Oster v. Valley County

No. 05-136

IN THE SUPREME COURT OF THE STATE OF MONTANA

2006 MT 180

KENNETH L. OSTER,

Plaintiff and Respondent,

v.

VALLEY COUNTY, MONTANA,
A Body Politic,

Defendant and Appellant.

APPEAL FROM: The District Court of the Seventeenth Judicial District,
In and For the County of Valley, Cause No. DV 2004-01,
Honorable David Cybulski, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Maxon R. Davis, James A. Donahue, Davis, Hatley, Haffeman
& Tighe, P.C., Great Falls, Montana

For Respondent:

James D. Rector, Attorney at Law, Glasgow, Montana

For Amicus Curiae:

The Honorable Mike McGrath, Attorney General, Chris D. Tweeten,
Assistant Attorney General, Helena, Montana

Submitted on Briefs: December 13, 2005

Decided: August 8, 2006

Filed:

__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.

¶1 County Attorney Kenneth Oster (Oster) filed suit in the District Court to recover unpaid

wages, related penalties, and attorney fees from Valley County (County). The District Court

granted summary judgment in favor of Oster. County appeals. We affirm in part and reverse in

part.

ISSUES

¶2 The restated issues on appeal are:

1. Whether Oster is estopped from bringing a claim for unpaid wages against the County.

2. Whether the District Court erred in ruling that County Attorney Oster is entitled to

payment of his salary increase by the County.

3. Whether the District Court erred in ruling that Oster is a County employee.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 Oster, the elected County Attorney in Valley County, brought suit against the County for

underpayment of his salary. Oster filed his claim after the County thrice denied his requests to

increase his paychecks to reflect his County-approved pay raise scheduled to take effect on July

1, 2003.

¶4 As part of the County’s annual budgeting process, the three County Commissioners

appointed a County Compensation Board (Board), comprised of themselves and Oster in his

capacity as County Attorney. On July 28, 2003, in accordance with § 7-4-2305, MCA, the Board

prepared a compensation schedule of salaries for the County’s elected officials, including Oster.

The Board recommended to the Commissioners that Oster’s salary be increased by 7%, from

$64,843.00 to $69,382.00 for fiscal year 2004, which commenced on July 1, 2003.

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¶5 During their budget deliberations, members of the Board discussed whether the County

or the State Department of Justice (DOJ) would be responsible for funding Oster’s raise. The

Board was informed both by their experience in years past and by Oster that the salary of the

County Attorney is generally paid half by the County and half by the State. However, each

member of the Board had received a memo from the Attorney General’s (AG) office, dated June

4, 2003, explaining that as a result of budget decisions made by the 2003 Legislature, state funds

appropriated for State contributions to county attorneys’ salaries for fiscal years 2004 and 2005

would be limited to “fifty percent of the legislature’s understanding of the actual salaries in fiscal

year 2003.” The AG advised that the County was not limited by the State’s contribution, but

would be responsible for any balance above that budgeted and appropriated by the State.

Subsequently, on June 6, 2003, DOJ sent a letter to the Commissioners, Oster, and others with an

attached schedule specifying the total amount the State would contribute to Oster’s salary in

fiscal year 2004. The letter clarified that $32,422.00 was the “maximum the state can pay for its

share, and is the portion included in the total legislative appropriation for county attorneys.”

¶6 On July 28, 2003, the Commissioners accepted the Board’s recommendation regarding

salaries for the County Attorney and other County officers by Resolution No. 30-2003, and

established Oster’s salary at $69,382.00. The Commissioners approved Oster’s raise despite

having received information that the State’s contribution would be limited to half of $64,843.00,

or $32,422.00.

¶7 Oster’s raise went into effect on July 1, 2003. Oster then received bi-weekly paychecks

from the County in the amount of $2,571.75, an $87.27 per paycheck shortfall from the County-

approved salary he should have received. Oster’s requests that the County make up the shortfall

were rejected.

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¶8 After the County refused to make up the deficiency, Oster filed suit. The District Court

granted Oster’s Motion for Summary Judgment and ordered the County to pay him $3,411.00,

representing Oster’s salary shortfall for fiscal year 2004 and a portion of fiscal year 2005, plus

statutory penalties, costs and attorney fees. The County appeals.

STANDARD OF REVIEW

¶9 We review a district court’s grant of summary judgment de novo, and apply the same

criteria applied by the district court pursuant to Rule 56(c), M.R.Civ.P. Hanson v. Water Ski

Mania Estates, 2005 MT 47, ¶ 11, 326 Mont. 154, ¶ 11, 108 P.3d 481, ¶ 11. A district court

properly grants summary judgment only when no genuine issues of material fact exist, and the

moving party is entitled to judgment as a matter of law. Oberson v. Federated Mut. Ins. Co.,

2005 MT 329, ¶ 8, 330 Mont. 1, ¶ 8, 126 P.3d 459, ¶ 8.

DISCUSSION

ISSUE ONE

¶10 1. Whether Oster is estopped from bringing a claim for unpaid wages against the
County.

¶11 The County argues that Oster’s wage claim against the County should be estopped

because Oster knew and actively concealed the fact that the State would contribute only

$32,422.00 towards his salary. The County further alleges that Oster misled the Board to its

detriment into believing that the State would pay half of his salary increase.

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¶12 “Equitable estoppel is not favored and will be sustained only upon clear and convincing

evidence.” In re Estate of Hill (1997), 281 Mont. 142, 151, 931 P.2d 1320, 1326 (citation

omitted). The defense of equitable estoppel and waiver requires the party invoking its

protections to prove each of six elements. The party must show:

1. Conduct, acts, language or silence by the estopped party amounting to a representation
or concealment of material facts;

2. These facts were known to the estopped party at the time of the conduct, or at least the
circumstances were such that knowledge of them is necessarily imputed to the estopped
party;

3. The truth concerning these facts was unknown to the party claiming the benefit of the
estoppel at the time they were acted upon;

4. The conduct was done with the intention, or at least the expectation, that it would be
acted upon by the other party, or under circumstances that it is both natural and probable
that it would be acted upon;

5. The conduct was relied upon by the other party; and

6. The other party acted upon it in such a manner as to change the other party’s position
for the worse.

In re Estate of Hill, 281 Mont. at 150-51, 931 P.2d at 1326 (citations omitted).

¶13 Equitable estoppel is inapplicable here because the County failed to prove the third

element of the defense. It is undisputed that the County received the AG’s June 4, 2003

memorandum as well as DOJ’s June 6, 2003 letter specifying that the State’s contribution to

Oster’s salary would be limited to $32,422.00 in fiscal year 2004. Even if we take as true the

County’s allegations of misrepresentation by Oster, the fact remains that by virtue of the

communications from the State directly to the Board and Commissioners, the County knew the

truth of the facts which Oster allegedly misrepresented at the time it approved Oster’s pay raise.

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We conclude, therefore, that the County cannot prove the necessary elements of estoppel, and its

defense fails.

ISSUE TWO

¶14 Whether the District Court erred in ruling that County Attorney Oster is entitled to
payment of his salary increase by the County.

¶15 Resolution of this issue requires reconciliation of three statutes which collectively direct

how payment of county attorneys’ salaries is apportioned between the State and Montana’s

counties. Section 7-4-2502(2)(a), MCA, provides:

The salary of the county attorney is payable one-half from the general fund
of the county and, if the county has supplied the information to the
department of justice for inclusion in its budget, the other one-half from the
state treasury upon the warrant of the state treasurer. If the county has not
supplied information concerning any scheduled or proposed increase in
salary for the county attorney to the department of justice for inclusion in
material submitted to the budget director under Title 17, chapter 7, part 1,
the county is responsible for any increased salary. The state’s share of the
county attorney’s salary is payable every 2 weeks.
The general precept that the State and the counties each pay one-half of county attorneys’

salaries is reiterated in § 7-6-2426(1)(b), MCA, which lists “one-half of the salary of the county

attorney” as an enumerated county charge. However, § 17-7-112(2)(b), MCA, provides that only

those funds which DOJ appropriates will account for the State’s contribution to county attorneys’

salaries:

As provided in 7-4-2502(2)(a), the department of justice is not obligated to
provide more than one-half of the salary of a county attorney based on the
amount included in the department’s budget and appropriated for that
purpose.

¶16 These statutes appear to conflict when, as here, DOJ’s budgeted and appropriated funds

for a county attorney’s salary are less than one-half the salary a county awards its county

attorney. As such, County urges this Court to limit the scope of our statutory application to §§ 7-

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4-2502 and 7-4-2426, MCA, which, in the County’s view, would relieve it of any obligation to

make up the shortfall in Oster’s wages. The County argues that § 17-7-112(2)(b), MCA, is

irrelevant because the State is not being asked to pay “more than one-half” of Oster’s salary, but

rather is being asked to pay one-half of Oster’s actual salary instead of one-half of what DOJ

appropriated for Oster’s salary. In so arguing, however, County ignores the operative language

contained in the statute which clarifies the State will only pay “one-half of the salary of a county

attorney based on the amount included in the department’s budget and appropriated for that

purpose.” Section 17-7-112(2)(b), MCA (emphasis added).

¶17 This Court’s rules of statutory construction require consideration and application of all

three statutes. A presumption exists that the Legislature does not pass meaningless legislation,

and accordingly, this Court must harmonize statutes relating to the same subject, as much as

possible, giving effect to each. Chain v. Montana Dept. of Motor Vehicles, 2001 MT 224, ¶ 15,

306 Mont. 491, ¶ 15, 36 P.3d 358, ¶ 15 (citation omitted). Further, more specific statutes prevail

over general provisions of law. Meyer v. Montana Power Co., L.L.C., 2005 MT 66, ¶ 14, 326

Mont. 283, ¶ 14, 109 P.3d 269, ¶ 14 (citation omitted).

¶18 The District Court reconciled the seemingly contradictory provisions of the statutes by

interpreting the specific directive set out in § 17-7-112(2)(b), MCA, as a limitation on the “one-

half” provisions set out in §§ 7-4-2502 and 7-4-2426, MCA. In so doing, the District Court

concluded the State was only obligated to contribute to Oster’s salary the amount budgeted and

appropriated for that purpose. If the County had set Oster’s salary at twice the amount budgeted

by DOJ, the State’s obligation to pay one-half would have been fully effective. However, the

County awarded Oster a salary in excess of twice the amount DOJ appropriated for fiscal year

2004. The District Court further concluded that the County could have avoided this situation by

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setting its budget for 2004 and 2005 in advance of the 2003 Legislative budget deadlines as

provided by § 7-4-2502, MCA.

¶19 It is undisputed that County provided information about Oster’s salary to DOJ prior to

DOJ’s reporting deadline. The record does not, however, reflect what specific information the

County provided to the State regarding Oster’s scheduled pay raise, or when such information

was provided. We cannot therefore determine whether DOJ had the information it needed in

time to include Oster’s salary increase in its budget proposal to the 2003 Legislature.

Regardless, the record shows that the County was on notice that the State’s contribution to

Oster’s salary in fiscal year 2004 would be limited to $32,422.00 (half of $64,843.00) as a

consequence of legislative budget decisions made by the 2003 Legislature. This is evidenced by

both the AG’s June 4, 2003 memo and the DOJ’s June 6, 2003 letter. Despite this knowledge,

the County on July 28, 2003, by Resolution No. 30-2003, authorized a 7% raise for Oster setting

his salary at $69,382.00.

¶20 As we concur with the District Court’s interpretation of the three statutes which

determine how county attorneys’ salaries are to be paid—namely §§ 7-4-2502 and 7-4-2426, and

17-7-112(2)(b), MCA—we must conclude that the counties are responsible for any increases in

county attorneys’ salaries which are not taken into account and included in DOJ’s appropriations

for that purpose. We therefore affirm the District Court’s Order requiring the County to pay

Oster’s wage shortfall from July 1, 2003, to December 25, 2004, in the amount of $3,411.00.

ISSUE THREE

¶21 3. Whether the District Court erred in ruling that Oster is a County employee.

¶22 In addition to seeking recovery of his salary deficiency, Oster sought relief in the District

Court for violation by the County of § 39-3-206, MCA, which mandates a penalty against

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employers who fail to pay employees. The County admits it is an “employer” as defined by the

statute, but contends Oster is not the County’s “employee.” For the purposes of § 39-3-206,

MCA, wage claims, an “employee” includes “any person who works for another for hire.”

Section 39-3-201(4), MCA.

¶23 In its Order, the District Court determined Oster was an “employee” of the County as

defined by § 39-3-206, MCA. Further, the District Court found that because the County failed to

pay Oster’s wages, Oster was entitled not only to full payment of his wages, but also to a

damages penalty in the amount of 110% of his wages, plus costs and attorney fees. For the

reasons set forth below, we conclude that Oster is not an “employee” of the County as defined

for purposes of applying § 39-3-206, MCA, and therefore we reverse the District Court’s Order

for a penalty, costs, and attorney fees to be paid by the County.

¶24 Elected county officials are employees of counties for liability purposes. Section 2-9-

101(2), MCA; Kenyon v. Stillwater County (1992), 254 Mont. 142, 146, 835 P.2d 742, 745. The

question here, however, is whether the County has the authority to hire and fire Oster sufficiently

to bring him within the definition of “employee” as set forth by § 39-3-201(4), MCA.

¶25 Oster was elected to the office of County Attorney by the citizens of Valley County. In

Geiger v. Department of Revenue, we evaluated the employment status of an elected county

assessor and determined that the county assessor was “employed” by her constituents, and served

at the pleasure of the voters who elected her. Geiger (1993), 260 Mont. 294, 299, 858 P.2d

1250, 1253. We further concluded that the statutorily-mandated supervisory relationship

between the county assessor and the Department of Revenue (DOR) did “not rise to the level of

an employer and employee.” Geiger, 260 Mont. at 299, 858 P.2d at 1253. We said that while

county assessors are agents of the DOR for some specific purposes, the assessor could be

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removed from her office only “if the electorate chose to recall her or if she was convicted of

official misconduct.” Geiger, 260 Mont. at 299, 858 P.2d at 1253. In essence, the county voters

hired and employed the county assessor.

¶26 Similarly, Oster serves as the County Attorney at the pleasure of the voting citizens of the

County. Neither the Commissioners nor any other agent of the County hired Oster or control

whether Oster retains his position. Though the Commissioners may appoint a replacement

county attorney when the office is vacated between elections as provided by § 7-4-2702, MCA,

the Commissioners may neither hire nor fire the county attorney once the voters have elected

him.

¶27 In support of his contention that he is in fact an “employee” of the County, Oster offers

admissions from the County that it “provides office, staff, and overhead and Oster is the

County’s legal counsel.” Additionally, the County’s payroll roster lists Oster as an employee,

and a February 2004 Employee Listing shows Oster as an employee and references his employee

number and date of employment, among other factors reflecting his relationship with the County.

Notwithstanding, we find these factors indeterminate in light of our holding in Geiger, as none of

the factors argued by Oster establish the County’s ability to hire, fire, or affirmatively direct

Oster’s work as the County Attorney. Quite simply, Oster does not work for the County “for

hire.”

¶28 Therefore, in keeping with the clear language of § 39-3-201(4), MCA, and our analysis in

Geiger, we conclude that though Oster certainly acts as an agent of the County, in light of his

election and ultimate accountability to the people of Valley County, Oster is not a County

“employee” within the meaning of the above referenced statute. Accordingly, we reverse the

District Court’s Order of penalty, costs and attorney fees.

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 CONCLUSION

¶1 For the foregoing reasons, we affirm in part and reverse in part.

/S/ PATRICIA COTTER

We Concur:

/S/ JAMES C. NELSON
/S/ W. WILLIAM LEAPHART
/S/ BRIAN MORRIS

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