file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm
No. 00-236
IN THE SUPREME COURT OF THE STATE OF MONTANA
2001 MT 127
MARIAS HEALTHCARE SERVICES, INC.,
Plaintiff, Respondent,
and Cross-Appellant,
v.
DR. ANNETTE YVETTE MARIE TURENNE,
Defendant, Counter claimant and Appellant.
APPEAL FROM: District Court of the Ninth Judicial District,
In and for the County of Toole,
The Honorable John Warner, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Frederick F. Sherwood, Reynolds, Motl and Sherwood, P.L.L.P., Helena, MT
For Respondent:
Peter O. Maltese, Attorney at Law, Sidney, MT
Submitted on Briefs: December 7, 2000
Decided: July 24, 2001
Filed:
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm (1 of 10)1/18/2007 9:57:22 AM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm
__________________________________________
Clerk
Justice Jim Regnier delivered the Opinion of the Court.
¶1 After a bench trial, the Ninth Judicial District Court, Toole County, dismissed both the
claim by Marias Healthcare Services, Inc., and the counterclaim by Dr. Annette Yvette
Marie Turenne and denied attorneys fees and costs to both parties. Dr. Turenne appeals,
and Marias Healthcare cross-appeals. The appellant, Dr. Turenne, raises several issues,
which we restate as follows:
1. Did the District Court err in determining that Dr. Turenne's claim for wages and
penalties was not timely filed?
2. Did the District Court properly determine that Dr. Turenne failed to provide proof
that Marias Healthcare did not fully compensate her pursuant to the employment
contract?
3. Did the District Court err in determining that Dr. Turenne was properly
suspended without pay pursuant to the employment contract?
4. Did the District Court err in determining that Marias Healthcare properly
deducted the cost of an educational workshop and supplies from Dr. Turenne's
compensation?
5. Did the District Court err in determining that Dr. Turenne was not entitled to
damages for the cost of replacement medical malpractice insurance coverage?
Both Dr. Turenne and cross-appellant Marias Healthcare appeal the denial of attorney
fees. We affirm.
BACKGROUND
¶2 On October 14, 1998, Marias Healthcare Services, Inc., a health care facility in Havre,
Montana, brought an action against Dr. Annette Yvette Marie Turenne for breach of a
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm (2 of 10)1/18/2007 9:57:22 AM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm
written employment contract. Marias Healthcare alleged that Dr. Turenne refused to
endorse State warrants made payable to her for Medicaid Services while she was an
employee of Marias Healthcare. Dr. Turenne counterclaimed for compensation still due
under her employment contract, damages for early termination of her medical malpractice
insurance, and for penalties and attorneys fees pursuant to relevant wage statutes. Both
parties claimed attorneys fees pursuant to breach of the employment contract.
¶3 On October 8, 1999, Dr. Turenne moved for summary judgment, which was
subsequently denied by the District Court except for a finding that Marias Healthcare was
liable for the early termination of the doctor's malpractice insurance coverage. Marias
moved for reconsideration of the motion for summary judgment relating to the medical
malpractice insurance coverage issue. The District Court subsequently vacated the
summary judgment order relating to malpractice insurance coverage and a bench trial was
held on January 18 and 19, 2000.
¶4 On March 2, 2000, the District Court issued its Findings of Fact and Conclusions of
Law dismissing Marias Healthcare's claim and dismissing Dr. Turenne's counterclaims. In
its Findings of Fact and Conclusions of Law, the District Court concluded Dr. Turenne's
wage claims were time barred but proceeded to address the merits of her claims. The
District Court further ruled that neither party was entitled to attorneys fees or costs. The
decision was appealed by Dr. Turenne and cross-appealed by Marias Healthcare.
STANDARD OF REVIEW
¶5 We review a district court's findings of fact to determine whether they are clearly
erroneous. Daines v. Knight (1995), 269 Mont. 320, 324, 888 P.2d 904, 906. We review a
district court's conclusions of law to determine whether its interpretation is correct.
Carbon County v. Union Reserve Coal Co. (1995), 271 Mont. 459, 469, 898 P.2d 680,
686.
ISSUE ONE
¶6 Did the District Court err in determining that Dr. Turenne's claim for wages was not
timely filed?
¶7 On October 30, 1997, Marias Healthcare paid Dr. Turenne's salary based on the
previous year's salary, failing to take into account the annual cost of living increase. Upon
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm (3 of 10)1/18/2007 9:57:22 AM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm
notice of the error, Marias Healthcare reimbursed Dr. Turenne. Dr. Turenne also claims
that Marias Healthcare improperly suspended her without pay beginning on October 27,
1997. Dr. Turenne filed wage claims relating to the late pay and suspension pursuant to §
39-3-201, MCA, and § 39-3-206, MCA, against Marias Healthcare on April 30, 1999, as a
counterclaim against Marias Healthcare's claim against her for failing to sign outstanding
warrants.
¶8 Marias Healthcare contends that Dr. Turenne is time barred from raising this claim
pursuant to the statute of limitations set forth in § 39-3-207, MCA, which provides that an
employee may recover all wages and penalties by filing a complaint within 180 days of a
default or delay in the payment of wages. Dr. Turenne argues that Marias Healthcare may
not raise a statute of limitations defense because such a defense is an affirmative defense
that must have been raised in the original pleadings, and Marias Healthcare first raised the
issue in its post trial memorandum. We agree.
¶9 A statute of limitations defense is an affirmative defense that is waived if it is not raised
in the answer to a claim. See Rule 8(c), M.R.Civ. P. See also Estabrook v. Baden (1997),
284 Mont. 419, 423, 943 P.2d 1334, 1336. Marias Healthcare failed to raise the issue in its
original pleadings and is thus barred from raising the defense. Additionally, Marias
Healthcare failed to respond to the issue when it was presented to this Court. Thus, we
conclude that the District Court erred in determining that Dr. Turenne's wage claims were
time barred. In turn, we shall address the merits of her claims.
ISSUE TWO
¶10 Did the District Court properly determine that Dr. Turenne failed to prove that Marias
Healthcare did not fully compensate her pursuant to the employment agreement?
¶11 Dr. Turenne argues that she provided sufficient proof that Marias Healthcare failed to
pay her an appropriate salary as required by § 39-3-204, MCA, by miscalculating her
monthly income for October 1997 and failing to include a cost of living increase to her
base salary. Dr. Turenne claims that she is entitled to damages for such an underpayment
pursuant to § 39-3-204, MCA. She also argues that pursuant to § 39-3-206, MCA, a
penalty must also be assessed against and paid by Marias Healthcare in an amount not to
exceed 110% of the wages due and unpaid.
¶12 Marias Healthcare responds that although they miscalculated Dr. Turenne's monthly
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm (4 of 10)1/18/2007 9:57:22 AM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm
paycheck in October 1997, Dr. Turenne failed to provide adequate proof that she was not
paid her full compensation package as required by the employment contract because
Marias Healthcare, upon discovery of the error, fully reimbursed Dr. Turenne in the
subsequent paychecks. Marias Healthcare also argues that Dr. Turenne is excluded from a
wage claim pursuant to § 39-3-204(3), MCA, which excludes any professional,
supervisory, or technical employee who by custom receives wages earned at least once
monthly. The District Court concluded that Dr. Turenne was to receive an annual "total
compensation package," and that after considering various deduction packages, Dr.
Turenne failed to prove that she was underpaid by Marias Healthcare.
¶13 Although payment stubs representing a portion of Dr. Turenne's monthly
compensation were entered into the record, the evidence is incomplete to determine
whether Dr. Turenne was underpaid in terms of her total compensation package for
October 1997. The compensation provision of the employment agreement was
intentionally flexible for tax purposes, designed to benefit the employee physicians by
withholding certain claims from physician paychecks. No evidence was presented by Dr.
Turenne as to the appropriate or required monthly level of compensation, accounting for
social security, workers compensation or other withholding, or the favorable tax benefits
employed by Dr. Turenne, which would adequately demonstrate whether or not Marias
Healthcare had provided inadequate compensation. See § 26-1-401, MCA.
¶14 Thus, based on the evidence presented, we conclude that the District Court did not err
in determining that Dr. Turenne failed to produce sufficient evidence. We need not reach
the question as to whether Dr. Turenne's claim was excluded under § 39-3-204(3), MCA.
ISSUE THREE
¶15 Did the District Court err in determining that Dr. Turenne was properly suspended
without pay pursuant to the employment contract?
¶16 Dr. Turenne argues that Marias Healthcare improperly suspended her. She argues that
pursuant to the employment contract, she cannot be suspended without pay except under
specific circumstances such as limitation or suspension of her license or hospital privileges
or the termination of the employment contract and that her suspension was not based on
these circumstances. Marias Healthcare argues that the employment contract incorporates
other Marias Healthcare policies and procedures which allowed for her suspension without
pay. We agree.
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm (5 of 10)1/18/2007 9:57:22 AM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm
¶17 In the case at hand, Marias Healthcare and Dr. Turenne signed and executed a valid
employment contract that contained specific references to Marias Healthcare policies and
provisions. Thus, because the employment contract was adequately bargained for,
sufficient consideration was present, and both parties were on notice of the terms of the
contract, the inclusion of the referenced policies and procedures is valid. See, e.g.,
Langager v. Crazy Creek Products, Inc., 1998 MT 44, ¶¶ 20-21, 287 Mont. 445, ¶¶ 20-21,
954 P.2d 1169, ¶ ¶ 20-21 (holding that the employer was bound by the terms of the
employment manual when it was given to the employee and specifically referenced during
her employment).
¶18 Specifically, the employment contract at issue states in Article XII, paragraph E, that
Dr. Turenne shall follow the policies and procedures promulgated by Marias Healthcare.
Such a direct reference to the policies and procedures clearly incorporates the policies and
procedures of Marias Healthcare into the employment contract. The policies and
procedures of the employment manual were sufficiently referenced in the employment
contract entered into between Marias Healthcare and Turenne as to hold both parties to
those policies and procedures. See Flanigan v. Prudential Fed. Sav. & Loan Ass'n. (1986),
221 Mont. 419, 428-29, 720 P.2d 257, 263 (holding that an employer may be liable for
negligence in violating its written employment policies). In addition, the policies and
procedures utilized by Marias Healthcare comprise a 68 page manual which Dr. Turenne
utilized and provided suggestions relating to modifications for favorable employee
benefits during her tenure.
¶19 Dr. Turenne argues that the disciplinary action by Marias Healthcare is prohibited by
her employment contract. We disagree. The employment contract specifically referenced
the policies and procedures of Marias Healthcare. The employment contract also stated
that if such policies were inconsistent with the employment contract, the "employment
agreement shall overrule [Marias Healthcare] Policies if there is [sic] any inconsistencies."
In this case, the disciplinary procedure as cited in the policies and procedures and used by
Marias Healthcare to suspend Dr. Turenne was not inconsistent with the employment
contract signed by Dr. Turenne. There was no conflict between the policies of Marias
Healthcare and the terms of the contract. No language in the employment contract barred
Marias Healthcare from implementing its policies and procedures - in fact, the contract
clearly stated that Dr. Turenne "shall follow the Policies & Procedures promulgated by
[Marias Healthcare]."
¶20 Had the employment contract been inconsistent with the policies and procedures, the
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm (6 of 10)1/18/2007 9:57:22 AM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm
employment agreement, by its terms, would take precedence. Because Dr. Turenne does
not claim that Marias Healthcare improperly suspended her pursuant to the requirements
of the policies and procedures and her suspension without pay does not violate the express
terms of the employment contract, we conclude that the District Court did not err in
determining that Dr. Turenne was properly suspended without pay.
¶21 Dr. Turenne also argues that she is entitled to her wages for the time that she was
suspended because she continued to see patients and Marias Healthcare was reimbursed by
the State for those patient visits. Marias Healthcare argues that they specifically informed
Dr. Turenne that she was to refer all patients to other physicians during that time period,
and that they had no knowledge of Dr. Turenne seeing patients. The District Court
concluded that no evidence was presented to calculate the numbers of hours that Dr.
Turenne may have worked during that period, and thus no calculation of the value of those
hours could be made. We agree.
ISSUE FOUR
¶22 Did the District Court err in determining that Marias Healthcare properly deducted the
cost of an educational workshop and supplies from Dr. Turenne's compensation?
¶23 Dr. Turenne attended a workshop on the chemical peel process in October 1997. As
was customary policy, Dr. Turenne charged several hundred dollars on her personal credit
card for travel and lodging relating to the workshop and requested that Marias Healthcare
withhold the amount from her wages, creating a tax advantage for Dr. Turenne. Marias
Healthcare paid a total of $200 for the workshop and supplies. Marias Healthcare
subsequently deducted the $200 from Dr. Turenne's paycheck. Dr. Turenne submits that
Marias Healthcare improperly deducted the cost of the workshop and supplies from her
compensation.
¶24 Dr. Turenne testified that it was her understanding that Marias Healthcare, through
prior approval from both Jerome Morasko and Kim Zink, employees of the clinic, would
cover the cost for her educational workshop and supplies relating to the chemical peel
workshop. Marias Healthcare contends that Morasko told Dr. Turenne that he would
present her request of coverage of the educational workshop and supplies to the Board of
Directors who had the power to approve additional expenses. Morasko further testified
that the Board of Directors did not approve covering the cost of the seminar, as reflected
in the Board minutes. Thus, Marias Healthcare contends that they properly deducted the
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm (7 of 10)1/18/2007 9:57:22 AM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm
amount of the seminar from Dr. Turenne's compensation.
¶25 As noted above, conflicting testimony was presented to the District Court relating to
this issue. We have consistently stated that a district court is in a better position to observe
witnesses and judge their credibility than this Court. We will not second guess a district
court's determination regarding the strength and weight of conflicting testimony nor
substitute our judgment for that of the trial court when the issue relates to the credibility of
the witness or the weight given to certain evidence. See Wareing v. Shreckendgust (1996),
280 Mont. 196, 210, 930 P.2d 37, 45-46. Thus, we will not overturn the ruling of the
District Court in determining that Marias Healthcare properly deducted the cost of the
educational workshop and supplies from Dr. Turenne's compensation.
ISSUE FIVE
¶26 Did the District Court err in determining that Dr. Turenne was not entitled to damages
for the cost of replacement medical malpractice insurance?
¶27 Dr. Turenne argues that she is entitled to damages for the cost of replacement medical
malpractice insurance because it reasonably appeared that Marias Healthcare fully
terminated her medical malpractice insurance, leaving her without tail coverage, at the
time of her suspension. Tail coverage is the portion of the medical malpractice insurance
policy that would cover any potential claims made in the future against Dr. Turenne
relating to her practice while working for Marias Healthcare. Marias Healthcare contends
that it properly provided Dr. Turenne with tail coverage which would adequately insure
her for claims made by patients seen while she was employed by Marias Healthcare and
thus, should not be liable for the cost of Dr. Turenne's tail coverage.
¶28 Sometime after she was suspended, Dr. Turenne was informed that Marias Healthcare
had removed her from the medical malpractice insurance that covered clinic doctors. She
was not informed that she was still covered under the policy for tail coverage.
Subsequently, Dr. Turenne purchased medical malpractice insurance which included tail
coverage insurance through the end of her employment contract with Marias Healthcare.
Dr. Turenne contends that Marias Healthcare should be liable for that cost.
¶29 We conclude that Dr. Turenne failed to prove the amount of her damages. The initial
burden of producing evidence as to the cost of replacement tail insurance is on Dr.
Turenne. See § 26-1-401, MCA. Evidence presented indicated that the cost of Dr.
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm (8 of 10)1/18/2007 9:57:22 AM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm
Turenne's new medical malpractice insurance did not include a specific amount designated
for the tail coverage from her previous employment with Marias Healthcare. Marvin
Jeppesen, the insurance agent for both Marias Healthcare and Dr. Turenne, testified that
the tail coverage provided in Dr. Turenne's subsequent insurance policy was only a
minimal amount of the entire insurance policy. He could not testify as to the exact cost of
such coverage. We conclude that Dr. Turenne failed to produce evidence establishing that
she incurred damages when she believed that she was without tail coverage. Thus, the
District Court did not err in determining that Dr. Turenne was not entitled to damages for
tail coverage.
¶30 Both plaintiff and defendant argue that they should be awarded attorney fees pursuant
to the employment contract. The defendant further alleges that she is entitled to attorney
fees pursuant to § 39-3-214, MCA. The District Court concluded that neither party was to
be considered a successful party in the litigation, and thus denied attorneys fees to both
parties.
¶31 The employment contract between Dr. Turenne and Marias Healthcare designated that
a prevailing party in an action should be awarded attorney fees. The District Court
specifically held that, in this case, neither party shall be considered the prevailing party
because neither party was wholly successful. See Nyquist v. Nyquist (1992), 255 Mont.
149, 156, 841 P.2d 515, 520. We conclude that the District Court did not err in exercising
discretion in that determination.
¶32 Additionally, we conclude that the District Court did not err in determining that Dr.
Turenne was not entitled to attorneys fees pursuant to § 39-3-214, MCA, which mandates
attorney fees to be awarded to a successful wage claimant. See Glaspey v. Workman
(1988), 234 Mont. 374, 377, 763 P.2d 666, 668; cited with approval in Stimac v. State
(1991), 248 Mont. 412, 416-417, 812 P.2d 1246, 1248. Dr. Turenne was not successful in
her wage claim.
¶33 Affirmed.
/S/ JIM REGNIER
We Concur:
/S/ KARLA M. GRAY
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm (9 of 10)1/18/2007 9:57:22 AM
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm
/S/ W. WILLIAM LEAPHART
/S/ JAMES C. NELSON
/S/ TERRY N. TRIEWEILER
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/00-236%20Opinion.htm (10 of 10)1/18/2007 9:57:22 AM