No. 85-283 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

RICHARD A. COLE, 

Claimant and Appellant, 

-17.5- 

GREYHOUND LINES, INC., 

Employer-Defendant and Respondent. 

APPEAL FROM: The Workers' Compensation Court, The Honorable 

Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Crowley, Haughey, Hanson, Toole & Dietrich; L. Randall 

Bishop a-rgued, Billings, Montana 

For Respondent: 

Keefer Law Firm; Neil S. Keefer argued, Billings, 

Montana 

Filed: 

Submitted: February 20, 1986 

Decided: April 8, 1986 

L;~& " /-/ A+, 

Clerk 
Mr. Justice Frank R. Morrison, Jr. delivered the Opinion of 

the Court. 

Claimant, Richard A. Cole, appeals the May 10, 1985, 

order of the Workers' Compensation Court dismissing his 

petition for an emergency hearing on the issue of whether 

claimant's biweekly benefit payments should have been 

reinstated. We affirm the order of the court. 

Cole was a bus driver for Greyhound. In 1978, he 

injured his back and leg while attempting to lift a bag from 

the cargo hold of a bus. Cole filed a Workers' Compensation 

claim. In its order of May 11, 1983, the Workers' 

Compensation Court declared Cole permanently totally 

disabled. The court further ordered that the parties attempt 

to agree on Cole's life expectancy, and the amount of an 

annuity which would reduce Cole's benefits to present value. 

If the annuity was over $48,500, Greyhound was ordered to pay 

it in a lump sum to enable Cole to invest in a business 

offering a reasonable likelihood of success. If the annuity 

was less than $48,500, Greyhound was to pay biweekly 

benefits. 

On June 2, 1983, Cole requested a rehearing challenging 

the court's determination that his biweekly permanent total 

disability benefits must be reduced to present value when 

converted to a lump sum. The court denied Cole's request for 

a hearing on June 9, 1983. The parties agreed that Cole's 

life expectancy was 24 years and agreed to a payment. Cole 

was paid a lump sum of $60,170.69. He signed a satisfaction 

of judgment on July 14, 1983. The case was not appealed. 

On November 1, 1984, this Court decided Willis v. Long 

Construction Co. (Mont. 1984), 690 P.2d 434, 41 St.Rep. 2050. 

In -- Willis, we held that a lump-sum award of Workers' 
Compensation benefits cannot be discounted to present value. 

On November 30, 1984, Cole filed a petition for an emergency 

hearing to require Greyhound to reinstitute biweekly benefit 

payments on the basis of this Court's decision in Willis. On 

May 10, 1-985, the Workers ' Compensation Court dismissed 

Cole's petition in an order grounded on res judicata. 

The issue on appeal is whether the doctrine of res 

judicata bars Cole from relitigating his lump-sum award based 

upon a subsequent change in the law regarding lump-sum 

awards. 

Res judicata is a judicially-created doctrine which 

literally means a matter adjudged. A l1 final judgment 

rendered upon the merits, without fraud or collusion, by a 

court of competent jurisdiction, is conclusive of causes of 

action and of facts or issues thereby litigated." 46 

Am. Jur. 2d Judgments 394 (1969) . We have stated that res 

judicata is applied to uphold the generally recognized public 

policy that there must be some end to litigation. Wellman v. 

Wellman (1982), 198 Mont. 42, 46, 643 P.2d 573, 576. While 

Workers' Compensation actions serve a different social policy 

than other civil litigation, that of providing benefits, 

there is still a need for finality. Moen v. Peter Kiewit & 

Sons1 Co. (1982), 201 Mont. 425, 436, 655 P.2d 482, 487. It 

follows that res judicata applies to decisions of the 

Workers' Compensation Court. 

Several exceptions to the doctrine of res judicata have 

been codified in the Restatement (Second) of Judgments S 28 

(1982). Appellant argues that because of our decision in 

Willis, supra, the second of those exceptions should be 

applied to this case. 

That exception is set forth as follows: 
5 28. Exceptions -- to the General -- Rule of Issue 

Preclusion Although an issue is actua-lly litigated 

and determined by a valid and final judgment, and 

the determination is essential to the judgment, 

relitigation of the issue - in - a subsequent action 

between the parties is not precluded in the 

following circumstances: 

(2) The issue is one of law and . . . (b) a new 

det.ermination is warranted in order to take account 

of an intervening change in the applicable legal 

context or otherwise to avoid inequitable 

administration of the laws . . . The Restatement suggests that relitigation of a 

previously resolved issue in a subsequent action is warranted 

when the law changes between the original and subsequent 

action. 

The authors of the R.estatement at page 278 provide the 

following example to illustra.te the intended application of 

S 28 (2) (b) of the Restatement (Second) of Judgments. 

4. A, a non-profit organization, brings an action 

against B, the tax commissioner, for a refund of 

property taxes on the ground that it is exempt as a 

charity. The court gives judgment for B, adopting 

a narrow definition of the charitable exemption. 

Shortly after, a higher court of the same 

jurisdiction grants a property tax refund to C, an 

organization quite similar to A, and in doing so 

formulates a much broader definition of the 

exemption. In a subsequent action by A against B 

for a refund of property taxes paid for the 

following year, A is not precluded from asserting 

that it is entitled to the charitable exemption. 

It does not matter that the nature of A's 

activities has not changed since the first action. 

The taxpayer in the example did not seek to change his 

adverse result based upon the new holding. Instead, he 

sought to apply the new interpretation to a subsequent tax 

year. This is the kind of result effected by Restatement 

We refuse to apply the exception stated in § 28I2) of 

the Restatement to the case presently before us. No 

"subsequent action'' has been filed. The doctrine of res 

judicata bars the reopening of claimant's original case. The 
litigation has ended. An award has been paid and an 

acknowledgement of satisfaction of judgment has been signed. 

The parties are entitled to a final judgment. 

According to Wheeler v. Carlson Transport (Mont. 1985), 

704 P.2d 49, 42 St.Rep. 1177, a final judgment of the 

Workers' Compensation Court can only be reopened upon one of 

two conditions: 1) the benefits may be changed, reviewed, 

diminished or increased only when "the disability of the 

claimant has changed. " Section 39-71-2909, MCA; and 2) a 

decision may be vacated and a new trial granted when the 

applicant's rights are materially affected by newly 

discovered evidence which could not, with reasonable 

diligence, have been discovered in time for the trial. 

Section 25-11-102 (4) , MCA. Claimant fails to allege the 

existence of either of these conditions. 

For the reasons set forth above, the decision of the 

trial judge is affirmed. 

We concur: 

Justices 

- 5 - 
Mr. Justice William E. Hunt, Sr., dissenting: 

The majority holds that the exception to res judicata 

found in the Restatement (Second) of Judgments S 28 (1960) 

does not apply in this case. I cannot agree. The situation 

in this case falls within the purview of the Restatement 

exception. Restatement (Second) of Judgments S 28 (1960) 

states: 

S 28. Exceptions to the General Rule of Issue 

Preclusion. 

Although an issue is actually 1.i.tigated and 

determined by a valid and final judgment, and the 

determination is essential to the jud.gment, 

relitigation of the issue in a subsequent action 

between the parties is not precluded in the 

following circumstances: 

(2) (b) a new determination is warranted in order to 

take account of an intervening change in the 

applicable legal context or otherwise to avoid 

administration of the laws.. . . 

When Cole filed his claim, the Workers1 Compensation 

Court decided a number of factual issues. The court found 

that Cole's disability was permanent and total. The court 

further found that Cole was entitled to a conversion of his 

biweekly benefits to a lump sum for the purpose of 

capitalizing a new business offering a reasonable likelihood 

of success. As appellant concedes, res judicata bars 

relitigation of these factual determinations. However, the 

decision to reduce Cole's lump-sum award to present value was 

purely one of law, no factual determinations were made. The 

court decided that as a matter of law Cole's lump-sum payment 

must be reduced to its present value. Subsequent to that 

decision, and in a different case, we held that lump-sum 

awards cannot be discounted to present value. Therefore, a 
new determination is warranted in order to take account of 

that intervening change in the applicable legal context. 

Further, a new determination is warranted in order to 

avoid inequitable administration of the laws. The reduction 

of a lump-sum award to its present value is inequitable. In 

Hall. v. State Compensation Insurance Fund (Kont. 1985), 708 

P.2d 234, 42 St.Rep. 1502, we held that the 1972 Mont. 

Const., Art. 11, S 16 as applied to the Workers' Compensation 

Act gives workers a right to be made whole. In 1975, when 

the legislature considered and adopted an amendment 

eliminating the statutory requirement that lump-sum awards he 

discounted, abundant testimony was elicited that a worker who 

received his benefits in a lump sum could only be made whole 

by receiving the lump-sum payment undiscounted to present 

value. 

Cole's undiscounted lump-sum payment would have been 

$217,152. The payment after discount was $75,670, a little 

over one-third of the undiscounted amount. His right to be 

made whole warrants reconsideration of this issue. In the 

interest of equitable administration of the laws, 

relitigation of appellant's claim to biweekly benefits is 

justified. 

Instead of applying an analysis such as that just 

presented, the majority bases its decision on the language of 

the Restatement section which states that relitigation is not 

precluded "in a subsequent action between the parties." The 

majority's narrow interpretation of the phrase, "in a 

subsequent action," is inconsistent with both the spirit of 

Workers' Compensation law and the intention of the 

Restatement. 
As the majority admits, Workers' Compensation actions 

serve a different social policy than other types of 

litigation, that of providing benefits. In cases such as 

this, where liability is not contested, the litigants seek a 

resolution of their disputes based upon the knowledge that 

the very purpose of the Workers' Compensation Act is to 

provide benefits. Yet Cole received merely a fraction of the 

amount he is now known to have heen entitled to under the 

Act. Granting Cole's petition for emergency rehearing would 

uphold the policy behind the Workers' Compensation Act. 

Furtlzer, the phrase, "in a subsequent action," should 

not he construed so narrowly as to frustrate the very 

intention of the framers of the Restatement exception. The 

authors of the Restatement include the following illustration 

of the application of 5 28: 

5. A, an employer, brings an action agai~st B, a 

labor union, to enjoin a strike in breach of a 

collective bargaintng agreement. The action is 

dismissed on the ground that a statute deprives the 

court of jurisdiction to issue such injunctions. 

In a subsequent case invol-ving two different 

parties, the decision in A v. B is overruled and 

jurisdiction to enjoin such a strike is sustained. 

A is not precluded from asserting jurisdiction in 

an action to enjoin B from continuing -- the same 

strike, from engaging in another strike in breach 

of the same contract, or from engaging in a strike 

in breach of a subsequent. contract. (Emphasis 

added. ) 

Restatement (Second) of Judgments 5 28 at 278-9. 

As this exa.mple illustrates, the "subsequent action" 

referred to in the Restatement includes the same parties 

seeking a different result in a continuing situation where 

there has been no change in the facts, but a significant 

change in the law. Just as an employer is not precluded, by 

a previous court ruling, from returning to court to enjoin 

the same ongoing strike, so too should Cole not be precluded, 
by a previous court ruling, from returning to court to obtain 

a redetermination of his compensation award. 

I cannot agree with the majority's holding that 

appellant's petition for an emergency rehearing constitutes a 

"subsequent action, " thereby precluding application of S 28 

of the Restatement. 

LA ,;&a&&,+d&-, Justice 

Mr. Justice John C. Sheehy, concurs in the above dissent: 

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