author: KALITOWSKI, Judge.

text:
    Danil J. DRAKE, et al., Respondents, v. REILE’S TRANSFER & DELIVERY, INC., Defendant, and The Minnesota Workers’ Compensation Assigned Risk Plan, as administered by Wausau Insurance Company, intervenor, Appellant.
    No. C5-00-1.
    Court of Appeals of Minnesota.
    July 3, 2000.

      Steven J. Cahill, Cahill & Marquart, P.A., Moorhead, MN (for respondents).
    R.B. McLarnan, James E. Nicolai, McLarnan, Hannaher, Vaa & Skatvold, P.L.L.P., Moorhead, MN (for defendant).
    Dale J. Evensen, Michael D. Barrett, Cousineau, McGuire & Anderson, Chartered, Minneapolis, MN (for appellant).
    Considered and decided by KALITOWSKI, Judge, KLAPHAKE, Judge, and FOLEY, Judge.

       Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const, art. VI, § 10.

   OPINION

KALITOWSKI, Judge.

Appellant Wausau Insurance Company challenges the district court’s order granting respondents’ posttrial petition for an allocation of proceeds from the judgment in their third-party tort action pursuant to Henning v. Wineman, 306 N.W.2d 550 (Minn.1981), arguing that as a matter of law respondents were required to allocate the judgment under the statutory formula in Minn.Stat. § 176.061, subd. 6 (1998). In the alternative, Wausau argues that respondents were equitably estopped from electing a Henning allocation.

FACTS

In 1993, respondent Danil Drake suffered an on-the-job injury while unloading appliances from a truck owned by Reile’s Transfer and Delivery, Inc. (Reile). Drake and his wife brought a personal injury action against Reile in 1994. Appellant Wausau Insurance Company (Wau-sau), the workers’ compensation insurance carrier for Drake’s employer, D.L. TV & Appliance, intervened in the lawsuit to assert its subrogated interest for workers’ compensation benefits paid to Danil Drake.

A jury found that Danil Drake and Reile were each 50% at fault and that Danil and Deanna Drake had sustained $340,000 and $15,000 in damages, respectively. The jury completed a special verdict form that apportioned Danil Drake’s damages as follows:

Loss of past earnings $ 37,000
Past medical expenses $ 14,000
Loss of future earnings and earning capacity $158,000 Future medical expense $ 18,000
Past damages for pain, disability, disfigure- $ 13,000 ment, embarrassment and emotional distress
Future damages for pain, disability, disfigure- $100,000 ment, embarrassment and emotional distress

The district court entered findings of fact, conclusions -of law, and an order for judgment reducing respondents’ damages to reflect Danil Drake’s 50% contributory negligence. Respondents filed posttrial motions for new trial or for additur, which the district court denied and this court affirmed. Drake v. Reile’s Transfer & Delivery, Inc., No. C4-98-1039, 1999 WL 17682 (Minn.App. Jan.19, 1999), review denied (Minn. Mar. 30,1999).

While respondents’ posttrial motions were pending, Wausau and Danil Drake reached a settlement of his workers’ compensation claim. At the time of the settlement, Wausau had paid a total of $118,790.64 in workers’ compensation benefits. Wausau agreed to pay an additional $110,000 in exchange for Drake’s release of all future claims except for future medical expenses. Under the agreement, Wausau retained any subrogation rights it had "with respect to respondents’ third-party tort action against Reile. The agreement did not address the appropriate method of allocating the proceeds from the third-party tort action.

Following the supreme court’s denial of their petition for further review in the tort action, respondents petitioned the district court for allocation of the judgment between recoverable and nonrecoverable damages pursuant to Henning v. Wineman, 306 N.W.2d 550 (Minn.1981), rather than the statutory allocation formula under Minn.Stat. § 176.061, subd. 6 (1998). Wausau opposed the petition, arguing that respondents were estopped both equitably and as a matter of law from making a posttrial petition for a Henning allocation after the jury verdict was reduced to judgment and satisfied. The district court granted respondents’ petition and allocated the judgment consistent with the itemized damage award made by the jury in its special verdict.

ISSUES

1. May an employee who has received workers’ compensation benefits make a posttrial election to allocate the proceeds from a third-party tort action between recoverable and nonrecoverable damages?

2. Were respondents equitably es-topped from seeking a nonstatutory allocation of the proceeds of their third-party tort action?

ANALYSIS

I.

The district court concluded that respondents were entitled as a matter of law to elect a posttrial allocation of the judgment under either Henning v. Wineman, 306 N.W.2d 550 (Minn.1981), or the statutory formula. This court is not bound by and need not give deference to a district court’s decision on a purely legal issue. Fros-Benco Elec. Ass’n v. Minnesota Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn.1984).

Minnesota’s workers’ compensation statutes permit an injured employee to bring an action against a third-party tortfeasor for recovery of damages. Minn.Stat. § 176.061, subd. 1 (1998). An employer and/or its insurer are subrogated to the employee’s rights against the third-party tortfeasor if the employee also receives workers’ compensation benefits. Minn. Stat. § 176.061, subd. 5 (1998). When the employee obtains either a judgment or a settlement from the third-party tortfeasor, the employer or insurer may deduct its subrogated share from future workers’ compensation benefits in accordance with the statutory allocation formula in Minn. Stat. § 176.061, subd. 6 (1998). Id., subd. 5(a).

The statutory formula does not require that the district court allocate the tort proceeds between damages recoverable and nonrecoverable under workers’ compensation law. Locher v. Gareis, 411 N.W.2d 273, 275 (Minn.App.1987). Instead, the employee receives one-third of the amount remaining after costs are deducted. Kliniski v. Southdale Manor, Inc., 518 N.W.2d 7, 9 n. 2 (Minn.1994). The employer/insurer is then reimbursed for its subrogation claim less a proportionate share of attorney fees, and the remainder, if any, is paid to the employee subject to a credit to the employer/insurer for any future benefits payable. Id. The statute’s provision for an initial one-third payment to the employee recognizes that a tort recovery often includes damages that are nonrecoverable under workers’ compensation law; thus, the employee receives this portion of the proceeds free from any sub-rogation claim by the insurer. Henning, 306 N.W.2d at 552.

In Henning, the supreme court held that where the employee settles with the third-party tortfeasor and the settlement includes amounts both recoverable and nonreeoverable under the workers’ compensation statutes, the insurer’s subrogation recovery can be calculated in one of two ways, at the employee’s option. Id. The employee can elect to have the statutory allocation formula applied to the entire recovery in the manner described above. Alternatively, the employee can petition the district court to allocate the proceeds between recoverable and nonrecoverable damages, and then have the statutory formula applied only to that part of the settlement allocable to recoverable damages. Id. An employee who selects the latter option forfeits the statutory right to receive a one-third share of the settlement. Id. at 552-53.

Unlike the facts in Henning, respondents here petitioned for allocation of a judgment following a jury verdict rather than a pretrial settlement. Wausau contends that once a tort action results in a judgment, Henning is not applicable and allocation of the proceeds may only occur according to the statutory formula. We disagree.

In making its argument, Wausau relies heavily on Kempa v. E.W. Coons Co., a case in which the supreme court mandated the use of the statutory allocation formula on a judgment from a jury verdict. Kempa v. E.W. Coons Co., 370 N.W.2d 414, 418-19 (Minn.1985). But Kempa involved significantly different circumstances, in that the injured employee reached a posttrial Naig settlement with the third-party tortfeasor that specifically excluded the employer’s subrogated claim for workers’ compensation benefits. Id. at 416-17. The district court calculated the employer’s surviving subrogated claim against the tortfeasor by making a Hen-ning allocation of the jury verdict, and the supreme court reversed. Id. at 417. The court held that the statutory formula must be used because (1) the employer had participated actively in the trial but not the settlement; and (2) the settlement agreement specifically excluded any resolution of the employer’s subrogation rights. Id. at 419.

Thus, Kempa did not limit an employee’s right to choose between allocation methods. The issue simply never arose in the case because the employee was no longer part of the dispute, having entered a settlement with the tortfeasor that expressly excluded resolution of the insurer’s subro-gated interest. Likewise, the other cases cited by Wausau involving application of the statutory formula to a jury verdict do not address the issue presented here because none involve an employee’s attempt to elect a posttrial Henning allocation of a judgment.

Wausau notes that the cases cited by the district court in support of granting respondents’ petition for allocation all involve the application of a Henning allocation to a pretrial settlement. See, e.g., Henning, 306 N.W.2d at 550; Tyroll v. Private Label Chems., Inc., 505 N.W.2d 54, 56 (Minn.1993); Locher, 411 N.W.2d at 275. Although that observation is correct, nothing in these cases suggests that the availability of a Henning allocation is somehow tied to the timing of the resolution of an employee’s tort claim. The rationale for permitting a Henning allocation is that an employer/insurer should not be able to recover its subrogated interest out of proceeds that are intended to reimburse an employee for tort damages not otherwise compensable under workers’ compensation law. Tyroll, 505 N.W.2d at 59. That rationale applies equally whether the employee reaches a pretrial settlement or the jury returns a verdict; in either case, an insurer should not be able to recover its subrogated interest from that part of the award for damages that are nonrecoverable under workers’ compensation law.

In concluding that a posttrial Hen-ning allocation is permissible under the circumstances presented here, we note that the supreme court has previously suggested in dictum that a district court may grant a petition for a postverdict Henning allocation. In Sargent v. Johnson, 323 N.W.2d 767, 771 (Minn.1982), the court held that an employee could not elect a Henning allocation of his posttrial settlement with a third-party tortfeasor where the employer/insurer had been foreclosed from participating in the settlement negotiations. But in its discussion, the court noted that the jury verdict could have been properly allocated between recoverable and nonrecoverable damages, either by special interrogatories to the jury or by the trial court following entry of judgment:

There is also no question that the trial court, on entry of the judgment on the verdict, could have allocated, and properly, proceeds between compensable and non-compensable claims.

Id.

Wausau asserts that policy reasons militate against allowing a posttrial Hen-ning allocation. We do not find these arguments persuasive. Wausau speculates that the availability of a posttrial Henning allocation will give employees a disincentive to adequately prosecute a claim for “recoverable” damages during trial, thereby forcing insurers to participate actively in the trial in order to maximize the proof of recoverable damages. But the workers’ compensation statutes already provide a mechanism to protect insurers under such circumstances by permitting intervention when an employee fails to prosecute a claim diligently or when an insurer otherwise deems it advisable. Minn.Stat. § 176.061, subd. 5(a). An insurer is also able to enter an independent settlement of its subrogated claim for workers’ compensation benefits against the third-party tort-feasor. See, e.g., Folstad v. Eder, 467 N.W.2d 608, 611 (Minn.1991).

Wausau also contends that permitting respondents to elect a Henning allocation in this case runs contrary to the general policy of preventing employees from receiving double recovery for damages recoverable both in tort actions and under workers’ compensation law. See Wandersee v. Brellenthin Chevrolet Co., 258 Minn. 19, 23, 102 N.W.2d 514, 517 (1960). Even assuming Wausau’s characterization of the outcome here is accurate, we decline to establish a general rule of law that is otherwise contrary to the rationale of Hen-ning. Moreover, the alleged double recovery here is attributable to a settlement agreement that did not adequately protect the insurer’s subrogated rights in a known jury award for future wages, and not to the application of Henning.

We conclude that the district court did not err by permitting a posttrial Henning allocation of the jury verdict, especially where the jury had already allocated the award between recoverable and nonrecoverable damages in the special verdict form. The court properly applied the statutory formula to that portion of the judgment that involved damages recoverable under workers’ compensation, minus the award for Danil Drake’s future lost-wage claim, which he and Wausau had since settled.

II.

Wausau argues that even if respondents are entitled to elect a Henning allocation, under the facts here they are equitably estopped from doing so. The application of equitable estoppel ordinarily presents a question of fact unless only one inference can be drawn from the facts. In re Amended Admin. Penalty Order to Westling Mfg., Inc., 442 N.W.2d 328, 331 (Minn.App.1989), review denied (Minn. Aug. 25, 1989). Here, the district court concluded that estoppel could not apply because there was no evidence that respondents agreed to an allocation pursuant to the statutory formula. This aspect of the court’s determination constitutes a factual finding, which we will not set aside unless clearly erroneous. Minn. R. Civ. P. 52.01.

Equitable estoppel prevents the assertion of otherwise valid rights where one has acted in such a way as to induce another party to detrimentally rely on those actions. See Lucio v. School Bd. of Indep. Sch. Dist. No. 625, 574 N.W.2d 737, 740 (Minn.App.1998), review denied (Minn. Apr. 30, 1998). In order to invoke the doctrine of equitable estoppel, Wausau has the burden of proving (1) that respondents made promises or inducements; (2) that it reasonably relied upon the promises; and (3) that it will be harmed if estoppel is not applied. Hydra-Mac, Inc. v. Onan Corp., 450 N.W.2d 913, 919 (Minn.1990).

The district court found Wausau had presented insufficient evidence to support a conclusion that the parties had agreed to a statutory allocation. On appeal, Wausau has pointed to no additional evidence of any express inducements or promises by respondents concerning the allocation method, and our independent review of the record reveals none. The district court did not clearly err in finding that the parties did not agree to use the statutory formula. Because Wausau has not met its burden of proof with respect to the first element of equitable estoppel, its claim must fail.

Wausau also contends that respondents are equitably estopped from choosing a Henning allocation because they did not reveal during settlement negotiations that they planned to seek a Henning allocation. We disagree. A Henning allocation of settlement proceeds from a tort action is available unless an employee expressly agrees that the statutory method will apply. Locher, 411 N.W.2d at 275. In the absence of any express agreement to the contrary, respondents were free to elect a Henning allocation. Wausau’s argument that respondents are barred from seeking a Henning allocation because they failed to raise the issue in their earlier appeal but waited until the jury verdict was reduced to judgment and satisfied is similarly without merit. The district court was not in a position to allocate the judgment until a final determination of respondents’ posttrial motions for new trial or additur had been made.

DECISION

The district court did not err in granting respondents’ petition for a posttrial Hen-ning allocation of the proceeds from their third-party tort action.

      . At oral argument, Wausau challenged for the first time the district court's calculation of Wausau's recovery under Henning. Because this issue was not properly briefed we decline te address it. State, Dep’t of Labor & Indus. by the Special Compensation Fund v. Wintz Parcel Drivers, Inc., 558 N.W.2d 480, 480 (Minn.1997).

      . A Naig settlement is an agreement between the injured employee and the third-party tort-feasor that settles only those damages that are not recoverable under workers’ compensation law. Jackson v. Zurich Am. Ins. Co., 542 N.W.2d 621, 622 (Minn.1996) (citing Naig v. Bloomington Sanitation, 258 N.W.2d 891, 893 (Minn.1977)).

      . See, e.g., Albert v. Paper Calmenson & Co., 524 N.W.2d 460, 461 (Minn.1994) (holding that a negligent employer’s contribution to third-party tortfeasor is limited by the amount of workers’ compensation benefits paid); Wilken v. Int’l Harvester Co., 363 N.W.2d 763, 767 (Minn.1985) (holding negligent employer must contribute its share of employee’s tort recovery, up to amount of workers’ compensation benefits paid); Horton by Horton v. Orbeth, Inc., 342 N.W.2d 112, 116 (Minn.1984) (same); Kordosky v. Conway Fire & Safety, Inc., 304 N.W.2d 616, 621 (Minn.1981) (affirming reduction of employee’s reimbursement to employer for subrogation interest by amount of attorney fees under section 176.061); Johnson v. Raske Bldg. Sys., Inc., 276 N.W.2d 79, 81 (Minn.1979) (holding that a negligent employer is still entitled to reimbursement of paid workers’ compensation benefits under statute); Cronen v. Wegdahl Coop. Elevator Ass’n, 278 N.W.2d 102, 105 (Minn.1979) (affirming reduction of insurer’s subrogated interest for future benefits by proportionate amount of attorney fees).


source: Caselaw Access Project

author: NEUMANN, Justice.

license: Public Domain

text:
    2000 ND 135
    Brian TANGEN, Claimant, Appellee and Cross-Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Appellant and Cross-Appellee, and National Sun Industries, Inc., Respondent.
    No. 20000026.
    Supreme Court of North Dakota.
    June 29, 2000.

      Mark G. Schneider, Schneider, Schneider & Phillips, Fargo, ND, for claimant, appellee and cross-appellant.
    Sara Gulhckson McGrane, Felhaber Larson Fenlon Vogt, Minneapolis, MN, for appellant and cross-appellee.
   NEUMANN, Justice.

[¶ 1] The North Dakota Workers Compensation Bureau appeals from a judgment reversing the Bureau’s order denying further disability benefits to Brian Tangen. We reverse and remand for further proceedings.

I

[¶ 2] Tangen suffered a work-related injury to his right knee in August 1992 while employed at National Sun Industries in Enderlin, North Dakota. The Bureau accepted Tangen’s claim and paid benefits for the injury. In March 1994 Tangen moved to Thief River Falls, Minnesota, where he began working at Arcteo.

[¶ 3] In December 1994 Tangen underwent knee surgery necessitated by the pri- or work injury. In a February 27, 1995, letter addressed “To Whom It May Concern,” Dr. Mark Lundeen released Tangen to return to work:

Brian Tangen is a patient that I have recently had the opportunity to re-evaluate and I think at this point he is able to return to work. I would not want him doing any kneeling or squatting or twisting activities with heavy loads. I think as far as kneeling and squatting is concerned that should be avoided even without loads.
I’m also a little bit concerned about him lifting loads above shoulder level until this situation completely resolves.

[¶ 4] In a letter to the Bureau dated April 17, 1995, Dr. Lundeen stated he was not changing Tangen’s work restrictions, but suggested if a position such as forklift operator were open Tangen should be given special consideration. Tangen was subsequently transferred to a position as a forklift operator at Arctco. On May 19, 1995, the Bureau issued an order awarding Tangen partial disability benefits.

[¶ 5] On June 7, 1996, Tangen voluntarily quit his job at Arctco for reasons unrelated to his knee injury. He worked briefly at a couple of other jobs, and in January 1997 began working at Sheldon’s Auto Parts, where he dismantled cars. In June 1997 Tangen had some fluid on his knee, and Dr. Lundeen recommended medication and rest for one week. Tangen filed a reapplication for benefits, and received disability benefits for the short period he was off work. In August 1997, Tangen was reexamined by Dr. Lundeen. On August 12, 1997, Dr. Lundeen wrote to the Bureau explaining Tangen’s knee had worsened and taking Tangen off work at Sheldon’s:

Brian over time has developed increasing problems which I think are directly related to a breakdown in the cartilage surface between the kneecap and the groove in which it rides, and although we have tried to modify his lifestyle and activities at work, it simply is no longer appropriate for him to continue to do activities which require prolonged standing, prolonged sitting, kneeling squatting, climbing ladders or stairs. I also think that it is inappropriate for him to be carrying loads of any more than 40 to 50 pounds for very short periods of time. These limitations are particularly designed to preserve the function of his patellofemoral joint, but as I discussed this with Brian, I think the limitations I am imposing preclude his returning to work at Sheldon’s.

[¶ 6] Tangen reapplied for disability benefits on August 18, 1997. The Bureau accepted the reapplication and began paying benefits. On February 18, 1998, the Bureau issued a Notice of Intent to Discontinue Benefits. On February 27, 1998, the Bureau issued an order finding that benefits awarded on Tangen’s reapplications were paid in error and terminating any further disability benefits.

[¶ 7] Tangen requested a rehearing, and an evidentiary hearing was held on February 3, 1999. The administrative law judge (“ALJ”) issued recommended findings of fact, conclusions of law, and order on March 11, 1999. The ALJ found Tangen had failed to show a significant change in his compensable medical condition, had failed to show actual wage loss, and had voluntarily withdrawn from the job market. The Bureau adopted the ALJ’s recommendations in a March 22, 1999, order denying Tangen further benefits.

[¶ 8] Tangen appealed to district court. The district court reversed and remanded for an award of benefits. The Bureau has appealed to this Court.

II

[¶ 9] In an appeal from a judgment involving the decision of an administrative agency, we review the decision of the agency, not the decision of the district court, and our review is limited to the record before the agency. Stewart v. North Dakota Workers Comp. Bureau, 1999 ND 174, ¶ 7, 599 N.W.2d 280. Under N.D.C.C. §§ 28-32-19 and 28-32-21, we affirm the agency’s decision unless its findings of fact are not supported by a preponderance of the evidence, its conclusions of law are not supported by its findings of fact, its decision is not supported by its conclusions of law, its decision is not in accordance with the law or violates the claimant’s constitutional rights, or the agency’s rules or procedures deprived the claimant of a fair hearing. Stewart, at ¶ 7. The interpretation of a statute is a question of law, which is fully reviewable by this Court. Wanstrom v. North Dakota Workers Comp. Bureau, 2000 ND 17, ¶ 5, 604 N.W.2d 860.

Ill

[¶ 10] A claimant seeking additional disability benefits for aggravation of a prior work-related injury must follow the reap-phcation procedure outlined in N.D.C.C. § 65-05-08(1):

When disability benefits are discontinued, the bureau may not begin payment again unless the injured employee files a reapplication for disability benefits on a form supplied by the bureau. In case of reapplication, the award may commence no more than thirty days before the date of reapplication. Disability benefits must be reinstated upon proof by the injured employee that:
a. The employee has sustained a significant change in the compensable medical condition;
b. The employee has sustained an actual wage loss caused by the significant change in the compensable medical condition; and
c. The employee has not retired or voluntarily withdrawn from the job market as defined in section 65-05-09.3.

The Bureau asserts Tangen performed activities beyond his work restrictions while employed .at Sheldon’s, and is therefore barred from seeking further disability benefits by N.D.C.C. § 65-05-28(5):

If an employee undertakes activities, whether or not in the course of employment, which exceed the treatment recommendations of the employee’s doctor regarding the work injury, and the doctor determines that the employee’s injury or condition has been aggravated or has worsened as a result of the employee’s activities, the bureau may not pay benefits relative to the aggravation or worsening, unless the activities were undertaken at the demand of an employer.

A

[¶ 11] We initially consider whether N.D.C.C. § 65-05-28(5) applies to Tan-gen’s reapplication. The statute was enacted in 1995. See 1995 N.D. Sess. Laws ch. 625, § 1. Tangen argues the law in effect at the time of his original 1992 work injury governs his claim, and, because the law at that time did not preclude benefits if the claimant exceeded restrictions, he is entitled to aggravation benefits. The Bureau asserts the law in effect in 1997, when Tangen’s work injury was aggravated and he reapplied for benefits, governs the reapplication, and N.D.C.C. § 65-05-28(5) therefore precludes payment of additional disability benefits to Tangen.

[¶ 12] We have often stated the general rule that, unless otherwise provided, the statutes in effect on the date of injury govern a claimant’s right to collect workers compensation benefits. See, e.g., Wanstrom, 2000 ND 17, ¶ 7, 604 N.W.2d 860; Saari v. North Dakota Workers Comp. Bureau, 1999 ND 144, ¶ 10, 598 N.W.2d 174. The rule is an outgrowth of our statutory mandate that provisions of the Century Code are not retroactive unless “expressly declared to be so.” N.D.C.C. § 1-02-10; see Anderson v. North Dakota Workers Comp. Bureau, 553 N.W.2d 496, 498 (N.D.1996).

[¶ 13] We have not previously addressed application of this rule to an aggravation claim where the original work injury occurred before the statutory change, but the aggravation of the prior injury and reapplication for benefits occurred after the new statute took effect. However, we find the situation in Gregory v. North Dakota Workmen’s Comp. Bureau, 369 N.W.2d 119 (N.D.1985), to be closely analogous. In Gregory, the claimant was injured in 1958. He subsequently returned to work until 1981, when the cumulative effects of the 1958 injury forced him to quit. In 1983 he sought a permanent partial impairment award. The Bureau determined he had suffered a twenty percent whole body impairment, but awarded benefits at the rate in effect at the time of the original work injury in 1958, rather than the higher rate under the statutes in effect in 1983.

[¶ 14] On appeal, the Bureau argued the general rule that the statutes in effect on the date of injury controlled. We rejected the Bureau’s arguments, holding the 1983 statutory rate applied:

The Bureau argues strenuously that because § 65-05-12 does not specify a time for determining the permanent impairment benefit rate, calculating impairment awards by the rate in effect on the date of determination results in an impermissible retroactive application of the later statutory rate. This retroac-tivity argument is premised on the faulty assumption that the impairment always takes place on the date of injury despite the fact that it sometimes does not become a permanent impairment until a later date as in this case. Common sense, as well as the plain language of § 65-05-12, tells us that an impairment does not take place until it is manifest and determined to be permanent.

Gregory, 369 N.W.2d at 122; see also Saari, 1999 ND 144, ¶¶ 11-13, 598 N.W.2d 174.

[¶ 15] Similarly, we conclude common sense and a proper consideration of the statutory scheme mandate the conclusion the 1995 amendment applies to Tangen’s reapplication for aggravation benefits. An injured worker does not have a right to claim aggravation benefits at the time of the original injury. Rather, by definition, the right to aggravation disability benefits does not arise unless disability benefits are discontinued and the claimant suffers a subsequent aggravation of the compensable medical condition. See N.D.C.C. § 65-05-08(1). Accordingly, the right to collect aggravation disability benefits does not arise at the time of the original work injury, but the claimant is entitled to such benefits only if subsequent contingencies occur.

[¶ 16] Under these circumstances, we hold N.D.C.C. § 65-05-28(5) applies to Tangen’s reapplication for benefits.

B

[¶ 17] Having determined N.D.C.C. § 65-05-28(5) applies to Tangen’s reapplication, we must next consider the appropriate interpretation of the statute under the facts in this case.

[¶ 18] Initially we must determine who bears the burden of proof. A claimant ordinarily bears the burden of demonstrating he is entitled to benefits. See, e.g., Sprunk v. North Dakota Workers Comp. Bureau, 1998 ND 93, ¶ 5, 576 N.W.2d 861. The employer and Bureau may, however, bear the burden of proof on certain issues. See, e.g., Siewert v. North Dakota Workers Comp. Bureau, 554 N.W.2d 465, 467 (N.D.1996) (the Bureau has the burden of proving an employee is barred from receiving benefits because the employee intentionally injured himself).

[¶ 19] When an injured claimant files a reapplication for disability benefits due to aggravation of a prior work injury, the claimant must show his medical condition has significantly changed, he has suffered an actual wage loss, and he has not retired or voluntarily withdrawn from the job market. N.D.C.C. § 65-05-08(1). If the claimant meets that burden, the employer and Bureau may nevertheless seek to preclude benefits based upon the claimant’s violation of work restrictions under N.D.C.C. § 65-05-28(5). If the employer and Bureau invoke that statute, however, the legislative history demonstrates an intent to place the burden upon the employer and Bureau to show the employee performed activities beyond his restrictions. In committee testimony, the Bureau’s representative twice explained the employer, and not the employee, bears the burden of proof under the statute. See Hearing on S.B. 2501 Before the Senate Industry, Business and Labor Committee, 54th N.D. Legis. Sess. (Jan. 31, 1995) (testimony of Julie Leer, Workers Compensation Bureau attorney) [“Hearing on S.B. 2501”]. We conclude the Bureau has the burden of proving Tangen is precluded from receiving benefits under N.D.C.C. § 65-05-28(5).

C

[II20] The Bureau asserts Tangen is precluded from receiving benefits because he performed activities which were beyond his physical restrictions while working at Sheldon’s. The Bureau points to “restrictions” outlined by Dr. Lundeen in medical records and letters to the Bureau to support its assertion Tangen’s activities were beyond his restrictions. The Bureau argues this is sufficient to preclude benefits under N.D.C.C. § 65-05-28(5).

[¶ 21] By its terms, N.D.C.C. § 65-05-28(5) precludes payment of benefits if the employee aggravates his injury by undertaking activities “which exceed the treatment recommendations of the employee’s doctor regarding the work injury.” The phrase “treatment recommendations” clearly suggests it encompasses only those restrictions which are communicated to the employee. In order for the statute to make sense, there must be a showing the employee knew of the “treatment recommendations” and intentionally engaged in activities which exceeded those recommendations.

[¶ 22] This interpretation is supported by the legislative history of N.D.C.C. § 65-05-28(5). In written testimony in support of the 1995 enactment, the Bureau’s attorney explained the primary intent of the bill was to encourage the employee and employer to follow the medical advice of the treating physician:

This bill precludes the bureau from paying benefits in relation to an aggravation or worsening of a work injury if the aggravation or worsening is determined to be the result of an injured worker’s failure to follow medical advice and refrain from activities determined by the doctor to be inappropriate for the worker. ...
This bill will assist in effectively directing the medical treatment and rehabilitation of an injured worker by requiring an injured worker and any employer of the worker to heed the medical advice of the doctor treating the worker. The injured worker should be held accountable for undertaking activities which lie beyond the physical restrictions outlined by the worker’s doctor. Physical restrictions are imposed on a person after an injury to facilitate healing of the injury. Recovery after the injury will not be complete if medical advice is not followed.

Hearing on S.B. 2501, supra, (written testimony of Julie Leer, Workers Compensation Bureau attorney). This history clearly articulates the injured worker is to “follow” and “heed” the advice and restrictions “outlined” by the doctor. An injured worker can only be expected to “follow” and “heed” medical recommendations which are actually communicated to him, and should only be penalized for intentional disregard of those recommendations.

[¶ 23] Any other interpretation of N.D.C.C. § 65-05-28(5) would violate the no-fault nature of the Workers Compensation Act, and seriously erode the “sure and certain relief’ which lies at the heart of the workers compensation system. See N.D.C.C. § 65-01-01 (“sure and certain relief is hereby provided regardless of questions of fault”); Basin Electric Power Cooperative v. North Dakota Workers Comp. Bureau, 541 N.W.2d 685, 689 (N.D.1996). One of the express goals of the workers compensation system is to return disabled employees to substantial gainful employment as soon as possible after an injury. See N.D.C.C. § 65-05.1-01(3); Hoffman v. North Dakota Workers Comp. Bureau, 1999 ND 66, ¶ 8, 592 N.W.2d 533. Injured employees may well be leery of returning to work if ongoing disability benefits may be terminated if the worker unintentionally exceeds restrictions. Holding an injured worker could be denied benefits for inadvertently exceeding work restrictions or for exceeding work restrictions of which he is unaware would move the workers compensation system toward the harsh, outmoded contributory negligence era of days gone by. We decline to do so. We hold that, in order to deny benefits under N.D.C.C. § 65-05-28(5), the Bureau must prove the claimant had knowledge of specific physical restrictions, and intentionally undertook- activities which exceeded those restrictions.

[¶ 24] In this case, neither the ALJ nor the Bureau made a finding that Tangen intentionally exceeded known restrictions. The only relevant finding stated:

In January 1997, Tangen started working for Sheldon’s Auto Parts dismantling automobiles. At Sheldon’s Auto Parts, even though there were tools and machines available to assist in the dismantling, Tangen had to, on occasion, lift and jockey heavy items onto shelves. Some of the tasks Tangen performed were beyond his physical restrictions.

[¶ 25] The record in this case is sketchy, at best, about what specific restrictions had been communicated to Tangen. Statements in medical records and letters to the Bureau do not, standing alone, establish knowledge by Tangen. Furthermore, some of the “restrictions” relied upon by the Bureau were general, equivocal statements by Dr. Lundeen which did not include specific restrictions upon Tangen’s activities. The Bureau’s findings do not support application of N.D .C.C. § 65-05-28(5) to preclude further benefits to Tan-gen.

IV

[¶ 26] The Bureau argues, notwithstanding application of N.D.C.C. § 65-05-28(5), the order denying further benefits may be upheld on alterative grounds. The Bureau found Tangen failed to show a significant change in his medical condition, failed to show actual wage loss attributable to his medical condition, and voluntarily withdrew from the job market. The Bureau’s arguments on these issues are, to a great extent, intertwined with its assertion Tan-gen wrongfully accepted work at Sheldon’s which was beyond his work restrictions.

[¶ 27] For example, the Bureau argues that, when Tangen left suitable employment at Arctco and accepted employment at Sheldon’s which allegedly was beyond his physical restrictions, he thereby voluntarily withdrew from the job market and any wage loss he suffered was due to such withdrawal, and not to the worsening of his work injury. Similarly, the Bureau’s argument that Tangen failed to show a significant change in his medical condition is based largely upon its conclusion that Tangen’s work restrictions remained the same throughout the entire time period. The Bureau reached this conclusion by considering statements in medical records and letters to the Bureau of which Tangen may have been unaware. The Bureau relied upon those records as evidence Tan-gen’s condition had not worsened, yet inexplicably ignored a letter from Dr. Lundeen expressly stating there was “clinical evidence of increasing chondral breakdown.”

[¶ 28] We have reviewed these issues and find they are without merit and do not provide an alternative basis to uphold the Bureau’s order.

V

[¶ 29] We conclude the Bureau’s findings do not support denial of further benefits to Tangen based upon application of N.D.C.C. § 65-05-28(5). We recognize, however, our interpretation of the statute presented an issue not previously addressed by this Court. Therefore, rather than directing payment of benefits, as the district court did, we reverse and remand with directions to remand to the Bureau for further proceedings consistent with this opinion. The Bureau may reopen the hearing to take additional evidence if deemed appropriate. Costs on appeal are awarded to Tangen.

[¶ 30] GERALD W. VANDE WALLE, C. J., MARY MUEHLEN MARING, CAROL RONNING KAPSNER, DALE V. SANDSTROM, JJ., concur.

      . Tangen has filed a cross-appeal, arguing the district court erred in applying the 1995 enactment of N.D.C.C. § 65-05-28(5) to his claim. Tangen's cross-appeal was unnecessary. When the judgment below provides all of the relief sought by the appellee, he may attempt to save the judgment by urging any ground asserted in the trial court without cross-appealing. E.g., Stewart v. North Dakota Workers Comp. Bureau, 1999 ND 174, ¶ 37, 599 N.W.2d 280.


author: MARING, Justice.

text:
    2000 ND 137
    JOHNSON FARMS, a general partnership, Plaintiff, Appellant and Cross-Appellee, v. George G. McENROE and Donna McEnroe, Defendants, Appellees and Cross-Appellants.
    No. 990297.
    Supreme Court of North Dakota.
    July 3, 2000.

      Douglas A. Christensen, Pearson Christensen, Grand Forks, for plaintiff, appellant, and cross-appellee.
    Robert Vaaler, Vaaler, Zimney, Foster & Johnson, Grand Forks, for defendants, appellees, and cross-appellants.
   MARING, Justice.

[¶ 1] Johnson Farms, a general partnership, appealed from a judgment dismissing its action against George and Donna McEnroe for specific performance of an oral agreement for the purchase of real property, but awarding Johnson Farms $91,930 it overpaid the McEnroes for an adjacent parcel of property Johnson Farms purchased in January 1994. The McEnroes cross-appealed from the part of the judgment awarding Johnson Farms $91,930 plus interest. We conclude the trial court’s pivotal findings of fact in this case are inconsistent and incapable of reconciliation. We reverse and remand for a new trial on all issues.

I

[¶ 2] The factual background of this case is detailed in Johnson Farms v. McEnroe, 1997 ND 179, 568 N.W.2d 920. In that case we reversed a summary judgment in favor of the McEnroes dismissing Johnson Farms’ action for specific performance of an oral agreement to convey 59.17 acres of land adjacent to Grand Forks because there were genuine issues of material fact to be resolved at trial. Johnson Farms claimed it orally agreed in 1993 to purchase 59.17 acres from the McEnroes for $9,000 per acre, or $532,530. The parties agreed to structure the transaction as a “like-kind” property exchange under 26 U.S.C. § 1031 so the McEnroes could avoid paying capital gains taxes. According to Johnson Farms, the initial transaction occurred when it purchased land from Bill and Pamela Rychart for $373,000 and exchanged it for 30.61 acres of the McEn-roes’ property in January 1994. Johnson Farms then owed McEnroe $159,530 for the remaining acreage, and the parties began to look for additional property to complete the transaction. In February 1994, George McEnroe executed an option giving Johnson Farms until April 1, 1995 to either deposit $159,530 in escrow or provide suitable “like-kind” property to complete the transaction. Johnson Farms argued even though the option was invalid, it nevertheless evidenced the overarching oral agreement between the parties. Johnson Farms claimed that before suitable property could be found, McEnroe breached the agreement and refused to complete the balance of the transaction. Johnson Farms argued the statute of frauds was no bar to its action against the McEnroes because it had partially performed the overarching agreement.

[¶ 3] The McEnroes argued no oral agreement existed for the sale of the entire 59.17 acres of property for $9,000 per acre. The only agreement between the parties, according to the McEnroes, was the completed “like-kind” property transaction involving the 30.61 acres exchanged for the Rychart property. The McEnroes admitted George McEnroe granted Johnson Farms a unilateral written option, which was actually an offer of the right to obtain the second tract of land. Whether the option was valid is immaterial, according to the McEnroes, because Johnson Farms never tendered suitable “like-kind” property to exchange, or deposited $159,530 in escrow, either within the time limitation contained in the option or afterward. During this time period, closure of the Grand Forks Air Force Base was a possibility, and the McEnroes argued it was only after retention of the base was secured and land immediately west of the subject property was chosen as the site for the new Aurora Events Center that Johnson Farms’ interest in the remaining tract was kindled.

[¶ 4] Following a bench trial on remand, the trial court ruled Johnson Farms was not entitled to specific performance compelling the McEnroes to convey the remainder of the 59.17 acre tract of land, but also ruled Johnson Farms was entitled to $91,930 from the McEnroes for “overpayment” of the initial exchange of 30.61 acres in January 1994.

[T]he only oral contract that ever existed between the parties, that is material to this case, is their oral agreement by which Johnson Farms agreed to exchange the Rychart property it purchased in November of 1993 for 30.61 acres of property described above. The Court further finds that the oral agreement for such exchange included an agreement of the parties that the property exchanged by the Defendants had an agreed value of $9,000 per acre, and that the Plaintiff intended to convey to the Defendants in exchange for Defendants’ property a tract of land having a value corresponding to the 30.61 acres of the Defendants’ land valued at $9,000 per acre.
[T]he tract of land traded by the Defendants to the Plaintiff pursuant to the oral agreement between the parties was valued at the agreed price of $9,000 per acre, or a value of $281,070.00. The price paid by the Plaintiff for the Ryc-hart property traded to the Defendant George McEnroe was $373,000.00, $91,930.00 more than the agreed value of the land traded by Defendants to Plaintiff for said property. This constituted an overpayment by the Plaintiff of $91,-930.00.
[Ejxcept for the trade of property between the parties in January of 1994, pursuant to the oral contract as found by the Court, no other contract for the purchase or sale of land between the parties, oral or written, was entered into. The Plaintiff contending for such an oral contract of purchase and sale of property, has wholly failed to sustain the burden of proof that such an oral contract ever existed between the parties with respect to the sale by the Defendant McEnroes to the Plaintiff Johnson Farms of all or any part of the property owned by George McEnroe, except the tract that was traded by the Defendants to the Plaintiff on January 18, 1994.

[¶ 5] Judgment was entered dismissing Johnson Farms’ action for specific performance and ordering that McEnroes pay Johnson Farms $91,930, plus interest from December 14, 1998, which was the date of the final submission of the case to the court for decision. Both parties appealed.

II

[¶ 6] Johnson Farms argues the trial court erred in finding there was an agreement only for the initial exchange of land for the Rychart property in January 1994 because the evidence establishes this transaction was part of an overarching agreement for the sale of the entire 59.17 acres, and Johnson Farms partially performed the oral agreement, taking it out of the statute of frauds. Johnson Farms also argues the trial court miscalculated the amount it overpaid the McEnroes for the initial conveyance of 30.61 acres, and contends it should be awarded interest from January 19, 1994, the date the parties exchanged deeds. In their cross-appeal, the McEnroes argue the trial court erred in finding Johnson Farms overpaid them for the 30.61 acres of land because there is no evidence the parties agreed to a $9,000 per acre price as part of the Rychart property exchange. The McEnroes also argue the trial court erred in failing to dismiss Donna McEnroe from the action because she did not participate in any of the discussions between the parties concerning the disputed property. Both parties also complain about internal inconsistencies in the trial court’s findings of fact.

[¶ 7] We agree the trial court’s findings in this case are not consistent. Johnson Farms’ theory throughout these proceedings has been the McEnroes orally agreed in 1993 to sell to Johnson Farms 59.17 acres of land for $9,000 per acre, or for a total purchase price of $532,530. Part of the evidence relied on by Johnson Farms to support its argument an overarching agreement existed is that when the $373,000 Johnson Farms paid for the Ryc-hart property it exchanged for the 30.61 acres of the McEnroes’ property is added to the $159,530 called for by the option for the remainder of the 59.17 acres, the total sum is $532,530, or $9,000 per acre for the entire 59.17 acre tract. The trial court, however, flatly rejected the contention that the parties reached an oral agreement for the sale of the entire 59.17 acre tract. The trial court found that during summer 1993, George McEnroe offered to sell the approximately 60 acre tract to Johnson Farms for $10,000 per acre, but Johnson Farms, through a partner, Bert Johnson, would pay only $9,000 per acre. The trial court found “the transaction was abandoned” and “the prior negotiations between the parties with respect to the sale of a 60 acre tract of land by McEnroe” was “nullified.”

[¶ 8] Instead, the trial court found “the only oral contract that ever existed between the parties, that is material to this case, is their oral agreement by which Johnson Farms agreed to exchange the Rychart property it purchased in November of 1993 for 30.61 acres of property,” and the property exchanged by the McEn-roes “had an agreed value of $9,000 per acre.” The McEnroes argue there is no evidence the parties negotiated a purchase price of $9,000 per acre for the 30.61 acres exchanged for the Rychart property, but only negotiated how much land to trade for the Rychart property. According to the McEnroes, if the parties had agreed on a $9,000 per acre price, Johnson Farms would have received 41.44 acres of land for the Rychart property. The McEnroes argue this establishes the January 1994 transaction was simply a “like-kind” property exchange without regard to a per acre price, and there was no $91,930 overpayment by Johnson Farms for the 30.61 acres.

[¶ 9] Johnson Farms agrees there is no evidence to support a $9,000 per acre price for the January 1994 transaction alone, but contends the $9,000 price per acre figure can only be reached by considering the January 1994 transaction as the first of a two-part overarching agreement for the purchase of the entire 59.17 acres of property. Johnson Farms argues if the January 1994 transaction was a totally separate transaction, the $373,000 it paid for the Rychart property and exchanged for the McEnroes 30.61 acres would have resulted in a $12,185.56 per acre purchase price, when Johnson Farms had offered only $9,000 per acre and McEnroe had asked for only $10,000 per acre. Johnson Farms contends the trial court’s separate transaction theory is preposterous because when McEnroe offered to sell the remainder of the 59.17 acres in the February 1994 option for $159,530, it resulted in a $5,585.78 per acre purchase price only one month after McEnroe sold 30.61 acres for $12,185.56 per acre.

[¶ 10] In its memorandum opinion, the trial court set forth its reasons for finding Johnson Farms had overpaid the McEn-roes for the 30.61 acres in January 1994:

The Rychart property conveyed to George C. McEnroe on January 18,1994 carried a cost to Johnson Farms of $373,000, or $88,000 more than Bert Johnson’s original bid. That auction bid was reduced to writing between Bert Johnson and the Rycharts on November 16, 1993.... Mr. Johnson’s $373,000 would have purchased 41.444+ acres of the McEnroe property, at $9,000.00 an acre. However, he decided to buy only 31.23 acres. ... No mention is made of the differences in the documents of exchange .... That fact alone has led defendants to contend that the $373,000 should be considered as the agreed price for the 31.23-acres that they conveyed to Johnson Farms. That position appears inconsistent with the voluntary action of George McEnroe to offer the option terms that he did. But for the option, the evidence would support a finding that the $373,000 was the exchange price for the 31.23 acres actually purchased by Johnson Farms from George and Donna McEnroe. However, the evidence in the case, particularly including the option offered by George McEnroe on February 19, 1994, shows that the agreed price for those 31.23 acres was $9,000.00 per acre.
$373,000 plus $159,530 equals $532,530, divided by $9,000 equals 59.17 acres at $9,000 per acre. 59.17 acres less 31.23 purchased equals 27.94 acres remaining unsold. 31.23 acres times $9,000 per acre equals $281,070 paid and due to McEnroes. $373,000 actually paid by Johnson Farms for Rychart land and exchanged for 31.23 acres. $373,000 less $281,070 equals $91,930. This amount is due from McEnroes to Bert Johnson, d/b/a/ Johnson Farms.

[¶ 11] It is evident the trial court found the parties agreed to a purchase price of $9,000 per acre for the January 1994 transaction based solely upon the purchase price set forth in the option added to the amount paid by Johnson Farms for the Rychart property, divided by 59.17 acres. This is tantamount to a finding that the Rychart property exchange was only the first part of an overarching agreement for the purchase of the entire 59.17 acres. The trial court’s use of this method to calculate the overpayment is internally inconsistent with its finding that the only agreement between the parties was for the purchase of the 30.61 acres of land in January 1994.

[¶ 12] We favor permitting a trial court, upon motion of a party, to clarify obvious inconsistencies and ambiguities in its judgments. Woodworth v. Chillemi, 1999 ND 43, ¶ 14, 590 N.W.2d 446. However, where the inconsistencies and ambiguities in the trial court’s findings of fact and conclusions of law are incapable of reconciliation to support a judgment, reversal and remand for a new trial is required. See, e.g., United States v. Jefferson Electric Mfg. Co., 291 U.S. 386, 405-06, 54 S.Ct. 443, 78 L.Ed. 859 (1934); Renfer v. Skaggs, 96 Cal.App.2d 380, 215 P.2d 487, 489 (1950); Wickham v. Famco Services, Inc., 350 So.2d 1159, 1161 (Fla.App.1977); Bob Anderson Pontiac, Inc. v. Davidson, 155 Ind.App. 395, 293 N.E.2d 232, 237 (1973); Hawkins v. Teeples and Thatcher, Inc., 267 Or. 151, 515 P.2d 927, 931-32 (1973); 75B Am.Jur. Trial § 1982 (1992); 89 C.J.S. Trial § 636 (1955). The test is similar to the one applied to a jury’s special verdict, where we will reverse and remand for a new trial if no reconciliation of the jury’s answers is possible and the inconsistency is such that the special verdict will not support the judgment entered below or any other judgment. See, e.g., Barta v. Hinds, 1998 ND 104, ¶ 6, 578 N.W.2d 553; Fontes v. Dixon, 544 N.W.2d 869, 871 (N.D.1996); Binstock v. Fort Yates Public School District, 463 N.W.2d 837, 839-40 (N.D.1990); Massey-Ferguson Credit Corp. v. Orr, 420 N.W.2d 1, 3 (N.D.1988).

[¶ 13] The pivotal issue in this case is whether there was an oral agreement for the purchase of the entire 59.17 acres of the McEnroe property. The trial court’s express finding and its method of determining Johnson Farms’ overpayment for the initial 30.61 acre exchange provide opposite answers to this question. The parties have not suggested how this inconsistency can be reconciled, and we, too, are unable to resolve the conflict. We conclude the trial court’s inconsistent findings do not support the judgment, and we reverse and remand for a new trial on all issues.

Ill

[¶ 14] The McEnroes argue the trial court erred in failing to dismiss Donna McEnroe as a party to this action because there is no evidence she participated in any of the discussions or negotiations concerning the property Johnson Farms seeks to recover through specific performance. The McEnroes moved to dismiss Donna McEnroe from the action, but the trial court failed to specifically rule on the motion.

[¶ 15] Title to all of the 59.17 acres involved in this case is in the name of George McEnroe alone. Donna McEnroe signed the initial deed conveying the 30.61 acres to Johnson Farms in January 1994 and the later deed conveying the additional .62 acres to Johnson Farms in July 1994. During trial, she claimed a homestead interest in the remainder of the 59.17 acres.

[¶ 16] In Sexton v. Sutherland, 37 N.D. 500, 164 N.W. 278 (1917), Patrick Sexton and Margaret Sexton, husband and wife, sued the defendants to quiet title to real property claimed as their homestead. Title to the property was in the name of Patrick Sexton alone. The defendants argued, because legal title to the homestead was in the name of the husband, the wife did not have a sufficient interest to maintain an action to determine adverse claims. This Court said:

The question here presented is whether [Margaret Sexton] is a proper party plaintiff in an action instituted by her husband to determine adverse claims to such homestead. We are agreed that, while a wife is not an indispensable party to such action she is nevertheless a proper party. She is clearly interested in the object of, and the relief sought in, the action. She has an interest in the subject-matter of the litigation, which cannot be concluded by decree unless she is made a party to the proceeding. If the defendants had desired to enforce their claims against the premises either by action to determine adverse claims or otherwise, it would have been manifestly proper for them to join both Patrick Sexton and Margaret Sexton as parties defendant. In fact, this would have been absolutely necessary in order to obtain a judgment concluding the homestead rights, if any, of Margaret Sexton in the premises.

Sexton, 37 N.D. at 511, 164 N.W. at 282. Sexton comports with the generally recognized rule that one spouse cannot be divested of homestead rights by judicial proceedings in which only the other spouse is a party, even if title to the homestead property is in the name of the other spouse alone. See, e.g., Francksen v. Miller, 297 N.W.2d 375, 377-78 (Iowa 1980); Priddy v. Massey, 208 Okla. 369, 256 P.2d 425, 426-27 (1953); Annot., Judgment involving real -property against one spouse as binding against other spouse not a party to the proceeding, 58 A.L.R.2d 701, § 18 (1958).

[¶ 17] Donna McEnroe is a proper party in this action for specific performance of an oral agreement for the purchase of property in which she claims a homestead interest. If specific performance is granted, Donna McEnroe’s homestead rights, if any, under N.D.C.C. ch. 47-18, will need to be addressed. Because we reverse and remand for a new trial, thus placing this case in its original posture, it is unnecessary to decide whether the trial court erred in failing to dismiss Donna McEnroe from the action after dismissing Johnson Farms’ claim for specific performance.

IV

[¶ 18] The judgment is reversed and the case is remanded for a new trial on all issues.

[¶ 19] VANDE WALLE, C.J., KAPSNER, NEUMANN, JJ., and JAMES M. BEKKEN, D.J., concur.

[¶ 20] The Honorable JAMES M. BEKKEN, D.J., sitting in place of SANDSTROM, J, disqualified.

      . The trial court used the figure, "31.23 acres,” because in July 1994, the McEnroes conveyed an additional .62 acres of land to Johnson Farms as part of the transaction.


author: KAPSNER, Justice.

text:
    2000 ND 136
    In the Matter of JURAN AND MOODY, INC., a/k/a JM Dissolution, JM Capital Corporation, Juran and Moody Financial Group, Inc., Municipal Capital Markets Corporation, George Frank, and their Officers, Directors, Employees, Salesmen, Affiliated Companies, and escrow Agents or Trustees who acted as Agents for any of the Respondents. North Dakota Securities Commissioner, Appellant, v. Juran and Moody, Inc., a/k/a JM Dissolution, JM Capital Corporation, Juran and Moody Financial Group, Inc., Municipal Capital Markets Corporation, George Frank, and their Officers, Directors, Employees, Salesmen, Affiliated Companies, and escrow Agents or Trustees who acted as Agents for any of the Respondents, Respondents and Appellees.
    No. 990355.
    Supreme Court of North Dakota.
    July 3, 2000.

      James L. Norris, Special Assistant Attorney General, James L. Norris, P.C., Bismarck, for appellant.
    Todd Ervin Zimmerman, Dorsey & Whitney, Fargo, for respondents and ap-pellees.
   KAPSNER, Justice.

[¶ 1] The North Dakota Securities Commissioner (“Commissioner”) appeals from the district court’s dismissal of his appeal from the final decision of the administrative law judge (“ALJ”) which dismissed the Commissioner’s order against Juran and Moody, Inc., et al. (“Juran and Moody”). We hold the Commissioner is allowed to appeal under N.D.C.C. § 28-32-15 and has standing to appeal. We therefore reverse and remand to the district court.

I

[¶ 2] On July 24, 1997, the Commissioner issued an order against Juran and Moody. The Commissioner ordered Juran and Moody to stop offering unregistered, nonexempt securities and to pay $175,000 for violations of securities laws. Juran and Moody timely requested a hearing. Juran and Moody filed objections to the Commissioner’s order, asserting, in part, the Commissioner had improperly destroyed documents regarding the treatment of securities transactions of other companies and Juran and Moody had relied on those documents in its own securities transactions. The Commissioner submitted a request for an ALJ to the Office of Administrative Hearings (“OAH”). The request listed the Commissioner and Ju-ran and Moody as the parties, described the matter as an “[ajppeal of Commissioner’s order based on unregistered securities offerings, misrepresentation and failure to provide information to the Commissioner,” and indicated the Commissioner sought an ALJ “[t]o conduct the hearing, issue findings of fact, conclusions of law, and a final order.” (emphasis in original). Explaining his decision to request a final order, the Commissioner indicated he “felt that it was very important to allow the hearing officer to make the final decision since Juran & Moody were already accusing the Commissioner of being biased.”

[¶ 3] The OAH designated an ALJ to hear the matter. Prior to a hearing, several motions were made. Juran and Moody moved the ALJ for permission to serve interrogatories upon the Commissioner. The Commissioner initially contested the motion but later provided Juran and Moody with the requested information. Juran and Moody successfully moved the ALJ to exclude an affidavit submitted by the Commissioner. Both Ju-ran and Moody and the Commissioner moved the ALJ for summary judgment.

[¶ 4] A hearing was held before the ALJ in November 1998. Juran and Moody and the Commissioner attended and presented arguments to the ALJ. On January 22, 1999, the ALJ issued “Findings of Fact, Conclusions of Law, and Order on Cross-Motions for Summary Judgment.” The ALJ found Juran and Moody did not violate securities registration laws and dismissed the Commissioner’s imposition of civil penalties. The ALJ, however, did not resolve all the issues. The Commissioner withdrew the allegations regarding the remaining issues. The ALJ issued a final order of dismissal on April 20,1999.

[¶ 5] The Commissioner appealed to district court. Asserting the Commissioner lacked standing to appeal, Juran and Moody filed a motion to dismiss. The court concluded “the agency has not established that it has ‘standing’ for purposes of appealing its own final order” and granted Juran and Moody’s motion to dismiss. The Commissioner appealed.

II

[¶ 6] The Commissioner argues N.D.C.C. § 28-32-15 should be interpreted to allow his appeal from the ALJ’s decision. The interpretation of a statute is a question of law fully reviewable by this Court. Medcenter One, Inc. v. North Dakota State Bd. of Pharmacy, 1997 ND 54, ¶ 13, 561 N.W.2d 634. Our primary goal is to ascertain legislative intent. Id. We look first to the language of the statute. Id. We read statutes as a whole to give meaning to each word and phrase, whenever fairly possible. Id. If the language is clear and unambiguous, the legislative intent is presumed clear from the face of the statute. Id. “If the language of a statute is ambiguous, the court may resort to extrinsic aids to interpret the statute.” Blackburn, Nickels & Smith, Inc. v. National Farmers Union Property & Cas. Co., 452 N.W.2d 319, 322 (N.D.1990). A statute is ambiguous if it is susceptible to differing rational meanings. Northern X-Ray Co., Inc. v. State ex rel. Hanson, 542 N.W.2d 733, 735 (N.D.1996). Ambiguity may result where the Legislature has amended portions of a statute. Roggenbuck v. North Dakota Workers Comp. Bur., 481 N.W.2d 599, 602 (N.D.1992) (noting “the ambiguity resulting from the amendments to section 65-05-15, N.D.C.C.”).

[¶ 7] Section 28-32-15, N.D.C.C., is susceptible to differing rational meanings and is thus ambiguous. On several occasions, the Legislature has amended different portions of the statute. Subsection one suggests the Commissioner, as a party to the administrative proceedings, may appeal from the ALJ’s decision. N.D.C.C. § 28-32-15(1). It indicates “[a]ny party to any proceeding heard by an administrative agency, except in cases where the order of the administrative agency is declared final by any other statute, may appeal from the order.” Id. “‘Party’ means each person named or admitted as a party or properly seeking and entitled as of right to be admitted as a party. An administrative agency may be a party.” N.D.C.C. § 28-32-01(8). Other subsections, however, suggest the Commissioner, as the agency, may not appeal. Subsection four provides “[a]n appeal shall be taken by serving a notice of appeal ... upon the administrative agency concerned.” N.D.C.C. § 28-32-15(4). Subsection five provides “[t]he agency and all other parties of record who are not designated as appellants must be named as appellees.” N.D.C.C. § 28-32-15(5). Subsection six provides “[t]he bond or other undertaking [filed by the appellant] ... may be enforced by the agency concerned.” N.D.C.C. § 28-32-15(6).

[¶8] Because the statute is ambiguous, we may consider extrinsic evidence to interpret it. State v. Brossart, 1997 ND 119, ¶ 14, 565 N.W.2d 752. Under N.D.C.C. § 1-02-39:

If a statute is ambiguous, the court, in determining the intention of the legislation, may consider among other matters:
1. The object sought, to be attained.
2. The circumstances under which the statute was enacted.
3. The legislative history.
4. The common law or former statutory provisions, including laws upon the same or similar subjects.
5. The consequences of a particular construction.
6. The administrative construction of the statute.

7. The preamble.

[¶ 9] Interpreting N.D.C.C. § 28-32-15 to preclude the Commissioner from appealing from the ALJ’s final decision would frustrate the apparent, although not explicit, legislative intent. “[0]ur interpretation must be consistent with legislative intent and done in a manner which will accomplish the policy goals and objectives of the statutes.” In the Interest of K.G., 551 N.W.2d 554, 556-57 (N.D.1996) (citations omitted). The consequences of construing N.D.C.C. § 28-32-15 to preclude the Commissioner’s appeal, a proper consideration under N.D.C.C. § 1-02-39(5), compel us to hold that in the limited context where an agency requests the OAH designate an ALJ to issue a final decision and appeal is not expressly prohibited, the requesting agency is allowed to appeal under N.D.C.C. § 28-32-15.

[¶ 10] Finality is a concept central to the administrative process as it establishes the time to petition for reconsideration under N.D.C.C. § 28-32-14, the effectiveness of the order under N.D.C.C. § 28-32-14.1, and the time for appeal under N.D.C.C. § 28-32-15. Understood within the statutory construct of administrative agency actions, the finality of an order is a precondition to taking further action, not a prohibition against further appeal. See II Kenneth Culp Davis & Richard J. Pierce, Jr., Administrative Law Treatise § 15.11, at 355 (3d ed.1994) (emphasizing “[c]ourts have long held that only ‘final agency action’ is renewable” and noting final actions are “immediately reviewable” under section 704 of the Administrative Procedure Act). We believe the district court misinterpreted the word “final” in the Commissioner’s request to the OAH as precluding appeal by the Commissioner from the ALJ’s decision.

[¶ 11] The Legislature has developed a scheme allowing an agency the option to request the OAH designate an ALJ to issue a final decision rather than a recommendation. See Blanchard v. North Dakota Workers Comp. Bur., 1997 ND 118, ¶ 14, 565 N.W.2d 485 (providing “[w]hen read as a whole, the statutory scheme for decisions by an ALJ manifests a legislative intent that an ALJ’s decision is a final order when the Legislature has authorized the ALJ to issue a final order, or when the requesting agency has authorized the ALJ to issue a final order”). Section 28-32-13(2), N.D.C.C., indicates if a “person authorized by the agency head or by law to issue a final order, is presiding, the order issued is the final order.” Under N.D.C.C. § 28-32-08.5(6), a hearing officer has a duty to “[m]ake findings of fact and conclusions of law and issue a final order, if required by statute or requested by an agency.”

[¶ 12] In enacting N.D.C.C. § 28-32-08.5(6) and related statutes, the Legislature was concerned with “accurately reflecting] the independent nature of OAH hearing officers.” Hearing on H.B. 1089 Before the House Judiciary Comm., 54th N.D. Legis. Sess. (March 30, 1995) (memorandum from OAH Director Allen C. Ho-berg to the Legislature).

[¶ 13] Likewise, in creating the OAH, the Legislature emphasized the value of independence and impartiality in administrative proceedings. “A central administrative tribunal is inherently separate from and therefore independent of the agency pursuing the issue under adjudication. This simple, yet fundamental feature dramatically enhances ... fairness.” Hearing on S.B. 2281 Before the House Judiciary Comm., 52nd N.D. Legis Sess. (March 6, 1991) (letter from Charles D. McFaul, Chief Administrative Law Judge for the City of New York, to North Dakota Attorney General Nicholas J. Spaeth) [“Hearing on S.B. 2234”]- An independent hearing body also “would remove the appearance of impropriety” that may exist where an agency uses it own employees as hearing officers. Hearing on S.B. 2234-, supra (remarks of North Dakota Senator Jim Maxson).

[¶ 14] An agency’s option to request designation of an ALJ to issue a final decision is important where, as here, the party opposing the agency alleges the agency is prejudiced against the party. Juran and Moody alleged the Commissioner had improperly destroyed documents which Ju-ran and Moody had relied upon in issuing its securities. Acknowledging the allegation, the Commissioner requested the OAH designate an ALJ to issue a final decision. In such circumstances, exercise of the agency’s option to request a final ALJ decision completely separates the agency from the decisionmaker, thus “re-mov[ing][any] appearance of impropriety” and ensuring the actual independence and impartiality of the decisionmaker. See Hearing on S.B. 2234, supra (remarks of North Dakota Senator Jim Maxson). If we held an agency that exercised its option to request a final ALJ decision was precluded from appealing, we would deter agencies from using the option in circumstances such as this where the agency itself believes there is a benefit, because of the issues raised, to use an independent final decisionmaker.

[¶ 15] Because construing N.D.C.C. § 28-32-15 to preclude the Commissioner from appealing would frustrate the Legislature’s apparent intent, we conclude where an agency requests the OAH designate an ALJ to issue a final decision, N.D.C.C. § 28-32-15 allows the requesting agency to appeal from that final decision unless such appeal is otherwise precluded. See N.D.C.C. § 54-44.3-12.2 (requiring the Central Personnel Division to request the OAH designate an ALJ to issue a final decision and precluding the Central Personnel Division from appealing from the ALJ's decision).

Ill

[¶ 16] In addition to being allowed to appeal under N.D.C.C. § 28-32-15, the Commissioner must have standing to appeal from the ALJ decision. See Shark v. U.S. West Communications, Inc., 545 N.W.2d 194, 197 (N.D.1996) (indicating “[w]hile this definition [of party in N.D.C.C. § 28-32-01(8) ] helped identify a party for purposes of the agency proceeding, it added nothing to the distinct concept of standing for judicial review of an agency decision”). The Commissioner argues he satisfies our test for standing to appeal from an agency decision.

[¶ 17] In Application of Bank of Rhame, 231 N.W.2d 801, 808 (N.D.1975), we established the requirements for standing to appeal from an agency decision. A person has standing if the person: (1) participates in the proceedings before an administrative agency, (2) is directly interested in the proceedings, and (3) is factually aggrieved by the agency’s decision. Shark, at 198 (explaining Application of Bank of Rhame).

[¶ 18] Here, the Commissioner participated in the proceedings before the ALJ and thus satisfies the first, requirement for standing. Juran and Moody, the Commissioner himself, and the ALJ treated the Commissioner as a party to the proceedings before the ALJ. Juran and Moody moved to serve interrogatories upon the Commissioner, to exclude an affidavit submitted by the Commissioner, and for summary judgment. The Commissioner moved the ALJ to issue summary judgment. Both Juran and Moody and the Commissioner participated in oral argument before the ALJ. The ALJ accepted motions and briefs and heard arguments from both Juran and Moody and the Commissioner. The ALJ indicated his pre-hearing scheduling order was “based on the agreement of the parties.”

[¶ 19] The Commissioner was directly interested in the proceedings and therefore meets the second requirement for standing. When administrative agencies “engage[ ] in a policy-making function, represent the public interest in the proper enforcement of the law being administered, and where the public as well as private parties have an interest in upholding the order of the agency, the agency itself is the proper party to represent this public interest.” 2 Am.Jur.2d Administrative Law § 642 (1994 & Supp.1999) (discussing an agency’s appeal from the final judgment of a court reviewing the agency’s determination); see also State v. Chicago & N.W. Ry. Co., 46 N.D. 313, 179 N.W. 378, 383 (1920) (noting “it is readily to be inferred that the board [of Railroad Commissioners] itself as a public agency is charged primarily with protecting the interests of the public”); Board of Adjustment of City of Fort Worth v. Stovall, 147 Tex. 366, 216 S.W.2d 171, 173-74 (1949) (reasoning the zoning board “represents the public interest in the proper enforcement of the particular law or regulation involved” and “there is a definite public interest to be protected” and thus reversing the lower appellate court’s dismissal of the zoning board’s appeal from the district court’s decision). The Commissioner has a strong interest in and responsibility for the proper and uniform application of securities laws. Under N.D.C.C. § 10-04-16(1), the Commissioner may issue a cease and desist order or a suspension order for a violation of chapter 10-04 if “the commissioner deems [it] necessary or appropriate in the public interest or for the protection of investors.” The statute also authorizes the Commissioner to impose fines for violations of the chapter. N.D.C.C. § 10-04-16(1).

[¶ 20] Finally, the Commissioner was factually aggrieved by the ALJ’s decision and thus satisfies the third requirement for standing. The ALJ reversed the Commissioner’s findings of securities laws violations and the Commissioner’s imposition of civil penalties for the violations. The Commissioner’s interest in ensuring proper and uniform application of securities laws for “the public interest” and “the protection of investors,” see N.D.C.C. § 10-04-16(1), may be impeded by a decision adverse to the Commissioner’s prior exercise of authority. That interest is protected by permitting judicial review of such decisions.

[¶ 21] We conclude the Commissioner satisfies the test established in Application of Bank of Rhame and thus does have standing to appeal from the ALJ’s decision.

IV

[¶ 22] Because the ALJ is an employee of the OAH, an independent and nonspecialized agency, the appropriate standard of review of a final decision made by an ALJ must be analyzed. When reviewing an agency decision, generally, a deferential standard applies.

[¶ 23] Regarding review of an agency’s factual findings, we have explained we do not make independent findings or substitute our judgment for that of the agency, but determine only whether a reasoning mind reasonably could have determined the findings were proven by the weight of the evidence in the record. Stewart v. North Dakota Workers Comp. Bur., 1999 ND 174, ¶ 7, 599 N.W.2d 280. “It is the agency’s responsibility to assess the credibility of witnesses and resolve conflicts in the evidence.” Id. An agency is required to adequately explain its rationale if it rejects the recommendations of an ALJ. Blanchard v. North Dakota Workers Comp. Bur., 1997 ND 118, ¶ 21, 565 N.W.2d 485.

[¶ 24] Here, deference to the ALJ’s factual findings is warranted. The ALJ had the opportunity to observe the witnesses and the “responsibility to assess the credibility of witnesses and resolve conflicts in the evidence.” Stewart, at ¶ 7. Moreover, even where an ALJ issues a mere recommendation, the ALJ is afforded some deference since the agency must sufficiently explain its rationale if it rejects the ALJ’s recommendation. Blanchard, at ¶ 21.

[¶ 25] Regarding review of an agency’s legal conclusions, we have indicated an agency “has a reasonable range of informed discretion in the interpretation and application of its own rules.” In the Matter of Permits to Drain Related to Stone Creek Channel Improvements and White Spur Drain, 424 N.W.2d 894, 900 (N.D.1988). “[C]ourts generally defer to an agency’s reasonable interpretation when the language is so technical that only a specialized agency has the experience and expertise to understand it or when the language is ambiguous.” Id.

[¶ 26] Similar deference to the ALJ’s legal conclusions is not justified. Unlike an agency, an ALJ does not necessarily have specialized knowledge or expertise. Section 54-57-03(1), N.D.C.C., indicates the OAH must conduct “all hearings of administrative agencies under chapter 28-32” except those expressly excluded. Although N.D.C.C. § 54-57-03(4) indicates “the director [of the OAH] shall attempt to assign an administrative law judge having expertise in the subject matter to be dealt with,” the OAH is not a specialized agency and the ALJ is not interpreting the OAH’s own rules. The ALJ here was interpreting and applying the rules of the Securities Commission, an agency independent from the OAH.

[¶ 27] We accordingly hold where an agency requests the OAH designate an ALJ to issue a final decision, judicial review of the ALJ’s factual findings should involve the same standard of review used for agency decisions, but the ALJ’s legal conclusions must be reviewed in the same manner as legal conclusions generally, without special deference to the ALJ.

V

[¶ 28] Because the Commissioner may appeal from the ALJ’s final decision under N.D.C.C. § 28-32-15 and has standing to appeal, we reverse the dismissal of his appeal and remand to the district court for further proceedings consistent with this opinion.

[¶ 29] GERALD W. VANDE WALLE, C.J., MARY MUEHLEN MARING, WILLIAM A. NEUMANN, JJ., and JAMES M. BEKKEN, D.J., concur.

[¶ 30] JAMES M. BEKKEN, D.J., sitting in place of SANDSTROM, J., disqualified.

      . Juran and Moody refers to these documents as "no action letters” in which the Commissioner advised the companies they would not have to register their proposed securities.

      . Section 10-04-16(1), N.D.C.C., does not prohibit the Commissioner’s appeal since it does not contemplate a situation where an ALJ issues a final decision which dismisses the Commissioner’s order. The statute merely provides, "[i]f, after a hearing, the commissioner sustains an order previously issued, the sustaining order is subject to appeal.” N.D.C.C. § 10-04-16(1).

      . Under N.D.C.C. § 54-57-01(3), ALJs are employees of the OAH.


author: PER CURIAM.

text:
    2000 ND 138
    In the Matter of the Application for DISCIPLINARY ACTION AGAINST Michael E. KELLER, A Member of the Bar of the State of North Dakota. Disciplinary Board of the Supreme Court of the State of North Dakota, Petitioner, v. Michael E. Keller, Respondent.
    No. 20000189.
    Supreme Court of North Dakota.
    July 5, 2000.
   INTERIM SUSPENSION ORDERED.

PER CURIAM.

[¶ 1] On July 3, 2000, an Application for the Interim Suspension of Michael E. Keller, a member of the Bar of North Dakota, and supporting Affidavits with attached exhibits, were filed under Rule 3.4, North Dakota Rules for Lawyer Discipline (N.D.R. Lawyer Discipl.) by Loralyn K. Hegland, Assistant Disciplinary Counsel for the Disciplinary Board of the Supreme Court. The Affidavit of Assistant Disciplinary Counsel indicates that formal proceedings are currently pending against Mr. Keller regarding allegations of lack of diligence, lack of communication with a client, and unreasonable fees. The Hearing Panel Chair issued an order compelling discovery dated March 20, 2000, to which Mr. Keller has not responded.

[¶ 2] The Affidavit further indicates that additional disciplinary complaints have been filed against Mr. Keller for mishandling client funds, and disobeying a district court order compelling him to provide information to a conservator, to which Mr. Keller has not responded.

[¶ 3] Assistant Disciplinary Counsel asserts that the information provided is sufficient evidence to demonstrate Mr. Keller has committed misconduct or is disabled in his handling of client funds, that he has failed to respond to a lawful order from the disciplinary board, that he has failed to respond to two complaints that have been filed against him, and that he presents a substantial threat of irreparable harm to the public. Assistant Disciplinary Counsel requests the immediate suspension of Michael E. Keller’s certificate of admission to the Bar and the appointment of a trustee, under Rule 6.4, N.D.R. Lawyer Discipl., to protect the interests of Mr. Keller’s clients. The Court considered the matter, and

[¶ 4] ORDERED, Michael E. Keller’s certificate of admission to the Bar of the State of North Dakota is SUSPENDED effective immediately and until further order of this Court, pending disposition of the proceedings predicated upon the conduct giving rise to the Application. This Order is subject to the provisions of Rule 3.4, N.D.R. Lawyer Discipl., which provides that upon request by counsel or the lawyer after entry of an interim suspension order, the court shall within 10 days provide an opportunity for the lawyer to demonstrate that the order should not remain in force.

[¶ 5] IT IS FURTHER ORDERED, that Assistant Disciplinary Counsel promptly apply to the district court for a professional trustee as provided in Rule 6.4, N.D.R. Lawyer Discipl.

[¶ 6] Dated at Bismarck, N.D., this 5th day of July, 2000.

[¶ 7] GERALD W. VANDE WALLE, C.J., DALE V. SANDSTROM, WILLIAM A. NEUMANN, JJ., concur.

[¶ 8] The Honorable MARY MUEHLEN MARING and the Honorable CAROL RONNING KAPSNER, Justices, being unavoidably absent, did not participate in this decision.


text:
    2000 ND 141
    In the Matter of the Application for DISCIPLINARY ACTION AGAINST Michael E. KELLER, a member of the Bar of the State of North Dakota. Disciplinary Board of the Supreme Court of the State of North Dakota, Petitioner, v. Michael E. Keller, Respondent.
    No. 20000189.
    Supreme Court of North Dakota.
    July 19, 2000.
   INTERIM SUSPENSION LIFTED

PER CURIAM.

[¶ 1] On July 5, 2000, the Supreme Court ordered Michael E. Keller’s certificate of admission to the Bar of the State of North Dakota suspended effective immediately and until further order of the Court. The July 5, 2000 Order was subject to the provisions of Rule 3.4, N.D.R. Lawyer Dis-cipl., which provides that upon request by counsel or the lawyer after entry of an interim suspension order, the Court shall within 10 days provide an opportunity for the lawyer to demonstrate that the order should not remain in force.

[¶ 2] On July 18, 2000, Michael E. Keller filed a Written Demonstration of Lawyer Pursuant to Rule 3.4, North Dakota Rules for Lawyer Discipline that Interim Suspension Order Not Remain in Force and Appendix. In his Written Demonstration, Mr. Keller asserts that with respect to the formal proceedings, prior to the proceedings becoming formal, he responded in writing to the initial complaint and personally appeared before the Inquiry Committee East. Mr. Keller acknowledges that he has not responded to the Hearing Panel Chair order compelling discovery, but will provide the requested responses by July 19, 2000.

[¶ 3] With respect to the complaint filed by a current employee of Mr. Keller’s former employer, Mr. Keller asserts that he perceived this complaint was filed in an effort to discredit him professionally. Mr. Keller admits he should have responded to the complaints and requests an extension of time to July 24, 2000, to provide a written response.

[¶ 4] With respect to the complaint filed by Mr. Keller’s former employer, Mr. Keller denies the allegations. Mr. Keller requests that he be allowed an extension of time to July 24, 2000, to provide a written response.

[¶ 5] With respect to the newest complaints, Mr. Keller asserts that these were filed on July 10, 2000, and that he intends to respond the complaints within the 20 days provided under Rule 3.1(d), N.D.R. Lawyer Discipline.

[¶ 6] Mr. Keller requests the Order of Interim Suspension entered July 5, 2000, not remain in force pending disposition of the proceedings predicated upon the conduct giving rise to the application. Mr. Keller further requests the order for an application for a professional trustee also be dismissed. The Court considered the matter, and

[¶ 7] ORDERED, in light of Mr. Keller’s Written Demonstration under Rule 3.4, N.D.R. Lawyer Discipl., there is no longer a prima facie case for an interim suspension and, therefore, this Court’s Interim Suspension is lifted.

[¶ 8] IT IS FURTHER ORDERED, that Mr. Keller’s requests for an extension of time to respond to the two complaints, file numbers 3395-NE-0005 and 3398-NE-0005, be referred to the Chair of the Inquiry Committee Northeast to grant a reasonable extension for the filing of his responses.

[¶ 9] Dated at Bismarck, North Dakota, July 19, 2000.

[¶ 10] GERALD W. VANDE WALLE, C.J., WILLIAM A. NEUMANN, DALE V. SANDSTROM, MARY MUEHLEN MARING, JJ., concur.

[¶ 11] The Honorable CAROL RONNING KAPSNER, being unavoidably absent, did not participate in this decision.


author: SANDSTROM, Justice.

text:
    2000 ND 139
    David F. MEAD and Marlene Mead, Co-conservators for Robert D. Mead; Pauline Mead a/k/a Elaine Mead; and Jackie Wolf, Trustee for the Jessica Mead and Justin Mead and Three Affiliated Tribes of Mandan-Hidatsa-Arikara Trust, Plaintiffs and Appellants, v. FARMERS UNION MUTUAL INSURANCE COMPANY, Defendant and Appellee.
    No. 20000046.
    Supreme Court of North Dakota.
    July 7, 2000.

      Vince H. Ficek, Ficek & Buresh, P.C., Dickinson, N.D., for plaintiffs and appellants.
    Steven A. Storslee, Storslee Law Firm, Bismarck, N.D., for defendant and appel-lee.
   SANDSTROM, Justice.

[¶ 1] David F. Mead and Marlene Mead, co-conservators for Robert D. Mead; Pauline Mead, also known as Elaine Mead; and Jackie Wolf, trustee for the Jessica Mead and Justin Mead and Three Affiliated Tribes of Mandan-Hidatsa-Arikara Trust (“the Meads”) appeal from a summary judgment of dismissal of the Northwest Judicial District Court. We affirm, concluding the issues of whether Robert Mead was competent and whether he acted intentionally in shooting Keith Braddock are res judicata, and thus Farmers Union Mutual Insurance Company (“Farmers Union”) did not have a duty to defend or indemnify the Meads in the resulting wrongful death suit.

I

[¶ 2] On March 20, 1996, Robert Mead shot and killed Officer Keith Braddock in Watford City. Mead was charged with murder, felonious restraint, and terrorizing. On April 3,1996, after Robert Mead’s initial appearance, the district court ordered he be evaluated by a psychiatrist or a licensed psychologist.

[¶ 3] On April 24, 1996, Dr. Dennis Kott-ke, a psychiatrist at the North Dakota State Hospital, submitted his psychiatric evaluation of Robert Mead to the court. Dr. Kottke wrote, “It is our impression that the patient is not mentally ill, does not have a frank mental disorder although he clearly has a lot of paranoid and distrustful features.... He is thus felt fit to proceed with the trial.” Robert Mead did not contest Dr. Kottke’s evaluation.

[¶ 4] Robert Mead acted as his own counsel throughout the criminal proceedings, although a court-appointed attorney-served as standby counsel. At trial, Robert Mead did not deny he shot Keith Braddock, but argued he shot him in self-defense. Self-defense was the only defense Robert Mead presented to the jury. The jury found him guilty as charged.

[¶ 5] By a complaint dated July 5, 1996, Mary Braddock brought suit against Robert Mead for the wrongful death of Keith Braddock, her husband. On August 13, 1996, Robert Mead created a trust, calling it the Jessica Mead and Justin Mead and Three Affiliated Tribes of Mandan-Hidat-sa-Arikara Trust. Robert Mead named Jackie Wolf as trustee.

[¶ 6] On December 26, 1996, the court appointed David F. Mead and Marlene Mead as co-conservators for Robert Mead, based on his incarceration at the North Dakota State Penitentiary. On April 9, 1997, the district court appointed David F. Mead and Marlene Mead “as Guardian Ad Litem to represent Robert D. Mead in the above entitled action while he is confined and detained in the North Dakota State Penitentiary.”

[¶ 7] Robert Mead was deposed and stated he intentionally shot Keith Braddock in self-defense. At the time of the shooting, Robert Mead had a farm liability policy through Farmers Union. The policy contained an exclusion for intentional acts committed by the insured. Farmers Union denied coverage for the Braddock suit.

[¶ 8] David F. Mead and Marlene Mead defended the civil suit and entered into a stipulation for judgment under which Robert Mead, “through his family members,” paid a settlement to the Braddocks. According to the complaint in the present action, Pauline Mead provided $60,000 of the settlement money and Jackie Wolf, as trustee for the Jessica Mead and Justin Mead and Three Affiliated Tribes of Man-dan-Hidatsa-Arikara Trust, provided $40,000 of the settlement funds. David F. Mead and Marlene Mead paid the costs of defending the suit.

[¶ 9] The Meads now bring this action against Farmers Union, seeking reimbursement for the settlement amounts and attorney’s fees. They allege Robert Mead is mentally ill and therefore incapable of committing an intentional act.

[¶ 10] On August 30, 1999, Farmers Union moved for summary judgment. The district court granted the motion, and the Meads appealed.

[¶ 11] The Meads’ appeal was timely under N.D.R.App.P. 4(a). The district court had jurisdiction under N.D.C.C. § 27-05-06. This Court has jurisdiction under N.D. Const, art. VI, § 6, and N.D.C.C. § 28-27-01.

II

[¶ 12] Summary judgment is a method for promptly and expeditiously disposing of a controversy, without trial, if either party is entitled to a judgment as a matter of law, if no dispute exists as to either the material facts or the inferences to be drawn from undisputed facts, or if resolving factual issues would not alter the results. Engel v. Montana Dakota Utils., 1999 ND 111, ¶ 6, 595 N.W.2d 319 (citing Perry Ctr., Inc. v. Heitkamp, 1998 ND 78, ¶ 12, 576 N.W.2d 505).

[¶ 13] Rule 56(c), N.D.R.Civ.P., provides summary judgment should be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” “On appeal, we review the evidence in the light most favorable to the party opposing the summary judgment motion.” Engel, 1999 ND 111, ¶ 6, 595 N.W.2d 319 (citing Freed v. Unruh, 1998 ND 34, ¶ 6, 575 N.W.2d 433).

A

[¶ 14] In its opinion granting Farmers Union’s motion, the district court held:

[w]hen the jury in State v. Robert Mead returned its verdict finding Mead guilty of murder, Class AA Felony, it necessarily determined that he acted with the intent required for the commission of that offense — -that is, that he acted intentionally (or knowingly) when he fired the shot that killed Keith Braddock.

The district court concluded the criminal judgment “is res judicata as to the issue of intent and that the Plaintiffs are collaterally estopped from re-litigating that issue.”

[¶ 15] On appeal, the Meads argue their claim against Farmers Union is not barred by res judicata or collateral estoppel. “Res judicata means that a valid, existing final judgment from a court of competent jurisdiction is conclusive, with regard to the issues raised, or those that could have been raised, and determined therein, as to the parties and their privies in all other actions.” Ohio Cas. Ins. Co. v. Clark, 1998 ND 153, ¶ 23, 583 N.W.2d 377 (quoting Peacock v. Sundre Township, 372 N.W.2d 877, 878 (N.D.1985)). Collateral estoppel “forecloses the relitigation, in a second action based on a different claim, of particular issues of either fact or law which were, or by logical and necessary implication must have been, litigated and determined in the prior suit.” Ohio Cas. Ins. Co., at ¶ 23 (citation omitted).

1

[¶ 16] The Meads claim the district court erred in granting Farmers Union’s motion for summary judgment because there are genuine issues of material fact “regarding the negligence of Keith Braddock vs. the negligence of Robert, and the state of mind or mental illness of Robert.” They argue that Robert Mead was incompetent to defend himself at his criminal trial and that a fact question exists as to whether his waiver of counsel at trial “was knowing and intelligent given his mental condition.” In addition, the Meads argue there was no evidence presented to the jury in Robert Mead’s criminal case regarding his mental condition or Keith Braddock’s allegedly improper procedures and actions.

[¶ 17] In Ohio Casualty Insurance Co. v. Clark, we held there were no genuine issues of material fact regarding Daniel Clark’s intent in shooting George Giroden-go because a jury had previously found the shooting was an intentional act. 1998 ND 153, ¶¶ 12, 28, 583 N.W.2d 377. Following Clark’s criminal trial, Girodengo’s family sued Clark for wrongful death. Id. at ¶¶ 2-3. Ohio Casualty Insurance Company, which had issued a homeowner’s insurance policy to Clark, provided him a defense in the civil suit. Id. at ¶ 4.

[¶ 18] Ohio Casualty Insurance Company, however, brought an action for a declaratory judgment, arguing the shooting was excluded from coverage. Ohio Cas. Ins. Co., 1998 ND 153, ¶ 4, 583 N.W.2d 377. Thus, Ohio Casualty Insurance Company claimed it owed no duty to defend or indemnify Clark in the civil suit. Id. We held that Clark’s killing was an intentional act for which insurance coverage was excluded, both because there was an intentional act exclusion and for public policy reasons. Id. at ¶¶ 17, 28, 30.

[¶ 19] In Poole v. State Farm Fire & Casualty Co., which we cited with approval in Ohio Casualty Insurance Co. v. Clark, William Poole, insured by State Farm Fire & Casualty Company, was convicted of first-degree murder after a trial in which he did not specifically assert the insanity defense. 941 F.Supp. 964, 965 (D.Colo.1996); see 1998 ND 153, ¶ 27, 583 N.W.2d 377. Poole was then sued for wrongful death, and a declaratory judgment was sought to determine whether State Farm was required to defend and indemnify him. Poole, at 965. The court in Poole held that a finding “beyond a reasonable doubt that one acted with deliberative intent necessarily negates questions of diminished mental capacity and legal insanity.” Id. at 968.

2

[¶ 20] The facts of the present case are very similar to Ohio Casualty Insurance Co. and Poole. Thus, under Ohio Casualty Insurance Co., we conclude the district court correctly determined there were no genuine issues of material fact. 1998 ND 158, 583 N.W.2d 377. The issues of whether Robert Mead was competent and whether he acted intentionally in shooting Keith Braddock were raised, litigated, and determined in Robert Mead’s criminal case. Therefore, the district court did not err in granting Farmers Union’s motion for summary judgment.

B

[¶ 21] The Meads further argue Farmers Union breached its duty of good faith and fair dealing by failing to defend the Meads in the Braddock suit. An insurer generally “has a duty to defend an underlying action against its insured if the allegations in the complaint give rise to potential liability or a possibility of coverage under the insurance policy.” Ohio Cas. Ins. Co. v. Clark, 1998 ND 153, ¶ 8, 583 N.W.2d 377 (quoting Nodak Mut. Ins. Co. v. Heim, 1997 ND 36, ¶ 11, 559 N.W.2d 846). Section 26.1-32-04, N.D.C.C., provides that “[a]n insurer is not liable for a loss caused by the willful act of the insured, but the insurer is not exonerated by the negligence of the insured or of the insured’s agents or others.”

[¶ 22] Because Robert Mead’s policy with Farmers Union contained an exclusion of liability for intentional acts and because the issue of whether Robert Mead acted intentionally when he shot and killed Keith Braddock is res judicata, the district court did not err in ruling Farmers Union had no duty to defend Robert Mead in the Braddock suit.

Ill

[¶ 23] The judgment of dismissal of the district court is affirmed.

[¶ 24] GERALD W. VANDE WALLE, C.J., WILLIAM A. NEUMANN, MARY MUEHLEN MARING, JJ., WILLIAM F. HODNY, S.J., concur.

[¶ 25] WILLIAM F. HODNY, S. J., sitting in place of KAPSNER, J., disqualified.