Swan v. Sletten Construction Co.

No. 8 6 - 8 5
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986

SANDRA E. SWAN,
Claimant and Appellant,

SLETTEN CONSTRUCTION COMPANY,
Employer,
and
MISSOULA SERVICE COMPANY, as agent
for GLACIER GENERAL ASSURANCE COMPANY
or INTERMOUNTAIN INSURANCE COMPANY,
as the case may be,
Defendants and Respondents.

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

COUNSEL OF RECORD:
For Appellant:
Church, Harris, Johnson & Williams; Cresap S.
McCracken, Great Falls, Montana
For Respondent:
Garlington, Lohn & Robinson; Bradley J. Luck,
Missoula, Montana
Swanberg, Koby, Swanberg, Matteucci; Ray F. Koby,
Great Falls, Montana

Submitted on Briefs: June 2 4 , 1986

Decided: October 24, 1 9 8 6

Filed: OCT 2 4 1986
Mr. Justice L. C. Gulbrandson delivered the Opinion of the
Court.

Sandra Swan appeals a Workers' Compensation Court order
which declines to award her attorney's fees on a lump sum
basis. The issues on appeal are (1) whether the lower court
erred in refusing to award attorney's fees to appellant's
counsel on a lump sum basis, and (2) whether the lower court
erred in refusing to award attorney's fees to appellant's
counsel for benefits received by appellant's step-daughter.
We affirm.
In September 1982, Donald Swan died in an automobile
accident in Wyoming. Sandra Swan, who had married Donald
Swan three months earlier, made a claim for workers'
compensation benefits. In November 1982, the insurer denied
appellant's claim on the basis that Mr. Swan's death did not
arise out of or in the course of his employment. Ultimately,
in August 1983, the Workers' Compensation Court held that
appellant was entitled to workers' compensation benefits.
The court imposed a 20% penalty upon the insurer for its
unreasonable delay or refusal in paying benefits. The court
also found that appellant was entitled to reasonable costs
and attorney's fees.
Section 39-71-721, MCA, provides workers' compensation
benefits for an employee's death caused by work-related
injuries. Subsection (5) of $ 39-71-721, MCA, states:
If any beneficiary of a deceased employee
dies, the right of such beneficiary to
compensation under this chapter ceases.
Death benefits must be paid to a widow or
widower for life or until remarriage, and
in the event of remarriage, 2 years'
benefits must be paid in a lump sum to
the widow or widower.
The two years of benefits paid upon remarriage have been
called "dowry" or "minimum entitlement" benefits.
Appellant had a contingency fee agreement with her
attorney. That agreement stated that the
[Alttorneys have agreed to abide by the
attorney's fees provisions and
regulations established by the State of
Montana Division of Workers [sic]
Compensation and will not charge in
excess thereof.
The Administrative Rules of Montana relative to workers'
compensation include § 24.29.3801 which states, in part:
(2.) An attorney representing a claimant
on a workers' compensation claim and who
plans to utilize a contingent fee
arrangement to establish the fee
arrangement with the claimant, may not
charge a fee above the following amounts:

(b.) For cases that go to a hearing
before the workers' compensation judge,
thirty-three percent (33%) the amount of
compensation payments - claimant
the
receives - -an order of the workers'
from
compensation judge. (Emphasis added. )
In August 1983, appellant's counsel filed a petition
requesting that the court order the respondent to pay
$200,793.92 for appellant's attorney's fees. Counsel
calculated this figure by taking one-third of appellant's
projected benefits of $607,637.66 and adding $273.50 for
costs. Counsel calculated appellant's projected future
benefits by multiplying her weekly benefits of $263 by 52
weeks a year, and multiplying that figure by 44.1 years
(appellant's life expectancy as established by mortality
tables submitted by appellant). In sum, counsel sought
immediate contingent fees for benefits which will possibly be
paid for the next 44 years.
 In September 1983, Tana Swan, Mr. Swan's minor
daughter, through separate counsel, filed a workers'
compensation claim arising from her father's death. On
October 26, 1983, the Workers' Compensation Division found
that Tana Swan, as a legal beneficiary, was entitled to share
the benefits and ordered that benefits be paid to her in the
sum of $131.50 per week until age 25 if unmarried and a
full-time student. On the same date, the Division ordered
that appellant wife was entitled to $131.50 per week for life
or until remarriage. Those Division orders were never
appealed. Later, through the efforts of appellant's counsel,
it was established that Tana Swan lost her entitlement as she
was only a part-time student as of March 20, 1985, and her
benefits were terminated, thus increasing the benefits paid
to the surviving wife. Appellant's counsel then claimed
attorney's fees on the benefits paid to Tana on the basis
that Tana would not have received benefits without his
efforts on behalf of her stepmother.
In July 1985, the Workers' Compensation Court entered
an order awarding attorney's fees. The court later entered
two other orders, in August 1985 and in January 1986,
clarifying its order on attorney's fees. Taken together,
these orders provide the following: as of November 9, 1984,
respondent had paid $8,098.75 in attorney's fees to
appellant's counsel for benefits paid up to that time;
appellant's counsel was immediately entitled to $9,051 as
fees of one-third of appellant's dowry award (appellant's two
year minimum entitlement to benefits in the event she
remarries); if appellant is alive and has not remarried
within two years, her counsel can petition the court for
biweekly attorney's fees (based on one-third appellant's
biweekly benefits); and appellant's counsel is not entitled
to attorney's fees for the benefits paid to Tana Swan because
he did not represent Tana's interests. This appeal followed.
Section 39-71-611, MCA, gives the Workers' Compensation
Court discretionary authority to determine reasonable
attorney's fees. Conway v. Blackfeet Indian Developers, Inc.
(Mont. 1985), 702 P.2d 970, 42 St.Rep. 1020. Thus, the
standard of review on this appeal is whether the lower court
abused its discretion in determining reasonable attorney's
fees. The standard of reasonableness includes both "the
amount, and the kind of fee--lump sum or periodic."
(Emphasis in original.) Conway, 702 P.2d at 973.
We hold that the lower court did not abuse its
discretion in providing for payment of the attorney's fees.
Respondent has paid a substantial amount in attorney's fees.
As appellant receives biweekly benefits in the future, her
counsel can petition the court for additional fees. We do
not agree that counsel is now entitled to over $200,000 in
fees on the possibility that appellant will collect benefits
the next 44 years because benefits to appellant will cease if
she remarries or dies.
Moreover, ". . . as between attorney and client,
Montana will enforce a contingent fee contract according to
its written terms." Wight v. Hughes Livestock Co., Inc.
(Mont. 1983), 664 P.2d 303, 309, 40 St.Rep. 696, 702-703.
Although this case does not involve enforcing the contract as
between attorney and client, we find it reasonable for the
lower court to enforce the contract according to its terms.
The contingent fee contract incorporates the Administrative
Rules of Montana regulations on contingent fee contracts.
Those regulations provide that in a situation such as this an
attorney may not collect, as fees, over one-third of the
compensation benefits a claimant receives. Counsel is
seeking his fees now for benefits appellant may never
receive. We hold that the lower court did not err in
refusing counsel a lump sum award of fees.
We also hold that the lower court did not err in
refusing counsel a contingency fee based on Tana Swan's
benefits. Tana was represented by her own counsel and
appellant's counsel did not have a contingency fee agreement
with her. His fee agreement, in effect, was based upon the
benefits received by his client, Sandra Swan.
Affirmed.

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Justice,
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We concur: