Case Title: ALASKA PACIFIC ASSURANCE CO v L

Citation: 

Docket Number: 79-103

State: montana

Court: Montana Supreme Court

Date: 1981-01-12T00:00:00Z

Document:
No. 7 9 - 1 0 3 I N THE SUPREME COURT OF THE STATE OF MONTANA 1 9 8 1 ALASKA P A C I F I C ASSURANCE COMPANY, Insurer and A p p e l l a n t , and CLARENCE R. RAINES, C l a i m a n t and A p p e l l a n t , -vs- L. H. C . , INC., E m p l o y e r and R e s p o n d e n t , and MARIE J. HARTMAN, e t a l . , A p p l i c a n t s i n Intervention and R e s p o n d e n t s . A p p e a l f r o m : Workers' C o m p e n s a t i o n C o u r t , T h e H o n o r a b l e W i l l i a m H u n t , Judge presiding. C o u n s e l of R e c o r d : For A p p e l l a n t : U t i c k and G r o s f i e l d , H e l e n a , M o n t a n a A l e x C. M o r r i s o n , P l a i n s , M o n t a n a For R e s p o n d e n t : C. E u g e n e P h i l l i p s , R a l i s p e l l , M o n t a n a R o b e r t L. Fletcher, T h o m p s o n F a l l s , M o n t a n a S u b m i t t e d on B r i e f s : May 2 7 , 1 9 8 0 D e c i d e d : 1 2 /?r,/ F i l e d : L f n q 1 2 1981 Mr. Justice Daniel J. Shea delivered the Opinion of the Court. This appeal comes from the Workers' Compensation Court as a result of that court's refusal to assume jurisdiction to determine whether Clarence R . Raines was, at the time of a collision between two logging trucks, the employee of L.H.C., Inc., or an independent contractor in relation to L.H.C., Inc. On September 10, 1980, we filed our opinion in this case (37 St.Rep. 16161, affirming the Workers' Compensation Court and fining Alaska Pacific Assurance Company $500 for taking a frivolous appeal. The insurance company promptly filed a petition for rehearing alleging that it was "shocked" by our opinion. This opinion shall take the place of the previous one entered on September 10, 1980, and our former opinion is withdrawn. The alleged "shock" of Alaska Pacific is apparently premised on its belief that "the decision is wrong on the facts and law." We agree that our previous opinion misstated the precise nature of the proceedings before the Workers' Compensation Court; but the correction we make here does not impel us to change the result we reached in our first opinion. We also agree that we overstated our conclusion that the Workers' Compensation Court is not empowered to render declaratory judgments; but the correction we make here also does not impel us to change the result reached in our former opinion. The appeal is as frivolous upon our reconsideration as we determined it to be in our first con- sideration. Our explanation follows. This dispute has its background in the death of Thomas H. Hartman, and a resulting lawsuit filed in Sanders County District Court by his widow, who sued Clarence R. ~aines for the wrongful death of her husband. At the time of his -2- death, ~homas H . Hartman was an employee of L.H.C., Inc. and he hauled logs for this company. Clarence R. Raines also hauled logs for the same company--but a dispute exists as to whether he was an employee of this company, or whether he was solely an independent contractor. As we shall explain, a final determination that Raines was an employee of L.H.C., Inc. at the time of the accident, will absolve Raines of any liability to Hartman's widow, and it will also, of course, relieve Alaska Pacific of any contractual duty to represent Raines in that suit, for Alaska Pacific is Raines' liability insurance carrier. On the other hand, a final determination that Raines had an independent contractor relationship with L.H.C., Inc., will mean that Hartman's widow can maintain her wrongful death action against Raines, and that Alaska Pacific will be obligated to defend the lawsuit as well as pay any potential judgment to the extent of the insurance coverage. The accident resulting in Hartman's death, occurred on June 28, 1978, when a logging truck driven by Hartman, collided with a logging truck driven by ~aines. Hartman's widow collected death benefits from L.H.C., Inc. pursuant to the Workers' Compensation Act--Alaska Pacific is the compensation insurance carrier for L.H.C., Inc. No dispute exists as to the right of Hartman's widow to collect these benefits, or as to the amount of the benefits. Although we do not know when the suit was filed, Hartman's widow also filed a wrongful death suit against Clarence Raines, alleging that ~aines negligently caused Hartman's death. Alaska Pacific again stepped into the picture, this time as the liability insurance carrier for Clarence Raines. Sometime after the June 28, 1979 accident, ~aines filed a claim to collect Workers' Compensation benefits and Alaska -3- P a c i f i c then asked t h e Workers' Compensation Division t o i n v e s t i g a t e and determine whether Raines was an employee of L.H.C., Inc., o r whether he w a s an independent contractor. ~ a i n e s could c o l l e c t Workers' Compensation b e n e f i t s only upon a determination t h a t he w a s an employee of L.H.C., Inc. (The record before us f a i l s t o t e l l us whether Raines f i l e d h i s Workers' Compensation claim a f t e r he and Alaska P a c i f i c w e r e n o t i f i e d t h a t Hartman's widow was making a claim a g a i n s t them f o r t h e wrongful death of her husband.) I t appears t h a t a f t e r investigation, t h e Workers' Com- pensation Division decided t h a t although t h e r e was a w r i t t e n c o n t r a c t purporting t o c r e a t e an independent contractor r e l a t i o n s h i p between Raines and L.H.C., Inc., Raines w a s an employee, a t l e a s t f o r purposes of t h e Workers' Compensation A c t . It a l s o appears t h a t L.H.C., Inc. disputes t h i s deter- mination. I n any event, it i s undisputed t h a t Raines c o l l e c t e d a t o t a l of about $60 i n b e n e f i t s from Alaska P a c i f i c . N o w back t o t h e wrongful death a c t i o n f i l e d a g a i n s t Raines i n s t a t e District Court. A s a defense t o t h e claim, Raines, through counsel representing both himself and Alaska P a c i f i c , moved t h e court t o dismiss t h e lawsuit on t h e ground t h a t Raines w a s a l s o an employee of L.H.C., Inc., a t t h e t i m e of t h e accident i n which Hartman w a s k i l l e d , and t h i s being so, t h e widow could not bring an action a g a i n s t a fellow servant, but w a s confined t o t h e r e c e i p t of b e n e f i t s under the Workers' Compensation A c t . But Alaska P a c i f i c and Raines were not content t o l e t t h e D i s t r i c t Court r u l e on this motion. Two days a f t e r they had f i l e d t h i s motion, they f i l e d a p e t i t i o n before t h e Workers' Compensation Court and sought a r u l i n g t h a t Raines was an employee and not an independent contractor. The opposing p a r t y named i n t h e p e t i t i o n was L.H.C., Inc. This p e t i t i o n was signed by counsel acting f o r both Alaska P a c i f i c and ~ a i n e s . -4- The essence of t h e p e t i t i o n before t h e Workers' Com- pensation Court is t h a t Alaska P a c i f i c wanted t o pay b e n e f i t s t o Raines, and t h a t Raines wanted t o receive them, but t h a t L.H.C., Inc., would not permit t h e s e payments because of i t s r e f u s a l t o acknowledge t h a t Raines was one of its employees. The p e t i t i o n r e c i t e d t h e former d e c l a r a t i o n of t h e Workers' Compensation Division, and a l s o s t a t e d t h a t Alaska P a c i f i c had paid b e n e f i t s t o Raines based on t h i s determination. (The p e t i t i o n d i d not reveal, however, t h a t Alaska P a c i f i c had paid only $60 i n b e n e f i t s , and t h a t Raines was n o t a l l e g i n g t h a t he w a s e n t i t l e d t o any more.) I n t h e f i n a l p a r t of t h e j o i n t p e t i t i o n , Alaska P a c i f i c and Raines a l l e g e t h a t because L.H.C., Inc. refuses t o acknowledge t h a t Raines was an employee, t h e Workers' Compensation Court should s t e p i n and make a ruling. Before t h e Workers' Compensation Court entered a r u l i n g , L.H.C., Inc. made its appearance--and e s s e n t i a l l y took t h e p o s i t i o n t h a t t h e r e w a s r e a l l y no i s s u e before t h a t court, and t h a t i n any event, the same i s s u e had f i r s t been presented before t h e District Court i n t h e wrongful death a c t i o n , and t h a t t h e i s s u e should be resolved there. M r s . Hartman intervened through counsel i n order t h a t t h e judge would know t h e possible e f f e c t t h a t a decision of t h e Workers' Compensation Court would have on her wrongful death a c t i o n f i l e d i n District Court a g a i n s t Raines. She a l s o argued t h a t t h e i s s u e was f i r s t r a i s e d i n D i s t r i c t Court, and t h a t it should f i r s t be resolved there. O n October 12, 1979, t h e District Court denied t h e motion t o dismiss, b u t not on t h e merits--apparently deciding t h a t t h e motion r a i s e d a f a c t u a l i s s u e on which evidence would be taken before t h e question could be decided. Two weeks l a t e r , on October 26, 1979, t h e Workers' Compensation Court refused t o take j u r i s d i c t i o n and dismissed t h e p e t i t i o n without prejudice. It was dismissed because of a b e l i e f t h a t -5- the case involved an application of the race-to-the-court- house theory, and that the issue should be decided in District Court because it was first raised there. From this decision, Alaska Pacific takes its appeal. In our original opinion in this appeal, we erroneously stated that Alaska Pacific and Raines filed their petition before the Workers' Compensation Court when there was absolutely no issue before that court upon which it should take juris- diction. For this reason, we concluded that the request was for the court to enter a declaratory judgment. We therefore, erroneously concluded that the Workers' Compensation Court is not empowered to issue declaratory judgments. In this statement, we were wrong to the extent that the Workers' Compensation Court, which operates under the Montana Admini- strative Procedure Act (section 39-71-2903, MCA) has a limited right to issue declaratory rulings (section 2-4-501, MCA) . The question then is whether there was an issue before the Workers' Compensation Court in need of resolution, or whether the proceedings before that court were commenced with the objective of obtaining a ruling there and then taking the ruling before the District Court to be used in support of Raines' motion to dismiss the wrongful death action filed by Hartman's widow against Raines. Undoubtedly, a legitimate dispute did not exist that required the Workers' Compensation Court to act. The petition before that court does not in any way indicate that Raines was then being deprived of compensation benefits. At the hearing before the Workers' Compensation Court, there was no allegation that Raines was being deprived of his just benefits under the Act because of the unwillingness of L.H.C., Inc. to admit that he was an employee. Counsel for Alaska pacific -6- at no time indicated at the hearing any great concern for Raines as an employee who may not get his benefits; rather, counsel was interested only in obtaining a ruling from the workersr Compensation Court that could then hopefully be used most effectively in District Court to determine whether or not Raines was an employee of L.H.C., Inc. Alaska Pacific makes the bald statement that, "regardless of the effect of one action on the other, Raines was entitled to a speedy determination of his right to compensation from the appropriate tribunal, -- and this Court's opinion has deprived him --- of that." (Emphasis added.) Raines, however, does not make that contention. He is not before this Court on a petition for rehearing, seeking to have this Court reverse its earlier holding. Nor is this a case where Raines is threatened with having compensation benefits cut off because a recalcitrant employer will not cooperate. It is a case where Alaska Pacific and Raines (the insured and the insurer) have a common interest to defeat the right of Hartman's widow to proceed with her wrongful death suit in District Court, by a ruling that Raines was an employee of L.H.C., Inc. Also, should Raines have an actual need for compensation benefits as a result of any injuries sustained in the same accident that took Hartman's life, nothing prevents Alaska Pacific from voluntarily paying them. To do this, neither Alaska Pacific nor Raines need to get the consent of L.H.C., Inc. The only reasonable conclusion we can reach is that Alaska Pacific and Raines filed their petition (signed by the same counsel who represented Raines and Alaska Pacific in the District Court suit) in an effort to sidetrack the wrongful death action filed in District Court. At no time did Raines or Alaska Pacific place an issue before the -7- Workers' Compensation Court t h a t was i n need of resolution. Neither Raines nor Alaska P a c i f i c was concerned with obtaining compensation b e n e f i t s f o r Raines; r a t h e r , they were concerned with a f f e c t i n g t h e D i s t r i c t Court s u i t by obtaining a r u l i n g before t h e Workersr Compensation Court t h a t Raines was an employee of L.H.C., Inc. This is c l e a r l y an instance where an insurance company has abused t h e c o u r t system i n its e f f o r t s t o avoid meeting t h e i s s u e s head-on i n D i s t r i c t Court. For t h i s reason, w e impose t h e same sanctions imposed i n our earlier opinion i n t h e same case. W e assess a penalty a g a i n s t t h e Alaska P a c i f i c Assurance Company, i n t h e amount of $500, f o r prosecuting a frivolous appeal. See Rule 32, M.R.App.Civ.P. W e cannot ignore t h e f a c t t h a t t h e insurance company, r a t h e r than Raines, is t h e r e a l p a r t y i n i n t e r e s t i n these proceedings, and t h e r e f o r e , t h e insurance company should bear f u l l r e s p o n s i b i l i t y f o r bringing t h i s frivolous appeal. W e order t h a t $250 be paid by t h e insurance company t o L.H.C., Inc., and t h a t $250 be paid by t h e insurance company t o Marie J. Hartman. L.H.C., Inc. was d i r e c t l y forced i n t o t h e Workers' Compensation Court proceedings, and t h e r e had t o defend its i n t e r e s t s . Marie J. Hartman, intervened i n t h e Workers' Compensation Court proceedings s o t h a t her i n t e r e s t would be considered there. Under t h e circumstances, she had no o t h e r choice. W e note, f i n a l l y , t h a t whether Raines w a s an employee o r an independent contractor with r e l a t i o n t o L.H.C., Inc., i s f i r s t a question f o r t h e D i s t r i c t Court. The question has not been decided on t h e m e r i t s . I f it is determined, and i f t h e r e i s a f i n a l determination of t h e underlying lawsuit a g a i n s t Raines, Raines and t h e insurance company are protected i n t h e event of an adverse judgment, by t h e i r r i g h t t o appeal. W e express no opinion a s t o the m e r i t s of -8- the employer-independent contractor issue. We state only that the court system should not be abused in the process of getting this issue resolved. It was abused in this case, and the fault can be laid directly on the doorstep of the insurance company. The order of the Workers' Compensation Court declining jurisdiction is affirmed. We Concur: Chief Justice Justices