Davis v. Jones

No. 87-142
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
JOHN A. DAVIS (FATAL),
VIVIAN MARIE DAVIS,
Claimant and Appellant,
-vs-
GEORGE W. JONES, Employer,
and
MOUNTAIN WEST FARM BUREAU MUTUAL
INSURANCE COMPANY,
Defendant and Respondent.
APPEAL FROM: The Workers' Compensation Court, The Honorable
Timothy Reardon, judge presiding.
COUNSEL OF RECORD:
For Appellant:
Joseph C. Engel, 111, Great Falls, Montana
For Respondent:
Norman H. Grosfield, Helena, Montana
Submitted on Briefs: Aug. 20, 1987
Decided: November 10, 1987
Mr. Justice R. C. McDonough delivered the Opinion of the
Court.
This action appears before us for the third time. The
first two appeals concerned insurer's liability under the
Montana Workers' Compensation Act for the injury that
resulted in the death of claimant's husband. See Jones v.
Davis (1983), 203 Mont. 464, 661 P.2d 859; Jones v. Davis
(Mont. 1985), 701 P.2d 351, 42 St-Rep. 840. This appeal
concerns insurer's liability for claimant's attorney fees.
Claimarlt contends that the fee due from insurer equals
50 percent of benefits awarded. Insurer contends that the
fee due equals 40 percent. The parties also contest the
propriety of awarding fees in a lump sum, and the
responsibility for costs charged by claimant's economist.
Claimant and her attorney signed an agreement providing
for a fee contingent upon success of her claim. The amount
of the fee was to equal 25 percent of benefits if the claim
succeeded prior to hearing before the Workers' Compensation
Court; 33 percent of benefits if the claim succeeded after
hearing before the Workers' Compensation Court; and 40
percent of benefits if the claim succeeded only after appeal
to the Montana Supreme Court.
The fee percentages provided for by the agreement
mirrored the maximum fees that were allowed under A.R.M. S
24.29.3801 (1986), a regulation promulgated by the Division
of Workers' Compensation. Also pursuant to A.R.M. S
24.29.3801 (1986), claimant obtained Division approval of the
agreement.
After the first appeal, claimant and her attorney agreed
to increase the percentage of fees payable upon the ultimate
success of the claim. In place of the 40 percent peak
already established as the proper percentage because of the
first appeal, they substituted 5 0 percent.
Claimant submittd the altered agreement for Division
approval. However, before the Civision had a chance to deny
or approve the altered agreement, claimant withdrew her
request and argued instead for a "good cause" variance from
the original fee agreement's 4 0 percent maximum. For good
cause shown, the regulations themselves provided for a fee
higher than 4 0 percent. See A.R.M. S 24.29.3801(4) (1986).
Claimant also argued that the Division did not have
jurisdiction to determine fees once a claim had advanced to
azjudication before the Workers' Compensation Court.
The Division assumed jurisdiction and denied the
variance. On appeal, the F70rkers1 Compensation Court held
that the Division lacked jurisdiction, and considered the
issue de novo. The Workers' Compensation Court then refused
tc vary from the 40 percent figure Sound in the original
agreement citing this Court's opinion in Wight v. Hughes
Livestock (19831, 204 Nont. 98, 664 P.2d 3 0 3 . The lower
court also refused to lump sum the fees for more than two
years, and refused to assess against insurer costs charged by
claimant's economist. From this ruling claimant appeals. P e7
affirm the lower court's decision.
Appellant presents four issues for review:
(1) Did the Workers' Compensation Court exceed its
jurisdictiori by passing judgment on an issue not raised by
the pleadings?
(2) Does the "good cause" provision found in A.R.M. S
24.29.3801!4) (1986), control over Wight?
(3) Should claimant's attorney receive all the fees in a
lump sum?
(4) Should claimant receive the cost of discounting her
attorney fees to present value? We will consider each issue
separately.
ISSUE 1: Claimant contends that the Workers'
Cornpensation Court erred by failing to base its decision on
claimant's allegation that:
after the erroneous assumption of jurisdiction by
the Division, the Division ignored the evidence
adduced in compliance with the requisites of
24.29.3801 A.R.M. that there was good cause in the
two cases litigated herein to vary from the maximum
fee schedule, as is provided for in subparagraph
(4) of that regulation.
Claimant's argument on 1 lacks merit.
issue She
requested that the lower court apply A.R.M. S 24.29.3801 (4)
(1986), and the court held that "the Civision rules governing
attorney fees on cases before this Court and the Supreme
Court are a nullity." This response squarely addresses the
issue presented by claimant's petition. The fact that the
lower court refused to apply the law as presented by claimant
does not mean that the lower court exceeded its jurisdiction.
As stated by the Supreme Court of Colorado,
The Court is not restricted to theories of counsel,
but has the duty of attempting a just determination
of the issues tendered pursuant to established
rules of law.
Newton Oil Co. v. Bockhold (Colo. 1947), 176 P.2d 904, 906.
ISSUE 2: Claimant's next contention also concerns the
correct authority for determining the amount of attorney
fees. The Workers' Compensation Court applied Wight to find
that the original agreement controlled the percentage for
calculating fees. Wight directed the Workers' Compensation
Court to give nc effect to a contingency agreement amended
after a sriccessful appeal. Wight, 664 P . 2 d at 312. The
amended agreement in Wight provided for a higher percentage
of benefits than the original agreement. Wight, 664 P.2d at
312. Claimant contends that Wight does not apply where the
claimant requests a good cause variance under A.R.M. $
5
24.29.3801 (4) (1986).
This is an issue of administrative law that we have
recently settled. See Bowen v. Super Valu Stores (filed
November 5, 1987), No. 86-253, slip op. at 8. Bowen held
that the "rules adopted by the Department, in this case the
Division, have no application to proceedings before the
Workers' Compensation Court." Bowen, slip op at 8. Thus,
the Workers' Compensation Court correctly concluded that the
Division rule did not apply, and properly proceeded to
analyze the issue under Wight.
Claimant also complains that the Workers' Compensation
Court should have granted some fees on an hourly basis.
According to claimant, the lower court could have exercised
its discretion and granted the 40 percent contingency fee for
the attorney's work on the second appeal, and figured fees
for the first appeal on an hourly basis.
Section 39-71-611, MCA, requires the Workers'
Compensation Court to establish reasonable attorney fees when
the insurer must pay the fees. Where a contingency agreement
exists, the Workers' Compensation Court "'is under a duty to
determine what would he a reasonable attorney fee on a
contingency basis.'" (Emphasis in original). Wight, 664
P.2d at 311 (quoting Clark v. Sage (Idaho 1981), 629 P.2d
657, 660). In determining what is reasonable, "the Workers'
Compensation judge should accept the approved contract as
having a strong presumption in its favor." Wight, 664 P. 2 6
at 312. In this claim, the Workers' Compensation Court. did
not abuse its discretion by finding that the original
agreement controlled the fee.
ISSUE 3: Claimant contends that the law at the time of
the injury to her husband favored lump sum awards of attorney
fees. To support this contention, claimant cites Garlitz v.
Rocky Mountain Keli.copters, WCC No. 1811, decided May 24,
1384. Respondent contends that Swan v. Sletten Const. (~ont.
1986), 726 P.2d 1170, 43 St.Rep. 1926, controls Garlitz, and
in its decision denying claimant's lump sum request, the
Workers' Compensation Court agreed and applied Swan.
Bath parties assume that Garlitz and Swan are
irreconcilable. In Garlitz, the Workers' Compensation Court
exercised its discretion and granted attorney fees in a lump
sum. In Swan, the Workers' Compensation Court exercised its
discretion and refused to lump sum all the fees. Under S
39-71-611, MCA, "the standard of reasonableness includes both
'the amount and kind of fee---lump sum or periodic.'" - -
Swan,
726 P.2d at 1172 (quoting Conway v. Blackfeet Indian
Developers, Inc. (Mont. 1985), 702 P.2d 970, 973, 42 St.Rep.
1020, 1022.) This was the law at the time of the injury in
both cases, and whether or not the Workers' Compensation
Ccurt acted unreasonably in granting a lump sum award in
Garlitz cannot be reviewed in this decision. However, as
stated in Swan, if the lower court denies a lump sum fee
request on the basis that claimant seeks a percentage of
benefits claimant may never receive, we will not overturn the
decision as unreasonable. Swan, 726 P.2d at 1173. Claimant
here seeks fees derived from benefits she will not receive if
she remarries or dies. Thus, the refusal to grant fees in a
lump sum beyond two years was reasonable, and we affirm on
this issue.
ISSUE 4: Section 39-71-611, MCA, provides for the
assessment of reasonable costs against the insurer as well as
attorney fees. In this case, claimant hired an economist to
discount her attorney fees to present value. However, the
lower court's decision to deny the lump sum request negated
the need for the present value calculations, and the
discounted fee was neither presented nor considered. Thus,
in assessing insurer's liability, the lower court concluded
that the discounting costs were unrelated to the issues. We
find that determination reasonable.
FA&^/
Affirmed.
Justice
We Concur:
/