ALASKA PACIFIC ASSURANCE CO v L
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No. 79-103 I N THE SUPREME COURT OF THE STATE O F MONTANA 1981 ALASKA P A C I F I C ASSURANCE COMPANY, and CLARENCE R. R A I N E S , Insurer and A p p e l l a n t , C l a i m a n t and A p p e l l a n t , -vsL. H. C., INC., E m p l o y e r and R e s p o n d e n t , and MARIE J . HARTMAN, e t a l . , A p p l i c a n t s i n I n t e r v e n t i o n and Respondents. Appeal from: Workers' C o m p e n s a t i o n C o u r t , T h e H o n o r a b l e W i l l i a m H u n t , Judge p r e s i d i n g . C o u n s e l of R e c o r d : For A p p e l l a n t : U t i c k and G r o s f i e l d , H e l e n a , M o n t a n a A l e x C. M o r r i s o n , P l a i n s , M o n t a n a For R e s p o n d e n t : C. E u g e n e P h i l l i p s , R a l i s p e l l , M o n t a n a R o b e r t L. F l e t c h e r , T h o m p s o n F a l l s , M o n t a n a S u b m i t t e d on B r i e f s : Decided: F i l e d: L 1 2 1981 n fq May 2 7 , 1 9 8 0 1 2 /?r,/ Mr. Justice Daniel J. Shea delivered the Opinion of the Court. This appeal comes from the Workers' Compensation Court as a result of that court's refusal to assume jurisdiction to determine whether Clarence R. Raines was, at the time of a collision between two logging trucks, the employee of L.H.C., Inc., or an independent contractor in relation to L.H.C., Inc. On September 10, 1980, we filed our opinion in this case (37 St.Rep. 16161, affirming the Workers' Compensation Court and fining Alaska Pacific Assurance Company $500 for taking a frivolous appeal. The insurance company promptly filed a petition for rehearing alleging that it was "shocked" by our opinion. This opinion shall take the place of the previous one entered on September 10, 1980, and our former opinion is withdrawn. The alleged "shock" of Alaska Pacific is apparently premised on its belief that "the decision is wrong on the facts and law." We agree that our previous opinion misstated the precise nature of the proceedings before the Workers' Compensation Court; but the correction we make here does not impel us to change the result we reached in our first opinion. We also agree that we overstated our conclusion that the Workers' Compensation Court is not empowered to render declaratory judgments; but the correction we make here also does not impel us to change the result reached in our former opinion. The appeal is as frivolous upon our reconsideration as we determined it to be in our first consideration. Our explanation follows. This dispute has its background in the death of Thomas H. Hartman, and a resulting lawsuit filed in Sanders County District Court by his widow, who sued Clarence R. ~ainesfor the wrongful death of her husband. -2- At the time of his death, ~homasH. Hartman was an employee of L.H.C., Inc. and he hauled logs for this company. Clarence R. Raines also hauled logs for the same company--but a dispute exists as to whether he was an employee of this company, or whether he was solely an independent contractor. As we shall explain, a final determination that Raines was an employee of L.H.C., Inc. at the time of the accident, will absolve Raines of any liability to Hartman's widow, and it will also, of course, relieve Alaska Pacific of any contractual duty to represent Raines in that suit, for Alaska Pacific is Raines' liability insurance carrier. On the other hand, a final determination that Raines had an independent contractor relationship with L.H.C., Inc., will mean that Hartman's widow can maintain her wrongful death action against Raines, and that Alaska Pacific will be obligated to defend the lawsuit as well as pay any potential judgment to the extent of the insurance coverage. The accident resulting in Hartman's death, occurred on June 28, 1978, when a logging truck driven by Hartman, collided with a logging truck driven by ~aines. Hartman's widow collected death benefits from L.H.C., Inc. pursuant to the Workers' Compensation Act--Alaska Pacific is the compensation insurance carrier for L.H.C., Inc. No dispute exists as to the right of Hartman's widow to collect these benefits, or as to the amount of the benefits. Although we do not know when the suit was filed, Hartman's widow also filed a wrongful death suit against Clarence Raines, alleging that ~aines negligently caused Hartman's death. Alaska Pacific again stepped into the picture, this time as the liability insurance carrier for Clarence Raines. Sometime after the June 28, 1979 accident, ~ainesfiled a claim to collect Workers' Compensation benefits and Alaska -3- P a c i f i c t h e n asked t h e Workers' Compensation D i v i s i o n t o i n v e s t i g a t e and d e t e r m i n e whether R a i n e s was a n employee o f L.H.C., I n c . , o r whether he w a s an i n d e p e n d e n t c o n t r a c t o r . ~ a i n e s o u l d c o l l e c t Workers' Compensation b e n e f i t s o n l y upon c a d e t e r m i n a t i o n t h a t he w a s an employee o f L . H . C . , Inc. (The r e c o r d b e f o r e u s f a i l s t o t e l l u s whether Raines f i l e d h i s Workers' Compensation c l a i m a f t e r he and A l a s k a P a c i f i c w e r e n o t i f i e d t h a t Hartman's widow was making a c l a i m a g a i n s t them f o r t h e wrongful d e a t h o f h e r husband.) I t a p p e a r s t h a t a f t e r i n v e s t i g a t i o n , t h e Workers' Com- p e n s a t i o n D i v i s i o n d e c i d e d t h a t a l t h o u g h t h e r e was a w r i t t e n c o n t r a c t p u r p o r t i n g t o c r e a t e an i n d e p e n d e n t c o n t r a c t o r r e l a t i o n s h i p between R a i n e s and L.H.C., Inc., Raines w a s an employee, a t l e a s t f o r p u r p o s e s of t h e Workers' Compensation Act. I t a l s o a p p e a r s t h a t L.H.C., mination. Inc. disputes t h i s deter- I n any e v e n t , it i s u n d i s p u t e d t h a t Raines c o l l e c t e d a t o t a l o f a b o u t $60 i n b e n e f i t s from A l a s k a P a c i f i c . Now back t o t h e w r o n g f u l d e a t h a c t i o n f i l e d a g a i n s t R a i n e s i n s t a t e District Court. A s a defense t o t h e claim, Raines, t h r o u g h c o u n s e l r e p r e s e n t i n g b o t h h i m s e l f and Alaska P a c i f i c , moved t h e c o u r t t o d i s m i s s t h e l a w s u i t on t h e ground t h a t R a i n e s w a s a l s o a n employee o f L . H . C . , Inc., a t t h e t i m e of t h e accident i n which Hartman w a s k i l l e d , and t h i s b e i n g s o , t h e widow c o u l d n o t b r i n g an a c t i o n a g a i n s t a f e l l o w s e r v a n t , b u t w a s c o n f i n e d t o t h e r e c e i p t o f b e n e f i t s under t h e Workers' Compensation A c t . But Alaska P a c i f i c and R a i n e s were n o t c o n t e n t t o l e t t h e D i s t r i c t C o u r t r u l e on this motion. Two d a y s a f t e r t h e y had f i l e d t h i s motion, t h e y f i l e d a p e t i t i o n b e f o r e t h e Workers' Compensation C o u r t and s o u g h t a r u l i n g t h a t Raines was an employee and n o t an i n d e p e n d e n t c o n t r a c t o r . named i n t h e p e t i t i o n was L.H.C., Inc. The o p p o s i n g p a r t y T h i s p e t i t i o n was s i g n e d by c o u n s e l a c t i n g f o r b o t h Alaska P a c i f i c and ~ a i n e s . -4- The e s s e n c e o f t h e p e t i t i o n b e f o r e t h e Workers' Comp e n s a t i o n C o u r t i s t h a t Alaska P a c i f i c wanted t o pay b e n e f i t s t o R a i n e s , and t h a t R a i n e s wanted t o r e c e i v e them, b u t t h a t L.H.C., I n c . , would n o t p e r m i t t h e s e payments b e c a u s e o f i t s r e f u s a l t o acknowledge t h a t Raines was one o f i t s employees. The p e t i t i o n r e c i t e d t h e former d e c l a r a t i o n o f t h e Workers' Compensation D i v i s i o n , and a l s o s t a t e d t h a t Alaska P a c i f i c had p a i d b e n e f i t s t o Raines based on t h i s d e t e r m i n a t i o n . (The p e t i t i o n d i d n o t r e v e a l , however, t h a t A l a s k a P a c i f i c had p a i d o n l y $60 i n b e n e f i t s , and t h a t Raines was n o t a l l e g i n g t h a t h e w a s e n t i t l e d t o any more.) I n t h e f i n a l p a r t of t h e j o i n t p e t i t i o n , Alaska P a c i f i c and Raines a l l e g e t h a t b e c a u s e L . H . C . , I n c . r e f u s e s t o acknowledge t h a t R a i n e s was a n employee, t h e Workers' Compensation C o u r t s h o u l d s t e p i n and make a r u l i n g . B e f o r e t h e Workers' Compensation C o u r t e n t e r e d a r u l i n g , L.H.C., I n c . made i t s appearance--and e s s e n t i a l l y took t h e p o s i t i o n t h a t t h e r e w a s r e a l l y no i s s u e b e f o r e t h a t c o u r t , and t h a t i n any e v e n t , t h e same i s s u e had f i r s t been p r e s e n t e d b e f o r e t h e D i s t r i c t C o u r t i n t h e wrongful d e a t h a c t i o n , and t h a t t h e i s s u e s h o u l d be r e s o l v e d t h e r e . Mrs. Hartman i n t e r v e n e d t h r o u g h c o u n s e l i n o r d e r t h a t t h e judge would know t h e p o s s i b l e e f f e c t t h a t a d e c i s i o n o f t h e Workers' Compensation C o u r t would have on h e r wrongful d e a t h a c t i o n f i l e d i n D i s t r i c t C o u r t a g a i n s t Raines. She a l s o a r g u e d t h a t t h e i s s u e was f i r s t r a i s e d i n D i s t r i c t C o u r t , and t h a t it s h o u l d f i r s t b e r e s o l v e d t h e r e . On October 1 2 , 1979, t h e D i s t r i c t C o u r t d e n i e d t h e motion t o d i s m i s s , b u t n o t on t h e m e r i t s - - a p p a r e n t l y deciding t h a t t h e motion r a i s e d a f a c t u a l i s s u e on which e v i d e n c e would be t a k e n b e f o r e t h e q u e s t i o n c o u l d be d e c i d e d . Two weeks l a t e r , on October 2 6 , 1979, t h e Workers' Compensation C o u r t r e f u s e d t o t a k e j u r i s d i c t i o n and d i s m i s s e d t h e p e t i t i o n without prejudice. I t was d i s m i s s e d b e c a u s e of a b e l i e f t h a t -5- the case involved an application of the race-to-the-courthouse theory, and that the issue should be decided in District Court because it was first raised there. From this decision, Alaska Pacific takes its appeal. In our original opinion in this appeal, we erroneously stated that Alaska Pacific and Raines filed their petition before the Workers' Compensation Court when there was absolutely no issue before that court upon which it should take jurisdiction. For this reason, we concluded that the request was for the court to enter a declaratory judgment. We therefore, erroneously concluded that the Workers' Compensation Court is not empowered to issue declaratory judgments. In this statement, we were wrong to the extent that the Workers' Compensation Court, which operates under the Montana Administrative Procedure Act (section 39-71-2903, MCA) has a limited right to issue declaratory rulings (section 2-4-501, MCA) . The question then is whether there was an issue before the Workers' Compensation Court in need of resolution, or whether the proceedings before that court were commenced with the objective of obtaining a ruling there and then taking the ruling before the District Court to be used in support of Raines' motion to dismiss the wrongful death action filed by Hartman's widow against Raines. Undoubtedly, a legitimate dispute did not exist that required the Workers' Compensation Court to act. The petition before that court does not in any way indicate that Raines was then being deprived of compensation benefits. At the hearing before the Workers' Compensation Court, there was no allegation that Raines was being deprived of his just benefits under the Act because of the unwillingness of L.H.C., Inc. to admit that he was an employee. Counsel for Alaska pacific -6- at no time indicated at the hearing any great concern for Raines as an employee who may not get his benefits; rather, counsel was interested only in obtaining a ruling from the workersr Compensation Court that could then hopefully be used most effectively in District Court to determine whether or not Raines was an employee of L.H.C., Inc. Alaska Pacific makes the bald statement that, "regardless of the effect of one action on the other, Raines was entitled to a speedy determination of his right to compensation from the appropriate tribunal, -- Court's opinion has and this - of that." deprived him- - (Emphasis added.) does not make that contention. Raines, however, He is not before this Court on a petition for rehearing, seeking to have this Court reverse its earlier holding. Nor is this a case where Raines is threatened with having compensation benefits cut off because a recalcitrant employer will not cooperate. It is a case where Alaska Pacific and Raines (the insured and the insurer) have a common interest to defeat the right of Hartman's widow to proceed with her wrongful death suit in District Court, by a ruling that Raines was an employee of L.H.C., Inc. Also, should Raines have an actual need for compensation benefits as a result of any injuries sustained in the same accident that took Hartman's life, nothing prevents Alaska Pacific from voluntarily paying them. To do this, neither Alaska Pacific nor Raines need to get the consent of L.H.C., Inc. The only reasonable conclusion we can reach is that Alaska Pacific and Raines filed their petition (signed by the same counsel who represented Raines and Alaska Pacific in the District Court suit) in an effort to sidetrack the wrongful death action filed in District Court. At no time did Raines or Alaska Pacific place an issue before the -7- Workers' Compensation C o u r t t h a t was i n need of r e s o l u t i o n . N e i t h e r R a i n e s n o r Alaska P a c i f i c was concerned w i t h o b t a i n i n g compensation b e n e f i t s f o r Raines; r a t h e r , t h e y were concerned w i t h a f f e c t i n g t h e D i s t r i c t C o u r t s u i t by o b t a i n i n g a r u l i n g b e f o r e t h e Workersr Compensation C o u r t t h a t Raines was an employee of L.H.C., Inc. T h i s i s c l e a r l y an i n s t a n c e where an i n s u r a n c e company h a s abused t h e c o u r t system i n i t s e f f o r t s t o a v o i d meeting t h e i s s u e s head-on i n D i s t r i c t Court. For t h i s r e a s o n , w e impose t h e same s a n c t i o n s imposed i n o u r e a r l i e r o p i n i o n i n t h e same c a s e . W e assess a p e n a l t y a g a i n s t t h e Alaska P a c i f i c Assurance Company, i n t h e amount o f $500, f o r p r o s e c u t i n g a f r i v o l o u s appeal. See Rule 32, M.R.App.Civ.P. W e cannot ignore t h e f a c t t h a t t h e i n s u r a n c e company, r a t h e r t h a n R a i n e s , i s t h e r e a l p a r t y i n i n t e r e s t i n t h e s e p r o c e e d i n g s , and t h e r e f o r e , t h e i n s u r a n c e company s h o u l d b e a r f u l l r e s p o n s i b i l i t y f o r bringing t h i s f r i v o l o u s appeal. W e o r d e r t h a t $250 b e p a i d by t h e i n s u r a n c e company t o L.H.C., Inc., and t h a t $250 b e p a i d by t h e i n s u r a n c e company t o Marie J. Hartman. L.H.C., I n c . was d i r e c t l y f o r c e d i n t o t h e Workers' Compensation C o u r t p r o c e e d i n g s , and t h e r e had t o d e f e n d i t s i n t e r e s t s . Marie J. Hartman, i n t e r v e n e d i n t h e Workers' Compensation C o u r t p r o c e e d i n g s s o t h a t h e r i n t e r e s t would be c o n s i d e r e d there. Under t h e c i r c u m s t a n c e s , s h e had no o t h e r c h o i c e . W e n o t e , f i n a l l y , t h a t whether R a i n e s w a s an employee o r a n i n d e p e n d e n t c o n t r a c t o r w i t h r e l a t i o n t o L.H.C., i s f i r s t a question f o r t h e D i s t r i c t Court. h a s n o t been d e c i d e d on t h e m e r i t s . Inc., The q u e s t i o n I f i t i s determined, and i f t h e r e i s a f i n a l d e t e r m i n a t i o n o f t h e u n d e r l y i n g l a w s u i t a g a i n s t R a i n e s , R a i n e s and t h e i n s u r a n c e company are p r o t e c t e d i n t h e e v e n t o f an a d v e r s e judgment, by t h e i r r i g h t t o appeal. W e e x p r e s s no o p i n i o n a s t o t h e m e r i t s of -8- the employer-independent contractor issue. We state only that the court system should not be abused in the process of getting this issue resolved. It was abused in this case, and the fault can be laid directly on the doorstep of the insurance company. The order of the Workers' Compensation Court declining jurisdiction is affirmed. We Concur: Chief Justice Justices
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