NO. 94-529
IN THE SUPREME COURT OF THE S'TATE OF MONTANA
1995
ROBERT CORWIN, FRED BISCHOFF,
DEBORAH MILLION, ERNIE BATEMAN,
DENNIS SLONAKER, SUSAN SWARTZ,
MADALINE GEMAR, BARBARA GILLIS, __r.s:.i .-p-q>.,
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Plaintiffs and Respondents, .\ 3 y#j~)
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BOARD OF PUBLIC EDUCATION, STATE
OF MONTANA,
Defendant and Appellant.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Thomas M. McKittrick, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Kimberly A. Kradolfer, Assistant Attorney General,
Agency Legal Services Bureau, Helena, Montana
For Respondent:
Lawrence A. Anderson, Great Falls, Montana
Submitted on Briefs: June 8, 1995
Decided: July 13, 1995
Filed:
Justice James C. Nelson delivered the Opinion of the Court.
The Board of Public Education, State of Montana (Board)
appeals from the June 17, 1993 Memorandum and Order of the District
Court of the Eighth Judicial District, Cascade County, granting the
motion for summary judgment of the plaintiff-employees of the
Montana School for the Deaf and Blind (Employees) and denying the
Board's motion for summary judgment. We affirm.
Background
The Montana School for the Deaf and Blind (MSDB) is managed by
the Board and provides both residential and day-school facilities
for handicapped children along with resources for parents and
public schools throughout the State. See §§ 20-E-101, MCA, and 20-
8-102, MCA. Employees are or were employed at the MSDB for many
years in non-teaching positions. Four employees are live-in
houseparents, who provide direct supervision and care for the
residential students; three employees are itinerant resource
consultants, who travel throughout the State serving handicapped
children living at home and attending public schools and who also
provide resources for parents, teachers and school districts; and
the remaining five employees are MSDB administrators--one employee
coordinates the Interpreter-Tutor Program, one coordinates the
Parent-Infant Program, one is the Athletic/Recreation Director, one
is the Director of Health and Food Services, and one is the
Director of the Instructional Materials Center.
The Employees are all hired under written, year-to-year, form
contracts which contain virtually the same language. At issue here
2
are the contract provisions which grant each employee "all holidays
and annual leave to which [the employee] is entitled under state
law," and language which grants "all employee benefits to which
[the employee1 is entitled under the laws of the State of Montana."
Additionally, the contracts grant each employee the right to
contract renewal, the right to notice and opportunity to be heard
in the event of discharge, and the right to appeal the decision to
the Board.
The personnel records of the Employees maintained by the State
are extensive and show that each Employee is given an annual
performance appraisal in which he or she is evaluated on numerous
grounds including neatness, thoroughness, use of time, ability to
meet schedules, training and direction of subordinates, and ability
to plan and organize work. The District Court concluded that these
evaluations are based on the basic criteria that employers
regularly use to evaluate their employees' job performance. In
their Stipulated Facts, the parties agree that Employees are not
independent contractors.
MSDB also maintains records of changes in payroll status of
each Employee using steps and grades and which show promotions and
withholdings by the State as their employer. Employee affidavits
submitted in support of their motion for summary judgment indicate
they generally do not work typical eight-hour days or 40-hour
weeks. Many are on call much of the time or work evenings.
Nevertheless, MSDB requires that the Employees fill out time cards
showing eight hours' of work per day regardless of actual hours worked.
3
This litigation began with a letter Employees sent to the
Board on February 20, 1990, requesting compensation under Title 2,
Chapter 18, part 6, MCA, for annual leave and holiday pay accrued
over previous school years but not paid. Each Employee's claim was
separately computed based on his or her individual pay rate. The
Board denied the Employees' claim stating that the Employees were
hired under "personal services contracts" and that the Employees
were, therefore, exempt from the definition of "employee" under the
provision of 5 2-IS-601(2), MCA (1991). Employees thereafter filed
suit, and following discovery and the submission of stipulated
facts and affidavits, the parties filed cross motions for summary
judgment. The District Court granted the Employees' motion for
summary judgment and denied the Board's. This appeal followed.
Issue
Did the District Court err in granting the Employees' motion
for summary judgment and in denying the Board's motion? Underlying
that question is the issue of whether the Employees here are
"employees" of the State for purposes of annual leave and holiday
pay and whether the court properly interpreted § 2-18-601(Z), MCA
(1991).
Standard of Review
Summary judgment is proper only when no genuine issues of
material fact exist and the moving party is entitled to judgment as
a matter of law. Rule 56(c), M.R.Civ.P. In determining the
propriety of summary judgment, we will utilize the same criteria as
a district court; our review is de nova. Minnie v. City of Roundup
4
0 (1993), 25-i Mont. 429, 431, 849 P.2d 212, 214. Our review of a
district court's conclusions of law is plenary. We simply
determine whether the court's interpretation of the law is correct.
Steer, Inc., v. Department of Revenue (1990), 245 Mont. 470, 474-
75, 803 P.2d 601, 603.
Discussion
Under Title 2, Chapter 18, part 6, MCA, State employees are
entitled to various leave and holiday benefits. For these
purposes, the code defines who is and who is not a State
employee. Section 2-1%601(2), MCA (1991), provides:
"Employee" means any person employed by an agency except
elected state, county, and city officials,
schoolteachers, and persons contracted as independent
contractors or hired under personal services contracts.
As regards this statutory definition, it is undisputed that
none of the exceptions are at issue here, save only the last--
persons "hired under personal services contracts." There is no
legislative history with respect to this phrase, and each side
proposes a different definition.
Summarizing the parties' arguments, the Board contends that
the phrase refers to the "traditional master and servant
relationship in which the contract is not delegable and which may
not be specifically enforced." As authority for its
interpretation, the Board relies on various broad definitions of
"personal services contracts," “master, ‘I "servant," and
"independent contractor" from a number of authorities, including
secondary authorities and decisional authorities. Additionally,
the Board argues definitions of "personal services" from the
5
Montana Operations Manual as referred to in Teamsters Local 45 v.
Montana Liquor Control Board (19701, 155 Mont. 300, 471 P.2d 541.
The Board contends also that the Employees here, hired under
written contracts, differ from the usual State employee who is
hired "at will." The Board criticizes the District Court's
rationale that typical "personal services contracts" are exempt
from State bidding requirements and, citing to a 1962 Attorney
General Opinion analogizing the work of cooks with art, 29 Op.Atty'
Gen. No. 49 (1962), disagrees with the trial court's conclusion
that such contracts usually pertain to consultants with special
skills or to professionals such as lawyers, architects and
engineers. The Board also argues various other Attorney General
opinions largely dealing with schoolteachers--which these Employees
are clearly not. Finally, the Board contends that it is reasonable
to deny the Employees payment for statutory leave and holidays
because they receive summer vacation and certain holidays on
account of the school calendar.
To the contrary, and, again without going into detail, the
Employees maintain that the statutory term "personal services
contracts" refers to persons hired on an unusual, ad hoc basis for
unique or extraordinary skills. Contrary to the Board's broad view
of this phrase, the Employees argue, that the term "personal
services contracts" must be given a narrow meaning related to the
unique personal quality of the services at issue. The Employees
contend that it is clear that the legislature did intend that sort
of construction, citing the statutes by which the State can hire
6
private consultants, Title 18, Chapter 8, part 1, MCA. The
Employees also maintain that the phrase "personal services
contracts" in the statute must be understood as related to the
parallel statutory category of "independent contractors," and that
such contracts must be exceptional and distinct from the statute's
primary category of "employees "--ordinary State payroll labor. The
Employees maintain that they were not hired because of any unique
personal credentials; that, while their work requires training,
they do not possess professional skills or extraordinary,
remarkable talents; and that they were not hired for the short-
term, ad hoc sort of work for which independent contractors or
special consultants are typically retained under personal services
contracts or independent contractor agreements. The Employees
contend that they are simply ordinary State payroll labor employees
with the same benefits as and indistinguishable from other State
employees. The Employees also reference their form contracts which
include as part of the "term" provisions "all holidays and annual
leave" to which the employee "is entitled under state law," and
conclude by noting that §§ 2-18-103(Y), MCA, and 2-18-701(E), MCA,
respectively, exclude the Employees from the State pay-matrix
system, but include them in the State's group health plan.
For the most part, the District Court adopted the Employees'
narrow interpretation of the phrase "personal services contracts"
and rejected the broad construction proposed by the Board. Having
carefully considered the arguments and authorities raised and cited
by the parties, we conclude that the District Court properly
interpreted the statute. We agree with its rationale.
In § 2-18-601(2), MCA (1991), an l'employeelP is broadly defined
by reference to certain persons who are specifically excluded from
that definition by job (state, county and city elected officials
and schoolteachers) and by status (independent contractors and
persons hired under personal services contracts). In other words,
if a person does not fit into one of the excepted categories, then
the person is, by definition, a State employee. Here the only
possible excepted category into which the Employees might arguably
fall is that which refers to those persons who are hired under
"personal services contracts."
In interpreting that phrase the District Court took a common
sense approach. The Employees here are typical in the sense of the
word--they are people who trade their labor to earn a living and
they have done so on a regular and continuing basis as opposed to
on an ad hoc or one-time/job-specific basis. While specifically
excluded from the State pay-matrix system (§ 2-18-103 (9), MCA), the
Employees are, nevertheless, specifically included as civil
servants in the State group health plans (S 2-18-701(8), MCA).
Each Employee is an "employee" for purposes of State unemployment
compensation, workers' compensation, and retirement benefits. Each
is closely evaluated annually, and each is given "promotions,"
"merit increases," "step increases," and changes in grade on State
payroll accounting forms.
The Employees' form contracts include, as part of the term
provisions, "all holidays and annual leave" to which the employee
8
is entitled under State law. TO accept the Board's contention that
the Employees are not entitled by law to leave or holidays,
necessitates reading out of the contracts (contracts which the
State drafted) that provision as being mere surplusage. Clearly,
such an interpretation is incorrect, as the whole of a contract is
to be taken together so as to give effect to every part if
reasonably practicable, § 28-3-202, MCA, and courts are without
authority to erase components from unambiguous contract provisions.
Hennen v. Omega Enterprises, Inc. (1994), 264 Mont. 505, 509, 872
P.2d 797, 800, (citing In re Marriage of McKeon (1992), 252 Mont.
15, 826 P.2d 537.)
Without demeaning the nature or importance of the work of the
Employees, there is no evidence that any of the Employees were
hired for any particular professional qualifications, skills or
credentials. While each is trained in his or her particular job,
none of those require remarkable skills of the type that, for
example, a lawyer, doctor, health-care provider, engineer,
architect, surveyor, expert or specialized consultant might
possess.
That the legislature contemplated that agencies would, on
occasion, need to hire consultants, professional persons and
experts on an ad hoc basis is evident in the statutes governing the
procurement of such services codified in Title 18, Chapter 8, MCA.
The need for such services and the statutory procedures for
retaining such persons provide an obvious explanation for the
"independent contractor" and "personal services contracts"
9
exceptions in § 2-18-601(2), MCA (1991). Professionals hired under
short-term, ad hoc contracts are appropriately excluded from leave
and holiday benefits granted to payroll employees. As the District
Court observed:
[Tl he term "personal service [sic] contract [sic]" was
inserted into § 2-18-601(2) , M.C.A., to cover
professional person [sic] in that situation, not regular
employees such as the Plaintiff's [sic].
We agree. Moreover, accepting the Board's arguments would, as
the District Court also observed, include within its broad
definition of personal services contracts, virtually every civil
service employee within the State. No civil servant would be
entitled to annual leave and holiday pay. The personal services
contracts exception would effectively swallow the definition of
employee and render that definition meaningless. Such an
interpretation is unreasonable and cannot stand. Sections l-3-232,
MCA and l-3-233, MCA. See American Linen Supply v. Department of
Revenue (1980), 189 Mont. 542, 545, 617 P.2d 131, 133.
We hold that the Employees here are "employees" as defined in
§ 2-18-601(2), MCA (1991); that the Employees here were not hired
under "personal services contracts;" and that the District Court's
legal conclusions to that effect were correct. Inasmuch as the
District Court's decision granting the Employees penalties under §
39-3-206, MCA, was not appealed, the court's ruling to that effect
also stands.
Accordingly, having determined that there are no genuine
issues of material fact in dispute and that the Employees are
entitled to judgment as a matter of law, the District Court's June
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17, 1993 Memorandum and Order is, in all respects
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July 13, 19s6
CERTIFICATE OF,SERVICE
I hereby certify that the following certified order was sent by United States mall, prepaid, to the
following named:
Kimberly A. Kradolfer
Assistant Attorney General
Agency Legal Services Bureau
215 N. Sanders
Helena, MT 59620
Lawrence A. Anderson
Attorney at Law
#18,Sixth St. No., P.O. Box 2608
Great Falls, MT 59403-2608
ED SMITH
CLERK OF THE! SUPREME COURT