NO. 94-022
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
IN RE THE MARRIAGE OF
SANDY J. MALQUIST,
Petitioner/Respondent,
and
DALE H. MALQUIST,
Respondent/Appellant.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Thomas C. Honzel, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Dale H. Malquist, Lincoln, Montana (pro se)
For Respondent:
Donald A. Garrity, Helena, Montana
For Amicus:
Daniel Minnis, Montana Legal Services, Helena,
Montana
Submitted on Briefs: July 12, 1994
Decided: September 20, 1994
Filed:
Cl;%rk
Justice James C. Nelson delivered the Opinion of the Court.
Dale Malquist (Dale) appeals from the Findings of Fact,
Conclusions of Law and Order entered by First Judicial District
court, Lewis and Clark County on November 15, 1993. The order
awarded Sandy Malquist (Sandy) a judgment in the amount of
$2,429.74, and attorney fees in the amount of $300. The order also
denied Dale's motion for sanctions. We affirm in part and remand
for further proceedings consistent with this opinion.
Dale raises four issues on appeal:
1'. Whether the District Court erred when it refused to
offset the minor child's accrued medical bills by her
Social Security Disability benefits.
2. Whether the District Court erred by failing to credit
Dale's medical costs arrearage by the money Sandy
received from the benefit auction held by the Snow
Warriors Snowmobile Club.
3. Whether the District Court erred by not compelling
Sandy to comply with Dale's discovery requests.
4. Whether the District Court erred by granting attorney
fees.
BACKGROUND
The decree ending Dale and Sandy's marriage was entered on
November 3, 1986. The parties had two minor children, Darcy and
Sara, at the time the decree was entered, and Dale was ordered to
pay child support in the amount of $125 per month for each child.
Dale was also ordered to provide medical insurance for the children
and to pay for any medical expenses not covered by insurance.
In May of 1990, Dale began receiving Social Security
disability benefits. As a result of Dale's disability, Sara, who
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was still a minor, was also awarded monthly Social Security
benefits in the amount of $488 retroactive to October 1, 1988.
Sara received a lump sum payment of $7,900 from the retroactive
benefit award.
On December 5, 1990, Dale filed a petition asking the District
Court to review the child support order contained in the decree.
Dale requested that he be relieved from having to pay the child
support obligation for Sara, as a result of her receiving Social
Security benefits. Dale also requested that he be relieved from
his obligation to provide health insurance for Sara, and that he be
relieved from having to pay all health care costs retroactive to
October 1, 1988. In a written order dated January 22, 1991, the
District Court relieved Dale of his child support obligation, and
ordered that Dale be responsible for one-half of any medical costs
incurred by Sara. The court did not retroactively relieve Dale of
his obligation to pay medical expenses from the date of the decree
to the date of the order.
On April 12, 1993, Sandy filed a motion requesting, among
other things, that Dale be required to pay all past due medical
bills that he was responsible for according to the District Court's
prior rulings. The District Court granted the motion, and found
that Dale was responsible for $888.98 as a result of a previous
judgment, and $2,429.74 for his portion of health care costs
accruing after that judgment. Dale appeals from this ruling.
Other facts will be presented as necessary for discussion of the
issues.
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1. OFFSET FOR SOCIAL SECURITY BENEFITS
gale argues that the District Court should have credited the
lump sum payment Sara received from the Social Security
Administration against his medical costs arrearages. Dale states
that he presumed the benefits paid to Sara were replacing any
payments required of him. However, the District Court concluded
that Dale was responsible for all of Sara's medical costs under the
terms of the original decree, and one half of Sara's medical bills
under the terms of its January 22, 1991 order. This Court reviews
conclusions of law to determine whether the district court's
interpretation of the law was correct. Burris v. Burris (1993),
258 Mont. 265, 269, 852 P.2d 616, 619. We conclude that the
District Court was correct in concluding that Dale was responsible
for accrued medical costs according to the terms of its prior
rulings.
This Court has determined that Social Security benefits may be
treated as a contribution from the disabled obligor parent toward
the support of the children. In re Marriage of Durbin (1991), 251
Mont. 51, 58, 823 P.2d 243, 247. However, § 40-4-208(l), MCA,
provides "a decree may be modified by a court as to maintenance or
support only as to installments accruing subsequent to actual
notice to the parties of the motion for modification."
Accordingly, a court cannot credit a child's receipt of Social
Security benefits on behalf of a disabled parent toward that
parent's child support obligation until the parent moves to modify
the decree. Marriase of Durbin, 823 P.2d at 247.
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In the instant case, Dale moved to modify his child support
and medical care costs obligation on December 5, 1990. The
District Court by its order of January 22, 1991, relieved Dale of
his obligation to pay child support, and limited his obligation for
Sara's health care costs to one-half of such expenditures. Sara
received the lump sum award shortly before Dale filed his motion
for modification. Therefore, pursuant to 5 40-4-208(l), MCA,
Dale's child support and medical care costs obligation could only
be modified back to December 5, 1990, when Dale gave notice of his
motion for modification. In re Marriage of Bolt (1993), 259 Mont.
54, GO, 854 P.2d 322, 325.
We hold that the District Court was correct in concluding that
Sara's receipt of Social Security benefits did not automatically
relieve Dale from his obligation to pay his share of Sara's medical
bills that he was responsible for according to the terms of the
previous court orders.
2. FUND RAISER OFFSET
In March of 1991, the Ponderosa Snow Warriors, a snowmobile
club located at Lincoln, Montana held a fund raiser to help pay for
Sara's medical expenses. As a result of the benefit, Sandy
received approximately $5,000. Sandy did not use the money to pay
for Sara's past medical expenses, and Dale argues that the District
Court abused its discretion by not ordering the money raised to
offset the medical costs arrearage.
According to the terms of the decree and the January 22, 1991
order of the District Court, Dale was responsible for a share of
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the medical costs. If Dale wanted to relieve himself of this
obligation, Dale was required by law to petition the court for
modification. Section 40-4-208, MCA. Because Dale failed to
petition the court for a modification subsequent to Sandy's receipt
of the fundraiser money, we hold that the District Court did not
abuse its discretion by refusing to offset the medical costs
arrearage by $5,000.
3. DISCOVERY REQUESTS
The third issue Dale raises concerns whether the District
Court erred by not compelling Sandy to comply with Dale's discovery
requests. As stated earlier in the opinion, the District Court
modified the terms of the original decree concerning child support
and medical costs on January 22, 1991, and ordered Dale to pay one-
half of Sara's medical costs.
On April 12, 1993, Sandy moved the court for a hearing to
determine why Dale had not made the required payments under both
the original decree and the January 22, 1991 order, and to order
him to make immediate payment of the medical costs previously
incurred. On April 27, 1993, Dale served Sandy with a discovery
request. In response to the request, Sandy filed a motion for
sanctions under Rule 11, M.R.Civ.P., alleging that the discovery
request was prepared and served in response to Sandy's April 12,
1993 motion for an order to show cause. Dale then filed a motion
to compel discovery and noticed the matter for hearing on June lG,
1993. Although Dale appeared for the June 16 hearing, neither
Sandy nor her attorney appeared.
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On June 21, 1993, Dale moved for sanctions against Sandy for
her failure to appear at the June 16, 1993 hearing, pursuant to
Rule 37, M.R.Civ.P. Sandy responded to the motion on June 23,
1993, alleging that Dale's discovery requests were and are totally
irrelevant to the question of why Dale has failed to make payments
required by the decree and the January 22, 1991 order.
On November 15, 1993, the District Court issued its Findings
of Fact, Conclusions of Law and Order regarding the above motions.
The court concluded that while the discovery requests concerning
the snowmobilers' fund raiser, did relate to the medical costs
issue, Dale had failed to move to modify the prior orders of the
court requiring him to pay for a portion of these costs. The court
found that the remaining discovery requests did not relate to the
issues before the court. Therefore, the court denied Dale’s motion
to compel and both parties' motions for sanctions.
In interpreting the trial court's rulings on discovery issues,
this Court will reverse the trial judge only when his or her
judgment may materially affect the substantial rights of the
appellant and allow the possibility of a miscarriage of justice.
Massaro v. Dunham (1979), 184 Mont. 400, 405, 603 P.2d 249, 252:
Granite County v. Komberec (1990), 245 Mont. 252, 261, 800 P.2d
166, 171.
The District Court has inherent discretionary power to control
discovery based on its authority to control trial administration.
State ex rel. Guar. Ins. v. District Court (1981), 194 Mont. 64,
67-68, 634 P.2d 649, 650. "Control over pretrial discovery is best
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exercised by the District Court which is in a better position than
this court to supervise the day to day operations of pretrial
discovery." State ex rel. Guar. Ins., 634 P.2d at 650.
In the instant case we conclude that the District Court's
denial of Dale's motion to compel did not materially affect his
substantial rights. Any discovery Dale might have received
concerning the fund raiser would not have changed his obligation to
pay medical costs under the original decree or the January 22, 1991
order. Dale was responsible for paying the accrued medical costs
regardless of the status of the fundraiser money. The remaining
discovery requests had nothing to do with issues before the court,
and therefore could not have affected his responsibility to pay for
the health care costs as previously ordered by the District Court.
We hold that the District Court's discovery ruling did not
materially affect Dale's substantial rights and that the court did
not abuse its discretion in denying his motion to compel discovery.
4. ATTORNEY FEES
Finally, Dale argues that the District Court erred by granting
attorney fees to Sandy when she was represented by a pro bono
attorney who was representing her at the request of Montana Legal
Services Association. Sandy responds that Dale owns substantial
assets: receives full Social Security disability payments; has
forced her to enlist the aid of the court to collect small sums of
money that lawyers would not find economical to pursue: has failed
to pay her attorney fees awarded as a result of a previous court
appearance in this case: and that any attorney fees awarded should
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be paid directly to Montana Legal Services Association.
Dale's assertion raises two separate issues: (1) whether the
District Court abused its discretion by awarding attorney fees in
the first instance; (2) whether a pro bono attorney or Montana
Legal Services Association may seek and accept on behalf of an
indigent client attorney fees and costs under § 40-4-110, MCA.
As to the first issue, Sandy requested that she be awarded
$1,000 in attorney fees. The District Court stated that Sandy
failed to provide the court with evidence supporting the
reasonableness of the $1,000 fee, but awarded her $300 in attorney
fees, nevertheless. The court concluded that Sandy was entitled to
$300, in light of Dale's continuing failure to provide medical
insurance for the children or to pay his share of the medical
bills.
Section 40-4-110, MCA, allows the district court to
discretionarily award attorney fees and costs in certain domestic
relation matters. In re Marriage of Dzivi (1991), 247 Mont. 165,
167-68, 805 P.2d 567, 568. Section 40-4-110, MCA, provides:
The court from time to time, after considering the
financial resources of both parties, may order a party to
pay a reasonable amount for the cost to the other party
of maintaining or defending any proceeding under chapters
1 and 4 of this title and for attorney's fees, including
sums for legal services rendered and costs incurred prior
to the commencement of the proceeding or after entry of
judgment. The court may order that the amount be paid
directly to the attorney, who may enforce the order in
his name.
In interpreting that section, we have required that before a
court awards attorney fees under the statute, the petitioning party
must make a showing of necessity. In addition, the award must be
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reasonable and must be based on competent evidence. In re Marriage
of Barnard (1990), 241 Mont. 147, 154, 785 P.2d 1387, 1391: In re
Marriage of Laster (1982), 197 Mont. 470, 479, 643 P.2d 597, 602;
Wilson v. Bean (1981), 192 Mont. 427-28, 628 P.2d 287, 289. To
make a showing of reasonableness a hearing must be held allowing
for oral testimony, the introduction of exhibits, and the
opportunity to cross-examine. Marriase of Barnard, 785 P.2d at
1391. If the award of attorney fees is supported by substantial
evidence, we will not reverse the award upon appeal. Marriage of
Barnard, 785 P.2d at 1391-92.
In its Conclusions of Law, the District Court stated that
Sandy did not submit any evidence to support the amount of the
attorney fees requested or the reasonableness of the fees.
Therefore, under the rules set forth in our previous cases, we must
reverse the District Court's award of $300 in attorney fees and
remand for an evidentiary hearing in order to determine necessity,
in order to consider the statutory criteria, and for a
determination of the reasonableness of the fees requested.
In so doing, however, we must also address the second issue
mentioned above -- Dale's argument that Sandy is not entitled to an
award of attorney fees at all because she is represented by a pro
bono attorney at the request of Montana Legal Services Association.
Dale argues that pro bono attorneys and, presumably, Legal Services
attorneys, represent indigent litigants as a "community service"
and have, therefore, no expectation of payment or right to collect
attorney fees from the opposing party. Implicit in Dale's argument
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is the proposition that Sandy would receive a windfall if the court
awarded attorney fees to her when she did not incur any obligation
of payment or debt as a result of her obtaining legal
representation, Dale's position has support in our prior case law.
This Court has previously held that a trial court cannot award
attorney fees pursuant to 5 40-4-110, MCA, to a party represented
by a legal services attorney. Thompson v. Thompson (1981), 193
Mont. 127, 129, 630 P.2d 243, 244. In Thompson, we reasoned that
"the authority of the court to order the payment of an attorney's
fee in a divorce action does not exist for the protection of the
attorney, but is strictly for the benefit of the client."
Thompson, 630 P.2d at 244. Therefore, we affirmed the district
court's ruling which denied the award of attorney fees to the
former wife who was represented by Montana Legal Services
Association. Thompson, 630 P.2d at 244. In our decision we
reasoned that a party who was represented by a legal services
attorney could not show a personal necessity to seek payment from
the former spouse. Thompson, 630 P.2d at 244.
When this Court decided Thompson, the case law governing
awarding fees to legal services organizations was not fully
developed. Subsequent to our decision, however, the majority of
jurisdictions ruling on this issue have held that legal services
organizations are entitled to attorney fees both in family law
cases and in non-family law cases. See e.g., In re Marriage of
Ward (Cal.App. 1992), 4 Cal.Rptr.2d 365; Beeson v. Christian (Ind.
1992), 594 N.E.2d 441; In re Marriage of Gaddis (Mo.App. 1982), 632
S.W.Zd 326 (family law cases); shands v. Castrovinci (Wis. 1983),
340 N.W.2d 506 (landlord tenant): Kleine-Albrandt v. Lamb (Ind.App.
1992), 597 N.E.2d 1310 (wage claim).
We also conclude that policy considerations which were not
discussed in our opinion in Thomnson militate in favor of allowing
the district courts to discretionarily award attorney fees to pro
bono attorneys and to Montana Legal Services Association on behalf
of indigent clients, providing the statutory criteria of 5 40-4-
110, MCA, and the evidentiary requirements mentioned above are
otherwise satisfied. Accordingly, under the circumstances, it is
necessary that we reconsider our decision in Thomnson.
At the outset, we do not distinguish between litigants
represented by pro bono attorneys and those represented by Montana
Legal Services Association. The same considerations, discussed
hereafter, apply. The deciding factor is not the status of the
attorney providing the professional services, but that the indigent
client is financially unable to pay for legal representation in a
domestic relations proceeding where representation is a practical
requirement.
In Thompson, our decision to deny the award of attorney fees
to individuals represented by legal services agencies was based on
the concept of "personal necessity." Thompson, 630 P.2d at 244.
We reasoned that an award of fees was not necessary because the
wife who was awarded attorney fees did not incur a debt as a result
of obtaining legal representation. While true as far as it goes,
that is only one, but not necessarily, the most important or the
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determinative consideration in resolving this issue.
We live in a society where, next to health care, competent
legal service is likely the most essential, yet most costly,
professional service that most people from time to time require.
That is certainly no more evident than in domestic relations cases
wherein the court's decision will likely involve important property
questions and will forever alter the personal relationships and
obligations of the litigants to each other. More importantly,
however, at issue in many such cases are the relationships of
children to their parents and the fundamental rights of those
children to food, clothing, shelter, education, medical care,
support, and to a safe and reasonably stable home life. The
multiplicity of laws and often technical court rules and procedures
governing domestic relations cases combined with the emotionally
charged nature of such proceedings, present a mine field to the
litigant who is too poor to hire competent counsel.
Legal Services Corporation is a publicly funded agency whose
purpose is to ensure that economic barriers to legal assistance are
minimized and whose overall objective is to provide equal access to
our country's system of justice. 42 U.S.C. § 2996. In fulfilling
that mandate, Legal Services works to develop pro bono programs
which, presumably, will provide services to greater numbers of
eligible clients and thereby advance the purposes of the Legal
Services Corporation Act. See, 45 C.F.R. 1614(l)(a). To that end,
as in this case, Montana Legal Services Association refers many
domestic relations cases to attorneys willing to take the case
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without charging a fee to the indigent client.
It is important to point out that the regulations promulgated
pursuant to the Legal Services Corporation Act, permit legal
services agencies to request and accept a fee awarded or approved
by a court or administrative body. 45 C.F.R. 5 1609.5. This
regulation helps insure that eligible clients are able to obtain
appropriate and effective legal assistance. 45 C.F.R. 3 1609.1.
Unfortunately, the number of indigent litigants appears to be
growing, while the numbers of attorneys willing to do domestic
relations work for an affordable fee seem to be decreasing. The
net result of that unfortunate state of affairs is that already
financially strapped and understaffed legal services organizations
must deal with ever expanding case loads and, of necessity, must
increasingly rely on members of the bar who are willing to render
legal assistance to indigent domestic relations clients, pro bono,
to pick up the overflow.
Moreover, many attorneys, in fulfilling their professional
responsibilities to provide public interest legal service as
required by Rule 6.1 of Montana's Rules of Professional Conduct,
provide representation to indigent domestic relations clients at a
reduced charge or for no charge, without a request from Montana
Legal Services Association.
Section 40-4-110, MCA, broadly allows the trial court to
discretionarily award attorney fees in domestic relations cases
'I.. . after considering the financial resources of both parties."
Furthermore, our statute allows the court to 'I... order that the
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amount [awarded] be paid directly to the attorney, who may enforce
the order in his name." Importantly, there is nothing in the
statutory language which precludes a district court from awarding
attorney fees in an appropriate case merely because the attorney
representing the indigent party has agreed to not charge the client
for his or her professional services. Equally important, there is
nothing in the statute that makes the litigant who would,
otherwise, be required to pay attorney fees, the third party
beneficiary of the Legal Services or pro bono attorney's agreement
with the indigent client.
While awarding attorney fees to the indigent client
represented by Montana Legal Services Association or a m bono
attorney, would, in fact, be a windfall to the client, that result
can be easily avoided by the court simply awarding the fee directly
to Legal Services or to the attorney, as is permitted by § 40-4-
110, MCA. On the other hand, refusing to award attorney fees in
favor of the indigent client because of the status of his or her
attorney, where the opposing litigant is financially able and would
otherwise be charged with the indigent party's fees and costs under
the statute, represents a windfall to the non-indigent litigant.
Presumably, if Montana Legal Services Association and pro bono
attorneys can recoup from the non-indigent litigant those fees and
costs for which he or she would, otherwise, be liable under the
statute, that organization and those attorneys will be financially
better able to provide more legal services to the increasing
numbers of indigent litigants who need such services. Moreover,
15
non-indigent litigants who might be encouraged to simply "run up
the other party's bill I1 with vexatious conduct and frivolous court
proceedings, might be less inclined to do so knowing that the court
has the statutory discretion to award the indigent party's attorney
fees and costs against the offending party.
Recognizing the validity of those considerations and the
legislature's grant to the district courts of broad discretion to
award attorney fees in domestic relations cases, we are also
persuaded by the post-Thompson decisions of other jurisdictions
that our focus in that case was, in retrospect, too narrow. Those
courts have concluded that the broader principle of providing equal
access of justice to all warrants the award of fees to individuals
represented by legal services organizations. See for example,
Marriage of Swink, (Colo.App. 1991), 807 P.2d 1245; Benavides v.
Benavides (Conn.App. 1987), 526 A.2d 536; In re Marriage of Gaddis
(Mo.App. 1982), 632 S.W.2d 326.
For example, the Connecticut court which considered this issue
in Benavides reasoned as follows:
We are aware that indigents are represented by legal
services attorneys in a large number of family relations
matters. It would be unreasonable to allow a losing
party in a family relations matter to reap the benefits
of free representation to the other party. A party
should not be encouraged to litigate under the assumption
that no counsel fee will be awarded in favor of the
indigent party represented by public legal services: or
as in this case, that a reasonable fee will be
discounted for the same reason. IPut in another way, the
public should be relieved from the financial burden of
obtaining an indigent plaintiff's divorce or successfully
defending against a husband's complaint, to the extent
that the husband is able to pay all or part of her
attorney's fees. The taxpayer has an interest in
recovering where possible a portion of the costs in these
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situations.'
An award of counsel fees that does not discriminate
against non profit legal service entities will encourage
non profit counsel to expend its resources in the
representation of those clients who are unable to afford
private counsel in disputed child custody and child
support enforcement litigation. The purposes of such
acts as the Uniform Child Custody Jurisdiction Act... are
advanced and are made more available to the poor where
there is an expectancy that the nonprofit legal services
will recoup at least part of its resources through an
award of counsel fees to its client. Furthermore, a
realization that the opposing party, although poor, has
access to an attorney and that an attorney's fee may be
awarded deters noncompliance with the law and encourages
settlements. (Citations omitted.)
Benavides, 526 A.2d at 538.
Similarly, in Marriase of Swink, 807 P.2d 1245, the Colorado
court addressed this same issue under a statute nearly identical to
5 40-4-110, MCA. The trial court denied the wife's request for
attorney fees as she wasrepresented by a pro bono attorney at the
request of a legal services agency. The appellate court overturned
the trial court holding that a showing of debt incurment was not
necessary since the statute allowed an award for "legal services
rendered." Marriage of Swink, 807 P.2d at 1247.
Simply stated, an award of attorney fees under § 40-4-110,
MCA, is authorized when, giving due consideration to the financial
resources of both parties, the requesting party shows necessity --
i.e. the inability to pay for legal representation -- and
reasonableness of the fees requested. Whether a party incurs debt
is irrelevant, and necessity is unrelated to the status of the
attorney who delivers the legal services.
Accordingly, for the reasons aforementioned, we conclude that
it is appropriate we overrule our decision in Thompson to the
extent our decision in that case prohibits a discretionary award of
attorney fees under 5 40-4-110, MCA, in favor of a party
represented by Montana Legal Services Association or a pro bono
attorney.
We hold that a district court may discretionarily award
attorney fees under the criteria set forth in § 40-4-110, MCA, to
either Montana Legal Services Association or to a pro bono attorney
representing the requesting party providing that such party
demonstrates the necessity for and reasonableness of the fees
requested.
Affirmed in part and remanded for further proceedings
consistent with this opinion w
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