Title: MCDANOLD v B N TRANSPORT INC
Citation: N/A
Docket Number: 84-287
State: Montana
Issuer: Montana Supreme Court
Date: June 27, 1985

No. 84-287 IN THE SUPREME COURT OF THE STATE OF MONTANA 1985 E . L. McDANOLD, Claimant and Appellant, -vs- B. N . TRANSPORT, INC. , Employer- Defendant and Respondent. APPEAL FROM: Workers' Compensation Court, The Honorable Timothy Reardon, Judge presiding. COUNSEL OF RECORD: For Appellant: William T. Kelly, P.C.; Halverson, Sheehy & Prindle, Billings, Montana Gene A . Picotte, Clancy, Montana For Respondent : Utick, Grosfield & Uda, Helena, Montana Thomas Spence, Billings, Montana Filed: Submitted on Briefs: Feb. 28, 1985 Decided: June 27, 1985 J U N 2 '. 1985 - , . - Clerk M r . J u s t i c e Fred J. Weber d e l i v e r e d t h e Opinion of t h e Court. This i s an appeal from t h e d e c i s i o n o f t h e Workers' Compensation Court l i m i t i n g c l a i m a n t ' s f e e t o t h e c o n t i n g e n t f e e agreement without regard t o t h e t i m e r e c o r d s o f h i s counsel. W e reverse and remand. The underlying Workers' Compensation proceeding was commenced b e f o r e t h e Workersf Compensation Court i n 1979. Two a p p e a l s t o t h i s Court followed. McDanold v. B. N. Trans- p o r t , Inc. (Mont. 1 9 8 1 ) , 634 P.2d 175, 38 St.Rep. 1466; McDanold v. B.N. Transport, Inc. (Mont. 1984), 679 P.2d 1188, 4 1 St.Rep. 472. Following appeal o f t h e lower c o u r t determi- n a t i o n i n t h e second c a s e t h a t t h e t o t a l amount o f weekly b e n e f i t s was $15,452.70, t h e m a t t e r was remanded f o r determi- n a t i o n o f a t t o r n e y s f e e s and c o s t s . The i s s u e s presented on appeal a r e : 1. Was it r e v e r s i b l e e r r o r f o r t h e Workers' Compensa- t i o n Court t o e n t e r i t s o r d e r determining a t t o r n e y s f e e s without allowing claimant a t l e a s t f i v e days t i m e t o respond t o t h e d e f e n d a n t ' s memorandum? 2 . Was it r e v e r s i b l e e r r o r t o f i x t h e a t t o r n e y s f e e s a t t h e amount of t h e c o n t i n g e n t f e e c o n t r a c t without regard t o a t t o r n e y s ' a f f i d a v i t s ? By o r d e r dated May 4 , 1984, t h e Workers' Compensation Court determined c l a i m a n t ' s e n t i t l e m e n t t o temporary t o t a l d i s a b i l i t y and permanent p a r t i a l d i s a b i l i t y a t a t o t a l o f $15,452.70. The o r d e r f u r t h e r s t a t e d : "Further, c l a i m a n t ' s counsel s h a l l , w i t h i n 10 days of r e c e i p t o f t h i s Order, provide t h e Court w i t h a Request f o r Reasonable Costs and Attorney Fees, and Proposed Order. Said r e q u e s t s s h a l l i n c l u d e a statement o f itemized c o s t s , c a l c u l a t i o n s concern- i n g t h e determination o f a reasonable a t t o r n e y f e e , and a copy o f t h e c l a i m a n t f s a t t o r n e y f e e agree- ment. Counsel sha 1 1 simultaneously provide defen- d a n t ' s counsel w i t h c o p i e s of t h e s e documents." P u r s u a n t t o t h e o r d e r , c l a i m a n t ' s a t t o r n e y f i l e d a copy o f t h e a t t o r n e y - c l i e n t agreement under which c l a i m a n t agreed t o pay h i s a t t o r n e y a c o n t i n g e n t f e e , based upon t h e follow- i n g p r o v i s i o n : "In t h e e v e n t t h e c a s e should be a p p e a l e d by e i t h e r t h e d e f e n d a n t i n s u r a n c e company o f t h e Workmen's Compensation D i v i s i o n , o r t h e CLIENT, a s t h e s i t u a - t i o n may o c c u r , t o t h e d i s t r i c t c o u r t o r t h e Su- preme Court o f t h e S t a t e o f Montana, t h e n and i n such e v e n t , s a i d ATTORNEY s h a l l r e c e i v e a s h i s f e e a sum e q u a l t o o n e - t h i r d ( 1 / 3 ) o f a l l sums recovered. l1 I n a d d i t i o n , sworn a f f i d a v i t s w e r e f i l e d , t h e f i r s t o f which e s t a b l i s h e d t h a t one f i r m o f a t t o r n e y s worked on t h e c a s e f o r a t o t a l o f 239.06 h o u r s , r e s u l t i n g i n claimed a t t o r - neys f e e s o f $18,684.15. The o t h e r a f f i d a v i t e s t a b l i s h e d a t o t a l o f 119.75 h o u r s worked by a n o t h e r a t t o r n e y and claimed a f e e o f $10,777.50. The a f f i d a v i t s c o n t a i n e d d e t a i l e d s t a t e m e n t s o f t h e t i m e r e c o r d s c o n v e r t e d t o money based upon t h e r o u t i n e h o u r l y r a t e o f t h e a t t o r n e y involved. The a f f i - d a v i t s c o n t a i n e d no f u r t h e r f a c t u a l e x p l a n a t i o n w i t h r e g a r d t o t h e n a t u r e o f t h e services performed. The a f f i d a v i t s d i d n o t a d d r e s s t h e r e a s o n why f e e s should b e determined on an h o u r l y b a s i s i n s t e a d o f under t h e c o n t i n g e n t f e e agreement. The d e f e n d a n t f i l e d i t s o b j e c t i o n t o any award o f a t t o r - neys f e e s i n excess o f t h e c o n t i n g e n t f e e agreement. By o r d e r d a t e d June 1 9 , 1984, t h e c o u r t made t h e f o l l o w i n g f i n d i n g s and c o n c l u s i o n s : "The c l a i m a n t ' s a t t o r n e y s have submitted a copy of t h e i r c o n t i n g e n t f e e agreement, which p r o v i d e s f o r one-third (1/3) o f a l l sums r e c o v e r e d upon a suc- c e s s f u l a p p e a l t o t h e Montana Supreme C o u r t , p l u s r e a s o n a b l e c o s t s i n c u r r e d . They have a l s o submit- t e d a s t a t e m e n t o f t h e h o u r s compiled i n p u r s u i n g t h i s m a t t e r and t h e c o s t s i n c u r r e d . "There e x i s t s a r e b u t t a b l e presumption t h a t t h e a t t o r n e y f e e due c l a i m a n t ' s a t t o r n e y under t h e c o n t i n q e n t f e e aqreement i s a r e a s o n a b l e f e e . Wight ; . Hughes ~ i v e s t o c k , I n c . , Mont. I 664 p.Td 303, (1983) . " N e i t h e r p a r t y h a s f i l e d a Motion f o r E v i d e n t i a r y Hearing Regarding Reasonableness o f A t t o r n e y f e e s based on t h e c o n t i n g e n t f e e agreement and an award o f costs based on c l a i m a n t ' s a t t o r n e y ' s s t a t e m e n t o f c o s t s . "It a p p e a r s from t h e r e c o r d t h a t t h e d e f e n d a n t p a i d $8,890.00 i n temporary t o t a l d i s a b i l i t y b e n e f i t s and $2,083.68 i n permanent p a r t i a l d i s a b i l i t y b e n e f i t s b e f o r e a c o n t r o v e r s y a r o s e . Following t h e c l a i m a n t ' s a t t o r n e y s ' e f f o r t s , and a s u c c e s s f u l a p p e a l t o t h e Montana Supreme C o u r t , t h a t Court determined t h a t temporary t o t a l and permanent p a r t i a l e n t i t l e m e n t t o t a l e d $15,452.70. . . [TI he c l a i m a n t ' s a t t o r n e y s a r e e n t i t l e d t o an award o f a t t o r n e y f e e s based on t h e $4,479.02 d i f f e r e n c e . . . "The i n s t a n t c a s e i s one i n which t h e a t t o r n e y f e e award a p p e a r s i n a d e q u a t e when compared t o t h e t o t a l number o f h o u r s r e p o r t e d by c l a i m a n t ' s a t t o r n e y s . However, no Request f o r E v i d e n t i a r y Hearing wa s r e c e i v e d , and no e v i d e n c e was p r e s e n t e d ( b e s i d e s t h e lone s t a t e m e n t o f hours) s u g g e s t i n g a d e p a r t u r e from t h e presumed r e a s o n a b l e n e s s o f t h e c o n t i n g e n t f e e agreement. T h e r e f o r e , an a t t o r n e y f e e award under t h e c o n t i n g e n t fee c o n t r a c t , and p u r s u a n t t o Wight, s u p r a . , s h a l l govern. "Based s o l e l y on t h e d i f f e r e n c e between t h e t o t a l amount t h e Supreme Court awarded and t h e amount t h e d e f e n d a n t p r e v i o u s l y p a i d t h e c l a i m a n t , t h e claim- a n t ' s a t t o r n e y s a r e e n t i t l e d t o an award o f $1,492.01 under t h e terms o f t h e c o n t i n g e n t f e e agreement. (33 1 / 3 p e r c e n t t i m e s $4,479.02, e q u a l - l i n g $1,493.01) ." C l a i m a n t ' s a t t o r n e y s a p p e a l from t h e f o r e g o i n g o r d e r . Was it r e v e r s i b l e e r r o r f o r t h e Workers' Compensation Court t o e n t e r i t s o r d e r d e t e r m i n i n g a t t o r n e y s f e e s w i t h o u t a l l o w i n g c l a i m a n t a t l e a s t f i v e d a y s t i m e t o respond t o t h e d e f e n d a n t ' s memorandum? C l a i m a n t ' s a t t o r n e y s p o i n t o u t t h a t t h e a d m i n i s t r a t i v e r u l e s o f t h e Workers' Compensation Court do n o t p r o v i d e f o r p o s t - t r i a l motions, s o t h e r e i s no s p e c i f i c p r o v i s i o n which would have allowed them t o respond t o t h e o b j e c t i o n t o f e e s f i l e d by t h e d e f e n d a n t . Claimant a r g u e s t h a t under Rule 2.52.316, A.R.M., p e r t a i n i n g t o p r e - t r i a l motions, a f i v e day p e r i o d should have been allowed comparable t o t h e f i v e d a y s allowed f o r a r e p l y b r i e f on p r e - t r i a l motions. The d e f e n d a n t r e p l i e s t h a t t h e r e i s no requirement under t h e o r d e r t o g r a n t any a d d i t i o n a l t i m e f o r such a r e p l y and contends t h a t t h i s i s merely a " r e d h e r r i n g . " The d e f e n d a n t p o i n t s o u t t h a t , under Sorenson v. D r i l c o n , I n c . (Mont . 1 9 8 3 ) , 664 P.2d 320, 40 St.Rep. 829, even a f t e r t h e e n t r y o f t h e o r d e r s e t t i n g a t t o r n e y s f e e s , c l a i m a n t ' s a t t o r n e y s w e r e f r e e t o r e q u e s t an e v i d e n t i a r y h e a r i n g . They have f a i l e d t o do s o even up t o t h e p r e s e n t t i m e . I n Sorenson, f o l l o w i n g t h e e n t r y by t h e Workers' Compen- s a t i o n Court o f a n o r d e r f i x i n g a t t o r n e y s f e e s , c l a i m a n t ' s a t t o r n e y r e q u e s t e d a h e a r i n g and a n o p p o r t u n i t y t o p r e s e n t evidence t o j u s t i f y h e r f e e . T h i s Court r e v e r s e d t h e lower c o u r t ' s d e n i a l o f t h e motion f o r a h e a r i n g and remanded t h e m a t t e r t o t h e lower c o u r t w i t h i n s t r u c t i o n s t o hold a n e v i d e n t i a r y h e a r i n g r e g a r d i n g t h e a t t o r n e y ' s f e e . W e h e l d t h a t it was a n abuse o f d i s c r e t i o n n o t t o a l l o w t h e h e a r i n g . I n t h e i n s t a n t c a s e , t h e c l a i m a n t f a i l e d t o r e q u e s t an e v i d e n t i a r y h e a r i n g . I n t h e absence o f any r u l e r e q u i r e m e n t , w e conclude t h a t t h e lower c o u r t d i d n o t err i n denying c l a i m a n t t h e o p p o r t u n i t y t o f i l e a r e s p o n s e t o t h e defen- d a n t ' s memorandum. Was it r e v e r s i b l e e r r o r t o f i x t h e a t t o r n e y s f e e s a t t h e amount o f t h e c o n t i n g e n t f e e c o n t r a c t w i t h o u t r e g a r d t o t h e a t t o r n e y s ' a f f i d a v i t s ? Both c o u n s e l r e l y on Wight v. Hughes L i v e s t o c k Co., b n c . (Mont. 1 9 8 3 ) , 664 P.2d 303, 40 St.Rep. 696, which d i s c u s s e s t h e e l e m e n t s t o be c o n s i d e r e d i n d e t e r m i n i n g t h e r e a s o n a b l e - n e s s of c o n t i n g e n t f e e c o n t r a c t s and t h e amount o f a t t o r n e y s f e e s t o b e awarded. C i t i n g an Idaho Supreme Court d e c i s i o n , t h i s Court adopted s e v e r a l f a c t o r s t o be considered by t h e judge o r t h e Division: " [ I ] n determining a reasonable a t t o r n e y s f e e . . . [ t h e judge o r t h e D i v i s i o n ] must engage i n a balancing p r o c e s s and c o n s i d e r on c o n t i n g e n t b a s i s t h e following f a c t o r s : '(1) The a n t i c i p a t e d time and l a b o r r e q u i r e d t o perform t h e l e g a l s e r v i c e p r o p e r l y . ' ( 2 ) The novelty and d i f f i c u l t y o f l e g a l i s s u e s involved i n t h e m a t t e r . ' (3) The f e e s customarily charged f o r s i m i l a r l e g a l s e r v i c e s . ' ( 4 ) The p o s s i b l e t o t a l recovery i f successfu1. ' (5) The t i m e l i m i t a t i o n s imposed by t h e c l i e n t o r circumstances o f t h e case. ' (6) The n a t u r e and l e n g t h o f t h e a t t o r n e y - c l i e n t r e l a t i o n s h i p . (7) The experience, s k i l l and r e p u t a t i o n of t h e a t t o r n e y . ' ( 8 ) The a b i l i t y o f t h e c l i e n t t o pay f o r t h e l e g a l services rendered. ' ( 9 ) The r i s k o f no recovery.' 629 P.2d a t 661. "Not mentioned by t h e Idaho c o u r t i n Clark v. Sage, s u p r a , b u t s u r e l y a f a c t o r t o be considered: i s t h e market v a l u e o f t h e I awyerl s s e r v i c e s a t t h e t i m e and p l a c e involved. Indeed it may be s a i d t h a t i n every r e t a i n e r c o n t r a c t , be it personal o r p u b l i c , h o u r l y , f i x e d f e e o r c o n t i n g e n t f e e , each such c o n t r a c t i s i n r e a l i t y based on t h e market v a l u e o f t h e lawyer's s e r v i c e s . With t h e added f a c t o r o f t h e market v a l u e o f t h e l a w y e r ' s s e r v i c e s a t t h e t i m e and p l a c e involved, we adopt t h e f a c t o r s set o u t by t h e Idaho Supreme Court t o be considered by Montana ' s Workers ' Compensation judge o r t h e Divi- s i o n i n determining t h e reasonabl e n e s s o f contin- g e n t f e e c o n t r a c t s and t h e amount o f a t t o r n e y s f e e s t o be awarded t o s u c c e s s f u l claimants." Wight, 664 P.2d a t 311-12, 40 St.Rep. a t 706. Under Wight, t h e lower c o u r t was r e q u i r e d t o c o n s i d e r t h e foregoing i n i t s determination of t h e reasonableness o f t h e c o n t i n g e n t f e e c o n t r a c t and t h e amount o f a t t o r n e y s f e e s t o be awarded. I n d i s c u s s i n g Wight, defendant emphasizes t h e holding by t h e c o u r t w i t h regard t o t h e s t r o n g presumption i n f a v o r o f t h e c o n t i n g e n t f e e c o n t r a c t : " I n c o n s i d e r i n g Wight's c o n t i n g e n t f e e c o n t r a c t w i t h h i s a t t o r n e y , t h e Workers' Compensation judge should a c c e p t t h e approved c o n t r a c t a s having a s t r o n g presumption i n i t s favor. I f t h e judge does n o t s e t a f e e i.n accordance w i t h t h e c o n t i n g e n t f e e c o n t r a c t , he s h a l l s t a t e w i t h p a r t i c u 3 a r i t y h i s reasons i n w r i t i n g , based upon s t r o n g c o u n t e r v a i l i n g e v i d e n c e , why t h e c o n t i n g e n t f e e c o n t r a c t i s n o t followed by him, and p r e c i s e l y what w ~ i g h t he accorded t o t h e c o n t i n g e n t f e e c o n t r a c t . " Wight, 664 P.2d a t 312, 40 St.Rep. a t 707 (emphasis a d d e d ) . D e f e n d a n t ' s c o u n s e l contends t h a t i n f a i l i n g t o r e q u e s t a h e a r i n g and f a i l i n g t o set f o r t h s t r o n g c o u n t e r v a i l i n g e v i d e n c e , c l a i m a n t ' s a t t o r n e y s have f a i l e d t o d i s c h a r g e t h e burden which i s p l a c e d upon them. A s a r e s u l t , t h e y a r g u e t h a t t h e lower c o u r t o r d e r must b e a f f i r m e d . C l a i m a n t ' s a t t o r n e y a r g u e s t h a t under Wight, c l a i m a n t was n o t r e q u i r e d t o r e q u e s t an e v i d e n t i a r y h e a r i n g . Claimant a t t e m p t s t o p l a c e t h e d u t y upon t h e c o u r t t o extend t h e o p p o r t u n i t y f o r h e a r i n g once t h e c o n t r o v e r s y a r i s e s . Claim- a n t f u r t h e r a r g u e s t h a t under Sorenson, which g r a n t e d a c l a i m a n t a r i g h t t o a n e v i d e n t i a r y h e a r i n g , such a h e a r i n g must b e h e l d . Respondent h a s a t t a c h e d t o i t s b r i e f a copy o f t h e p r e s e n t a d m i n i s t r a t i v e r u l e s i n e f f e c t f o r t h e Workers' Compensation Court. These r u l e s p r o v i d e t h e b a s i s f o r a h e a r i n g upon t h e r e q u e s t o f a p a r t y t o d e t e r m i n e t h e reason- a b l e n e s s o f a t t o r n e y s fees. Those r u l e s o f c o u r s p a r e n o t a p p l i c a b l e i n t h e p r e s e n t c a s e . However, t h e y do i n d i c a t e a r e a s o n a b l e procedure f o r t h e d e t e r m i n a t i o n o f a t t o r n e y s f e e s . Based upon Sorenson, c l a i m a n t p r o p e r l y could have re- q u e s t e d a h e a r i n q b e f o r e t h e c o u r t f o l l o w i n g i t s a d v e r s e o r d e r o f June 1 9 , 1984. The r e c o r d d o e s n o t d i s c l o s e t h e r e a s o n f o r c l a i m a n t ' s f a i l u r e t o make t h a t t y p e o f a motion. C l a i m a n t ' s e v i d e n c e c o n t a i n e d s i g n i f i c a n t c o n t r a d i c - t i o n s . O n t h e one hand, t h e c o n t i n g e n t f e e agreement j u s t i - f i e d a n award of $1,493.01 i n a t t o r n e y s f e e s . On t h e o t h e r hand, t h e t i m e r e c o r d s , i f a c c e p t e d on t h e i r f a c e , would j u s t i f y an award i n e x c e s s o f $28,000. The evidence f u r t h e r d e m o n s t r a t e s t h a t t h e a t t o r n e y s w e r e s u c c e s s f u l i n s e c u r i n g approximately $5,000 f o r t h e c l a i m a n t . Before it could a d e q u a t e l y compare t h e e v i d e n c e s u b m i t t e d , t h e Workers1 Compensation Court r e q u i r e d s u b s t a n t i a l a d d i t i o n a l e v i d e n c e on t h e v a r i o u s Wight f a c t o r s , such a s t h e a n t i c i p a t e d t i m e and l a b o r r e q u i r e d , t h e n o v e l t y and d i f f i c u l t y o f t h e l e g a l i s s u e s , and t h e f e e s c u s t o m a r i l y charged f o r s i m i l a r servic- es. I n a d d i t i o n , it would have been a p p r o p r i a t e f o r b o t h s i d e s t o have submitted evidence o f t h e market v a l u e of t h e lawyers1 s e r v i c e s under t h e s e unusual c i r c u m s t a n c e s . While it might have been a p p r o p r i a t e t o a f f i r m t h e lower c o u r t i n t h e absence o f more adequate e v i d e n c e , undek a l l t h e c i r c u m s t a n c e s w e have concluded it i s j u s t t o a l l o w a h e a r i n g b e f o r e t h e Workers' Compensation Court. While b o t h s i d e s may p r e s e n t a d d i t i o n a l e v i d e n c e a t t h a t h e a r i n g , t h e c l a i m a n t 1 s counsel have t h e primary o b l i g a t i o n t o p r e s e n t a p p r o p r i a t e e v i d e n c e from which t h e c o u r t may d e t e r m i n e a r e a s o n a b l e a t t o r n e y s f e e . W e r e v e r s e t h e d e c i s i o n o f t h e Workers1 Compensation Court. T h i s c a u s e i s remanded f o r such f u r t h e r h e a r i n g and c o n s i d e r a t i o n a s t h e c o u r t may deem a d v i s a b l e i n accordance w i t h t h i s o p i n i o n . W e concur: