent and convincing showing — respondent’s determination that the salary paid to the Director of Juvenile Services was so inadequate that the court [could] not fulfill its duties. Neither does the record show that an increase in salary was reasonably necessary for the efficient administration of justice. (Citation omitted.) Lacking such proof, there is no basis for the exercise of inherent power in the circumstances of this case, and respondent’s attempt to do so imposed an improper check on the function of the legislative branch of government.”

An unreasoned demand for budgetary consideration is a threat to the image of and public support for the courts. Webster Cty Bd. of Sup’rs. v. Flattery (Iowa 1978), 268 N.W.2d 869, 874. A true financial emergency exists when the local government refuses to pay legitimate court expenses and as a result, trials must be postponed, jurors and witnesses cannot be paid and salaries for judges and court personnel cannot be provided for; in other words, when the lack of funds stops or threatens to stop the efficient and orderly administration of justice and court business. See State ex rel. Dist. Ct., Etc. v. Whitaker (Mont. 1984), [210 Mont. 363,] 681 P.2d 1097, 41 St.Rep. 1104.

Analyzing this case under the two-part test of State ex rel. Hillis v. Sullivan, supra, we first must ask whether a true financial emergency existed to justify the imposition of the judge’s salary order. The only justification offered by the trial judge was that,

“[B]y some plan, conspiracy, or mistake, the union and management leadership determined to demote and denigrate the employees of the Judges and the Clerk of the Court, and by that action demoralized these personnel of the Court system.”

This statement is not factual evidence of a true financial emergency in Silver Bow County District Court, but merely a subjective reflection on the budgeting process. The local government was not refusing to pay court staff salaries, nor was it proposing to reduce any court employee’s salary. To the contrary, the government was proposing a 10.4% salary increase over two years for these employees, and there appeared to be no impairment of court operations.

The second part of the Sullivan test is whether the established methods for providing funding have failed. At the time the government entered its order, the government was following the required procedure for adopting an annual budget and submitting it to the union for ratification. The union voted 23-7 to ratify the contract. Under the contract, the employees had the right to appeal the reclassification, but the record fails to disclose that they exercised their right to appeal. We conclude that the established methods for funding the court positions had not failed, and therefore the District Judge had no inherent authority to enter an ex parte order establishing salaries for these positions. We refer to a particularly relevant concurrence in Webster Cty Bd..of Sup’rs. v. Flattery, supra, 268 N.W.2d at 879:

“If the courts can function but the dispute is over the extent of the salaries, . . . which are to be provided, I come down on the side of the appropriating authorities.” (Emphasis in original.)

The second issue is whether the issue on appeal is moot. The burden to establish that the issue raised in an appeal is moot is a heavy one. See Combined Communications Corp. v. Finesilver (10th Cir. 1982), 672 F.2d 818, 821. In addition there are exceptions to the mootness rule, as the Ninth Circuit has so held:

“[The mootness] exception is limited to cases where
“(1) [T]he challenged action [is] in its duration too short to be fully litigated prior to its cessation or expiration, and
“(2) there is a reasonable expectation that the same complaining party would be subjected to the same action again. (Citations omitted.) . . . The exception to mootness for those actions that are capable of repetition, yet evading review, usually is applied to situations involving governmental action where it is feared that the challenged action will be repeated. The defending party being constant, the emphasis is on continuity of identity of the complaining party.” (Emphasis in original.)

Lee v. Schmidt-Wenzel (9th Cir. 1985), 766 F.2d 1387, 1390.

The government argues that the mootness exception applies since the District Judge could again enter a budget order the following year (1987) prior to the time the government adopts a final budget. The District Judge argues that the issue on appeal is moot because the government adopted its budget and included the budget order therein, and that once the budget was adopted, it could not be changed. We reason that the “capable of repetition, yet evading review” exception to the mootness rule is more tenable since the court could in the absence of our decision, make a budget order for 1987 and the years beyond. We conclude that the issue on appeal is not moot.

We reverse and vacate the order of August 8, 1986, and the order of October 3, 1986, which denied the government’s motion for reconsideration.

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

MR. JUSTICE SHEEHY,

dissenting:

In a recent case Mead v. McKittrick (Mont. 1986), [223 Mont. 428,] [727 P.2d 517, 43 St.Rep. 1886, we upheld the right of a district judge to hire his own secretary, saying “if an employee’s duties are intimately related to the functioning of the judicial process, then personnel decisions regarding that employee are also part of the process” (citing Forrester v. White (7th Cir. 1986), 792 F.2d 647, 655).

The classification of court employees within a general matrix of county employees for pay purposes is a matter of direct concern to the court and the judicial process. Here the District Court found that the classification of its employees by the union and the city-county management served to “demote and denigrate” the court employees. The majority dismisses that finding as “subjective,” a new standard of appellate review. Yet it clearly is true that if court employees are demoted to a lesser pay grade than their duties and responsibilities require, they are denigrated. The judicial process is directly affected, because court employees would not be properly compensated when compared to city-county employees of similar rank in responsibility.

There is no “unreasoned demand” for budgetary consideration involved in this case, and the basis for Webster Cty. Bd. of Sup’rs. v. Flattery (Iowa 1979), 268 N.W.2d 869 therefore does not apply here. What jumps out of the record is that the independent professional consultant favored classifying court personnel at a higher grade. The union and management bargained that away without any consideration of the rights of the District Court to properly-compensated employees, or of the adverse effect on the judicial process. The District Court here had an inherent and a statutory right to act to protect the judicial process. Section 3-1-113, MCA. It does not have to wait until the emergency actually occurs. It has a right to forestall the emergency. Only a few years ago, when the county commissioners of Cascade County refused to provide proper funds for the operations of its District Court, this Court ordered the county commissioners to provide those funds for the very purpose of avoiding an impending emergency. We did not wait until the collapse occurred, although here the majority indicate an actual emergency is necessary for a court to act.

In like vein, there is no logic in the position that because Court employees are paid the same as last year, they are not adversely damaged by the matrix pay plan. Self-esteem may be more important to an employee than the pay involved.

Inadvertently or not, the city-county did not comply with the District Court orders either before or after it was brought to the attention of management. The orders of the District Court have not been and are not now being obeyed. The orders which are the subject of this appeal have had no more effect than scraps of paper. It may be fortunate that the majority are unwilling to test the efficacy of our orders in Butte.

I would not concede to the management of the city-county of Butte-Silver Bow, nor to its negotiating team, nor to the union negotiations the right to classify adversely court employees for purposes other than court business. Therefore, I would affirm the orders of the District Court.

MR. JUSTICE HUNT, concurs in the foregoing dissent.