No. 94-423

IN THE SUPREME COURT OF THE STATE OF MONTANA

APPEAL FROM: In the Workers' Compensation Court,

The Honorable Mike McCarter, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Ken H. Grenfell, Grenfell & Ogg,

Missoula, Montana

For Respondent:

Leo S. Ward, Browning, Kaleczc, Berry

& Haven, Helena, Montana

Filed:

Submitted on Briefs: January 12, 1995

Decided: April 20, 1995
Justice Terry N. Trieweiler delivered the opinion of the Court.

The appellant, Charles Rasmussen, filed a petition for

permanent total disability benefits in the Workers' Compensation

court, based on injuries he claimed were sustained during the

course of his employment with Heebs Food Center in Bozeman on

June 9, 1987. The respondent, State Compensation Mutual Insurance

Fund, which insured Heebs against compensation claims at that time,

denied that Rasmussen was totally disabled, and that his

disability, if any, was caused by a work-related accident. After

a two-day trial, the Workers' Compensation Court found that

Rasmussen was totally disabled from a work-related injury and

awarded benefits to him. The State Fund petitioned for a new

trial, and its petition was granted. Rasmussen appeals from the

Workers' Compensation Court's order granting the State Fund a new

trial. We reverse the Workers' Compensation Court and reinstate

its original judgment.

The following issue is dispositive on appeal:

Was it a manifest abuse of discretion for the Workers'

Compensation Court to grant the State Fund's petition for a new

trial?

FACTUAL BACKGROUND

Rasmussen filed a claim with the State Fund that he was

injured on June 9, 1987, when he fell while working for Heebs Food

Center in Bozeman. After investigating his claim, the State Fund

accepted liability for Rasmussen's injury and paid temporary total

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disability benefits until May 1993, when the benefits were

converted to permanent partial disability benefits.

On December 4, 1992, Rasmussen filed a petition for a hearing

before the Workers' Compensation Court in which he alleged that he

was permanently totally disabled from his job-related injury. On

December 28, 1992, the State Fund filed a response in which it set

forth three contentions: (1) that Rasmussen was not permanently

totally disabled; (2) that Rasmussen's disability, if any, was not

caused by a work-related injury; and (3) that Rasmussen was not

entitled to any relief or attorney fees.

Before trial on September 20, 1993, the parties filed a

pretrial order which was approved by the Workers' Compensation

Court. The pretrial order stipulated that the issues to be decided

were as follows: (1) whether Rasmussen is permanently totally

disabled; (2) whether Rasmussen is entitled, in the alternative, to

permanent partial disability benefits under § 39-71-703, MCA; and

(3) whether Rasmussen is entitled to attorney fees and costs. The

pretrial order specifically set forth the State Fund's contentions

as follows: (1) Rasmussen is not permanently totally disabled;

(2) Rasmussen's disability, if any, was not caused by an industrial

injury; (3) Rasmussen is not entitled to attorney fees and costs;

and (4) Rasmussen is not entitled to additional relief.

Trial commenced on September 20, 1993, in Missoula. During

its opening statement, the State Fund repeatedly referred to

Rasmussen's injury as an "alleged injury." Rasmussen objected and

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argued that the State Fund had accepted liability and that the

issue was to what extent Rasmussen's disability was related to the

injury. The court allowed the State Fund to continue, but later

engaged in the following colloquy with its counsel:

THE COURT: I'm trying to unravel that, if you are trying

to unaccept the claim in this proceeding.

MR. WARD: NO, this trial is about the credibility issue,

Your Honor. . . .

THE COURT: Okay. But is this proceeding, you're arguing

that the injury did not occur, or the accident did not

occur?

MR. WARD: We are arguing that evidence that the accident

did not occur which affects the credibility of this

Claimant, Your Honor, that's what we are arguing. We're

not arguing that we should be able to unravel and go

back. And you know, the claim, we paid the claim. We've

paid a bunch of the total disability benefits, a whole

bunch of medical benefits, and reflected by that stack of

records right there. We're not claiming that we're owed

that money.

1'm not sitting riqht now and savinq this is the

Donald Chatlin [sic] case and it's a fraud case at this

point. I am saying, though, most total disability cases

in my experience that go to court, that go to hearing,

are credibility cases, and that affects credibility.

(Emphasis added.)

Later in the trial, Rasmussen testified that he was injured

while working at Heebs on June 9, 1987. During cross-examination,

his counsel objected to questions that pertained to whether

Rasmussen was injured while working for Heebs on the basis that the

State Fund had accepted liability for the injury and that the State

Fund did not intend to pursue fraud. The State Fund again

responded that the questions were related to the issue of

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credibility. No mention was made of fraud; and the court clarified

that the State Fund was not attempting to rescind its original

acceptance of liability.

As part of its case, the State Fund called Cindy Kern,

Rasmussen's ex-wife, to testify that Rasmussen submitted a false

claim. Following her testimony, the court again expressed concern

about evidence of fraud which had not been previously alleged.

Again, the State Fund asserted that credibility was the issue.

On May 18, 1994, the Workers' Compensation Court entered its

findings of fact, conclusions of law, and judgment. The court held

that a fraud defense had not been properly raised, and found that

the accident occurred as alleged by Rasmussen. It also found that

he was permanently totally disabled from his job-related injury,

and awarded benefits accordingly.

On June 8, 1994, the State Fund petitioned for a new trial on

the basis that it had no notice that fraud needed to be

specifically pled and was surprised by that requirement. On

July 28, 1994, the Workers' Compensation Court granted the State

Fund's petition for a new trial. The court reasoned that because

its rules were unclear regarding the need to specially plead

affirmative defenses, such as fraud, the State Fund had not had

adequate notice of the need to amend its pretrial contentions and

that it should be given an opportunity to do so. It also held that

because it had not been pled as a defense, the court had not

adequately considered the State Fund's evidence of fraud.

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Therefore, the Workers' Compensation Court concluded that a new

trial was appropriate pursuant to 5 25-11-102, MCA. It also held

that it would consider evidence of fraud at the new trial.

DISCUSSION

Was it a manifest abuse of discretion for the Workers'

Compensation Court to grant the State Fund's petition for a new

trial?

We review a trial court's order granting a new trial for

manifest abuse of discretion. Jim’s Excavating Service v. HKM Assoc. ( I 9 9 4 ) ,

265 Mont. 494, 512, 878 P.2d 248, 2 5 9 (citing Nelson v. Flathead Valley

Tramif (1992), 251 Mont. 269, 274, 824 P.2d 263, 266.)

Rasmussen argues that the State Fund failed to allege fraud in

any of its pretrial claims, failed to ask that the pretrial order

be amended prior to the Workers' Compensation Court's judgment, and

indicated by its attorney's representations during trial that it

was not attempting to revoke its original acceptance of his claim.

He contends that the State Fund should not be allowed to amend its

pleadings after an entire trial and the court's unfavorable

decision. The State Fund responds that it was unfair to bind it to

requirements of the Rules of Civil Procedure which were not

applicable to the Workers' Compensation Court and were not

recognized by the Workers' Compensation Court until after the trial

in this case commenced.
Based on principles of estoppel and judicial admissions, we

conclude that the Workers' Compensation Court manifestly abused its

discretion when it granted the State Fund a new trial.

We have previously held that a party may not benefit from

asserting one position during pretrial discovery and later assert

a contrary position to the detriment of its opponent at trial or on

appeal. Plouflee, BurlingtonNorthern, Inc. (1986), 224 Mont. 467, 474, 730

P.2d 1148, 1153. In Plouffe, we relied on § 26-l-601, MCA, for the

following conclusive presumption:

[T]he truth of a declaration, act, or omission of a

party, as against that party in any litigation arising

out of such declaration, act, or omission, whenever he

has, by such declaration, act, or omission, intentionally

led another to believe a particular thing true and to act

upon such belief.

Section 26-l-601, MCA; Plouffe, 730 P.2d at 1153.

We have also previously held that a counsel's admissions in

court proceedings bind the client to those statements. Kohne v. Yost

(1991), 250 Mont. 109, 818 P.2d 360. In Kohne, defense counsel

admitted in closing argument that both parties in that case were

negligent. However, the jury found that neither the defendant nor

the plaintiff was negligent. The plaintiff moved for a judgment

notwithstanding the verdict, and for a new trial. The basis of the

motions was that the jury's decision was based on insufficient

evidence, in part, because defense counsel admitted in closing

argument that the defendant was negligent. Kohne, 818 P.2d at 361.

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Discussing defense counsel's statement, we recognized that a

counsel's admissions bind his or her client. Kohne, 818 P.2d at

361-62. A judicial admission is an express waiver made in court by

a party or his attorney conceding the truth of an alleged fact. It

has a conclusive effect upon the party who makes the admission and

no further evidence can be introduced to prove, disprove, or

contradict the admitted fact. Kohne, 818 P.2d at 362 (citing

9 Wigmore, Evidence, §§ 2588, 2590 (Chadbourn rev. 1981)). We also

held that such admissions may occur at any point during litigation.

Kohne . 818 P.2d at 362.

Based on principles of estoppel and judicial admissions, we

conclude that the State Fund is bound by its counsel's statements

during trial that it was not relying on the defense of fraud, and

that it cannot, after an adverse result, move for a new trial so

that it can allege the affirmative defense of fraud. The State

Fund led Rasmussen to believe that it was not asserting fraud as a

defense. It repeatedly skirted the court's questions on this issue

and, on at least one occasion, stated that it was not asserting

fraud. Therefore, counsel conceded for purposes of trial that

fraud was not an issue. Rasmussen should not have to spend the

time and assume the expense of trial on the assumption that the

State Fund's position is as represented by its attorney, only to

find out after the result that the whole proceeding must be

repeated based on a different theory.

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For these reasons, we hold that the Workers' Compensation

Court abused its discretion when it granted a new trial to consider

evidence of fraud. We reverse the Workers' Compensation Court's

order and reinstate the original judgment of the Workers'

Compensation Court.

Ju ice

We concur:
April 20, 1995

CERTIFICATE OF SERVICE

I hereby certify that the following certified order was sent by United States mall, prepaid, to the

following named:

Ken H. Grenfell

GRENFELL & OGG

412 West Alder

Missoula, MT 59802

Leo S. Ward

Browning, Kaleczc, Berry & Hoven, P.C.

P.O. Box 1697

Helena, MT 59624

ED SMITH

CLERK OF THE SUPREME COURT

STATE OF MONTANA