y 

No. 95-170 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1995 

CNA INSURANCE COMPANIES, 

Petitioner and Appellant, 

v. 

KENNETH RAYLON DUNN, UNINSURED EMPLOYERS' 

FUND, and BIG TRUCK PRODUCTIONS, 

Respondents and Respondents. 

APPEAL FROM: Workers' Compensation Court, 

The Honorable Mike McCarter, Judge presiding. 

COUNSEL OF RECORD: 

Filed: 

For Appellant: 

Todd A. Hammer, Warden, Christiansen, 

Johnson & Berg, Kalispell, Montana 

For Respondent: 

Chris J. Ragar, Attorney at Law, 

Bozeman, Montana (for Dunn) 

Kevin Braun, Department of Labor & Industry, 

Helena, Montana 

Beth Heckscher, Big Truck Productions, 

Hollywood, California 

Submitted on Briefs: August 3, 1995 

Decided: September 21, 1995 

I Clerk 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

The petitioner, CNA Insurance Companies, filed a petition for 

declaratory judgment in the Workers' Compensation Court of the 

State of Montana in which it sought a determination that it 

provided workers' compensation insurance coverage to Big Truck 

Productions for inj uries sustained by Kenneth R. Dunn. The 

Workers' Compensation Court concluded that although it had 

jurisdiction to decide the issue raised by CNA's petition, it was 

not required to do so, and dismissed the petition without 

prejudice. CNA appeals from the order and judgment of the Workers' 

Compensation Court. We affirm the Workers' Compensation Court. 

Although a number of issues are raised by CNA on appeal, we 

find the following issues dispositive. 

1. Did the Workers' Compensation Court have either exclusive 

or concurrent jurisdiction to determine whether Dunn's employer was 

insured against workers' compensation claims at the time of Dunn's 

work-related accident and injury? 

2. Should sanctions be imposed against CNA for filing a 

frivolous appeal? 

FACTUAL BACKGROUND 

In pleadings filed in either the Workers' Compensation Court 

or the District Court for the Third Judicial District in Powell 

County, Dunn alleged the following facts: 

On August 17, 1993, Dunn suffered an industrial injury arising 

out of and in the course and scope of his employment with Big 

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Truck. Big Truck first informed him that it was covered by a 

workers' compensation policy through its payroll company, Axium. 

Next, Big Truck asserted that Dunn was not entitled to compensation 

benefits because he had signed a release absolving his employer 

from responsibility for those benefits. 

After his injury, Dunn learned from the State Fund that Big 

Truck's policy with Axium did not cover him. He also learned from 

the Montana Department of Labor that it had no notice/information/ 

or election of workers' compensation coverage for Big Truck at any 

time in the State of Montana. Therefore, on February 16, 1994, 

Dunn filed an independent action against Big Truck in Powell County 

District Court pursuant to § 39-71-515, MCA. Among other 

allegations, Dunn alleged that he was an employee of Big Truck 

when, on August 17, 1993, he suffered an industrial injury arising 

out of and in the course and scope of his employment; that Big 

Truck was not, at that time, properly insured against workers' 

compensation claims; and that, therefore, Big Truck was liable 

pursuant to § 39-71-515, MCA, for damages in an amount equal to the 

benefits Dunn would have received had Big Truck been insured. 

Dunn's District Court complaint was served on Big Truck on 

March 23, 1994. Two days later, Big Truck, for the first time, 

asserted that it was covered against Dunn's claim by CNA. 

On December 15, 1994, Dunn filed an amended complaint in 

District Court in which he added claims of fraud and negligent 

misrepresentation. 

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On November 22, 1994, after receiving notice of Dunn's 

proposed amendment, the same attorney who was defending Big Truck 

in the District Court action filed a petition in the Workers' 

Compensation Court on behalf of CNA. In that petition, CNA sought 

a determination that its policy provided workers' compensation 

insurance coverage to Big Truck for the injury alleged by Dunn. 

After appropriately noting that the relief sought by CNA was 

"odd" because "[a] n insurer is free to admit liability without 

permission or order of the Court. It is not harmed if the injured 

worker refuses to accept benefits," the Workers' Compensation Court 

dismissed CNA' s petition. It concluded that although it had 

jurisdiction to decide the issues raised, it was not required to do 

so and in exercising its discretion not to do so, it observed that: 

The only foreseeable impact of a decision by this Court 

is the impact it would have in the district court action. 

Indeed, the present petition appears to be a calculated 

attempt to circumvent a determination by the district 

court. 

ISSUE 1 

Did the Workers' Compensation Court have either exclusive or 

concurrent jurisdiction to determine whether Dunn's employer was 

insured against workers' compensation claims at the time of Dunn's 

work-related accident and injury? 

We review the Workers' Compensation Court's conclusions of law 

to determine whether they are correct. Stordalen v. Ricci's Food Farm 

(1993), 261 Mont. 256, 258, 862 P.2d 393, 394; Martelliv. Anaconda-Deer 

Lodge County (1993), 258 Mont. 166, 168, 852 P.2d 579, 580. 

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In Bohmerv. UninsuredEmployers'Fund (1994), 266 Mont. 289, 292, 880 

P.2d 816, 818, we held that when a worker sues an uninsured 

employer because of a work-related injury pursuant to § 39-71-515, 

MCA, the action and all its "integral elements" are the exclusive 

jurisdiction of the district court. The Workers' Compensation 

Court distinguished Bohmer by concluding that it was not asked to 

exercise jurisdiction over an action commenced pursuant 

§ 39-71-515, MCA, but rather, it was being asked to determine an 

insurer's liability for benefits. It held that while CNA' s 

petition may raise questions of fact common to those raised in the 

District Court action, the relief sought by CNA was independent of 

that action. CNA agrees with the Workers' Compensation Court's 

conclusion that Bohmer is inapplicable, but contends that the 

Workers' Compensation Court had exclusive jurisdiction over this 

matter and erred when it held that the Powell County District Court 

also had jurisdiction. Dunn, on the other hand, contends that 

pursuant to our decision in Bohmer, the District Court had exclusive 

jurisdiction to decide whether Big Truck was insured at the time of 

his injury. 

In Bohmer, the injured employee sued his employer in district 

court as an uninsured employer. The employer agreed it was 

uninsured. The employee then petitioned the Workers' Compensation 

Court to determine the benefits to which he was entitled. Bohmer, 

880 P.2d at 817. This Court was, therefore, required to reconcile 

the Workers' Compensation Court's statutory jurisdictional grant at 

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\ I 

§ 39-71-2905, MCA, with that jurisdiction provided to the district 

court pursuant to §§ 39-71-515 and -516, MCA. 

Section 39-71-515(1), MCA, provides: 

An injured employee or the employee's beneficiaries have 

an independent cause of action against an uninsured 

employer for failure to be enrolled in a compensation 

plan as required by this chapter. 

Section 39-71-516, MCA, provides in part that "[a]n injured 

employee . pursuing an independent cause of action pursuant to 

39-71-515 must bring such action in the district court " 

(Emphasis added.) 

Prior to the commencement of this action in the workers' 

Compensation Court, Dunn had filed suit in district court pursuant 

to § 39-71-516, MCA, based on his allegation and presumed belief 

that Big Truck was an uninsured employer. An uninsured employer is 

defined in § 39-71-501, MCA, as "an employer who has not properly 

complied with the provisions of 39-71-401 [requiring an employer to 

elect to be bound by a plan] " Dunn alleged that before filing the 

suit he learned from the Department of Labor that it had no 

notice/information/or election of workers' compensation coverage 

for Big Truck at any time in the State of Montana. This was a 

sufficient factual basis upon which to invoke the District Court's 

jurisdiction pursuant to § 39-71-516, MCA. Once the District 

Court's jurisdiction was properly invoked, it had exclusive 

jurisdiction over all of the "integral elements" of Dunn's claim. 

CNA contends that Bohmer is distinguishable because there the 

extent of benefits was at issue while here the uninsured status of 

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the employer is at issue. These distinctions make no difference. 

In Bohmer, we found that once an independent cause of action 

pursuant to § 39-71-515, MCA, is brought in district court, that 

district court has exclusive jurisdiction over any issues which are 

an integral part of the cause of action. 

We reasoned that: 

The interpretation which harmonizes and gives effect to 

both § 39-71-516, MCA, and § 39-71-2905, MCA, [providing 

that, "the workers' compensation judge has exclusive 

jurisdiction to make determinations concerning disputes 

under chapter 71, except as provided in ... 39-71-516"] 

is that the legislature intended to prevent the 

Workers' Compensation Court from exercising jurisdiction 

over the new cause of action over which it specifically 

vested jurisdiction in the district courts. 

Bohmer's argument that the jurisdiction vested in 

the district courts pursuant to § 39-71-516, MCA, is 

confined to the liability issues raised in § 39-71-

515(2), MCA, is not persuasive. Such an interpretation 

would limit the District Court's jurisdiction to 

questions relating to Lybeck's failure to enroll in a 

compensation plan and would exclude the damages issue 

which is an integral element of the cause of action. 

Bohmer, 880 P.2d at 818. 

Section 39-71-515, MCA, provides a cause of action which 

includes as an essential element the employer's failure to insure 

itself against workers' compensation claims. In order for Dunn to 

prevail in the District Court, he must prove that Big Truck was 

uninsured at the time of his injury. 

Permitting piecemeal litigation of the various issues involved 

in Dunn's District Court action would be a terrible waste of 

judicial resources and the parties' time and money. But most 

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importantly, it would fly in the face of the district court's 

exclusive jurisdiction which is clearly provided for ln 

§ 39-71-516, MCA. 

CNA also contends that the Workers' Compensation Court's 

dismissal of its petition effectively denied its constitutional 

right to full legal redress pursuant to Article II, Section 16, of 

the Montana Constitution, and violated its rights to due process 

and equal protection of the law in violation of Article II, 

Sections 17 and 4, of the Montana Constitution. 

The most appropriate response to this claim is to echo the 

Workers' Compensation Court's observation that it is indeed "odd." 

First, since when does an insurer have a greater interest in 

providing coverage than the employer (represented by the same 

attorney) has in obtaining coverage? Second, an insurer does not 

need a court order to admit liability and tender benefits. If the 

employee does not want to accept them, how is the insurer damaged? 

Finally, if, for some reason not readily apparent to this Court, 

CNA has a greater or different interest in the resolution of the 

coverage issue than Big Truck has, there are numerous procedural 

avenues available by which to involve itself in the pending 

District Court action. Through intervention, interpleader, or 

permissive joinder CNA could have seen that its interests were 

adequately represented in the District Court action. See Rules 

20 (a), 22, and 24, M.R.Civ.P. CNA was provided plenty of due 

process. Having not concerned itself with any of these available 

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1 ; 

remedies, the Workers' Compensation Court's observation about CNA's 

probable motivation is well taken. 

While we disagree with the Workers' Compensation Court's 

conclusion that it had concurrent jurisdiction to decide the issue 

presented in CNA's petition, we conclude that for the stated 

reasons, the court's order dismissing CNA's petition was correct. 

"We will affirm a court's correct result regardless of its 

reasoning." Bohmer, 880 P. 2 d at 81 7 . Therefore, the order and 

judgment of the Workers' Compensation Court are affirmed. 

ISSUE 2 

Should sanctions be imposed against CNA for filing a frivolous 

appeal? 

As a final matter, Dunn requests the imposition of sanctions 

against CNA pursuant to Rule 32, M.R.App.P. Sanctions on appeal, 

in the form of damages, are appropriate if this Court "is satisfied 

from the record and the presentation of the appeal . that the 

same was taken without substantial or reasonable grounds 

Rule 32, M.R.App.P. 

" 

In Reillyv. Farm Credit Bank of Spokane (1993), 261 Mont. 532, 535, 863 

P.2d 420, 

unfounded 

422, we stated that "[w] hen an appeal 

and causes delay, the respondent is 

is entirely 

entitled to 

reasonable costs and attorney's fees." In this case, even the 

original petition in the Workers' Compensation Court was 

unnecessary and appears to have been brought for purposes of delay. 

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We agree with the Workers' Compensation Court that CNA's sole 

motivation for its petition, and subsequently for this appeal, is 

to circumvent determination of this issue by the District Court. 

As discussed in response to Issue 1, CNA could have assured that 

its interests were represented by intervention in the civil action 

already commenced. Instead, its attorney, who is also the sole 

attorney of record for Big Truck in the District Court action, has 

imposed upon the Workers' Compensation Court, and now this Court, 

issues that should have been disposed of in the District Court 

action. 

In addition, Dunn has been caused additional and unnecessary 

expense and delay. Whether his claim has merit is not the point. 

The point is that he has a right to have it resolved in the most 

expeditious and least expensive manner possible. CNA, with its 

greater resources, has no right to use the courts of this state to 

frustrate that objective. 

This Court is "burdened by a heavy volume of business and the 

problem is needlessly aggravated when frivolous appeals are taken." 

Furbee v. Vintage Press, Inc. (D.C. Cir. 1972), 464 F.2d 835, 837. 

We, therefore, conclude that this is a proper case in which to 

impose sanctions in the amount of $500 against CNA and its attorney 

for a frivolous appeal. 

The order of the Workers' Compensation Court which dismissed 

CNA's petition is affirmed. Sanctions, as set forth above, are 

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imposed and this matter is remanded to the Workers I Compensation 

Court for entry of judgment consistent with this opinion. 

We concur: 

Justices 

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