No. 86-254
TN THF SUPREME COURT OF THE STATE OF MONTANA
1987
FREDRTC CADWELL,
Claimant and Appellant,
-vs-
BECHTEL POF7ER CORPORATION, Empl oyer ,
and
INDUSTRIAL TNDEMNITY COMPANY,
Defendant and Respondent.
APPEAL FROM: The Workers' Compensation Court, The Honorable
Timothy Reardon, Judge presiding.
COTJNSEL OF RECORD:
For Appellant:
Bottomly & Gabriel; R. V. Bottomly, Great Falls,
Manta-na
For Respondent:
Marra, Wenz, Johnson & Hopkins; David E. Bauer,
Great Falls, Montana
For Amicus Curiae:
Jeffrey T. Renz for ACLU, Billings, Montana
Submitted on Briefs: Sept. 25, 1986
Decided: February 26, 1987
Clerk
Mr. Justice William E. Hunt, Sr. , delivered the Opinion of
the Court.
Claimant Cadwell was awarded permanent partial
disability benefits by the Montana Workers' Compensation
Court. We are asked to decide if attorney fees awarded to
this successful WorkersYompensation claimant whose injury
occurred in 1981 should be based on standards in effect on
the date of the injury or on the standards ~dopted in 1985
and set forth in § 39-71-614, MCA.
We reverse the Workers' Compensation Court's decision to
apply the later 1985 standards and remand with instructions
to use the law in effect at the time of claimant's injury.
On November 30, 1981, claimant injured his back while
working as a carpenter erecting scaffolding at Colstrip,
Montana. Claimant filed for compensation with the Workers '
Compensation Court and trial was held on September 24, 1984.
The court ordered proposed findings of fact and
conclusions of law by November 30, 1984. Defendants moved
and were granted an open-ended extension based on thejr
desire to have a transcript of the proceedings prepared.
Appellant objected to the extension being open-ended. The
transcript was completed five months later and the parties"
findings of fact and conclusions of law were submitted May
I@, 1985.
The Workers' Compensation Court adjudged claimant's
injury to be compensable and awarded the claimant 500 weeks
of permanent partial disability benefits a t the rate of
$120.50 per week.
Claimant and his attorney had entered into a contingency
fee aareement to cover claimant's attorney fees for the case.
On April 19, 1985, H.R. 778 became effective as S 39-71-614,
MCA amending SS 39-71-611; 612, MCA. The statute required
attorney fees be paid to successful claimants based
exclusively on an hourly rate. It required the hourly fee to
be based on the attorney's customary hourly fee for legal
work performed in the State. Gullett v. Stanley Structures
(1986), 722 P.2d 619, 43 St.Rep. 1335.
The Workers' Compensation Court found that § 39-7'1-614,
MCA (1985), applied to this case since the case was submitted
to that court after April 19, 1985 and found that the
claimant's right to an award of attorney fees did not attach
until the court ordered a fee award. It held that claimant's
attorney fees were to be determined by an hourly rate using
the attorney's customary and current hourly fee pursuant to S
39-71-614 ( 2 ) , MCA.
Counsel's affidavit indicates he did not have a set
hourly rate because he worked on a contingency fee basis.
The Workers' Compensation Court requested counsel supply
additional information as to the reasonableness of the
requested $200 per hour attorney fee for this attorney.
Claimant appeals the order finding S 39-71-614, MCA,
applicable to his case.
Although the amicus curiae brief thoroughly addresses
the issue of how to determine reasonable attorney fees in
Workers' Compensation cases, this issue is not before this
Court and therefore will not be addressed here. We limit our
opinion to the issue of the attorney fee standards to be
applied.
The effective date of S 39-71-61.4, MCA (1985), was April
19, 1985. Claimant's injury occurred on November 18, 1981.
He contends that the law in effect on the date of the injury
is the applicable law for this case and argues that use of
the amended statute would be an impermissible retroactive
application.
This Court has held that Workers' Compensation benefits
a.re determined by the statutes in effect as of the date of
injury. Trusty v. Consolidated Freiqhtways (Yont. 1 9 8 4 ) , 681
In Trusty, we held that: "The statute in effect on the
date of the injury determines the benefits to be received
... (Citations omitted.) That sets the contractual rights
and debts of the parties." - at 1088, 976. The basis for
Id.
Worker's Compensation is a contract of hire either express or
implied. Sections 39-71-117, -118, MCA. This Court, as well
as courts of other states, have held that Workers'
Compensation is based on contract theory. Ruckman v. Montana
Deaconess Hospital and State Compensation Insurance Fund
,
(19861, - P. 2d - 43 St.Fep. 2216. The Buckman Court
approved the holding of the Kansas Supreme Court in Esta-te of
Baker (Kan. 1977), 563 P.2d 431 which reads as follows:
The liability of an employer to an injured or
deceased employee arises out of the contract
between them; the terms of the workmens'
compensation statute are embodied in the contract.
The substantive rights between the parties are
determined by the law in effect on the date of the
injury. (Citation omitted. ) However, the rights
under the contract vest when the cause of action
accrues, and the cause of action accrues on the
date of iniury or death. (Citations omitted. )
- at 436.
Id.
In the instant case, claimant's cause of action accrued
on November 18, 1981. His substantive contract rights vested
at this time.
Further, a statute should not be applied retroactively
unless the legislature clearly expressed an intention to so
apply it. First National Bank in Billings v. First I a n c
?.l
Stock Corporation (D.C. Mont. 1961), 197 F.Supp. 417;
Yurkovich v. 1ndustria.l Accident Board (1957), 132 Mont. 77,
314 P.2d 866. Here there is no indication that the
legislature intended the amendments to apply retroactively
and we will not make those amendments retroactive.
Section 39-71-614, MCA, does not apply to cases where
the injury occurred prior to April 19, 1985. Ra-ther, the law
in effect on November 18, 1981, the date of claimant's injury
is the applicable law.
This Court interpreted the 1983 attorney's fee statutes
which are the same as the 1981 statutes applicable to this
case in Wight v. Hughes Livestock Company et a1 (Mont. 1983),
664 P.2d 303, 40 St-Rep. 696.
The net award concept, as articulated by this Court in
Wight, allowed a claimant to recover the full value of lost
earnings or earning capacity benefits. It did this by
awarding the claimant attorney fees in an amount sufficient
to cover the actual attorney fees whether the attorney-client
agreement was based on a contingent fee or hourly fee. In
most cases, this meant an award of attorney fees based on a
contingency fee.
These were substantive provisions which granted
substantive rights from the date of the injury.
The 1985 amendments were meant to change this
arrangement. Section 39-71-614, MCA, (1985) recognized the
necessity of contingency fee contracts and allowed a claimant
and her attorney to enter into such contracts. However, the
statute was changed so the insurer is now exempted from
paying fees based on this contract. The claimant must now
pay any difference between an agreed upon contingency fee and
the hourly rate ordered by the court. This is a substantive
change from the law in effect at the time this claimant was
injured.
Because the applicable law here is the law in effect on
the date of claimant's injury, the date his contract rights
vested, the Wight interpretation applies to this case and the
1985 amendments do not apply.
We therefore reverse and remand this case with
instructions to determine attorney fees in accordance with
this Opinion.
F
!
e Concur: ,,'
-9
Justices
Mr. Justice L . C. Gulbrandson, dissenting.
I respectfully dissent.
The Workers' Compensation Court Judge in his order
awarding attorney fees relied upon Castles v. State ex rel.
Mont. Dept. of Highways (1980), 187 Mont. 356, 609 P.2d 1223,
and stated:
An analogous situation is presented by
the dispute over the recently enacted
attorney fee amendments which are at
issue in the instant case. Under a
Castles analysis, those amendments are
procedural in nature since claimants are
still entitled to an award of attorney
fees, but the means of calculating the
attorney fee has been legislatively
modified. Since claimants are still
entitled to an award of attorney fees,
the substantive right was not impacted by
the House Bill 778 amendments. Instead,
those amendments only affect the method
of calculating the attorney fee to be
awarded, and are therefore, procedural in
nature.
While it is apparent that the claimant's
right to an award of attorney fees does
not, in fact, attach until this Court
orders an award of attorney fees, this
Court finds it appropriate to look beyond
the date a case is decided, and instead
focus on its date of submission. This
legal fiction serves the interests of
justice for if this Court were to apply
the law in effect at the time a case is
decided, instead of the law in effect at
the time the case was submitted, a
claimant could conceivably be penalized
by a backlog on this Court's calendar.
Such a result would be patently unfair,
and that is the reason that this Court.
will look to the date of submission.
This Court in Yearout v. Rainbow Painting (Mont. 1986),
719 P.2d 1.258, 43 St.Rep. 1063, reaffirmed the rule that no
attorney's fees may be awarded until the claim is adjudged
compensahle by the Workers' Compensation Court Judge. Based
upon that reasoning, the FJorkers' Compensation Judge
properly, in my opinion, applied the law in effect at the
date of submission of the case. By so doing, the Judge
avoided penalizing a claimant due to a backlog on the court's
calendar.
The majority seem to justify the classification of the
amendments as substantive, rather than procedural, by the
statement that claimants must now pay any difference between
an agreed contingency fee and the hourly fee determined by
the court. As a practical matter, few, if any, attorneys
would attempt to collect any such difference, if they intend
to continue a workers' compensation practice. In fact, the
amendments provide that an attorney, with a contingent fee
agreement, may be awarded a larger sum in fees computed under
the hourly fee requirement than he would have received under
the contingent fee agreement. See Paulsen v. Bonanza Steak
House (Mont. 1987), P.2d , 44 St.Rep. 159, where
counsel for claimant was awarded an hourly fee approximately
three times greater than he would have earned under his
contingent fee contract.
I would affirm the order of the Workers' compensation
Court Judge.
I
Justicg