Case Title: HOCK v LEINCO CEDAR PRODUCTS

Citation: 

Docket Number: 80-464

State: montana

Court: Montana Supreme Court

Date: 1981-09-28T00:00:00Z

Document:
No. 80-464 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 DAWN M . HOCK, Claimant and Respondent, VS. LIENCO CEDAR PRODUCTS, Employer, and STATE COMPENSATION INSURANCE FUND, Defendant and Appellant. Appeal from: Workers' Compensation Court Honorable William E. Hunt, Judge presiding. Counsel of Record: For Appellant: Hon. Mike Greely, Attorney General, Helena, Montana Roy Andes, Assistant Attorney General, argued, Helena, Montana J. David Slovak argued, Helena, Montana For Respondent: Hoyt and Trieweiler, Whitefish, Montana Terry N. Trieweiler argued, Whitefish, Montana Submitted: June 12, 1981 Decided: September 28, 1.983. Filed : SEP 2 9 1 9 8 1 1 M r . J u s t i c e Fred J. Weber delivered t h e Opinion of t h e Court. Defendant S t a t e Compensation Insurance Fund appeals from t h e order of t h e Workers' Compensation Court granting claimant Dawn Hock's p e t i t i o n f o r a lump sum award of b e n e f i t s . The Fund presents t h e following i s s u e s : 1. I n disposing of o r prejudicing t h e f u t u r e i n t e r e s t s of t h e surviving i n f a n t beneficiary, should t h e c o u r t have made t h e c h i l d a p a r t y and appointed a guardian ad litem? 2. Is it proper f o r t h e Workers' Compensation Court t o e n t e r t a i n a p e t i t i o n f o r a $19,000 lump sum, where a $6,000 claim was presented t o t h e d i v i s i o n ? 3. Does a lump sum award of b e n e f i t s i n t h e amount of $19,622.72 c o n s t i t u t e an abuse of d i s c r e t i o n i n l i g h t of evidence of expenses aggregating only $14,039.25? 4. Does t h e f a i l u r e t o f i l e an a t t o r n e y f e e agreement p r i o r t o t r i a l f o r f e i t t h e r i g h t t o c o l l e c t a t t o r n e y f e e s ? W e a f f i r m t h e award of t h e Workers' Compensation Court, b u t with some i n s t r u c t i o n s t o be followed i n s i m i l a r cases i n t h e f u t u r e . Dawn Hock i s eighteen years old, and has a two-year-old c h i l d . She i s n o t employed, having completed only t h e t e n t h grade and having no prospects of employment. She p r e s e n t l y draws $186.68 per week i n workersr compensation payments by reason of t h e death of her husband, Warren, which occurred on May 23, 1980, while he was working f o r defendant/employer, Lienco Cedar Products ( h i s gross s a l a r y was $279 per week). She a l s o draws s o c i a l s e c u r i t y b e n e f i t s , giving her a monthly, tax-free income of more than $1,100. The employer was insured under compensation plan no. 3, by defendant S t a t e Compensation Insurance Fund. Under t h e s t a t u t e s , Dawn i s e n t i t l e d t o receive biweekly payments f o r t h e r e s t of her l i f e ; however, i f she ever remarries, then she w i l l r e c e i v e a f i n a l , s i n g l e payment equal t o two-years' b e n e f i t s , and compensation w i l l then be stopped. Section 39-71-721, MCA. Dawn's daughter, Dusty Rae, i s a l s o a b e n e f i c i a r y under t h e workers' compensation s t a t u t e s . Section 39-71-116 ( 2 ) , MCA. A l l payments a r e presently made t o Dawn alone, b u t i f she should d i e o r remarry, then t h e c h i l d w i l l receive t h e same amount of b e n e f i t s u n t i l age 18, o r age 25 i f a f u l l - t i m e student. I n considering the lump s u m award t o Dawn, w e must determine t h e e x t e n t t o which t h e c h i l d ' s contingent f u t u r e r i g h t s a r e t o be protected. Dawn i n i t i a l l y requested a $6,000 advance on her b e n e f i t s from t h e Division of Workers' Compensation. She a l l e g e d c e r t a i n d e b t s were causing hardship f o r her and t h e c h i l d . The claims supervisor t e n t a t i v e l y agreed t o t h e advance, upon the condition t h a t t h e $6,000 t o be advanced be deducted from t h e payment Dawn would receive i n t h e event she remarries. When t h e claims supervisor submitted t h e plan f o r approval t o t h e d i v i s i o n administrator, it w a s r e j e c t e d . The administrator required " p o s i t i v e p r o t e c t i o n of recovery" of the advance, c i t i n g the p o s s i b i l i t y t h a t should Dawn never remarry, then t h e advance would never be recovered. The Fund o f f e r e d another plan, which proposed t o deduct $ 2 5 p e r week from Dawn's b e n e f i t s u n t i l f u l l recovery o r remarriage. The new p l a n was r e j e c t e d by Dawn's attorney. Dawn p e t i t i o n e d t h e Workers' Compensation Court f o r an emergency hearing on t h e lump sum dispute. I n her p e t i t i o n , she asked, f o r t h e f i r s t time, f o r an advance of $19,622.72, which amount i s equal t o t h e two-years' worth of b e n e f i t s she would receive i n a s i n g l e payment upon remarriage. The Fund moved t o s t r i k e t h e $19,000 f i g u r e and i n s e r t t h e o r i g i n a l $6,000 f i g u r e , on t h e ground t h a t t h e l a r g e r sum had never been presented t o t h e d i v i s i o n and s o w a s not a "dispute" t h e c o u r t could hear, c i t i n g s e c t i o n 39-71-2905, MCA. The Fund paid t h e $6,000 sum t o t h e c l e r k of t h e c o u r t , and f i l e d an o f f e r of judgment which sets f o r t h t h e Fund's second proposal f o r recovery of t h e advance. The motion t o s t r i k e was never ruled upon by t h e court. I n its t r i a l b r i e f and i n t h e p r e t r i a l order, t h e Fund r a i s e d t h e i s s u e of p o s s i b l e prejudice t o t h e c h i l d ' s con- t i n g e n t f u t u r e r i g h t t o receive b e n e f i t s . The Fund asked t h e c o u r t t o join t h e c h i l d a s a p a r t y and t o appoint a guardian ad l i t e m t o p r o t e c t t h e c h i l d ' s i n t e r e s t s i n regard t o any scheme t o recover a lump sum advance. The c o u r t d i d n e i t h e r . A t t r i a l , Dawn t e s t i f i e d t o t h e following debts which t o t a l s l i g h t l y over $14,000: 1. New Mobile Home $6,500 2. Automobile $4,900 3. Funeral Expenses $806 4. Taxes $43.75 5. U t i l i t y I n s t a l l a t i o n $433 6. Balance Due on Old Mobile Home $780 7. Gambles Account $50 8. Medical B i l l s approximately $500. With regard t o t h e s e debts, Dawn t e s t i f i e d t h a t her o l d mobile home was i n need of s u b s t a n t i a l r e p a i r , n e c e s s i t a t i n g t h e purchase of a new one. I n a s i m i l a r manner, she t e s t i f i e d t h a t she had no usable automobile and had arranged t o purchase a s a t i s f a c t o r y used 1978 Plymouth. Dawn t e s t i f i e d t h a t she had no medical insurance coverage f o r h e r s e l f o r her daughter. The c h i l d i s s u s c e p t i b l e t o convulsions. Dawn a l s o t e s t i f i e d t h a t she and her c h i l d can l i v e on her $1,100 per month tax-free income, i f her debts a r e paid. The only o t h e r witness a t t r i a l was t h e claims supervisor f o r the d i v i s i o n . He t e s t i f i e d t h e d i v i s i o n acted i n good f a i t h throughout t h e negotiations t o p r o t e c t the i n t e r e s t of t h e c h i l d and the Fund from overpayment. H e a l s o s t a t e d t h a t no a t t o r n e y f e e agreement had ever been f i l e d with t h e d i v i s i o n by Dawn's a t t o r n e y a s required by s t a t u t e , thus laying the foundation upon which t h e Fund argues t h a t Dawn i s n o t e n t i t l e d t o r e c e i v e a t t o r n e y f e e s . H e s t a t e d t h a t no claim f o r $19,000 had ever been made t o the d i v i s i o n , only a claim f o r $6,000, b u t t h a t t h e $19,000 claim would have been denied i n any event because t h e p o i n t of d i s p u t e concerned n o t the amount of advance b u t the method of recovering it. The Workers' Compensation Court pointed o u t t h a t lump sum payments a r e more d e s i r a b l e than formerly was t h e case. The c o u r t ordered t h a t 1 0 4 weeks of c l a i m a n t ' s f u t u r e weekly b e n e f i t s be converted i n t o a lump s u m of $19,622.72. The order provided t h a t t h e Fund can recover t h e amount of t h i s lump sum b e n e f i t by terminating payment of biweekly b e n e f i t s t o t h e claimant on t h e s i x t e e n t h birthday of c l a i m a n t ' s c h i l d , u n t i l an amount equal t o the advance provided f o r has been recovered. The order a l s o provided t h a t the c l a i m a n t ' s a t t o r n e y i s e n t i t l e d t o a t t o r n e y f e e s and provided t h a t t h e c o u r t would take under consideration t h e question of whether t h e defendant i s responsible f o r t h e f e e s and c o s t s . A f e e agreement (1/3 of award) w a s f i l e d with t h e d i v i s i o n subsequent t o t h e hearing, b u t was objected t o a s n o t timely. Dawn's a t t o r n e y subsequently o f f e r e d t o s t i p u l a t e t o a change i n t h e method of recovery ordered by t h e court. The s t i p u l a t i o n would have c a l l e d f o r recovery of t h e advance o u t of Dawn's remarriage b e n e f i t s o r , i f she d i d not remarry, o u t of her weekly b e n e f i t s a f t e r t h e c h i l d ceased t o be a beneficiary. The Fund d i d not choose t o consider t h i s s t i p u l a t i o n , p r e f e r r i n g t o proceed with t h e appeal. I. There can be no question t h a t an i n f a n t c h i l d of a widow who draws compensation b e n e f i t s has a s e p a r a t e i n t e r e s t t h e r e i n . Section 39-71-116(2), MCA, d e f i n e s "Beneficiary" a s including (a) a surviving spouse, and (b) an unmarried c h i l d under 18, o r under 25 i f a full-time student. Section 39- 71-723, MCA, provides t h a t compensation due t o b e n e f i c i a r i e s s h a l l be paid t o t h e surviving spouse. This Court, i n i n t e r p r e t i n g t h e predecessor of t h e above s e c t i o n , has s t a t e d : " I t is t r u e t h a t f o r t h e purpose of saving t r o u b l e and expense of guardianship proceedings t h e l a w permits t h e payment of t h e f u l l amount t o t h e widow . . . but an undivided p o r t i o n thereof belongs absolutely t o t h e c h i l d and is dedicated t o its support." Cogdill v. Aetna L i f e Ins. Co. (1931), 90 Mont. 244, 257, 2 P.2d 292, 296. The c o u r t went on t o hold t h a t c h i l d r e n receive f i r s t consideration under t h e a c t , t h a t t h e i r i n t e r e s t s must always be c a r e f u l l y guarded, and t h a t " [ t l h e a c t gives t o t h e c h i l d r e n such an i n t e r e s t i n t h e compensation a s can be l a i d hold of by t h e c o u r t s , and its u l t i m a t e d i s p o s i t i o n controlled; p a r t i c u l a r l y i s t h i s s o when such compensation assumes t h e shape of a commuted payment." ( C i t a t i o n omitted.) Cogdill v. Aetna L i f e I n s . Co., supra. The Workers' Compensation s t a t u t e s have undergone s u b s t a n t i a l amendment s i n c e 1931, but t h e above quoted p r i n c i p l e s still apply because c h i l d r e n a r e s t i l l named as s e p a r a t e b e n e f i c i a r i e s and payments a r e s t i l l made only t o t h e surviving parent. The c o u r t ' s order could r e s u l t i n a s u b s t a n t i a l reduction i n b e n e f i t s t o t h e c h i l d because of t h e termination of payment of b e n e f i t s a t t h e time t h e c h i l d reaches s i x t e e n years of age. This r e q u i r e s t h a t t h e c o u r t consider t h e b e n e f i t t o t h e c h i l d of t h e p r e s e n t lump sum settlement a s compared t o t h e prospective l o s s of b e n e f i t s . There i s t h e r e a l p o s s i b i l i t y t h a t t h e c h i l d ' s i n t e r e s t may c o n f l i c t with t h e mother's a t t h a t p o i n t , and t h a t a guardian ad l i t e m would be required t o p r o t e c t t h e c h i l d ' s i n t e r e s t . The p a r t i e s agree t h a t Rule 1 7 ( c ) , M . R . c ~ v . P . , i s t h e only p r e s e n t a u t h o r i t y i n Montana f o r appointment of a guardian ad litem. The r u l e s of c i v i l procedure a r e n o t d i r e c t l y a p p l i c a b l e t o t h e Workers' Compensation Court, because the c o u r t i s expressly made s u b j e c t t o the provisions of t h e Montana Administrative Procedure Act ( s e c t i o n 39-71- 2903, MCA) and M A P A allows each agency t o promulgate i t s own r u l e s . Federal Rule 17 ( c ) i s s u b s t a n t i a l l y t h e same a s Montana Rule 1 7 ( c ) . The f e d e r a l r u l e has been i n t e r p r e t e d as being d i s c r e t i o n a r y , granting t o t h e f e d e r a l d i s t r i c t c o u r t t h e , power t o choose whether o r n o t t o appoint a guardian ad l i t e m , b u t t h e c o u r t s must f i n d t h a t t h e i n t e r e s t s of t h e minor a r e adequately protected. M.S. v. Wermers ( 8 t h C i r . 1977), 557 F. 2d 170, 174. This c o u r t has adopted a s i m i l a r d i s c r e t i o n a r y approach t o appointment of independent counsel i n divorce/custody cases. "[Tlhe c o u r t s h a l l appoint independent counsel f o r t h e c h i l d [where custody i s i n s e r i o u s d i s p u t e ] o r make a finding s t a t i n g t h e reasons t h a t such appointment was unnecessary." ( C i t a t i o n omitted. ) Matter of Guardianship of G u l l e t t e (1977), 173 Mont. 132, 1 4 0 , 566 P.2d 396, 400. See a l s o I n Mont. re Marriage of Bartmess (1981), - - 631 P.2d 299, 300, 38 St.Rep. 1097, 1098. The Workers' Compensation Court should have appointed a guardian ad l i t e m o r made a finding s t a t i n g t h e reasons why an appointment was unnecessary; b u t because of t h e f a c t s contained i n t h e record i n t h i s case, we f i n d t h a t t h e f a i l u r e t o appoint a guardian ad l i t e m does not c o n s t i t u t e r e v e r s i b l e e r r o r . I n t h i s case t h e r e was a mutual b e n e f i t t o t h e c h i l d and t h e mother i n t h e payment of t h e described debts. I n a d d i t i o n , because of t h e change of t h e method of repayment a s set f o r t h i n t h i s opin- ion, t h e r e i s a very l i m i t e d p r o b a b i l i t y of f i n a n c i a l l o s s t o t h e c h i l d . W e , therefore, hold t h a t the f a i l u r e t o appoint a guardian was not r e v e r s i b l e e r r o r . However, w e admonish t h e Workers' Compensation Court t h a t i n f u t u r e cases, where a c h i l d ' s i n t e r e s t may be e f f e c t e d by any lump sum award, t h e c o u r t s h a l l appoint a guardian ad l i t e m f o r t h e c h i l d o r make a finding s t a t i n g t h e reasons t h a t such appoint- ment i s unnecessary. The Fund argues t h a t no claim f o r any amount over $6,000 should have been heard by t h e Workers' Compensation Court, because only t h e $6,000 claim was ever presented t o t h e d i v i s i o n . The Fund argues (1) t h e r e i s no e s t a b l i s h e d "dispute" a s t o t h e excess money t h a t could g i v e j u r i s d i c t i o n t o t h e c o u r t under s e c t i o n 39-71-2905, MCA, and ( 2 ) t h e c o u r t hearing c o n s t i t u t e s an appeal from an agency, r e q u i r i n g a claimant t o r a i s e a l l i s s u e s before t h e agency, t o exhaust t h e a d m i n i s t r a t i v e remedies, before he can be heard i n court. The claims supervisor t e s t i f i e d t h a t t h e "dispute" d i d n o t concern the amount of t h e advance a s much a s t h e method t o be used f o r recovery. H e s t a t e d t h a t t h e $19,000 claim would c e r t a i n l y have been denied i f presented. Therefore, a d i s p u t e a s t o method of repayment d i d e x i s t ; a l s o , because "Etlhe law n e i t h e r does nor r e q u i r e s i d l e a c t s " , s e c t i o n 1- 3-223, MCA, Dawn should n o t now be required t o go back t o t h e d i v i s i o n and begin again only t o have t h e same i s s u e s a r i s e . Dawn has n o t f a i l e d t o exhaust her a d m i n i s t r a t i v e remedies i n any event. The Workers' Compensation Court i s n o t a full-blown D i s t r i c t Court a c t i n g i n review of an agency decision. It i s an administrative law c o u r t , having l i m i t e d j u r i s d i c t i o n t o decide d i s p u t e s r e l a t i n g t o b e n e f i t s i n a de novo proceeding. See S t a t e ex rel. Uninsured Employer's Mont . Fund v. Hunt (1981), - - , 625 P.2d 539, 542, 38 St.Rep. 421, 424-425. I t should be s u f f i c i e n t t o p r e s e n t i s s u e s a t any time before t h e d i v i s i o n o r t h e Workers' Compensation Court i n order t o o b t a i n review by t h i s Court. Such an approach i s supported by s e c t i o n 39-71-2903, MCA, which s u b j e c t s t h e Workers' Compensation Court t o t h e provisions of M A P A . The Fund's c i t e d a u t h o r i t y f o r r e q u i r i n g p r i o r p r e s e n t a t i o n t o t h e d i v i s i o n i s n o t persuasive. Its p r i n c i p a l case was handed down before t h e Workers' Compensation Court was e s t a b l i s h e d . A t t h e time of t h a t case, t h e d i v i s i o n conducted i t s own contested case hearings l i k e a l l o t h e r agencies. The i s s u e s t h e r e were n o t even presented a t t h e hearing. DeLeary v. Anaconda Aluminum Co. (1975), 168 Mont. 208, 541 P.2d 788. By c l a i m a n t ' s r a i s i n g of a l l i s s u e s i n her o r i g i n a l p e t i t i o n before t h e Workers ' Compensation Court, t h e Fund was a£ forded adequate n o t i c e and opportunity t o defend. The Fund f e a r s a waste of j u d i c i a l resources i f a resolvable controversy i s n o t f i r s t presented t o t h e d i v i s i o n , b u t here, by the d i v i s i o n ' s own admissions, no r e s o l u t i o n could have been had. Allowing claimant t o p r e s e n t i s s u e s r a i s e d f o r the f i r s t time a t t h e hearing i s i n keeping with s e c t i o n 39-71-104, MCA: the act should be liberally construed to effectuate its purposes. 111. Dawn established debts of $14,039 at trial. The court awarded her a $19,622 lump sum advance. Lump sum settlements are granted in exceptional circum- stances. Outstanding indebtedness, pressing need, or circum- stances in which the best interests of the claimant, his family and the general public are served justify such a settlement. Willoughby v. Arthur G. McKee & Co. (1980), - Mont. - , 609 P.2d 700, 702, 37 St.Rep. 620, 623; Kuehn v . National Farmers Union Property & Cas. Co. (1974), 164 Mont. 303, 307, 521 P.2d 921, 924. The decision to award or deny a lump sum settlement will not be interfered with on appeal unless there has been an abuse of discretion. The Workers1 Compensation Court will be presumed correct and affirmed if supported by substantial evidence, and reversed only if the evidence clearly preponderates against its findings. Willoughby, 609 P.2d at 702. Wide discretion will be afforded the Workers' Compensation Court in its determinations. Willoughby, 609 P.2d at 704; Kuehn, 521 P.2d at 923. In determining whether or not there is subtantial evidence to support the Workers' Compensation Court's findings and conclusions, the Supreme Court is required to look to all of the evidence properly before the lower court. Hume Mont. v. St. Regis Paper Co. (1980), - - , 608 P.2d 1063, 1066, 37 St.Rep. 378, 382. Evidence before the court showed existing debts for the purchase and maintenance of a home, living expenses, medical expenses, potential future medical expenses for the child, and the need for a fuel efficient car, in all of which the mutual interests of Dawn and her child are intertwined. In addition, we have the possibility of attorney fees being taken out of the award pursuant to the fee agreement. Considering all such factors, we find no abuse of discre- tion by the court and affirm the award. IV . The Fund argues that Dawn's attorney failed to file his fee agreement prior to the hearing, so has forfeited any claim for attorney fees. No statute or division rule prescribes the time for filing fee agreements. Section 39-71-613, MCA, and Rule 24.29.3801, ARM, set maximum amounts of fees and simply require such filing. In the absence of any specified time, and in view of the court's call for a hearing on fees, the division's asserted desire to regulate fees and to protect the workman are not prevented. No rule has been violated under section 39-71-613(3), MCA, justifying forfeiture. The division and/or the court can certainly adopt their own rules as to time of filing if the question is as important as claimed. Claimant urges the award of attorney fees in connection with this appeal. When an appeal is entirely unfounded and causes delay, respondent is entitled to reasonable costs and attorney fees under Rule 32, M.R.App.Civ.P. Carbon County v. Schwend Mont. (1979) - - , 594 P.2d 1121, 1127, 36 St.Rep. 917, 924-925. We find that the Fund in good faith raised significant issues on appeal. We, therefore, do not award attorney fees for the appellate proceedings. VI . We remand the case to the Workers' Compensation Court for the following action: (1) Modification of the order awarding lump sum advance to provide that recovery of the amount of the advance shall be repayable out of the advance to Dawn in the event of her remarriage, or if she does not remarry, out of her biweekly benefits received after her child ceases to be a beneficiary, or in the event that the claimant dies, that recovery be made out of the child's benefits commencing at her sixteenth birthday; all as agreed to by claimant. (2) Determination by the court of the amount of the attorney fees to be awarded to claimant's attorney and the party responsible for the payment of such fees and other costs. We Concur: 24 Chief -~?$~Pd~4.e~ Justice