COLLEEN KAREN SCHUFF, individually and as personal representative of the ESTATE of WILLIAM SCHUFF, Deceased, ADAM SCHUFF, and JACOB SCHUFF, Plaintiffs, Respondents, and Cross-Appellants, v. A.T. KLEMENS & SON, Defendant, Appellant and Cross-Respondent.
No. 99-053
In the Supreme Court of the State of Montana
Decided December 27, 2000
Heard April 4, 2000. Submitted June 28, 2000.
2000 MT 357 | 57 St.Rep. 1499 | 303 Mont. 274 | 16 P.3d 1002
For Respondents: Charles R. Johnson, Sara R. Sexe, Marra, Wenz & Johnson, Great Falls.
For Amici: Neil E. Ugrin, Roger T. Witt, Ugrin, Alexander, Zadick & Higgins, Great Falls (James, Gray, Bronson & Swanberg, Attorneys at law); John Richardson, Beck & Richardson, Bozeman (Montana Trial Lawyers Association).
¶1 A.T. Klemens & Son (Klemens) appeals from a judgment resulting from a wrongful death claim entered in favor of Colleen Karen Schuff, and her sons, Adam and Jacob Schuff (Schuff), by the Eighth Judicial District Court, Cascade County. Schuff, both individually and as a personal representative of the estate of her deceased husband, cross-appeals the judgment, asserting that the court erred in reducing the judgment award and in calculating judgment interest.
¶2 We affirm in part, reverse in part, and remand for further proceedings.
¶3 Klemens raises the following issues:
- Did the District Court abuse its discretion when it denied Klemens’ motion to disqualify the Marra firm from representing Schuff?
Did the District Court abuse its discretion when it entered a default judgment against Klemens on the issue of liability as a sanction under Montana Rules of Civil Procedure 37(d) for alleged discovery abuses?
Subject to Schuff‘s cross-appeal as well as Klemens’ appeal, we address the following issues:
- Does
Article II, Section 16, of the Montana Constitution create a fundamental right to recover attorney‘s fees and costs? - Did the District Court err when it reduced the jury verdict pro tanto based on Schuff‘s prior settlement with the other named defendants?
- Did the District Court err in its collateral source reduction determinations regarding workers’ compensation and Social Security benefits?
- Did the District Court err when it limited Schuff‘s recovery of prejudgment interest?
- Did the District Court err in determining the proper date for post-judgment interest?
FACTUAL AND PROCEDURAL BACKGROUND
¶4 Schuff initiated this action in 1991 to recover damages for the alleged wrongful death of her husband, William Schuff, who died as a result of burns sustained at the M&H Gas Station in Great Falls, Montana. The accident occurred on September 12, 1991, while Schuff‘s husband, an employee of Kenneco, Inc., was repairing a submersible pump in a manhole above an underground gasoline storage tank at the station. Accumulated gas fumes ignited, and engulfed Schuff in flames. He died from the resulting severe burn injuries on September 25, 1991.
¶5 Schuff‘s theory of negligence, in part, blamed the accident on either a mislabeled electrical relay switch and/or a mis-wired relay switch, which deceived William Schuff into turning off the wrong relay switch, and thereby providing an ignition source. Schuff alleged that the fumes accumulated due to a defective pump. On October 29, 1998, a jury returned a verdict in Schuff‘s favor in the amount of $1,303,000.
¶6 After filing her original complaint against M&H Gas Company and three John Does on October 4, 1991, Schuff filed an amended complaint naming Klemens as well as another electrical contractor
¶7 Klemens was served with a copy of the amended complaint on February 3, 1992. The District Court would find, in its Order granting Schuff‘s motion for default judgment, that Klemens “denied ever doing any work involving wiring of the submersible pump and relay system.” Klemens claimed that it had not performed any of the alleged negligent work, including installing faulty wiring or mislabeling the electrical system related to the submersible pump. In its December 14, 1994 motion for summary judgment, Klemens asserted that:
It is uncontroverted that Kenneco and other electrical contractors did all design, installation and maintenance work on the M&H gasoline pumping system as it was configured at the time of the accident. A.T. Klemens did nothing more [than] connect the gasoline pumping system as wired to a new electrical service panel for the building. There was nothing wrong with the electrical service panel and it had no involvement in the accident because Mr. Schuff intentionally did not use the breaker panel to cut power to the west pump.
¶8 This blanket denial was substantiated by Klemens’ discovery responses as well as the depositions of its employees who had performed the work at the gas station. Although claiming that a thorough disclosure of the resulting paper trail for the work performed was irrelevant and burdensome, Klemens nevertheless offered that all records could be examined at its counsel‘s office.
¶9 Needless to say, the litigation of the matter, now approaching its tenth year, was less than tractable.
¶10 One focal point of the dispute arose in 1993 when counsel for Klemens filed a motion to disqualify the Great Falls law firm of Marra, Wenz, Johnson & Hopkins (hereinafter the Marra firm) from continuing to represent Schuff. The basis for the motion to disqualify stemmed from the Marra firm‘s existing representation of Klemens, an ongoing relationship that had formed in 1984. At the time the Marra firm served Klemens with Schuff‘s amended answer, Klemens claims it had pending legal matters that were being addressed by the Marra firm on its behalf, including the monitoring of another lawsuit against Klemens. These legal matters allegedly provided the Marra firm with access to Klemens’ financial information, which apparently included knowledge of a $1 million liability insurance policy.
¶12 The Marra firm asserted to the court that there was “no substantial possibility that any information they have previously acquired or may acquire in the future relative to Klemens corporation could have any adverse influence on Klemens in this lawsuit,” and dismissed Klemens’ motion to disqualify as “frivolous.” Primarily, the firm asserted that there was no substantial relationship between the work performed over the years for Klemens and Schuff‘s wrongful death claim, which could conceivably cast fault on Klemens for its electrical work at M&H. Nevertheless, the Marra firm terminated its relationship with Klemens prior to the court‘s ruling on the motion to disqualify “to prevent the possibility of any acquisition of information which could be used to the detriment of Klemens in the litigation.”
¶13 The District Court denied Klemens’ motion in an order entered September 3, 1993, applying a “substantial relationship” analysis to the Marra firm‘s representation of Schuff and Klemens.
¶14 Also in dispute here is the liability default judgment entered against Klemens resulting from its conduct during discovery.
¶15 In earlier 1993, Klemens was served with interrogatories and requests for production from co-defendant M&H Gas Company. Klemens objected to much of the requests as either irrelevant or unduly burdensome. Nevertheless, Klemens claims that it provided the records up to the date of the accident by making them available for inspection at its counsel‘s office. Klemens responded to an interrogatory request for work performed at the gas station with:
Copies of records for work done by Klemens at M&H up to the date of the accident are available for inspection at the office of James, Gray and McCafferty. Generally, what is known about the work described in the records, with regard to the questions asked above, is contained in these records.
In response to an interrogatory request for information regarding “any electrical wiring installation or hookup, including that for any submersible fuel pumps,” Klemens replied that: “Klemens’ only work was to refeed wiring through conduit and no designing or engineer was required.” Further, in response to a request for production of “ev-
¶16 The District Court found that Klemens’ response to the foregoing interrogatories and requests for production clearly indicated that Klemens did not do any of the alleged negligent electrical work as set forth by Schuff‘s theory of the case. The court then observed that Klemens’ employee, Wayne Anderson, failed to produce these requested documents at his October 18, 1994 deposition. Anderson‘s deposition testimony, the court found, was consistent with Klemens’ assertion that it had only replaced an electrical service panel, connecting it to existing circuits.
¶17 Next, the court observed that counsel for Klemens also frustrated the depositions of its expert witnesses with delay and a refusal to make one witness available—all the while contending that their witnesses’ testimony would be redundant and immaterial.
¶18 On November 8, 1996, a paralegal working for Schuff‘s counsel went to McCafferty‘s office to examine the documents. The paralegal copied 211 pages of documents, including documents indicating that Klemens had relocated the conduit running to the submersible gas pumps in June of 1989 and had installed pilot lights on submersible pump relays in February of 1991. The court found that it was “clear from these documents that Klemens did much more extensive work at M&H than it had claimed in the preceding four years—work which may well have resulted in the miswiring and/or mislabeling of the submersible pump circuits.” The court further found that:
From the documents it is apparent that Darrel Anderson, who denied knowledge of any work by Klemens on the wiring of the submersible gas pumps, did 6 ½ hours of work relocating the conduit to the submersible pumps. His partner in this project was Dennis Zaremski, one of the witnesses that Klemens would not produce and
to whom Mr. Fairclough stated that he had spoken, and who did not remember anything except that they had replaced a service panel.
¶19 The District Court, in light of the foregoing, turned to
¶20 The court concluded that Klemens committed “no less than four direct discovery violations” that were subject to
¶21 Schuff would settle prior to trial with the two other named Defendants, M&H Gas Company, and The Marley Company, which designed and manufactured the pump involved in the accident. A jury rendered a verdict against Klemens on October 29, 1998. A judgment in favor of Schuff was entered on October 30, 1998, providing $203,000 for medical and funeral expenses; $100,000 for pain and suffering of the deceased; $600,000 for lost earnings of the deceased; and $400,000 for loss of society, for a total of $1,303,000.00.
¶22 Post-judgment motions by both parties ensued. Schuff argued that in addition to the $1.3 million judgment she was legally entitled to $166,689.80 in prejudgment interest on the medical and funeral expenses award, and $49,303.73 prejudgment interest on the lost earnings award. Klemens claimed that the jury award should be reduced by the amount of Schuff‘s prior settlement with the other defendants, the $203,000 paid to Schuff by her deceased husband‘s employer‘s workers’ compensation carrier for medical and funeral ex-
¶23 The District Court issued an order and amended judgment on January 4, 1999. The District Court concluded that Schuff was not entitled to prejudgment interest for the medical and funeral expenses received from workers’ compensation, or for the lost earnings award. As for the collateral source reductions themselves, the court determined Klemens was entitled to reduce the verdict amount by the $203,000 received by Schuff from workers’ compensation for payment of medical and funeral expenses. The court further determined that the continuing workers’ compensation and social security death and survivor benefits received by Schuff and her family were not collateral sources, and therefore could not be deducted from the jury verdict. The court also determined that Klemens could offset the jury verdict by the amount Schuff received in settlement from the two other defendants.
¶24 The court nevertheless determined that the collateral source statutes and the pro tanto settlement offset standard announced in State ex rel. Deere v. District Court (1986), 224 Mont. 384, 730 P.2d 396, were unconstitutional to the extent that they denied Schuff “full legal redress,” which it determined is synonymous with “full compensation.” Therefore, the court determined that Klemens’ claims for collateral source reduction and offset must be reduced by the costs of recovery to Schuff, including “reasonable” attorney‘s fees. After deducting the collateral source payments and settlement offset from the $1,303,000 verdict, the court then added back in $553,685.96, representing $498,185.96 in contingency fees,2 and $55,500.00 for a workers’ compensation subrogation settlement. Thus, the court determined that the judgment against Klemens was $978,685.96.
STANDARD OF REVIEW
¶26 The denial of a motion to disqualify is within a district court‘s discretionary powers, and therefore we will review its decision for an abuse of discretion. See In re Guardianship of Mowrer, 1999 MT 73, ¶ 24, 294 Mont. 35, ¶ 24, 979 P.2d 156, ¶ 24. We also review the District Court‘s imposition of sanctions in the form of a default judgment for an abuse of discretion. Eisenmenger by Eisenmenger v. Ethicon, Inc. (1994), 264 Mont. 393, 402, 871 P.2d 1313, 1319, cert. denied (1994), 513 U.S. 919, 115 S.Ct. 298, 130 L.Ed.2d 211 (addressing propriety of sanctions for discovery abuses imposed pursuant to
¶27 We have concluded that in determining whether the trial court abused its discretion, the question is not whether the reviewing court agrees with the trial court, but, rather, did the trial court in the exercise of its discretion act arbitrarily without the employment of conscientious judgment or exceed the bounds of reason, in view of all the circumstances, ignoring recognized principles resulting in substantial injustice. See Campbell v. Bozeman Investors of Duluth, 1998 MT 204, ¶ 34, 290 Mont. 374, ¶ 34, 964 P.2d 41, ¶ 34 (citations omitted).
¶28 Our review of questions involving constitutional law is plenary. State v. Schnittgen (1996), 277 Mont. 291, 295, 922 P.2d 500, 503. A court‘s resolution of an issue involving a question of constitutional law is a conclusion of law which we review to determine whether the conclusion is correct. Schnittgen, 277 Mont. at 295-96, 922 P.2d at 503.
¶29 The reduction of a jury award based on a collateral source statute, as well as awarding judgment interest, which is also statutory, are questions of law, and therefore, we examine whether the district court was correct in its application of the law. The same holds true for a district court‘s offset of a judgment based on a plaintiff‘s prior settlement with other tortfeasors. See Liedle v. State Farm Mut. Auto. Ins. Co. (1997), 283 Mont. 129, 132, 938 P.2d 1379, 1380-81; Dew v. Dower (1993), 258 Mont. 114, 125, 852 P.2d 549, 556; Jim‘s Excavating Serv., Inc. v. HKM Associates (1994), 265 Mont. 494, 494, 515, 878 P.2d 248, 260.
¶30 Before addressing the extensive issues raised by both parties, a preliminary discussion of the alleged violation of one of Montana‘s Rules of Professional Conduct is necessary. Klemens contends that the Marra firm clearly violated
¶31
¶32 This argument raises two inevitable questions: first, may such an alleged rule violation be determined, as a matter of law, by a district court, and if so, what effect does a proven violation have in an underlying civil proceeding. As this Court has stated, “[m]erely reciting a rule does not establish a violation.” State v. Lemmon (1984), 214 Mont. 121, 126, 692 P.2d 455, 458. To date, these questions have been only marginally asked and answered, with no clear direction from this Court‘s holdings.
¶33 In Montana, it is beyond argument that this Court has original and exclusive jurisdiction in all matters involving the conduct of attorneys practicing law in this state. See Preamble, Rules on Lawyer Disciplinary Enforcement (citing
¶34 Unquestionably, therefore, a party cannot receive relief from a district court for the mere misconduct of an attorney or firm. A district court lacks the necessary jurisdiction for such adjudication. Further, as this Court has observed, a violation of a professional conduct rule “should not give rise to a cause of action nor should it create any presumption that a legal duty has been breached.” Carlson v. Morton (1987), 229 Mont. 234, 238, 745 P.2d 1133, 1136 (quoting from the Preamble to the Model Rules of Professional Conduct). Likewise, the Preamble acknowledged by this Court in Carlson provides that the “purpose of the Rules can be subverted when they are invoked by opposing parties as procedural weapons.”3 Carlson, 229 Mont. at 238, 745 P.2d at 1136. As the Ninth Circuit Court of Appeals stated in a case arising in California, the “Rules of Professional Conduct do not establish substantive legal duties—they neither create, augment nor diminish any duties.” In re Kirsh (9th Cir. 1992), 973 F.2d 1454, 1461 (stating that a rule violation, standing alone, does not prove that a fiduciary duty has been breached). In Carlson we concluded that the Appellant “must prove not that various disciplinary rules were breached in his opinion; rather he must demonstrate that [the attorney] failed in his legal duty.” Carlson, 229 Mont. at 240, 745 P.2d at 1137 (discussing legal malpractice, and determining that expert testimony is required to establish that attorney departed from prevalent standard of care).
¶35 As an Illinois state court suggested, however, a trial court may consider attorney violations of the Rules of Professional Conduct if that misconduct results in prejudice or adversely impacts the rights of the parties in the case pending before it. See Beale v. Edgemark Financial Corp. (Ill.App.Ct. 1998), 697 N.E.2d 820, 827. We agree with the Illinois court‘s reasoning. One common example of where a court may consider a professional conduct rule violation—which is at issue here—is the disqualification of an attorney due to a conflict of interest. See In re Guardianship of Mowrer, 1999 MT 73, ¶¶ 19-20, 294 Mont. 35, ¶¶ 19-20, 979
¶36 Thus, the gravamen of a motion to disqualify is not that an attorney or firm violated one of the conflict of interest rules under our Rules of Professional Conduct (see, e.g.,
¶37 Thus, a proven or admitted rule violation is not prima facie grounds for disqualification—or any other relief sought from a district court, for that matter. Likewise, the disqualification of an attorney or firm, or any other sanction, based solely on a rule violation—absent sufficient proof of prejudice—would likely exceed a district court‘s jurisdiction, in that the sanction would be nothing more than a means of “punishing” the attorney or firm for the violation. See generally Beale, 697 N.E.2d at 828-29. Conversely, a district court may, in its discretion, conclude that any number of professional conduct rules were violated, as a matter of law, and yet nevertheless permit an attorney or firm to proceed in its representation of a client. See generally In re Kirsh, 973 F.2d at 1461 (concluding that a violation of professional conduct rule requiring attorney to refrain from entering into business transactions with clients did not preclude attorney, who loaned money to clients, from later filing petition in clients’ bankruptcy proceedings). Even so, an attorney or a firm subsequently may be subject to discipline by our Commission on Practice for the rule violations—even though a district court ruled that the conduct was not prejudicial to one of the parties to the litigation.
¶39 In light of the foregoing discussion, we now turn to the issues at hand.
Issue 1.
Did the District Court abuse its discretion when it denied Klemens’ motion to disqualify the Marra firm from representing Schuff?
¶40 The District Court denied Klemens’ motion to disqualify on September 3, 1993. From that date forward, Klemens did not once renew its concern for the “tainted legal proceedings” that allegedly followed, including in its post-judgment motions to amend. Thus, in light of the foregoing discussion, Klemens did not present any evidence to the District Court that it was prejudiced or that its rights were adversely impacted by the Marra firm‘s representation of Schuff subsequent to the court‘s denial of its motion to disqualify. Likewise, the relief sought from this Court—a new trial, including adjudication on liability—was not requested at any time from the District Court.
¶41 Schuff argues, therefore, that Klemens should be barred from making its claim now, six years later, based on the equitable doctrine of laches. In principle, we agree with Schuff‘s laches argument, but need not pursue that theory in resolving this issue in its favor. However, in light of our ultimate determination of this issue, a review of the merits of Klemens’ claim is warranted.
¶42
¶43 These rules arise out of the fundamental principle that an attorney, as a fiduciary, owes a duty of undivided loyalty to his or her client. See Joyce v. Garnaas, 1999 MT 170, ¶ 32, 295 Mont. 198, ¶ 32, 983 P.2d 369, ¶ 32 (Trieweiler, J., dissenting) (quoting 1 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 11.1, at 631 (3d ed.1989)). See also In re Anonymous (Ind. 1995), 654 N.E.2d 1128, 1129-30 (concluding that lawyer violated
¶44 Klemens goes to great lengths to articulate precisely how
¶45 Further, Klemens is also correct in pointing out that the Marra firm conveniently failed to discuss the required consent and consultation under
¶46 Nevertheless, in moving to disqualify in the first instance Klemens should have been aware that, as a general rule, “[a]lleged lawyer conflict of interest problems should be brought up as early as possible so that a determination may be made that does not unduly prejudice any party.” In re Guardianship of Mowrer, 1999 MT 73, ¶ 23, 294 Mont. 35, ¶ 23, 979 P.2d 156, ¶ 23 (citing Trust Corp. of Montana v. Piper Aircraft Corp. (9th Cir. 1983), 701 F.2d 85, 88). In Mowrer, we concluded that even if a conflict of interest had occurred (having found none), “under the circumstances... failure to object and move to disqualify within a reasonable time would constitute a de facto consent to Christiansen‘s continued representation of Mowrer and a waiver of the right to object.” Guardianship of Mowrer, ¶ 23.
¶47 The Ninth Circuit, in Trust Corp. of Montana, followed the well-settled rule that a former client who is entitled to object to an attorney representing an opposing party based on a conflict of interest but who knowingly refrains from asserting it promptly is deemed to have waived that right. See Trust Corp. of Montana, 701 F.2d at 87 (citing Central Milk Producers Co-op v. Sentry Food Stores (8th Cir. 1978), 573 F.2d 988, 992; and Redd v. Shell Oil Co. (10th Cir. 1975), 518 F.2d 311, 315).
¶48 Although readily distinguishable by the facts here—namely, Klemens initiated the motion to disqualify in a timely manner—the fact remains that several viable options to forestall the looming ineradicable harm rested in its hands as lengthy discovery ensued and this matter eventually went to trial five years after the court denied its motion to disqualify.
¶49 For starters, the motion to disqualify should have been attached to a request for an injunction under the irreparable harm theory.4 If denied, the district court‘s order could have been reviewed by this Court subject to an interlocutory appeal, without awaiting the outcome of the related litigation. See
¶50 Although failing to seek a remedy that would have clearly given rise to an interlocutory appeal, Klemens could have nevertheless sought a writ of supervisory control, arguing that the alleged taint of the Marra firm‘s representation of Schuff would render any future remedy by appeal inadequate. See Plumb v. Fourth Jud. Dist. Court (1996), 279 Mont. 363, 368-69, 927 P.2d 1011, 1014 (citations omitted). Or, alternatively, Klemens could have sought certification of the order pursuant to
¶51 At the very least, it can be argued that counsel for Klemens failed to observe the Rules of Professional Conduct by not promptly reporting the alleged violation to the Commission on Practice. See
¶52 Instead, what the record reveals is that Klemens did nothing for six years. In this sense, we agree with Schuff‘s laches argument: in view of such an unexplained delay, it would be inequitable to permit a party to assert its rights. See Kelleher v. Board of Soc. Work Exam‘rs & Licensed Prof‘l Counselors (1997), 283 Mont. 188, 191, 939 P.2d 1003, 1005 (citations omitted).
¶53 Here, the “unexplained delay” is further compounded by the fact that Klemens’ original request for relief is moot at this point. Indeed, Klemens’ claim for relief has changed—dramatically. At the time of its motion in 1993, Klemens sought nothing more than for Schuff to find another attorney, or, far more generously, to dismiss her claim against Klemens. Now, after six years of silence, Klemens seeks a new trial on the merits—including the issue of liability which was deemed admitted pursuant to a subsequent discovery sanction default judgment. As we have often stated, we do not address substantive and procedural issues raised for the first time on appeal, which includes a
¶54 Nevertheless, Klemens focusses our attention not so much on the District Court‘s denial of its motion but on the subsequent results: the alleged “tainted” legal proceedings. As previously discussed, such a contention must be supported by evidence of prejudice. See, e.g., First Small Business Inv. Co. v. Intercapital Corp. (Wash. 1987), 738 P.2d 263, 267 (holding that when a motion for disqualification is challenged after judgment has been entered, the judgment will not be reversed unless the breach of ethics prejudiced the interests of the former client).
¶55 On appeal, Klemens claims that “Schuff‘s counsel was in possession of the most intimate and detailed financial information of Klemens.” Even so, Klemens offers no specific details of how this information—which presumably could otherwise be obtained through discovery—was used by Schuff through the course of litigation to its prejudice. Klemens then vaguely claims that the Marra firm “knew the concerns, attitudes, and approaches that Klemens wanted undertaken in conjunction with defending itself in lawsuits where excess verdict[s] were a possibility.” Again, even if Schuff possessed such “knowledge,” Klemens fails to explain if and how Schuff unfairly used such information to its detriment during the course of litigation. Finally, Klemens claims that it was prejudiced by the alleged fact that counsel for Schuff assured the court at the disqualification hearing that it only sought recovery of Klemens’ insurance policy limits, which purportedly were $1 million, and then proceeded to seek a judgment in excess of that amount.5 Assuming this is true, how this relates to the alleged conflict of interest and any ensuing prejudice at trial is never substantiated.
¶56 Therefore, even if we were to assume, arguendo, that counsel in the Marra firm violated
¶57 Nevertheless, that does not end this matter. Pursuant this Court‘s singular jurisdiction under
¶58 In making this referral we emphasize for the benefit of counsel and the Commission that we have reached no conclusion as to the merits of any claimed or alleged violations by counsel of the
¶59 That said, the practicing bar should understand that the situation presented in this case is unusual. On the one hand, both in the trial court and on appeal, Klemens’ counsel have maintained that Schuff‘s counsel engaged in unethical conduct so serious that we should reverse the trial judge‘s pretrial disqualification of counsel ruling; that we should set aside a substantial jury verdict in favor of an innocent widow and her children; and that we should send a case that already has been in litigation for ten years back to the District Court for retrial. We assume that Klemens’ counsel has made these arguments in good faith with the view and expectation that we would grant the relief requested. And if, in fact, the Commission determines that Schuff‘s counsel did engage in unethical conduct as serious as
¶60 On the other hand, if Klemens’ counsel did view Schuff‘s counsel‘s conduct as being as serious as claimed, then it is, likewise, appropriate that the Commission make inquiry into why such violations were not reported to the disciplinary authority with jurisdiction to address those.
¶61 We again emphasize that the Montana Rules of Professional Conduct are not to be ignored for economic gain nor are they to be used—or rather abused—by opposing parties as procedural weapons to gain a tactical or strategic advantage in litigation. See Carlson, 229 Mont. at 238, 745 P.2d at 1136. The Rules encompass ethical standards by which all attorneys are expected to conduct their practice of law; the rules are there to protect the public in general and the lawyer‘s clients in particular. On the one hand, the prospect of earning a substantial fee does not justify ignoring the Rules. On the other hand, the Rules are not designed to be employed as arrows in the litigator‘s quiver, to be loosed from time to time at targets of opportunity as the ebb and flow of an adversarial proceeding may appear to dictate. Quite simply, a serious
¶62 For these reasons we refer this matter to the Commission for investigation and consideration of Schuff‘s counsel‘s conduct, as well as that of trial and appellate counsel for Klemens, and for a recommendation as to discipline if the Commission determines, after appropriate proceedings and the taking into consideration the requisite standard of proof, that any attorney involved in this cause violated the
Issue 2.
Did the District Court abuse its discretion when it entered a default judgment against Klemens on the issue of liability as a sanction under Montana Rules of Civil Procedure 37(d)?
¶63 Klemens argues that the District Court abused its discretion when it entered a default judgment against it, pursuant to
(1) to appear before the officer who is to take the deposition, after being served with a proper notice, or (2) to serve answers or objections to interrogatories submitted under
Rule 33 , after proper service of the interrogatories, or (3) to serve a written response to a request for inspection submitted underRule 34 , after proper service of the request.
If one or more of these sanctionable events occur, then the court “in which the action is pending on motion may make such orders in regard to the failure as are just, and among others it may take any action authorized under paragraphs (A), (B), and (C) of subdivision (b)(2) of this rule.” Under
¶65 As a preliminary matter, we conclude that Klemens misconstrues the court‘s rationale for entering its default judgment pursuant to
¶66 We conclude that the default judgment resulted from not four, but one
¶67 In this instance, the court‘s identification of three other alleged discovery violations—as well as other discovery-related misconduct identified in the order—merely serve as additional factors in its determination of an appropriate sanction; i.e., whether “the consequences imposed by the sanctions relate to the extent and nature of the actual discovery abuse.” See Maloney v. Home and Investment Center, Inc., 2000 MT 34, ¶ 35, 298 Mont. 213, ¶ 35, 994 P.2d 1124, ¶ 35 (citation omitted). The other misconduct identified by the court, therefore, merely serves to demonstrate the relevant “attitude of unresponsiveness” that Klemens argues now it never displayed, in determining the severity of the sanction. See McKenzie v. Scheeler (1997), 285 Mont. 500, 508, 949 P.2d 1168, 1172 (citations omitted).
¶68 Accordingly, our review of the court‘s order will be limited to whether it abused its discretion when it sanctioned Klemens for failing to answer interrogatories as specified under
¶69 In determining whether a district court has abused its discretion in rendering a discovery sanction, or that the sanction was too severe, this Court has recognized, that “[t]he trial judge is in the best position to know which parties callously disregard the rights of their opponents and other litigants seeking their day in court,” and that “[t]he trial judge is also in the best position to determine which sanction is the most appropriate.” Eisenmenger, 264 Mont. at 402-03, 871 P.2d at 1319 (citing Dassori v. Roy Stanley Chevrolet Co. (1986), 224 Mont. 178, 179-80, 728 P.2d 430, 431).
¶70 Further, this Court‘s position is that abuse of discovery must no longer be dealt with leniently and that the transgressors of discovery abuses should be punished rather than encouraged repeatedly to cooperate. See Smith v. Butte-Silver Bow County (1996), 276 Mont. 329, 332, 916 P.2d 91, 92-93 (reversing district court‘s dismissal with prejudice of non-compliant party‘s case). We have stated that concerns “related to crowded dockets and the responsibility to maintain fair and efficient judicial administration have shifted the traditional reluctance to impose discovery-related sanctions to a judicial intoler-
¶71 Thus, the imposition of sanctions for failure to comply with discovery procedures is regarded with favor. See McKenzie, 285 Mont. at 506, 949 P.2d at 1172. It is, after all, a maxim of our rules of discovery that the price for dishonesty must be made unbearable to thwart the inevitable temptation that zealous advocacy inspires. See generally Eisenmenger, 264 Mont. at 406, 871 P.2d at 1321; Owen v. F.A. Buttrey Co. (1981), 192 Mont. 274, 280, 627 P.2d 1233, 1236. As a Michigan appellant court recently observed, “[g]iven the complexities of human affairs, the truth cannot always be found, but the fair search for it is why courts, lawyers and lawsuits exist,” which is why when it is known, “the truth must always be spoken.” Traxler v. Ford Motor Co. (Mich.Ct.App. 1998), 576 N.W.2d 398, 405 (Gribbs, J., concurring and dissenting) (quoting from trial court‘s opinion, and affirming default judgment for discovery violations).
¶72 In light of the foregoing proposition that we generally defer to the decision of the district court regarding the appropriate sanction for discovery abuses, this Court has identified three factors which we may consider in review of the court‘s order for abuse of discretion: (1) whether the consequences imposed by the sanctions relate to the extent and nature of the actual discovery abuse; (2) the extent of the prejudice to the opposing party which resulted from the discovery abuse; and (3) whether the court expressly warned the abusing party of the consequences. See Maloney, ¶ 35 (reviewing severity of sanction, where party admitted sanctions were proper) (citation omitted).
¶73 At the core of the discovery violations at issue here rests the facts surrounding the scope of work performed by Klemens at M&H Gas. Schuff‘s theory of negligence in part blamed the accident on the negligently mislabeled electrical relay switch or a miswired relay switch connected to the submersible pump in question. Throughout discovery, Schuff sought the simple answer to a simple question: was Klemens involved with this particular electrical work?
¶74 Klemens contends here that there is no evidence to indicate that the inconsistency between its business records and its representations as to the scope of its work was a result of anything other than an “honest mistake.”
¶75 The District Court‘s factual account of the proceedings, however, shows that throughout discovery, Klemens denied that it had performed such work, and downplayed the significance of the work it
It is uncontroverted that Kenneco and other electrical contractors did all design, installation and maintenance work on the M&H gasoline pumping system as it was configured at the time of the accident. A.T. Klemens did nothing more [than] connect the gasoline pumping system as wired to a new electrical service panel for the building. There was nothing wrong with the electrical service panel and it had no involvement in the accident because Mr. Schuff intentionally did not use the breaker panel to cut power to the west pump.
¶76 Klemens also launched repeated objections to Schuff‘s discovery requests on the grounds that production of its records would be unduly burdensome and unnecessary in light of the asserted fact that it had had nothing to do with the electrical work implicated by Schuff. Klemens’ counsel never directly referenced specific information contained in any of these records in response to discovery, and likewise failed to produce these records at a deposition. Counsel for Klemens would also claim that he never reviewed the documents provided by Klemens, but “rather relied on recollections and representations by Klemens’ officers and employees of the work they had done at M&H,” according to the District Court. At no time has Klemens adequately explained how providing such simple, routine information of the actual work performed created such a burden that Schuff should have been charged with seeking the information herself.
¶77 Shortly before trial, Schuff discovered that Klemens had, in fact, been involved with substantial work at the station upon a last-minute review of Klemens’ records at its counsel‘s office. The District Court would find that a total of little more than 200 pages of documents revealed this information. The District Court concluded that it was “clear from these documents that Klemens did much more extensive work at M&H than it had claimed in the preceding four years—work which may well have resulted in the miswiring and/or mislabeling of the submersible pump circuits.” For example, the court found that the documents revealed that Darrell Anderson—a Klemens employee who had denied having knowledge of any work performed on the wiring of the submersible gas pumps—had per-
¶78 Explaining why it had avoided disclosing such critical information, Klemens claims that the “inability of Klemens’ agents (including its attorney) to correctly recall the scope of work performed at M&H Gas was unfortunate.” Unfortunate, indeed, because it is clear from the court‘s findings and conclusions that had Klemens been forthright in responding to the initial discovery responses in 1993, Schuff could have conducted meaningful follow-up discovery, and this matter could have been resolved—perhaps even settled—long before 1998. Thus, Schuff clearly was prejudiced by Klemens’ tactics.
¶79 Apparently, Klemens would have this Court believe that no one took the time to review any of the relevant business records related to the electrical work at M&H Gas during the course of this litigation, which is the only plausible explanation for its collective amnesia. Yet, the review of such records is precisely what Schuff requested of Klemens from the initial stages of discovery forward. This “excusable ignorance” defense cannot be looked upon with anything less than disfavor.
¶80 It is unclear, therefore, how the District Court acted “arbitrarily without employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice” in concluding that Klemens should be deemed liable pursuant to
¶81 We conclude that the District Court did not ignore “recognized principles resulting in substantial injustice.” One recognized principle at stake that should have favored a less severe sanction—the principle of trial on the merits—was curtailed by Klemens’ own actions. The record is replete with instances where Klemens willfully and in bad faith shielded Schuff from a clear view of the truth, and simply did not “speak” the truth itself when required by our rules of discovery. Thus, under the criteria identified in Maloney, the default judgment clearly relates to the extent and nature of the actual discovery abuse. Second, the record also amply demonstrates that Schuff was prejudiced by the tactics employed by Klemens, which again justifies the severity of the sanction chosen by the court. Finally, given the timing of Schuff‘s discovery of the concealed information—just
¶82 Accordingly, we hold that the District Court did not abuse its discretion, and therefore the default judgment sanctioning Klemens for discovery violations pursuant to
Issue 3.
Does Article II, Section 16, of the Montana Constitution create a fundamental right to recover attorney fees and costs?
¶83 Following trial, Klemens moved the District Court to alter or amend its judgment to reduce it by the amount collected from collateral sources and the amount paid in settlement by M&H Gas Company and Marley Company, previous codefendants. Schuff objected on the basis that if granted, the offsets claimed would reduce her recovery to less than zero in violation of the right to full legal redress found in
¶84 The District Court held that:
Therefore, as applied to the case at bar, to the extent that
§ 27-1-307 and-308 and the offset standard announced in Deere will deny Plaintiffs’ full legal redress, including recovery of the costs of being made whole, those statutes are constitutionally invalid. However, this Court makes clear that such invalidity is premised on the specific application of the statutes and offset standard to the facts of this case, that is, as against an injured worker, not on a facial invalidity of the statutes. Therefore, Defendant‘s claims for collateral source reduction and offset must be reduced by the costs of recovery to the Plaintiffs, including attorney fees.
¶85 The District Court based its decision on this Court‘s decisions in Trankel v. State Department of Military Affairs (1997), 282 Mont. 348, 938 P.2d 614; Francetich v. State Compensation Mut. Ins. Fund (1992), 252 Mont. 215, 827 P.2d 1279; and Skauge v. Mountain States Telephone & Telegraph Co. (1977), 172 Mont. 521, 565 P.2d 628.
¶86 On appeal, Klemens contends that based on Meech v. Hillhaven West, Inc. (1989), 238 Mont. 21, 776 P.2d 488,
¶87 Schuff responds that this Court in Trankel held that employees injured during the course of their employment are entitled to full legal redress against third-party tortfeasors and that Meech did not define full legal redress but simply addressed whether pursuant to
¶88
Courts of justice shall be open to every person, and speedy remedy afforded for every injury of person, property, or character. No person shall be deprived of this full legal redress for injury incurred in employment for which another person may be liable except as to fellow employees and his immediate employer who hired him if such immediate employer provides coverage under the Workmen‘s Compensation Laws of this state. Right and justice shall be administered without sale, denial, or delay.
¶89 As is more fully discussed in the following section, the pro tanto offset of amounts received through settlement as provided for in this Court‘s decision in State ex rel. Deere & Co. v. Fifth Judicial District Court (1986), 224 Mont. 384, 730 P.2d 396, does not deny full compensation for a claimant‘s losses. It simply assures a single recovery for a single injury. Collateral source offset is based on the same principle. See
¶90 In Skauge the plaintiffs’ home was destroyed by fire and an explosion and all of their personal possessions destroyed. Their personal possessions were insured for $4000. Their insurance policy granted the insurer the right to subrogate against any third party responsible for the damage. Skauges’ actual damage was in the amount of $11,267.32 and they filed a third-party complaint to recover that amount. However, the district court held that Skauges’ insurer was entitled to be subrogated to the extent of its payment.
¶91 On appeal we noted that “[s]ubrogation is a device of equity which is designed to compel the ultimate payment of a debt by the one who in justice, equity, and good conscience should pay it.” Skauge, 172 Mont. at 524, 566 P.2d at 630 (citation omitted). We cited with approval the following language from 16 Couch on Insurance 2d, Subrogation § 61.92:
Subrogation is the substitution of another person in the place of the creditor, so that the person substituted will succeed to the rights of the creditor in relation to the debt or claim, and is an act of the law growing out of the relation of the parties to the original contract of insurance, and the natural justice or equities arising from the fact that the insurer has paid the insured, rather than a right depending upon the contract ....
Skauge, 172 Mont. at 526, 566 P.2d at 630-31.
¶92 We held that the doctrine of legal subrogation is equitable in nature and exists for the purpose of serving the ends of justice:
[W]hen the insured has sustained a loss in excess of the reimbursement by the insurer, the insured is entitled to be made whole for his entire loss and any costs of recovery, including attorney‘s fees, before the insurer can assert its right of legal subrogation against the insured or the tortfeasor.
Skauge, 172 Mont. at 528, 566 P.2d at 632.
¶93 In Francetich, the claimant was injured during the course of his employment and received disability benefits from the State Compensation Mutual Insurance Fund. When he settled a third-party claim arising from the same incident for policy limits, the state fund sought to exercise its subrogation rights pursuant to
[U]pon an equitable balancing of the rights of the insurer as compared to the claimant. As previously quoted, the basic conclusion is that when the amount recovered by the claimant is less than the claimant‘s total loss, with the result that either the claimant or the insurer must to some extent go unpaid, then it is equitable that the loss be born by the insurer which had been paid an insurance premium for the assumption of its liability.
Zacher, 243 Mont at 230, 794 P.2d at 338.
¶94 In Francetich, the equitable limitation on legal subrogation was no longer available because it had been written out of the law by the terms of
We hold that
§ 39-71-414(6)(a), MCA is unconstitutional in light of the clear and direct language ofArticle II, Section 16 of the Montana Constitution . We hold that in a case of reasonably clear liability where a claimant is forced to settle for the limits of an insurance policy which, together with claimant‘s workers’ compensation award, do not grant full legal redress under general tort law to the claimant, under workers’ compensation laws the insurer is not entitled to subrogation rights under§ 39-71-414, MCA .
Francetich, 252 Mont. at 224, 827 P.2d at 1285 (emphasis added).
¶95 In Trankel, the plaintiff claimed to have been injured due to the negligence of the State of Montana, acting through its Department of Military Affairs while in the course of his employment with the United States Army. However, the District Court held that because Trankel‘s injuries were incident to his service in the national guard, his claim was barred pursuant to the United State Supreme Court‘s decision in Feres v. United States (1950), 340 U.S. 135, 71 S. Ct. 153, 95 L. Ed. 152, and our prior decision in Evans v. Montana National Guard (1986), 223 Mont. 482, 726 P.2d 1160. We reversed the District Court and held that
We reaffirm that pursuant to the second sentence in
Article II, Section 16, of the Montana Constitution , any statute or court decision which deprives an employee of his right to full legal redress, as defined by the general tort law of this state against third parties, is absolutely prohibited. That sentence is mandatory and self-executing, and leaves no room for erosion based on what federal courts or the courts of other states would do pursuant to federal laws or the laws of other states.
Trankel, 282 Mont. at 362, 938 P.2d at 623.
¶96 We conclude that the right to full legal redress guaranteed by our decision in Trankel is limited to the recovery of those damages provided by the general tort law and that pursuant to the American Rule, attorney fees are not damages recoverable pursuant to the general tort law as it pertains to survival and wrongful death actions. We furthermore conclude that Skauge and its progeny which include the costs of recovery in the concept of full compensation relate to equitable principles unique to the law of legal subrogation and are inapplicable to the constitutional issue of whether full legal redress as guaranteed by
¶97 Montana‘s common law has followed the American Rule that attorney fees are not an element of damages unless expressly provided for by statute or contract. See Hickingbotham v. Duncan (1995), 271 Mont. 525, 531, 898 P.2d 1215, 1219; Ehly v. Cady (1984), 212 Mont. 82, 687 P.2d 687. The United Supremo Court has held that: “[T]he argument that attorneys’ fees must be added to a plaintiff‘s recovery if the award is truly to make him whole is contrary to the generally applicable American Rule.” Norfolk & Western Ry. Co. v. Liepelt (1980), 444 U.S. 490, 495, 100 S. Ct. 755, 758, 62 L. Ed. 2d 689.
¶98 On the other hand, those damages recoverable in a survival or wrongful death action based on the general tort law of Montana were summarized in Swanson v. Champion Int‘l Corp. (1982), 197 Mont. 509, 646 P.2d 1166. There we held that:
The damages that may be recovered in the survival cause of action for the death of the decedent through tort include his lost earnings from the time of his injury to his death; the present value of his reasonable earnings during his life expectancy; the medical and funeral expenses incurred by him as a result of the tort; reasonable compensation for his pain and suffering, and other special damages.
Swanson, 197 Mont. at 515, 646 P.2d at 1169 (citations omitted).
¶99 We held that in wrongful death actions:
Generally the proof of damages under this cause of action will include loss of consortium by a spouse ... the loss of comfort and society of the decedent suffered by the surviving heirs; and the reasonable value of the contributions in money that the decedent would reasonably have made for the support, education, training, and care of the heirs during the respective life expectancies of the decedent and the survivors.
Swanson, 197 Mont. at 517, 646 P.2d at 1170 (citation omitted).
¶100 Schuff contends that because the jury awarded damages in the amount of $1,303,000 that is the measure of full legal redress and if she is required to deduct attorney fees from that amount, she will be denied full legal redress. While it is true that following proper instructions regarding the damages recoverable at law a jury‘s verdict is the measure of full legal redress, it does not follow that a party required to pay attorney fees from that amount is denied full legal redress. As pointed out, attorney fees are not an element of damage. They are the subject of contract between a party and his or her attorney. Brytus v. Spang & Co. (3d Cir. 2000), 203 F.3d 238, 241. They are what a party chooses to do with his or her recovery after it is received based upon a prior arrangement. While the practical effect may be that Schuff recovers less than the full amount of her actual damages, she has not been denied something she is entitled to recover against third parties based on “the general tort law of this state.”
¶101 For these reasons, we conclude that
Did the District Court err when it reduced the jury verdict pro tanto based on Schuff‘s prior settlement with the other named defendants?
¶102 On cross-appeal, Schuff argues that, aside from the constitutional question, the District Court erred when it offset the jury award by the amount she received in settlement with the other named defendants. Schuff primarily focusses on the equitable nature of such a “pro tanto” offset, and argues that under the specific facts of this case, Klemens is not entitled to any equitable reduction of the jury award entered against it. We disagree.
¶103 The District Court determined that Klemens was entitled to a pro tanto offset of the amounts Schuff received through her settlement, pursuant to this Court‘s decision in State ex rel. Deere & Co. v. District Court (1986), 224 Mont. 384, 730 P.2d 396, superseded in part by statute as provided in Plumb v. Fourth Jud. Dist. Court (1996), 279 Mont. 363, 927 P.2d 1011. In that case, which similarly involved multiple defendants, we held that an award entered against “remaining tortfeasors is to be reduced by a dollar credit in the amount of consideration paid by the settling tortfeasor ...” Deere, 224 Mont. at 386, 730 P.2d at 398. Thus, the District Court—notwithstanding any adjustment for attorney‘s fees—effectively reduced Schuff‘s jury verdict by the undisclosed sum received in settlement with the other defendants.
¶104 The principle of pro tanto reduction provides that “when a joint tort-feasor settles with a claimant, the claimant‘s recovery against the remaining tort-feasor is to be reduced dollar-for-dollar by the consideration paid by the settling tort-feasor.” Boyken v. Steele (1993), 256 Mont. 419, 421, 847 P.2d 282, 284 (citations omitted). The pro tanto rule applies only if two or more concurrent or joint tortfeasors cause a single “indivisible” harm. See Jim‘s Excavating Serv., Inc. v. HKM Associates (1994), 265 Mont. 494, 514, 878 P.2d 248, 260; Azure v. City of Billings (1979), 182 Mont. 234, 248, 596 P.2d 460, 468 (concluding that a pro tanto deduction is not allowed where the plaintiff‘s injuries are divisible).
¶105 Schuff does not argue that the settling defendants and Klemens did not cause a single “indivisible” harm. Nor does she argue, as a matter of equity, that Klemens will not be paying its fair share of the damages once the jury award is reduced by the amount of the settlement. See, e.g., Roland v. Bernstein (Ariz. Ct.App. 1991), 828 P.2d 1237, 1239 (stating that a rule allowing a non-settling tortfeasor
¶106 Accordingly, we hold that the District Court did not err when it reduced Schuff‘s jury verdict award by the amount received prior to trial in settlement with the other named defendants.
Issue 5.
Did the District Court err in its collateral source reduction determinations regarding workers’ compensation and Social Security benefits?
¶107 Klemens argues that the District Court erred when it ruled that the workers’ compensation death benefits and Social Security survivor benefits received by Schuff as a result of her husband‘s death could not be used to offset the jury verdict award pursuant to Montana‘s collateral source statutes. In turn, Schuff argues that the court similarly erred when it determined that her receipt of medical and funeral expenses from a workers’ compensation insurance carrier was a collateral source, and therefore erred when it deducted $203,000, less a $55,000 subrogation settlement, from the jury verdict.
¶108 Pursuant to
¶110 On the other hand, we hold that the District Court erred when it deducted the $203,000 workers’ compensation medical and funeral expense payments, less the subrogation settlement of $55,000, from the jury verdict pursuant to
¶111 Social Security survivor benefits, however, carry no subrogation rights to tort injury awards. See generally Richardson v. Belcher (1971), 404 U.S. 78, 81-86, 92 S.Ct. 254, 257-60, 30 L.Ed.2d 231 (stating that Social Security benefits would not be reduced following injured worker‘s receipt of proceeds from a tort action);
¶112 Therefore, we next turn to
¶113 Under
¶114 We must next turn to the subparts of
¶115 At this juncture in our review, it is critical to again emphasize that in construing a statute, “the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted or to omit what has been inserted.” See
¶116 Therefore, we began our review of
¶117 Turning our attention back to the statute at issue, the subparts in their entirety under
(a) for medical expenses and disability payments under the federal Social Security Act, any federal, state, or local income disability act, or any other public program;
(b) under any health, sickness, or income disability insurance or automobile accident insurance that provides health benefits or income disability coverage, and any other similar insurance benefits available to the plaintiff, except life insurance;
(c) under any contract or agreement of any person, group, organization, partnership, or corporation to provide, pay for, or reimburse the costs of hospital, medical, dental, or other health care services, except gifts or gratuitous contributions or assistance;
(d) any contractual or voluntary wage continuation plan provided by an employer or other system intended to provide wages during a period of disability; and
(e) any other source, except the assets of the plaintiff or of the plaintiff‘s immediate family if the plaintiff is obligated to repay a member of the plaintiff‘s immediate family.
¶118 The District Court determined, under a plain-meaning analysis, that the Social Security survivor benefits received by Schuff and her children were neither a “medical expense” nor a “disability payment” under subpart (a) and therefore were not identified under the statute as a collateral source that must be deducted from Schuff‘s wrongful death recovery pursuant to
¶119 Social Security benefits, as a potential collateral source under
¶120 First, Klemens does not argue that the collateral statute is, as a whole or in part, ambiguous. Therefore, we need not turn to legislative history for guidance; rather, the legislative intent of
¶121 Under a plain-meaning interpretation of
¶122 In the context of
¶123 Klemens argues that any distinction that might be drawn between “disability” and “survivorship” benefits is “irrelevant for purposes of
¶124 The application of the foregoing rules to our interpretation of
¶125 Subpart (e) provides that in addition to the specific kinds of sources identified in subparts (a) through (d), “any other source except the assets of the plaintiff” should qualify as a collateral source deduction. According to Klemens, subpart (e) should include the “other source“—the payment of Social Security survivor benefits. This interpretation would effectively repeal subpart (a) as to Social Security payments or render that subpart meaningless surplusage. Such an interpretation invokes yet another rule of statutory construction: The legislature does not perform useless acts. See American Linen Supply Co., 189 Mont. at 545, 617 P.2d at 133. Hence, if we were to rule that the general language of part (1) and subpart (1)(e) controls the specific language of (1)(a) through (d), contrary to our well-settled rules of statutory construction and our case law, we would upset the very legislative scheme that the Legislature chose to enact by its enumeration of these specific kinds of collateral source payments.
¶126 Again, if the Legislature had truly wished that a collateral source be any other possible source “except the assets of the plaintiff,” then it could have easily said so—and simply could have omitted the carefully detailed subparts (a) through (d). Accordingly, we hold that the plain meaning of “any other source” under subpart (e) means just what it says: any source other than those identified and addressed in subparts (a) through (d), which would obviously exclude Social Security, under subpart (a).
¶127 We conclude, therefore, that the District Court did not err when it determined that Schuff‘s Social Security benefits were not a collateral source identified under
Issue 6.
Did the District Court err when it limited Schuff‘s recovery of prejudgment interest?
¶129 The District Court denied Schuff‘s post-judgment motion for prejudgment interest on her $203,000 jury award for medical and funeral expenses. The court concluded that Schuff had already received compensation for these expenses from workers’ compensation—a sum which in turn would serve as a collateral source reduction—and therefore the statute governing the recovery of prejudgment interest was inapplicable. In other words, Schuff could not collect interest on a damage award that she would never actually receive due to what amounted to a dollar-for-dollar offset.
¶130 Under
¶131 Schuff contends that the application of the foregoing to the factual scenario of her cause is straightforward. She provided the opposing party here with written notice of the claim for medical and funeral expenses in 1993, at slightly more than $200,000, and this specific claim in turn was awarded by the jury. It is undisputed that the jury awarded Schuff $203,000 for medical and funeral expenses. See generally Jim‘s Excavating Serv., Inc. v. HKM Associates (1994), 265 Mont. 494, 516, 878 P.2d 248, 261 (concluding that damages are not capable of being made certain by calculation where “claimant alleges an award which is substantially different from the amount ultimately awarded by the trial court“) (citations omitted).
¶132 Schuff‘s contention, however, relies on this Court‘s reversal of the District Court‘s collateral source reduction ruling. Therefore, because we have reversed the District Court‘s collateral source reduc
Issue 7.
Did the District Court err in determining the proper date for post-judgment interest?
¶133 Finally, Schuff argues that the District Court erred when it ruled that judgment interest should run from the date of the amended judgment on January 4, 1999, rather than from the date of the original judgment on October 30, 1998. Klemens conceded this issue both in its brief and at oral argument. Because this issue is no longer in dispute, we therefore need not address this issue on appeal. See generally State v. Keys, 1999 MT 10, ¶ 20, 293 Mont. 81, ¶ 20, 973 P.2d 812, ¶ 20; Doting v. Trunk (1992), 253 Mont. 350, 360, 833 P.2d 1028, 1035.
CONCLUSION
¶134 In summary, we (1) affirm the District Court‘s denial of Klemens’ motion to disqualify the Marra firm from representing Schuff; (2) affirm the court‘s entry of a default judgment on liability in favor of Schuff as a sanction for Klemens’ discovery violations; (3) reverse the court‘s award of attorney‘s fees and costs based on its “full legal redress” analysis pursuant to Article II, Section 16, of the Montana Constitution; (4) affirm the court‘s offset of the jury award based on Schuff‘s prior settlement with the other named defendants; (5) affirm the court‘s ruling that workers’ compensation death benefits and Social Security survivor benefits are not collateral sources subject to a statutorily-mandated offset; (6) reverse the court‘s ruling that Schuff‘s receipt of workers’ compensation medical and funeral expenses constituted a collateral source; (7) reverse the court‘s denial of prejudgment interest accruing to the jury‘s award of medical and funeral expenses; and, finally, (8) reverse the judgment interest date fixed by the court in its Order amending the judgment.
¶135 Accordingly, this matter is affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion.
CHIEF JUSTICE TURNAGE and JUSTICE TRIEWEILER concur.
JUSTICE GRAY, concurring in part and dissenting in part.
¶137 With regard to default judgments as sanctions for discovery abuses pursuant to ¶138 These agreements, however, do not change my view that the Court‘s discussion and analysis of the sanction issue is flawed. In my view, the Court should first resolve the threshold question inherent in this important issue. That question, simply stated, is whether the District Court‘s determination that there were “no less than four direct discovery violations ... falling under ¶139 The Montana Rules of Civil Procedure provide the authority for a district court to impose sanctions for discovery abuses. (1) to appear before the officer who is to take the deposition, after being served with a proper notice, or (2) to serve answers or objections to interrogatories submitted under ¶140 Against this backdrop, then, I turn to the District Court‘s determination that Klemens’ discovery-related conduct in this case resulted in “no less than four direct discovery violations” under ¶141 After close scrutiny of the record before us, and stated only briefly, I would conclude that the District Court‘s first determination is correct under Eisenmenger, where we made it clear that a complete failure to respond to interrogatories is not required before sanctions are allowed under ¶142 In reviewing the propriety of the sanction, it is my view the “abuse of discretion” test set forth in Eisenmenger—rather than the three-factor test from Maloney set forth by the Court but never applied—is the proper standard of review in cases such as Eisenmenger and the present case involving ¶143 Under the abuse of discretion standard, our strong commitment to the principle that the trial judge generally is in the best position to determine which sanction is appropriate, and the complete record before us including the matters of importance referenced by the District Court but, in my view, not constituting JUDGE HARKIN, District Judge, concurring in part and dissenting in part. ¶144 I concur with the Court‘s analysis and decision as to Issues 1, 2, 3, 4, 6 and 7. I concur with the Court‘s analysis and decision as to Issue 5, except I do not agree with that part of the analysis which resolves the Social Security survivor benefits matter by application of the canon of construction expresio unius est exclusio alterius. JUDGE BAUGH, District Judge, concurring in part and dissenting in part. ¶145 I dissent from the majority‘s analysis and decision as to that part of Issue 5 dealing with Social Security survivor benefits, and I dissent from the majority‘s analysis and decision as to that part of Issue 6 pertaining to prejudgment interest on the jury‘s award of medical and funeral expenses. I concur with the Court‘s decision and analysis as to all other Issues. ¶146 As to Issue 5, the majority concludes that Social Security death benefits are not a collateral source. Collateral sources are defined at ¶147 The subparts to ¶148 The majority says that something that is not in the statute in so many words, to-wit: Social Security death benefits, is, nonetheless, an exception to the broad definition of collateral source defined in part (1). They do this by application of two of the canons of construction: primarily, expressio unius est exclusio alterius (the expression of one thing is the exclusion of another) applied to subpart (a), and secondarily, ejusdem generis, applied to subparts (a-e). ¶149 In general, the canons of construction are not without criticism. See Richard A. Posner, Statutory Interpretation—In the Classroom and in the Courtroom, 50 U.Chi.L.Rev. 800 (1983). Judge Posner argues that many courts put too much emphasis on and otherwise misuse these canons. ¶150 To apply expressio unius est exclusio alterius one must conclude that a complete statement or list would have normally included that which was omitted. Only then does it follow that the omission is arguably significant. Ford v. U.S. (1927), 273 U.S. 593, 611-12, 47 S.Ct. 531, 537, 71 L.Ed. 793. ¶151 Subpart (a) references medical and disability payments as an example of or, as the majority see it, a part of the definition of, collateral source. If one emphasizes the adjective “federal Social Security Act” rather than the predicate of subpart (a), then subpart (a) references federal Social Security Act medical and disability payments. Obviously, the legislature could have expanded subpart (a) to include Social Security death benefits. ¶152 Is Social Security death benefits so closely related to Social Security medical and disability payments that it must necessarily follow that the omission of Social Security death benefits was purposely omitted by the legislature? The majority answer this question in the affirmative. I believe the majority reads too much into the omission and misapplies the canon in question. ¶154 If expressio unius est exclusio alterius has application in construing ¶155 At best, it is a draw and this canon offers no assistance in interpretation of ¶156 Is ejusdem generis of any more assistance? This canon (of the same kind, class or nature) is an illustration of noscitur a sociis, general and specific words are associated with and take color from each other, restricting general words to a sense analogous to less general words. Black‘s Law Dictionary. ¶157 Apparently, the majority or at least some of them, see subparts (a-e) as a list of specific and general phrases, discussion, definitions or whatever and conclude that the general “any other source” part of subpart (e) is limited to the less general or specifics of subparts (a-d). This seems to me a strained application of the maxim or canon of construction. Further, this interpretation effectively eliminates “any other source” from the statute all together. ¶158 The majority may be right in their interpretation. The Legislature may have intended that Social Security death benefits are not to be a collateral source. However, the Legislature did not say that and any amount of construction, rationalization, bending or manipulation will not make it so. ¶159 The object is to make a plaintiff whole for his damages caused by a defendant. On the other hand, it is not the object to make the plaintiff more than whole. The jury in this case determined the amount necessary to make the Plaintiff whole: 1.3 million dollars. ¶160 Unlike life insurance (an exception to collateral source) which one purchases with his own money or earns as part of his employment package, Social Security death benefits are part of the fabric of society paid for by all citizens, including the Plaintiff and the Defendant. ¶162 As to Issue 6, the majority will also give Plaintiff prejudgment interest on the basis that it is calculable as to at least the $203,000, in medical and funeral expenses awarded by the jury. The Plaintiff made a demand of Defendant for this long before trial. ¶163 However, I believe the record reflects that even before Plaintiff‘s demand, the State Fund had paid these things. At some point before trial and after Plaintiff had settled with some other Defendants, Plaintiff was able to settle the State Fund‘s subrogation rights for $55,000. Plaintiff certainly cannot be faulted for settling a claim for 25 cents on the dollar and is certainly entitled to the benefit of the bargain. ¶164 Inherent in the concept of interest is that the purpose of interest is to compensate for the use or detention of money. In the case at bar, the medical and funeral expenses were paid by the State Fund. Plaintiff accepted the benefit of those payments and has waived all claims to prejudgment interest. See ¶165 Then, Plaintiff paid the State Fund $55,000 to settle the subrogation claim. All Plaintiff is out, that Plaintiff was entitled to from Defendant prior to trial, was $55,000 from the date Plaintiff settled the subrogation claim. Plaintiff‘s prejudgment interest should be based on the $55,000 Plaintiff lost the use of before trial. ¶166 To the extent the majority will allow Plaintiff prejudgment interest on more than the $55,000 for a longer period than from the date Plaintiff paid the $55,000, I dissent. JUDGE DAY, District Judge, dissenting. ¶167 I dissent from the majority‘s decision and analysis as to Issue 1. Since I would remand for a new trial, I do not reach the remaining issues on appeal. ¶168 With regard to issue 1, whether the District Court abused its discretion when it denied Klemens’ motion to disqualify the Marra ¶169 The Second Circuit in Cinema 5 Ltd. v. Cinerama, Inc. (2d Cir. 1976), 528 F.2d 1384, stated that a lawyer who would sue his or her own client, asserting in justification the lack of “substantial relationship” between the litigation and the work he or she has undertaken to perform for that client, is “leaning on a slender reed indeed.” Cinema 5 Ltd., 528 F.2d at 1386. This slender reed now also has the majority camped on its edges. ¶170 I agree with the majority that the Supreme Court has original and exclusive jurisdiction in all matters involving discipline of attorneys practicing law in this state. However, there is no issue regarding discipline of attorneys before this Court. The issue before the Court is whether the Marra firm should have been allowed to continue to represent the Plaintiff in this matter given the fact that it had, as a current client, the Defendant. District courts commonly issue orders that govern the conduct of attorneys in regards to particular litigation (e.g., contempt and discovery sanctions). These orders are under the district court‘s inherent power to control litigation and to provide for fairness and justice and an orderly conduct of the proceedings. See ¶171 In its discussion of the background of Montana‘s Rules of Professional Conduct the majority indicates that the argument of Appellant raises two “inevitable” questions, the first being whether an alleged rule violation can be determined, as a matter of law, by a district court and secondly, if so, what effect does a proven violation have in an underlying civil proceeding. I disagree with the first part of this analysis. The issue before this Court is not whether the District Court erred in finding no rule violation concerning disqualification, but rather whether the District Court erred in finding that no disqualification of the Marra firm was necessary under the facts. ¶172 The majority cites Carlson v. Morton (1987), 229 Mont. 234, 745 P.2d 1133, to support its position that a district court cannot consider a Rules of Professional Conduct violation because such a violation is the exclusive jurisdiction of the Court. The Carlson case should ¶173 ¶174 It is undisputed that the Defendant in this case, Klemens, did not consent to its lawyer suing it in this case. It is also undisputed that Klemens was a client of the Marra firm, the firm representing the Plaintiff, on a number of other files. Finally, it is undisputed that after the motion to disqualify had been filed but prior to the hearing, the Marra firm fired Klemens as a client on all cases. The Marra firm then went to the hearing on the motion to disqualify and said that Klemens was a former client, not a current client, and therefore ¶175 The majority states the proper standard of review of attorney disqualification is whether the district court abused its discretion. I agree that it is within a district court‘s discretionary powers to grant a motion to disqualify under the facts of this case. A district court has the right and the duty to see to it that, in the context in the proceedings before it, attorneys conduct themselves in such a way to promote, not impede, justice and fairness. ¶177 The District Court in this case applied the former client test after the Marra firm fired Klemens and then determined that no substantial relationship existed between the alleged “former” representation of Klemens by the Marra firm and the instant case. On that issue alone the decision of the District Court should be vacated and the case remanded for consideration under the proper analysis. The District Court abused its discretion because it applied the wrong analysis. ¶178 I agree with the majority that the Rules of Professional Conduct arise out of the fundamental principle that an attorney, as a fiduciary, owes a duty of undivided loyalty to his or her client. The basis for ¶179 The Rules of Professional Conduct were not written in a vacuum. A district court should not have to hear a case in a vacuum. Rather, a district court should be able to rely on the Rules as an indication of the standard of conduct that is expected of attorneys in this state, especially as the Rules relate to conflicts of interest. In fact, the Supreme Court has demanded that each attorney comply with the Rules of Professional Conduct. To now state that a district court cannot look at the Rules of Professional Conduct for guidance and do what justice requires is a giant step backward. ¶181 It is interesting that this is a case of first impression in Montana. I submit that the reason that it is a case of first impression is that the common understanding and the common conscience of the bar is in accord with ¶182 The phrase “appearance of impropriety” was used under the old canons and disciplinary rules with the admonition that such should be avoided. The Rules of Professional Conduct do not use that phrase but the standard should not be wholly abandoned in spirit. Certainly concerns about the public‘s perception of the legal profession bears some relevance when this Court views attorney conduct. While appearance of impropriety as a principle of professional ethics may be vague and open-ended, in this case it has meaning and weight. For a law firm to represent a client in one file, and sue it in another, creates an unsavory appearance of impropriety that is difficult if not impossible to dispel in the eyes of the public—or for that matter the bench and bar—by simply denying that prejudice will exist. Prejudice must be presumed. ¶183 Because of the need for public confidence and the fair and just administration of the law, the Court should conclude that the appearance of impropriety is so marked in this case that remand is necessary. This case is an example of situations in which an ordinary, knowledgeable citizen acquainted with the facts would conclude that ¶184 In summary, the trial court erred in its analysis of the situation before it concerning disqualification by reviewing this situation as a “former” client rather than a “current” client case. It allowed the Marra firm to fire its client and apparently take the better of the cases before it. Under these facts and circumstances I would find that the District Court abused its discretion when it denied the motion to disqualify the Marra firm. While it may not be necessary to do so, I would also urge the adoption of the legal principle that in a case involving an attorney suing a client such representation is prima facie improper and the attorney who seeks to represent both must come forward with substantial supporting facts to indicate prejudice will not result and vigorous representation can be maintained on behalf of both clients. The burden of proof should be with the attorney who is stepping on the lip of that slender reed referred to in Cinema 5 Ltd. When that reed breaks, public trust is gone, client rights are violated and the attorney‘s professional reputation is harmed. It is for these reasons that I dissent.