Cole v. Greyhound Lines, Inc.

No. 85-283
IN THE SUPREME COURT OF THE STATE OF MONTANA

1986

RICHARD A. COLE,
Claimant and Appellant,
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GREYHOUND LINES, INC.,
Employer-Defendant and Respondent.

APPEAL FROM: The Workers' Compensation Court, The Honorable
Timothy Reardon, Judge presiding.

COUNSEL OF RECORD:

For Appellant:
Crowley, Haughey, Hanson, Toole & Dietrich; L. Randall
Bishop a-rgued,Billings, Montana

For Respondent:
Keefer Law Firm; Neil S. Keefer argued, Billings,
Montana

Submitted: February 20, 1986

Decided: April 8, 1986

Filed:

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Mr. Justice Frank R . Morrison, Jr. delivered the Opinion of
the Court.
Claimant, Richard A. Cole, appeals the May 10, 1985,
order of the Workers' Compensation Court dismissing his
petition for an emergency hearing on the issue of whether
claimant's biweekly benefit payments should have been
reinstated. We affirm the order of the court.
Cole was a bus driver for Greyhound. In 1978, he
injured his back and leg while attempting to lift a bag from
the cargo hold of a bus. Cole filed a Workers' Compensation
claim. In its order of May 11, 1983, the Workers'
Compensation Court declared Cole permanently totally
disabled. The court further ordered that the parties attempt
to agree on Cole's life expectancy, and the amount of an
annuity which would reduce Cole's benefits to present value.
If the annuity was over $48,500, Greyhound was ordered to pay
it in a lump sum to enable Cole to invest in a business
offering a reasonable likelihood of success. If the annuity
was less than $48,500, Greyhound was to pay biweekly
benefits.
On June 2, 1983, Cole requested a rehearing challenging
the court's determination that his biweekly permanent total
disability benefits must be reduced to present value when
converted to a lump sum. The court denied Cole's request for
a hearing on June 9, 1983. The parties agreed that Cole's
life expectancy was 24 years and agreed to a payment. Cole
was paid a lump sum of $60,170.69. He signed a satisfaction
of judgment on July 14, 1983. The case was not appealed.
On November 1, 1984, this Court decided Willis v. Long
Construction Co. (Mont. 1984), 690 P . 2 d 434, 41 St.Rep. 2050.
In --
Willis, we held that a lump-sum award of Workers'
Compensation benefits cannot be discounted to present value.
On November 30, 1984, Cole filed a petition for an emergency
hearing to require Greyhound to reinstitute biweekly benefit
payments on the basis of this Court's decision in Willis. On
May 10, 1-985, the Workers ' Compensation Court dismissed
Cole's petition in an order grounded on res judicata.
The issue on appeal is whether the doctrine of res
judicata bars Cole from relitigating his lump-sum award based
upon a subsequent change in the law regarding lump-sum
awards.
Res judicata is a judicially-created doctrine which
literally means a matter adjudged. A l1 final judgment
rendered upon the merits, without fraud or collusion, by a
court of competent jurisdiction, is conclusive of causes of
action and of facts or issues thereby litigated." 46
Am. Jur. 2d Judgments 394 (1969) . We have stated that res
judicata is applied to uphold the generally recognized public
policy that there must be some end to litigation. Wellman v.
Wellman (1982), 198 Mont. 42, 46, 643 P.2d 573, 576. While
Workers' Compensation actions serve a different social policy
than other civil litigation, that of providing benefits,
there is still a need for finality. Moen v. Peter Kiewit &

Sons1 Co. (1982), 201 Mont. 425, 436, 655 P.2d 482, 487. It
follows that res judicata applies to decisions of the
Workers' Compensation Court.
Several exceptions to the doctrine of res judicata have
been codified in the Restatement (Second) of Judgments S 28
(1982). Appellant argues that because of our decision in
Willis, supra, the second of those exceptions should be
applied to this case.
That exception is set forth as follows:
 5 28. Exceptions - - General - -of Issue
to the Rule
Preclusion Although an issue is actua-lly litigated
and determined by a valid and final judgment, and
the determination is essential to the judgment,
relitigation of the issue - - subsequent action
in a
between the parties is not precluded in the
following circumstances:
(2) The issue is one of law and ... (b) a new
det.ermination is warranted in order to take account
of an intervening change in the applicable legal
context or otherwise to avoid inequitable
administration of the laws ...
The Restatement suggests that relitigation of a
previously resolved issue in a subsequent action is warranted
when the law changes between the original and subsequent
action.
The authors of the R.estatement at page 278 provide the
following example to illustra.te the intended application of
S 28 (2) (b) of the Restatement (Second) of Judgments.

4. A, a non-profit organization, brings an action
against B, the tax commissioner, for a refund of
property taxes on the ground that it is exempt as a
charity. The court gives judgment for B, adopting
a narrow definition of the charitable exemption.
Shortly after, a higher court of the same
jurisdiction grants a property tax refund to C, an
organization quite similar to A, and in doing so
formulates a much broader definition of the
exemption. In a subsequent action by A against B
for a refund of property taxes paid for the
following year, A is not precluded from asserting
that it is entitled to the charitable exemption.
It does not matter that the nature of A's
activities has not changed since the first action.
The taxpayer in the example did not seek to change his
adverse result based upon the new holding. Instead, he
sought to apply the new interpretation to a subsequent tax
year. This is the kind of result effected by Restatement

We refuse to apply the exception stated in § 28I2) of
the Restatement to the case presently before us. No
"subsequent action'' has been filed. The doctrine of res
judicata bars the reopening of claimant's original case. The
litigation has ended. An award has been paid and an
acknowledgement of satisfaction of judgment has been signed.
The parties are entitled to a final judgment.
According to Wheeler v. Carlson Transport (Mont. 1985),
704 P.2d 49, 42 St.Rep. 1177, a final judgment of the
Workers' Compensation Court can only be reopened upon one of
two conditions: 1) the benefits may be changed, reviewed,
diminished or increased only when "the disability of the
claimant has changed. " Section 39-71-2909, MCA; and 2) a
decision may be vacated and a new trial granted when the
applicant's rights are materially affected by newly
discovered evidence which could not, with reasonable
diligence, have been discovered in time for the trial.
Section 25-11-102 (4), MCA. Claimant fails to allege the
existence of either of these conditions.
For the reasons set forth above, the decision of the
trial judge is affirmed.

We concur:

Justices
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Mr. Justice William E. Hunt, Sr., dissenting:

The majority holds that the exception to res judicata
found in the Restatement (Second) of Judgments S 28 (1960)
does not apply in this case. I cannot agree. The situation
in this case falls within the purview of the Restatement
exception. Restatement (Second) of Judgments S 28 (1960)
states:
S 28. Exceptions to the General Rule of Issue
Preclusion.
Although an issue is actually 1.i.tigated and
determined by a valid and final judgment, and the
determination is essential to the jud.gment,
relitigation of the issue in a subsequent action
between the parties is not precluded in the
following circumstances:

( 2 ) (b) a new determination is warranted in order to
take account of an intervening change in the
applicable legal context or otherwise to avoid
administration of the laws.. ..
When Cole filed his claim, the Workers1 Compensation
Court decided a number of factual issues. The court found
that Cole's disability was permanent and total. The court
further found that Cole was entitled to a conversion of his
biweekly benefits to a lump sum for the purpose of
capitalizing a new business offering a reasonable likelihood
of success. As appellant concedes, res judicata bars
relitigation of these factual determinations. However, the
decision to reduce Cole's lump-sum award to present value was
purely one of law, no factual determinations were made. The
court decided that as a matter of law Cole's lump-sum payment
must be reduced to its present value. Subsequent to that
decision, and in a different case, we held that lump-sum
awards cannot be discounted to present value. Therefore, a
new determination is warranted in order to take account of
that intervening change in the applicable legal context.
Further, a new determination is warranted in order to
avoid inequitable administration of the laws. The reduction
of a lump-sum award to its present value is inequitable. In
Hall. v. State Compensation Insurance Fund (Kont. 1985), 708
P.2d 234, 42 St.Rep. 1502, we held that the 1972 Mont.
Const., Art. 11, S 16 as applied to the Workers' Compensation
Act gives workers a right to be made whole. In 1975, when
the legislature considered and adopted an amendment
eliminating the statutory requirement that lump-sum awards he
discounted, abundant testimony was elicited that a worker who
received his benefits in a lump sum could only be made whole
by receiving the lump-sum payment undiscounted to present
value.
Cole's undiscounted lump-sum payment would have been
$217,152. The payment after discount was $75,670, a little
over one-third of the undiscounted amount. His right to be
made whole warrants reconsideration of this issue. In the
interest of equitable administration of the laws,
relitigation of appellant's claim to biweekly benefits is
justified.
Instead of applying an analysis such as that just
presented, the majority bases its decision on the language of
the Restatement section which states that relitigation is not
precluded "in a subsequent action between the parties." The
majority's narrow interpretation of the phrase, "in a
subsequent action," is inconsistent with both the spirit of
Workers' Compensation law and the intention of the
Restatement.
 As the majority admits, Workers' Compensation actions
serve a different social policy than other types of
litigation, that of providing benefits. In cases such as
this, where liability is not contested, the litigants seek a
resolution of their disputes based upon the knowledge that
the very purpose of the Workers' Compensation Act is to
provide benefits. Yet Cole received merely a fraction of the
amount he is now known to have heen entitled to under the
Act. Granting Cole's petition for emergency rehearing would
uphold the policy behind the Workers' Compensation Act.
Furtlzer, the phrase, "in a subsequent action," should
not he construed so narrowly as to frustrate the very
intention of the framers of the Restatement exception. The
authors of the Restatement include the following illustration
of the application of 5 28:
5. A, an employer, brings an action agai~stB, a
labor union, to enjoin a strike in breach of a
collective bargaintng agreement. The action is
dismissed on the ground that a statute deprives the
court of jurisdiction to issue such injunctions.
In a subsequent case invol-ving two different
parties, the decision in A v. B is overruled and
jurisdiction to enjoin such a strike is sustained.
A is not precluded from asserting jurisdiction in
an action to enjoin B from continuing - - the same
strike, from engaging in another strike in breach
of the same contract, or from engaging in a strike
in breach of a subsequent. contract. (Emphasis
added. )
Restatement (Second) of Judgments 5 28 at 278-9.
As this exa.mple illustrates, the "subsequent action"
referred to in the Restatement includes the same parties
seeking a different result in a continuing situation where
there has been no change in the facts, but a significant
change in the law. Just as an employer is not precluded, by
a previous court ruling, from returning to court to enjoin
the same ongoing strike, so too should Cole not be precluded,
by a previous court ruling, from returning to court to obtain

a redetermination of his compensation award.
I cannot agree with the majority's holding that
appellant's petition for an emergency rehearing constitutes a
"subsequent action, " thereby precluding application of S 28
of the Restatement.

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Mr. Justice John C. Sheehy, concurs in the above dissent:

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