No. 83-232
IN THE SUPFGME COURT OF THE STATE OF MONTASA
1984
IN THE 1G.TTER OF THE WAGE CLAIMS OF
PAUL CHAGNON and LINDEN CHAGNON,
Petitioners and Respondents,
HARDY CONSTRUCTION COMPANY, and the
LABOR STANDARDS DIVISION, DEPT. OF
LABOR AND INDUSTRY, STATE OF MONTANA,
Respondents and Appellants.
APPEAL FROM: District Court of the Twelfth Judicial District,
In and for the County of Hill,
The Honorable Chan Ettien, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
McNamer, Thompson & Cashmore; James Thompson argued
for Bardy Construction, Billings, Montana
William P. Richardson aruged, Dept. of Labor,
Helena, Montana
For Respondents:
Altman & Lilletvedt; J. Brian Lilletvedt argued for
Paul & Linden Chagnon, Havre, Montana
Submitted: 11/28/83
Decided: 3/23/84
Filed:
Clerk
Mr. Chief Justice Frank T. Haswell delivered the Opinion of
the Court.
This js an appeal from an order of the District Court
of Hill County reversing the determination of the hearing
officer of the Department of Labor and Industry. We reverse
the District Court and reinstate the determination of the
Department of Labor and Industry.
This case arose from wage claims which were filed by
Paul Chagnon and Linden Chagnon against Hardy Construction
Company, with the Commissioner, Department of Labor and
Industry, State of Montana. An administrative hearing was
held on July 8, 1982, before John Andrew, a hearing officer
for the Commissioner, in Havre, Montana.
Those present at the hearing included Paul and Linden
Chagnon and their attorney, Les Hardy, president of Hardy
Construction, and its attorney, as well as Dave Roseman,
business manager of the Central Montana District Council of
Carpenters and Larry Paulson, Superintendent for Hardy Con-
struction at the Buttrey/Osco project in Havre. During the
hearing, the hearing officer heard the testimony of the
Chagnons, Hardy, Roseman and Paulson and evidence was intro-
duced both in support of and in opposi-tion to the wage
claims.
The Commissioner's hearing officer issued findings of
fact, conclusions of law and an order on July 16, 1982. The
hearing officer ordered that the wage claim of the Chagnons
be dismissed.
On August 11, 1982, the Chagnons filed a petition for
judicial review with the District Court for the Twelfth
Judicial District, in and for the County of Hill. Hardy and
the Commissioner appeared and answered the petition. After
briefs and arguments, the District Court issued an order
reversing the order of the Com.issioner and. awarding wages,
penalties, costs and attorney fees to the Chagnons. Both the
Commissioner and Hardy now appeal the District Court's order.
Several issues are raised by the parties but essen-
tially one is dispositive of the matter: Did the District
Court err under section 2-4-704, MCA, by substituting its
jud.gment for the determination of the Department.
The scope and appropriate standard of judicial review
of an administrative agency decision is set forth in section
2-4-704, MCA:
"Standards of review. (1) The review
shall be coniucted by the court without a
jury and shall he confined to the record.
In cases of a.lleged irregularities in
procedure before the agency not shown in
the record, proof thereof may be taken in
the court. The court, upon request,
shall hear oral argument and receive
written briefs.
"(2) The court may not substitute its
judgment - - - - the agency - - -
for that of as to the
- - - the evidence on questions of
weiaht of
fact. The court mav affirm the decision
of the agency or remand the case for
further proceedings. The court may
reverse or modify the decision if sub-
stantial rights of the appellant have
been prejudiced because the administra-
tive findings, inferences, conclusions or
decisions are:
" (e) clearly erroneous in view of the
reliable, probative, and substantial
evidence on the whole record;" (Empha-sis
added. )
The District Court reversed. the Department of Labor and
Industry and substituted its own findings on the basis of
section 2-4-704(e), MCA, which allows such action if the
agency's decision is ". . . clearly erroneous in view of the
reliable, probative, and substantial evidence on the whole
record." While the standard cited by the court is proper, we
find nevertheless that under the circumstances of this case
the District Court erred in substituting its judgment in
place of that of the agency. We have discussed the proper
standard of review in previous cases and in Martinez v.
Yellowstone County Welfare Department (~ont.1981), 626 p.2d
242, 38 St.Rep. 474, we stated the following:
"In reaching its determination to re-
verse, the District Court reviewed the
entire record, and in effect, redeter-
mined the credibility of the witnesses
and the weight given to evidence by the
Commission. The scope of review of a
District Court regarding agency determi-
nations is governed by section 2-4-704,
MCA ...
"The effect of this provision [of the
sta.tute1 is to limit a reviewing District
Court to a determination of whether or
not substantial evidence exists to sup-
port the agency decision.
"This Court spoke to that issue in Stan-
dard Chemical Manufacturing Company v.
Employment Security Division (1980), -
Mont .
, 605 P.2d 610, 613, 37 St.Rep.
105, 108, stating that:
11 I ...
In questions of this kind, where
the agency is entrusted and charged with
administering the statute and making
necessary, initial factual determina-
tions, it is well settled that a review-
ing court's function is limited. Where
factual determinations are warranted by
the record and have a reasonable basis in
law, they are to be accepted. It is not
the court's function to substitute its
own inferences of fact for those of an
administrative tribunal or agency, where
facts are supported by the evidence in
the record.'"
Further, in Bronken's Goodtime Co. v. Bishop (Mont.
1982), 664 P.2d 292, 39 St.Rep. 2165, we stated:
.
". . A court may not reverse the agency
decision unless substantial rights of the
appellant have been prejudiced because
the agency determination was clearly
erroneous in light of the reliable,
probative and substantial evidence
(section 2-4-704 (2)(e), MCA) . Also, a
reviewing court may not substitute its
judgment for that of the agency's as to
the weight of the evidence on questions
of fact (section 2-4-704(2), MCA). In
Montana Wilderness Association [State ex
rel. Montana Wilderness et al. v. Board
of Natural Resources and Conservation et
al. (Mont. 1982), 648 P.2d 734, 39
St.Rep. 12381, supra, we noted that our
review was 1-imitedto determining whether
the administrative body's decision was
supported by substantial evidence."
We have reviewed the transcript of testimony and docu-
mentary evidence presented. There is clearly sufficient
evidence to support the hearing officer's determination in
favor of Hardy.
The scope of review of administrative agency decisions
is exceedingly clear. In addition, we have consistently he1.d
that the District Court cannot substitute its own
judgment for that of the agency. Consequently, we hold that
it was error for the District Court to reverse the Department
of Labor and Industry's ruling and we herewith reverse the
judgment of the District Court and reinstate the determina-
tion of the Department.
The second issue is whether attorney fees should be
awarded and, if so, to whom they should be given. It is a
well-settled principle that attorney fees are allowable only
when provided for by cont.ract or statute. Thornton v. Corn-
missioner of Department of Labor 2nd Industry (Mont. 1980),
621 P.2d 1062, 37 St.Rep. 2026. In this case, section
39-3-214, MCA, represents the authority for a determination
on this issue. It reads, in pertinent part, as follows:
"Court costs and attorneys' fees. (1)
Whenever it is necessary for the employee
to enter or maintain a suit at 1a.w for
the recovery or collection of wages due
as provided for by this part, a resulting
judgment must include a reasonable attor-
ney's fee in. favor of the successful
party, to be taxed as part of the costs
in the case.
"(2) Any judgment for the plaintiff in a
proceeding pursuant to this part must
include all costs reasonably incurred in
connection with the proceeding, including
attorneys' fees."
We have held previously that an administrative hearing
is not a "suit at law." In addition, a "determination" made
by the Commissioner is not a "judgment." Thornton, 621 P.2d
at 1066. Therefore, it would be improper to award fees to
any party for services rendered at the administrative agency
level. However, section 39-3-214, MCA, provides that the
resulting judgment of a suit at law include reasonable a.ttor-
ney fees in favor of the successful party. Consequently,
since Hardy Construction is the successful party, we hereby
award attorney fees for services rendered at both the Dis-
trict Court and Supreme Court levels of the proceedings.
In summary, we hold:
(1) The District Court erred in reversing the determi-
nation of the Department of Labor and Industry and substi-
tuting its judgment for that of the agency; and,
(2) Attorney fees be awarded Hardy Construction for
services rendered for the District Court and Supreme Court
proceedings.
Reversed and remanded to the District Court for deter-
mina.tion of attorney fees.
~ 4,W!&J
2 Chief Justfce
4
We concur:
Justices
Mr. Justices Shea, Sheehy and Morrison dissent and will file
written dissents later.
D I S S E N T O F MR. J U S T I C E JOHN C . SHEEHY
I N THE MATTER OF THE WAGE CLAIMS
OF PAUL CHAGNON a n d LINDEN CHAGNON,
P e t i t i o n e r s and. R e s p o n d e n t s ,
VS.
HARDY CONSTRUCTION COMPANY, and t h e
,
LABOR STANDARDS D I V I S I O N DEPARTMENT
O F LABOR AND INDUSTRY, STATE O F MONTANA,
R e s p o n d - e n t s and A p p e l l a n t s .
Majority Opinion Decided: March 23, 1984
Mr. Justice John C. Sheehy, dissenting to the majority
opinion, a.nd dissenting to the order denying rehearing:
The majority opinion is a faulty judicial effort. It
purports to find "clearly sufficient evidence," upon which to
support the hearing officer's determination in favor of
Hardy. Yet not a smidgeon of that "clearly sufficient"
evidence is set forth in the majority opinion in support of
the conclusion.
Because I find the facts completely supportive of the
decision made by the District Court in reversing the hearing
officer, I dissent to the majority opinion; and because of my
optimistic belief that the majority must have overlooked
these substantive facts, I would grant rehearing.
Here is what happened in this case, taken from the
Agency transcript:
Paul Chagnon and Linden Chagnon, father and son, reside
in Havre, Montana. Hardy Construction Company has its
principal office in Billings. Hardy Construction Company was
the general contractor involved in construction of the
Buttrey-Osco building in Havre in 1981.
Larry Paulson was the superintendent on the Buttrey-Osco
job for Hardy Construction. Paul Chagnon obtained employment
from Larry Paulson on the Havre job, commencing April 5,
1981. Paul Chagnon requested employment for his son, Linden,
from Mr. Paulson as an apprentice carpenter. Linden began
work on July 5, 1981. Paul worked on the job through
September 20, 1981; Linden worked through September 20, 1981,
and did some additional. work during the week of October 11,
1981.
Paul and Linden were members of the local carpenters
trade union. At the time that Paul sought employment from
Hardy Construction, Larry Paulson asked Paul if he were a
member of the carpenters union to which Pzul replied he was.
Paulson at that time stated that Hardy Construction was also
union. When Linden requested employment, he was also asked
if he was a union member and Linden replied that he was. The
union pay scale for Paul Chagnon, a carpenter, was $11.13 an
hour. The prevailing union rate for a carpenter-apprentice
was $9.54.
It developed that although Hardy Construction Company
operates as a union employer in the Billings area, it did not
do so in Havre, although on occasions, it signed "short
agreements," that is, agreements to be bound by the union
prevailing wage rates and fringe benefits in the area where
the job was being completed.
When Paul Chagnon received his first paycheck, he
discovered it was computed at a rate of 50 cents an hour
under the union scale. He immediately told the job
superintendent about the shortage, and Paulson said he would
take care of it. The shortage was not cleared up the first
week and Paul threatened to quit the job if Hardy was not
going to pay him union scale. The job superintendent did get
the shortage resolved and Paul Chagnon was paid back-pay to
make up the difference between what he had been paid and the
union scale, and his next checks arrived at the proper union
rate. On May 1, 1981, the union scale increased for
carpenters to $11.93 per hour. The increased rate was not
automatically paid by Hardy Construction; again Paul brought
this to the attention of Paulson. Paulson said he would take
care of it. Paul Chagnon wrote on his time card the new
union scale. The information went into the Ilardy
Construction Company main office in Billings. The next week
Hardy Construction Company paid Paul at the new rate.
Linden Chagnon's paychecks were computed always at the
rate of $9.54 an hour, the prevailing union rate for an
apprentice carpenter.
In addition to the hourly rate, the union pay package
for carpenters and apprentices included pensions, health and
welfare contributions to be paid by the employer. Un.til llay
1, 1981, the hourly value of these fringe benefits for a
carpenter was $2.05 and after Ma.y 1, 1981., was $2.15. For an
apprentice, such as Linden, the fringe benefits had an hourly
value of $2.15.
The union package also required that the employer deduct
50 cents an hour from each employee for a vacation trust
fund. This is a deduction from the employees' pay and not a
contribution by the employer. Hardy Construction, in this
case, deducted 50 cents an hour from both Paul and Linden for
each hour they worked. for Hardy Construction; there was no
agreement or discussion between them about such deductions
for vacation pay. It was done automatically by Hardy
Construction Company. This would have been true in the case
of any union job, and Paul and Linden believed that these
deductions for vacation were being paid into the union
vacation trust fund.
The fringe benefits are contributions made by the
employer directed to the union. The contributions a.re not
reflected on the pay stubs of the employees. It was not
until Paul a.nd Linden saw a union publication some three
months later that they realized that the fringe benefits ha.d
not been paid on their behalf by Hardy Construction Company.
Again, Paul Chagnon complained to Larry Paulson and again
threatened to quit if Hardy Construction was not going to pay
the union package. Larry Paulson told Paul Chagnon that
everything would be taken care of. Chagnon did not learn
that the vacation pay deductions had not been paid to the
trust fund by Hardy Construction until after their employment
had terminated.
At the end of the job, Hardy Constryction did refund to
Paul and Linden Chagnon all of the vacation deductions made
by it. No contributions were made for fringe benefits. The
claim of Paul and Linden in this case relates to their fringe
benefits, since they had been paid the union wages.
On this statement of facts, the hearing examiner for the
Department of Labor and Industry found in favor of Hardy
Construction. Paul and Linden Chagnon appealed to the
District Court and the District Court reversed the Department
of Labor and Industry, and ordered that the fringe benefits
as well as penalties and attorneys fees be paid to the
Chagnons .
The majority of this Court, in the opinion promulgated
in this case, have reversed the District Court, stating
without support that clearly sufficient evidence supports the
hearing examiner. To me that position is inexplicable.
On its appeal to this Court, Hardy Construction, in
addition to claiming that the decision of the District Court
was incorrect, raised additional issues that fringe benefits
are not "wages," that the employee was not entitled to
attorney fees, and that the penalties begin only after final
judgment was entered in the District Court. These issues
have been short-circuited because of the route taken for
decision by the majority.
The evidence in this case is beyond rebuttal that the
Chagnons would not have continued working for Hardy
Construction if they were not being paid union scale on the
job. They continued to work for Hardy Construction because
they were led to believe by Hardy Construction that their
employment was one for union scale. When Hardy Construction
defaulted on the perceived contract between it and the
Chagnons, the employees sought redress before the Department
of Labor and Industry, and then before the District Court.
As a result of the majority action in this case, the Chagnons
lose not only the fringe benefits which they earned on the
job but they must now pay Hardy Construction Company's
attorney fees for daring to claim those fringe benefits.
Such, I am sad to relate, are the possible vagaries of this
Court.
DISSENTING OPINION
No. 83-232 Justice Daniel J. Shea
IN THE MATTER OF THE WAGE
CLAII'IS OF PAUL CHAGNON AND
LINDA CHAGNOM,
Petitioners and Respondents,
VS.
HARDY CONSTRUCTION COMPANY,
and the LABOR STANDARDS DIVISION,
DEPT. OF LAEOR AND INDUSTRY,
STATE OF MONTANA,
Respondents and Appellants.
$!
.JY'E~*J-;L%O~T
CLERK QF GUPi;Ei\QE COURT:
STATE OF MCN'TAHA
Mr. Justice Daniel J. Shea, dissenting:
I dissent. Issues were raised before the hearing
examiner that were never decided. As a result, neither the
Department of Labor and Industry nor the District Court could
rule on the merits of the case until the factual disputes
were resolved by the hearing examiner.
This Court has previously held in effect, that whenever
i-ssues are raised by the parties and the trial court failed
to make a record as to those issues, remand is appropriate to
make that record. For example, in Diede v. Davis (Mont.
1983), 661 P.2d 838, 843-844, 40 St.Rep. 394, the District
Court record failed to establish in what months certain
vehicle repairs were made. Without that determination, it
could not he known which, if any, of those repairs were
necessary a.nd therefore recoverable and In Wippert v.
Blackfeet Tribe of Blackfeet Indian Reservation (Mont. 19821,
654 P.2d 512, 39 St.Rep. 2117, the complaint laid the
foundation for inquiry into the amount of a tribal court
jud-gment. We ruled remand was necessary for a determination
of that amount.
Here also, issues were raised. below, and not decided.
There is no reasonable path to follow except to remand the
matter for a determination of those issues.