Mountain West Farm Bureau Mutual Ins. Co. v. Hall

• Court: Montana Supreme Court
• Citation: Mountain West Farm Bureau Mutual Ins. Co. v. Hall, 2001 MT 314, 38 P.3d 825, 308 Mont. 29 (Mont. 2001)
• Decision Date: 31 December 2001
• Docket Number: No. 00-749.,00-749.
• Parties: MOUNTAIN WEST FARM BUREAU MUTUAL INSURANCE COMPANY, Plaintiff, v. Wallace HALL, Glenn Hall and Keltz Hall, Defendants, v. Martin Kilmer and Carolyn Kilmer, Defendants and Appellants, v. Medcenter one, inc., Defendant and Respondent.

38 P.3d 825

2001 MT 314

308 Mont. 29

MOUNTAIN WEST FARM BUREAU MUTUAL INSURANCE COMPANY, Plaintiff, v. Wallace HALL, Glenn Hall and Keltz Hall, Defendants, v. Martin Kilmer and Carolyn Kilmer, Defendants and Appellants, v. Medcenter one, inc., Defendant and Respondent.

No. 00-749.

Supreme Court of Montana.

Heard June 19, 2001.

Submitted June 19, 2001.

Decided December 31, 2001.

For Appellants: Gene R. Jarussi (argued), Jarussi & Bishop, Billings, MT; Thomas Dickson, Dickson Law Firm, Bismarck, ND.

For Respondents: Jacque Best (argued), Michael Johnson (argued), Habedank Law Firm, Sidney, MT; Timothy Lervick, Rolfson, Schultz, Lervick & Geiermann, Bismarck, ND.

For Amicus Curiae: Katharine S. Donnelley, Brand Boyar, Browning, Kaleczyc, Berry & Hoven, Helena, MT (Association of Montana Health Care Providers).

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

¶ 1 Martin and Carolyn Kilmer (Kilmers) appeal from an order issued by the Seventh Judicial District Court, Richland County, granting Medcenter One, Inc.'s (Medcenter) motion for partial summary judgment. The District Court's order precluded Kilmers from recovering Medcenter's alleged pro rata share of attorney fees from a settlement fund subject to Medcenter's lien. We reverse and remand.

¶ 2 We restate the sole issue on appeal as follows:

Does our opinion in Sisters of Charity v. Nichols preclude application of the common fund doctrine to the case at bar?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 On April 1, 1999, Martin Kilmer was a passenger in a vehicle driven by Keltz Hall on a North Dakota highway. Hall lost control of the vehicle and Martin suffered severe injuries as a result of the single vehicle accident. Martin received medical attention from Medcenter, a North Dakota hospital. Despite Medcenter's efforts, Martin's injuries rendered him a quadriplegic. Medcenter perfected a hospital lien in North Dakota and Montana for the value of its services, approximately $309,000.

¶ 4 Hall possessed no vehicle, homeowners', or farm and ranch insurance coverage. However, Hall's father Wallace, co-owner of the vehicle Hall was operating, did have a motor vehicle insurance policy through Mountain West Farm Bureau (Mountain West). This policy had a maximum limit of $500,000 with an additional $30,000 in no-fault coverage. The policy contained a step-down provision which limited Mountain West's liability to $25,000 per person for passengers other than the named insured or a relative of the named insured.

¶ 5 Initially, Mountain West claimed Kilmers were entitled to only $25,000 under Wallace's policy pursuant to the step-down provision. However, after negotiating with Kilmers' attorney, Mountain West agreed to proffer the policy limits of $530,000. On October 29, 1999, Mountain West filed a complaint for interpleader naming the above captioned parties and subsequently tendered $530,000 to the District Court. Medcenter cross-claimed against Kilmers seeking satisfaction of its lien. Kilmers cross-claimed against Medcenter seeking reduction in Medcenter's recovery for a pro rata portion of their attorney fees incurred in negotiating Mountain West's $530,000 tender. Upon stipulation of the parties, the District Court subsequently dismissed Defendants Wallace Hall, Glenna Hall, and Keltz Hall from the action.

¶ 6 On December 29, 1999, Medcenter moved for partial summary judgment, arguing it was not liable for a pro rata portion of Kilmers' attorney fees. Following a June 13, 2000, hearing, the District Court concluded that the facts existing herein are indistinguishable from those in Sisters of Charity v. Nichols (1971), 157 Mont. 106, 483 P.2d 279. Concluding that Nichols is still controlling law in Montana, the District Court granted Medcenter's motion and entered judgment for Medcenter. Kilmers appeal the District Court's summary judgment ruling.

STANDARD OF REVIEW

¶ 7 Our standard of review in appeals from summary judgment rulings is de novo. Motarie v. Northern Mont. Joint Refuse Disposal Dist. (1995), 274 Mont. 239, 242, 907 P.2d 154, 156. We review a district court's summary judgment to determine whether it was correctly decided pursuant to Rule 56, M.R.Civ.P., which provides that summary judgment is appropriate only when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. See Motarie, 274 Mont. at 242, 907 P.2d at 156.

¶ 8 Here, the parties do not present disputed factual issues on appeal. Thus, our role is to determine, as did the District Court, whether Medcenter is entitled to judgment as a matter of law. In essence, we need only determine whether the District Court's conclusion regarding the applicability of this Court's case law is correct.

DISCUSSION

¶ 9 Does our opinion in Sisters of Charity v. Nichols preclude application of the common fund doctrine to the case at bar?

¶ 10 Section 71-3-1114(1)(b), MCA (1999), provides that a hospital has a lien for the value of services rendered on:

(i) any claim or cause of action that the injured person or the injured person's estate or successors may have for injury, disease, or death;

(ii) any judgment that the injured person or the estate or successors may obtain for injury, disease, or death; and

(iii) all money paid in satisfaction of the judgment or in settlement of the claim or cause of action.

Both parties agree that pursuant to § 71-3-1114(1)(b), MCA (1999), Medcenter has a valid lien for the medical services rendered to Martin Kilmer immediately following his accident. However, § 71-3-1114, MCA (1999), is silent on the issue of attorney fee apportionment.

¶ 11 In the 2001 session, the Montana Legislature amended § 71-3-1114, MCA, to address a hospital's pro rata liability for an injured person's attorney fees. Section 71-3-1114(3), MCA, now states:

A ... hospital ... claiming a lien under this part is not liable for attorney fees and costs incurred by the injured person, the injured person's estate or successors, or a beneficiary in connection with obtaining payments or benefits subject to a lien under this part.

The statute contains no express retroactive application provision.

¶ 12 Pursuant to § 1-2-201, MCA, every statute adopted after January 1, 1981, takes effect on the first day of October following its passage and approval unless the enacting legislation prescribes otherwise. As § 71-3-1114, MCA (2001), contains no express effective date prescription, both parties agree it has an October 1, 2001, effective date. Further, no Montana law is retroactive unless the statute expressly so declares. Section 1-2-109, MCA. Since § 71-3-1114, MCA (2001), contains no retroactive provision and all of the relevant events pertaining to Kilmers' claim occurred prior to October 1, 2001, § 71-3-1114, MCA (1999), applies to the case at bar. However, as previously stated, § 71-3-1114, MCA (1999), contains no attorney fee apportionment provision.

¶ 13 Montana follows the general American rule that a party in a civil action is not entitled to attorney fees absent a specific contractual or statutory provision. School Trust v. State ex rel. Bd. of Com'rs, 1999 MT 263, ¶ 62, 296 Mont. 402, ¶ 62, 989 P.2d 800, ¶ 62. However, we have recognized equitable exceptions to the American rule. See, e.g., Foy v. Anderson (1978), 176 Mont. 507, 511, 580 P.2d 114, 117, and Holmstrom Land Co. v. Hunter (1979), 182 Mont. 43, 48-49, 595 P.2d 360, 363 (affirming award of attorney fees on equitable grounds despite absence of specific contractual or statutory grant); Goodover v. Lindey's, Inc. (1992), 255 Mont. 430, 447, 843 P.2d 765, 775 (recognizing limited equitable exception to general rule when party is "forced into a frivolous lawsuit").

¶ 14 One of the recognized equitable exceptions to the American rule is the common fund doctrine. Generally, this doctrine authorizes the spread of fees among those individuals benefitting from the litigation which created the common fund. See Morris B. Chapman & Assocs., Ltd. v. Kitzman (2000), 193 Ill.2d 560, 251 Ill.Dec. 141, 739 N.E.2d 1263, 1271. In Means v. Montana Power Co. (1981), 191 Mont. 395, 403, 625 P.2d 32, 37, this Court adopted the common fund doctrine, concluding:

The "common fund" concept provides that when a party through active litigation creates, reserves or increases a fund, others sharing in the fund must bear a portion of the litigation costs including reasonable attorney fees. The doctrine is employed to spread the cost of litigation among all beneficiaries so that the active beneficiary is not forced to bear the burden alone and the "stranger" (i.e., passive) beneficiaries do not receive their benefits at no cost to themselves.

The doctrine entitles the party who created the fund to reimbursement of his or her reasonable attorney fees from the common fund. Murer v. State Comp. Mut. Ins. Fund (1997), 283 Mont. 210, 223, 942 P.2d 69, 76. Our decisions in Means and Murer outline the three elements necessary to establish a common fund.

¶ 15 First, one party must create, reserve, or increase a common fund. This party is typically referred to as the active beneficiary. The fund must be an existing, identifiable monetary fund or benefit to which all of the beneficiaries maintain an interest.

¶ 16 Second, the active beneficiary must incur legal fees in establishing the common fund. Medcenter insists the active beneficiary must initiate "active litigation" to satisfy this element. Since Kilmers did not bring suit against Mountain West to establish the fund, Medcenter argues Kilmers failed to satisfy the active litigation requirement.

¶ 17 Medcenter derived this active litigation language from our decisions in Means and Murer. However, in Murer, the language preceding the "active litigation" reference appears to dispel Medcenter's argument. We stated:

The United States Supreme Court created the common fund doctrine in Trustees v. Greenough (1881), 105 U.S. 527, 15 Otto 527, 26 L.Ed. 1157,

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