No. 79-103 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

ALASKA PACIFIC ASSURANCE COMPANY, Insurer and Appellant, 

and CLARENCE R. RAINES, 

Claimant and Appellant, 

-vsL. H. C., INC., Employer and Respondent, 

and 

MARIE J. HARTMAN, et al., 

Applicants in Intervention and 

Respondents. 

Appeal from: Workers' Compensation Court, The Honorable William 

Hunt, Judge presiding. 

Counsel of Record: 

For Appellant: 

Utick and Grosfield, Helena, Montana 

Alex C. Morrison, Plains, Montana 

For Respondent: 

C. Eugene Phillips, Ralispell, Montana 

Robert L. Fletcher, Thompson Falls, Montana 

Submitted on Briefs: May 27, 1980 

Decided: 12 /?r,/ 

Filed : Lfnq 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opinion is withdrawn.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 consideration. 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 

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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 

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Pacific then asked the Workers' Compensation Division to 

investigate and determine whether Raines was an employee of 

L.H.C., Inc., or whether he was an independent contractor. 

~aines could collect Workers' Compensation benefits only upon 

a determination that he was an employee of L.H.C., Inc. (The 

record before us fails to tell us whether Raines filed his 

Workers' Compensation claim after he and Alaska Pacific were 

notified that Hartman's widow was making a claim against them 

for the wrongful death of her husband.) 

It appears that after investigation, the Workers' Compensation Division decided that although there was a written 

contract purporting to create an independent contractor 

relationship between Raines and L.H.C., Inc., Raines was an 

employee, at least for purposes of the Workers' Compensation 

Act. It also appears that L.H.C., Inc. disputes this determination. In any event, it is undisputed that Raines collected 

a total of about $60 in benefits from Alaska Pacific. 

Now back to the wrongful death action filed against Raines 

in state District Court. As a defense to the claim, Raines, 

through counsel representing both himself and Alaska Pacific, 

moved the court to dismiss the lawsuit on the ground that Raines 

was also an employee of L.H.C., Inc., at the time of the accident 

in which Hartman was killed, and this being so, the widow could 

not bring an action against a fellow servant, but was confined 

to the receipt of benefits under the Workers' Compensation Act. 

But Alaska Pacific and Raines were not content to let the 

District Court rule on this motion. Two days after they had 

filed this motion, they filed a petition before the Workers' 

Compensation Court and sought a ruling that Raines was an 

employee and not an independent contractor. The opposing party 

named in the petition was L.H.C., Inc. This petition was signed 

by counsel acting for both Alaska Pacific and ~aines. 

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The essence of the petition before the Workers' Compensation Court is that Alaska Pacific wanted to pay benefits 

to Raines, and that Raines wanted to receive them, but that 

L.H.C., Inc., would not permit these payments because of its 

refusal to acknowledge that Raines was one of its employees. 

The petition recited the former declaration of the Workers' 

Compensation Division, and also stated that Alaska Pacific 

had paid benefits to Raines based on this determination. (The 

petition did not reveal, however, that Alaska Pacific had paid 

only $60 in benefits, and that Raines was not alleging that 

he was entitled to any more.) In the final part of the joint 

petition, Alaska Pacific and Raines allege that because L.H.C., 

Inc. refuses to acknowledge that Raines was an employee, the 

Workers' Compensation Court should step in and make a ruling. 

Before the Workers' Compensation Court entered a ruling, 

L.H.C., Inc. made its appearance--and essentially took the 

position that there was really no issue before that court, 

and that in any event, the same issue had first been presented 

before the District Court in the wrongful death action, and 

that the issue should be resolved there. Mrs. Hartman intervened 

through counsel in order that the judge would know the possible 

effect that a decision of the Workers' Compensation Court would 

have on her wrongful death action filed in District Court against 

Raines. She also argued that the issue was first raised in 

District Court, and that it should first be resolved there. 

On October 12, 1979, the District Court denied the 

motion to dismiss, but not on the merits--apparently deciding 

that the motion raised a factual issue on which evidence 

would be taken before the question could be decided. Two weeks 

later, on October 26, 1979, the Workers' Compensation Court 

refused to take jurisdiction and dismissed the petition 

without prejudice. It was dismissed because of a belief that 

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the case involved an application of the race-to-the-courthouse 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 jurisdiction. 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 Administrative 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 

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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 

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Workers' Compensation Court that was in need of resolution. 

Neither Raines nor Alaska Pacific was concerned with obtaining 

compensation benefits for Raines; rather, they were concerned 

with affecting the District Court suit by obtaining a ruling 

before the Workersr Compensation Court that Raines was an 

employee of L.H.C., Inc. This is clearly an instance where 

an insurance company has abused the court system in its 

efforts to avoid meeting the issues head-on in District 

Court. For this reason, we impose the same sanctions imposed 

in our earlier opinion in the same case. 

We assess a penalty against the Alaska Pacific Assurance 

Company, in the amount of $500, for prosecuting a frivolous 

appeal. See Rule 32, M.R.App.Civ.P. We cannot ignore the 

fact that the insurance company, rather than Raines, is the 

real party in interest in these proceedings, and therefore, 

the insurance company should bear full responsibility for 

bringing this frivolous appeal. We order that $250 be paid 

by the insurance company to L.H.C., Inc., and that $250 be 

paid by the insurance company to Marie J. Hartman. L.H.C., 

Inc. was directly forced into the Workers' Compensation 

Court proceedings, and there had to defend its interests. 

Marie J. Hartman, intervened in the Workers' Compensation 

Court proceedings so that her interest would be considered 

there. Under the circumstances, she had no other choice. 

We note, finally, that whether Raines was an employee 

or an independent contractor with relation to L.H.C., Inc., 

is first a question for the District Court. The question 

has not been decided on the merits. If it is determined, 

and if there is a final determination of the underlying 

lawsuit against Raines, Raines and the insurance company are 

protected in the event of an adverse judgment, by their 

right to appeal. We express no opinion as to the merits of 

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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