NO. 84-202 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1984 

KELLEHER LAW OFFICE, 

Claimant and Appellant, 

-vsSTATE COMPENSATION INSURANCE FUND, 

Defendant and Respondent. 

APPEAL FROM: Workers' Compensation Court, The Honorable Timothy 

Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Kelleher Law Office, Billings, Montana 

For Respondent: 

Thomas E. Martello, Helena, Montana 

Submitted on Briefs: August 2, 1984 

Decided: November 28, 1984 

Filed: r\i 0 V 2 d 1984 

Clerk 
Mr. Justice Frank B. Morrison delivered the Opinion of the 

Court. 

Kelleher filed an action in the Workers' Compensation 

Court for an order directing the Fund to pay attorney fees 

and costs. The Workers' Compensation Judge denied petitioner's claim on the grounds that it lacked jurisdiction. 

Kelleher appeals. 

Timothy Richards was injured on September 10, 1382. Big 

Horn Calcium, Richards' employer, was insured by State Compensation Insurance Fund (Fund), which d-enied Richards' 

claim. Richards retained the Kelleher Law Office to represent him. 

Kelleher's retainer agreement with Richards was drafted 

pursuant to requirements of the Administrator of the Division 

of Workers' Compensation and was filed with the Division. 

The contingency agreement entitled attorney to 25 percent of 

the amount recovered. 

An attorney in the Kelleher Law Office negotiated a 

settlement with Fund. In addition to claimant's hospital and 

medical bills, Fund agreed to compensate Richards $1,162.46, 

representing 4 3/7 weeks of temporary tota-l benefits. Attorney was entitled to $290.62 in attorney fees and $32.70 in 

costs. Fund sent the state warrant directly to the claimant. 

Kelleher's name was not listed as payee on the warrant. 

Richards left the state without paying Kelleher Law Office 

for attorney's fees or reimbursing it for costs as provided 

for in the retainer agreement on file with the Division. 

In response to a demand made to the Administrator that 

the Fund be directed to pay the 25 percent attorney fee and 

related costs, the Administrator sent an opinion dated 24 

March 1983, to Kelleher denying that the Fund was liable. 
Kelleher then filed an action against the Fund in the 

Workers' Compensation Court for an order directing Fund to 

pay attorneys fees and costs. Petitioner also requested a 

declaratory ruling that Fund must list the attorney's name as 

payee on all compensation drafts. Workers ' Compensation 

judge denied the claim based on lack of jurisdiction. 

On appeal these issues are presented: 

1. Does a claimant's attorney have a lien on the proceeds of his client's workers' compensation award? 

2. Is the lien created at the moment an agreement is 

reached between the attorney and the insurer? 

3. Does the Workers ' Compensation Court have jurisdiction to enforce a lien arising out of a workers' compensation 

claim? 

4. Must the insurer list the attorney's name as a payee 

on the draft representing the proceeds of the workers compensation award or settlement? 

5. Is the petitioner entitled to en award of reasonable 

attorney fees and costs for prosecuting this action? 

6. Is the Respondent liable for interest on the attorney fees? 

In State ex rel. Uninsured Fund v. Hunt (Mont. 1981) , 

625 P.2d 539, 38 St.Rep. 421, interpreting 39-71-2905, MCA, 

this Court recognized that whenever the dispute is related to 

workers' compensation benefits payable to a claimant, the 

jurisdiction of the Workers' Compensa.tion Court goes beyond 

merely providing a forum for adjudicating workers' claims. 

The Workers Compensation Court was granted broad jurisdictional powers by the unequivocal language of this Court: 

"Although the Workers' Compensation Court is not 

vested with the full powers of a District Court, it 

nevertheless has been given broad powers concerning 

benefits due and payable to claimants under the 

Act. It has the power to determine which of 
several parties is liable to pay the Workers' 

Compensation benefits, or if subrogation is allowable, what apportionment of liability ma.y be made 

between insurers, and other matters that go beyond 

the minimum determination of the benefits payable 

to an employee." Hunt, supra, 625 P.2d at 539, 38 

St.Rep. at 425. 

We find that this extended jurisdictional authority of 

the Workers' Compensation Court includes payment of attorney's fees and related costs. We reverse the Workers' Compensation Court's judgment denying jurisdiction and remand 

for determination of attorney's fees. The following guidelines are pertinent to such determination. 

The legislature enacted the attorney's statutory right 

to a judgment lien for compensation against proceeds of a 

client's award in 37-61-420, MCA: 

"37-61-420. Judgment lien for compensation. (1) 

The compensation of an attorney and counselor for 

his services is governed by agreement, express or 

implied, which is not restrained by law. 

(2) From the commencement of an action or the 

service of an answer containing a counterclaim, the 

attorney who appears for a party has a lien upon 

his client's cause of action or counterclaim which 

attaches to a verdict, report, decision, or judgment in his client's favor and the proceeds thereof 

in whose hands they may come. Such lien cannot be 

affected by any settlement between the parties 

before or after judgment. " 

Applying this statutory scheme to the case at bar a 

judgment lien would not attach against the claimant's compensation award, because the attorney negotiated a settlement 

with the State Compensation Insurance Fund prior to the 

"commencement of an action" or "service of an answer containing a counterclaim." 

We agree with the policy of the legislature that an 

attorney should be able to obtain his fee in case of an 

award. However, the present statutory entitlement to a lien 

encourages litigation. By judicial fiat we extend the same 

protection to those attorneys who have filed their retainer 

agreement with the Division of Workers' Compensation. The 
lien for compensation attaches upon filing of the contingency 

fee agreement with the Workers' Compensation Division. 

We do not find our holding in conflict with our ruling 

in State ex rel. Harry v. District Court (Mont. 1981) 628 

P.2d 657, 659, 38 St.Rep. 818, 820 strictly construing 

39-71-743, MCA. In Harry this Court stated, " . . . the 

Montana legislature has specifical1.y provided that payment of 

a workers' compensation award shall be exempt from all forms 

of seizures. " The Harry decision is distinguishable in that 

it did not involve a statutory right to invade proceeds of a 

workers' compensation award. In the appeal before us, the 

legislature exempted attorneys by granting a specific statutory right to attach a lien upon the client's compensation 

award. For this reason, Harry is not controlling. 

Whether attorney's name is listed a.s a payee on the 

state warrant is an administrative detail better left to 

determination by the Division of Workers' Compensation. 

We reverse the Workers' Compensation Court's judgment 

denying jurisdiction in this matter, and issue a declaratory 

judgment that a lien for attorney's fees and costs attaches 

at the time the retainer agreement is approved by the Division of Workers' Compensation. 

Appellant presents the issue whether attorney's fees 

should be awarded for prosecuting this action. 

"It has long been the rule in Montana that in the 

absence of agreement between the parties or statutory authorization, a successful party is not 

entitled to an award of attorney's fees. -~ikles - v. 

Barnes (1969), 153 Mont. 113, 454 P.2d 608. . . . We recognize a very narrow exception to the above 

rule. A District Court does have equitable power 

to award attorney's fees where the prevailing party 

has been forced into an action that is frivolous 

and utterly without merit. Wilson v. Department - of 

Natural Resources and ~onservation (1982) . , . Mont . , 648 nd 766, 39 st.kep. 1234." 

Thompkins v. Fuller (Mont. 19831, 667 P.2d 944, 
An award of attorney's fees is not appropriate in this 

case. There is no requisite statutory authority as basis for 

such an award. No contract or agreement between the parties 

justifies awarding attorney's fees. Application of the 

narrow exception to the general rule permitting award by the 

District Court's equitable discretion is also not appropriate. The trial court ruled that it lacked jurisdiction in 

the action. There is a justiciable controversy involvj-ng 

that question. Therefore, no basis exists for an award of 

fees. 

Appellant claims interest should accrue on the attorney 

fees wrongfully withheld by trial court's denial of jurisdiction. A claim becomes liquidated, for the purpose of allowing prejudgment interest, when both the amoupt due and the 

date on which it becomes due are fixed and certain. First 

Nat. Bank of Girard v. Bankers Dispatch (1977), 221 Kan. 528, 

562 P.2d 32. Liquidated claims include an indebtedness which 

is capable of ascertainment by reference to an agreement or 

simple mathematical computation. L. M. White Contracting Co. 

v. St. Joseph Structural Steel Co. (1971), 15 Ariz.App. 260, 

488 P.2d 196, 200. 

Commensurate with the fee agreement timely filed with 

the Division of Workers' Compensation, appellant's legal fees 

could be computed to a sum certain upon issuance of the state 

warrant establishing the specific amount of appellant's 

client's compensation benefits. Prejudgment interest on 

appellant's attorney's fees is permitted to run as of the 

date the state warrant was issued. 

We reverse and remand for a determination of appellant's 

fee and interest due thereon. 
We concur: 

'?A&& GJiLd4 

Chief Justice 

/ 

Justices 
Mr. Justice Fred J. Weber dissents as follows. 

1 respectfully dissent from the holding of the majority 

which "by judicial fiat" extends lien protection to attorneys 

who have filed their retainer agreements with the Division of 

Workers Compensation. 

As set forth in the majority opinion, section 37-61-420, 

MCA, provides that a lien attaches from the commencement of 

an action or the service of an answer. The legislature has 

determined that a lien is appropriate for an attorney where 

he has commenced an action for a plaintiff or filed an answer 

for a defendant in pending litigation. The legislature has 

not provided for such a lien on the part of an attorney for 

services prior to the commencement of an action. 

Here the majority has concluded that it will extend lien 

protection to those attorneys who ha-ve filed a retainer 

agreement without the commencement of an action. While there 

may be a valid argument that such protection is appropriate 

for attorneys representing workers' compensation claimants, 

it seems to me that such argument should be made to the 

legislature, the appropriate body for this type of legislation, rather than this Court. 

As with other liens, I would defer to the provisions 

adopted by the legislature. 

[ Justice