NO. 91-067
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
PETER J. WORTS,
Claimant and Appellant,
v.
HARDY CONSTRUCTION COMPANY,
Employer,
and
PACIFIC EMPLOYERS INSURANCE COME'ANY,
Defendant and Respondent.
APPEAL FROM: Workers' Compensation court,
The Honorable Timothy W. Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Lloyd E. Hartford, Attorney at Law, Billings,
Montana
For Respondent:
Andrew J. Utick; Utick & Grosfield, Helena, Montana
Submitted on briefs: June 18, 1991
Filed:
I
Clerk
Justice Karla M. Gray delivered the Opinion of the Court.
On January 26, 1989, the Workerst Compensation Court
determined that the claimant was entitled to an award of reasonable
costs and attorney's fees pursuant to 5 39-71-611, MCA (1983). An
evidentiary hearing was held to determine the amount to be awarded
and, on November 30, 1990, the Workerst Compensation Court issued
an order awarding attorney's fees of $3,329.39 based on the
contingent fee agreement between the claimant and his attorney.
From this order, the claimant appeals. We affirm.
The claimant raises the following issues on appeal:
1. Did the Workerst Compensation Court abuse its discretion
by awarding attorney's fees in accordance with the contingent fee
agreement and not on an hourly basis?
2. Should attorney's fees be awarded for the time spent
litigating the fee issue?
3. Should attorney ' s fees be based on future benefits as well
as the reinstated temporary total disability benefits and payment
for psychological counseling if the contingent fee agreement
controls?
The respondent raises as an additional issue on appeal
whether sanctions should be imposed against the claimant pursuant
to Rule 32, M.R.App.P., for bringing this appeal.
The claimant, Peter Worts, sustained a work-related injury on
June 30, 1983. The respondent, Pacific Employers Insurance
Company, accepted liability and paid the claimant temporary total
disability benefits of $263 per week. Later, effective May 8,
1986, the respondent reduced the claimant's benefits fromtemporary
total to permanent partial at a rate of $131.50 per week.
Following the reduction in benefits, the claimant retained
attorney Lloyd Hartford to represent him in connection with his
claim for benefits. The claimant and Mr. Hartford entered into a
contingent fee agreement which provided in part:
4. That the Attorney accepts this employment, and the
Client agrees to pay the Attorney, a fee not to exceed
the following amounts:
(b) For cases that go to a hearing before the Workers'
Compensation Judge, thirty-three percent (33%) of the
amount of compensation payments the Client received from
an order of the Workers' Compensation Court.
On January 30, 1987, the claimant filed a petition for an
emergency trial with the Workers' Compensation Court requesting
reinstatement of his temporary total benefits and payment for
psychological counseling. Prior to the trial, the respondent moved
to dismiss the case upon the ground that, as a result of the 1987
amendments to the Workers' Compensation Act regarding mandatory
mediation of claims, the Workers' Compensation Court lacked subject
matter jurisdiction. This motion was denied by the Workers'
Compensation Court and the matter proceeded to trial.
The respondent then filed an application for a writ of
supervisory control with this Court. On February 3, 1988, we
issued our opinion concerning the jurisdictional issue, holding
that the 1987 amendments to the Act covering dispute resolution did
not apply retroactively to cases in which petitions had been filed
with the Workers' Compensation Court prior to July 1, 1987, the
effective date of the amendments; therefore, the Workers'
Compensation Court had jurisdiction. See State ex rel. Pac. Emp.
Ins. Co. v. Workers' Comp. Court (1988), 230 Mont. 233, 749 P.2d
522.
By the time the jurisdictional question had been resolved,
the trial had already been held on eight issues raised by the
claimant. On January 26, 1989, the Workers' Compensation Court
entered its findings of fact, conclusions of law and judgment,
ruling in the claimant's favor on three issues, including
reinstatement of temporary total disability benefits retroactive
to the date such benefits were reduced by the respondent, an award
of medical benefits for psychological treatment, and an award of
reasonable costs and attorney's fees. The court ruled in the
respondent's favor on the five remaining issues.
The Workers' Compensation Court directed Mr. Hartford to
submit a statement of the hours he spent in pursuing the matter,
the costs incurred, a statement of his customary and current hourly
fee and a copy of the fee agreement as approved by the Division of
Workers' Compensation. On February 14, 1989, Mr. Hartford filed
Claimant's Memorandum of Time and Costs in which he moved for an
award of fees in the amount of $48,510 and costs of $1,202.40. Mr.
Hartford claimed that he spent 215.60 hours on the case. He also
asserted that he does not charge an hourly rate in the regular
course of business, but claimed that $225 represented a reasonable
hourly fee for his services based upon an accountant-prepared
formula utilized for determining his hourly cost of doing business.
The respondent requested an evidentiary hearing regarding the
propriety of the requested award of attorney's fees. A dispute
arose during the preparation for that hearing concerning Mr.
Hartford's refusal to completely answer certain interrogatories;
the dispute culminated in the WorkersF Compensation Court imposing
sanctions against Mr. Hartford in the amount of $1,000.
Thereafter, the claimant filed a motion to disqualify the Workerst
Compensation Judge. The Workers' Compensation Court denied the
motion but appointed a hearing examiner to hear the attorney fee
matter and make proposed findings and conclusions.
On July 24, 1990, Mr. Hartford moved to supplement his request
for attorneyfs fees and costs to add a claim for 67 additional
attorney hours and ten paralegal hours for time spent in pursuing
the claim for attorney's fees. Again, the claim was based upon a
rate of $225 per hour for Mr. Hartford, with $35 per hour claimed
for paralegal time. Thus, as of July 24, 1990, the total amounts
requested for attorney's fees and costs were $63,935 and $1,202.40,
respectively,
The evidentiary hearing was held on August 20, 1990. The
pertinent issue to be decided at the hearing, as stated in the
pretrial order, was:
The amount of attorney's fees and costs to be
awarded to claimantls counsel and whether claimant is
entitled to attorney's fees based on an hourly rate as
set forth in his memorandum of time and costs filed
February 14, 1989, together with added fees and costs as
supplemented on July 24, 1990 and hours to be
supplemented at the termination of the case.
On November 30, 1990, the hearing examiner entered his
Findings of Fact, Conclusions of Law and Proposed Judgment. The
examiner found that, based on the evidence presented at the
hearing, the January 26, 1989 decision of the Workers' Compensation
Court resulted in the payment of $8,124.05 in reinstated temporary
total disability benefits to the claimant. In addition, the
decision resulted in the payment of $1,965 in medical benefits to
Dr. Traynham for psychological counseling. Thus, Mr. Hartford
recovered a total of $10,089.05 for the claimant by reason of the
order of the Workers' Compensation Court. The examiner further
found that Mr. Hartford failed to present strong countervailing
evidence sufficient to overcome the presumption in favor of the
contingent fee agreement as establishing a reasonable fee;
therefore, in accordance with the contingent fee agreement, Mr.
Hartford was entitled thirty-three percent of the total award
received by the claimant, or $3,329.39, plus costs of $1,202.40.
The respondent was entitled to credit the $1,000 sanction against
Mr. Hartford against the award of fees and costs. The Workerst
Compensation Court adopted the findings of fact and conclusions of
law and entered judgment on November 30, 1990. A rehearing was
denied on January 7, 1991.
I
Did the Workerst Compensation Court abuse its discretion by
awarding attorney's fees in accordance with the contingent fee
agreement and not on an hourly basis?
In determining attorney's fees, the Workers' Compensation
Court examined the factors set out by this Court in Wight v. Hughes
Livestock Co., Inc. (1983), 204 Mont. 98, 664 P.2d 303, for
assessing the reasonableness of a contingent fee agreement. Those
factors include:
"(1) The anticipated time and labor required to
perform the legal service properly.
(2) The novelty and difficulty of legal issues
involved in the matter.
(3) The fees customarily charged for similar legal
services.
(4) The possible total recovery if successful.
(5) The time limitations imposed by the client or
circumstances of the case.
(6) The nature and length of the attorney-client
relationship.
(7) The experience, skill and reputation of the
attorney.
(8) The ability of the client to pay for the legal
services rendered.
(9) The risk of no recovery."
Wiqht, 204 Mont. at 114, 664 P.2d at 312 (quoting Clark v. Sage
(Idaho 1981), 629 P.2d 657, 661) . A tenth factor noted by this
Court is "the market value of the lawyer's services at the time and
place involved." Wiqht, 204 Mont. at 114, 664 P.2d at 312. In
addition, we stated that:
In considering ... [the claimant's] contingent fee
contract with his attorney, the Workers' Compensation
judge should accept the approved contract as having a
strong presumption in its favor. If the judge does not
set a fee in accordance with the contingent fee contract,
he shall state with particularity his reasons in writing,
based upon strong countervailing evidence, why the
contingent fee contract is not followed by him, and
precisely what weight he accorded to the contingent fee
contract.
Wiuht, 204 Mont. at 115, 664 P.2d at 312.
The Workers7 Compensation Court concluded that the contingent
fee agreement between Mr. Hartford and the claimant established a
reasonable attorney's fee based on its determination that Mr.
Hartford failed to present strong countervailing evidence
sufficient to overcome the presumption in favor of the contingent
fee agreement. The Workers' Compensation Court concluded that:
Mr. Hartford did not offer any testimony or evidence
whatsoever regarding the ten factors that must be
considered under Wisht, supra. . . .
[ H I is entire case
was designed to show that his cost of doing business
justified an hourly rate of $225.00. An attorney's cost
of doing business is not a proper factor for
consideration under Wisht or under Rule 1.5 of the Rules
of Professional Conduct. Mr. Hartford simply did not
attempt to meet his burden of presenting evidence that
his contingency fee did not establish a reasonable fee.
Mr. Hartford challenges the Workerst compensation Court's
award of attorneyfs fees, arguing that, on its face, a fee of
$3,329.39 for 215.60 hours of work is unreasonable. He also
asserts that the Workers1 Compensation Court erred in its
application of several of the Wisht factors.
his Court has held that workerst compensation benefits,
including the claimant's award of attorney's fees, are determined
by the statutes in effect on the date of the injury. Cadwell v.
Bechtel Power Corp, (1987), 225 Mont. 423, 732 P.2d 1352. Here,
the claimant was injured on June 30, 1983, before the 1985
amendments to g g 39-71-612 and 39-71-614, MCA. Therefore the 1983
statutes govern this case. Section 39-71-611, MCA (1983), gives
the Workers' Compensation Court discretion to determine reasonable
attorney's fees. Swan v. Sletten Construction Co. (1986), 223
Mont. 477, 480, 726 P.2d 1170, 1172. Thus, this Court will not
interfere with the Workers' Compensation Court's determination of
reasonable attorney's fees absent an abuse of discretion. Swan,
223 Mont. at 480, 726 P.2d at 1172.
We find no abuse of discretion on the part of the Workers'
Compensation Court. The issue to be determined at the evidentiary
hearing, as set forth in the pretrial order, was the "amount of
attorney's fees and costs to be awarded . . . and whether claimant
is entitled to attorney's fees based on an hourly rate as set forth
in his memorandum of time and costs .... " At the hearing, Mr.
Hartford's only evidence was that of his accountant, Richard Hobbs,
who testified regarding Mr. Hartford's alleged cost of doing
business and the formula for determining an hourly rate from that
cost of doing business. Mr. Hartford did not testify on his own
behalf, present any other attorney to testify on his behalf, offer
any evidence concerning the Wicrht factors, or make any effort
whatsoever to overcome the presumption in favor of the contingent
fee agreement. Moreover, subsequent to the evidentiary hearing
Mr. Hartford abandoned his theory that attorney's fees should be
set at $225 per hour based upon his cost of doing business and, in
Claimant's Proposed Findings of Fact, Conclusions of Law and
Judgment, he proposed that the Workers1 Compensation Court award
attorney's fees at a rate of $125 per hour, his prior hourly rate.
However, no evidence was presented at the hearing regarding Mr.
Hartford's prior hourly rate.
The respondent presented evidence from Geoffrey Keller, an
attorney experienced in representing claimants in workersi
compensation matters. It was Mr. Keller's opinion that this case
was a rather routine case, and that the work required to be
performed was not sufficient or unusual enough to take the case
outside the presumption in favor of the contingent fee contract as
establishing a reasonable attorney's fee. The Workersf
compensation Court ultimately agreed with Mr. Keller.
In addition, Mr. Hartford's assertion that a fee of $ 3 , 3 2 9 . 3 9
for 215.60 hours of work is patently unreasonable is unfounded.
In Buckman v. Montana Deaconess Hospital (1989), 238 Mont. 516, 776
P.2d 1210, we held that a claimant's attorney is entitled to
attorney's fees only on those issues upon which the claimant
prevailed in a workerst compensation case. In this case, the
claimant prevailed on three of eight issues and Mr. Hartford made
no attempt to identify the hours he devoted to those issues.
Mr. Hartford further asserts that, as the party moving for the
evidentiary hearing, the respondent had the burden of proof to
establish that the claim for attorney's fees was unreasonable. He
argues that the record speaks for itself and no additional evidence
was required regarding the claim for attorney's fees. We disagree.
As already noted, a contingent fee agreement carries with it a
presumption of establishing a reasonable fee under our decision in
Wisht. It follows logically that the party contesting the
reasonableness of the contingent fee agreement has the burden of
overcoming the presumption. It was the claimant in this case who
contested the reasonableness of the contingent fee agreement and
he had the burden of overcoming the presumption of reasonableness.
Having presented no evidence regarding the Wisht factors in
determining the reasonableness of the contingent fee agreement, he
failed to carry his burden of proof. We hold that the Workers'
Compensation Court did not abuse its discretion by awarding
attorney's fees in accordance with the contingent fee agreement.
II
Should attorney's fees be awarded for the time spent
litigating the fee issue?
The claimant contends that he should be awarded attorney's
fees for time spent litigating the fee issue, arguing that the
effect of holding otherwise diminishes the value of the attorney's
fees awarded by the order of the Workers1 Compensation Court.
As noted previously, the claimant is entitled to attorney's
fees only as to those issues on which he prevailed. Buckman, 238
Mont. 516, 776 P.2d 1210. The claimant did not prevail on his
argument that the contingent fee agreement did not establish a
reasonable attorney's fee. Therefore, we hold that the Workers'
Compensation Court correctly refused to award Mr. Hartford
attorney's fees for litigating the issue.
I11
Should attorney's fees be based on future benefits as well as
the reinstated temporary total disability benefits and payment for
psychological counseling if the contingent fee agreement controls?
The claimant contends that if this Court is not persuaded that
attorney's fees should be awarded on an hourly basis, the fees
awarded under the contingent fee agreement should take into account
future benefits as well as the reinstated temporary total
disability benefits and payment for psychological counseling. He
notes that his underlying claim for benefits was subsequently
settled on January 18, 1991, for $65,750 on a full and final
compromise basis.
Mr. Hartford received exactly what his fee agreement provided
for, thirty-three percent of the compensation payments the claimant
received from an order of the Workers' Compensation Court,
determined in accordance with the evidence presented at the
hearing. The action involved only a claim for reinstatement of
temporary total disability benefits and payment for psychological
counseling. The evidentiary hearing was held to determine a
reasonable attorney's fee for Mr. Hartford's efforts in obtaining
those benefits for the claimant. Resolution of the underlying
claim for benefits was a matter completely separate from the
present action. The order approving the full and final compromise
settlement was not even in existence at the time of the evidentiary
hearing on attorney's fees and is not properly part of the record
on appeal. Therefore, we hold that the Workers' Compensation Court
correctly determined attorney's fees based only on the
reinstatement of temporary total disability benefits and payment
for psychoZogica1 counseling.
We also note that in support of his argument on this issue,
the claimant's attorney cited a nonciteable, unpublished opinion
of this Court. In December 1989, we amended our Internal Operating
Rules to allow for nonciteable, unpublished, abbreviated opinions
in certain cases. We take this opportunity to remind counsel that
such opinions shall not be cited as precedent.
IV
Should sanctions be imposed against the claimant pursuant to
Rule 32, M.R.App.P., for bringing this appeal?
Rule 32, M.R.App.P., provides:
If the supreme court is satisfied from the record
and the presentation of the appeal in a civil case that
the same was taken without substantial or reasonable
grounds, such damages may be assessed on determination
thereof as under the circumstances are deemed proper,
Where a reasonable ground for appeal exists, sanctions or
damages will not be imposed under Rule 32, M.R.App.P. Searight v.
Cirnino (19881, 230 Mont. 96, 103-04, 748 P.2d 948, 9 5 2 . We believe
that the statutory and case law governing attorney's fees in this
case, and the Workerst Compensation Court's actions in accordance
therewith, were sufficiently clear. The claimant s total
abandonment of the attorney fee theory he propounded at the
evidentiary hearing, after that hearing, lends further credence to
the existence of such clarity. Because of a modicum of legitimate
confusion as to the burden of proof at the evidentiary hearing
regarding attorney's fees, however, a barely reasonable ground for
appeal did exist. For that reason, we will not impose sanctions
against the claimant.
Af finned.
We concur:
1
diT& Chief Justice d7c
August 29, 1991
CERTIFICATE O F SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
Lloyd E. Hartford
ATTORNEY AT LAW
P.O. BOX 1517
Billings, MT 59103
Andrew J. Utick
ATTORNEY AT LAW
P.O. Box 512
Helena, MT 59624-0512
ED SMITH
BY: