Wagner v. AGW CONSULTANTS, No. 28,348.

• Docket Nº: No. 28,348.
• Citation: 137 N.M. 734, 114 P.3d 1050
• Case Date: May 24, 2005
• Court: Supreme Court of New Mexico

114 P.3d 1050
137 N.M. 734

David WAGNER, Worker-Appellee/Cross-Appellant,
v.
AGW CONSULTANTS, d/b/a Turner Environmental Consultants, and William M. Turner, individually and as trustee, Employer-InsurerAppellants/Cross-Appellees

No. 28,348.

Supreme Court of New Mexico.

May 24, 2005.

As Corrected June 29, 2005.

114 P.3d 1052

Duhigg, Cronin, Spring & Berlin, P.A. Nancy C. Wagner, Albuquerque, NM for Worker-Appellee/Cross-Appellant

James R. Beam Albuquerque, NM, for Employer-Insurer-Appellants/Cross-Appellees.

William M. Turner, Pro Se.

Michael B. Browde Albuquerque, NM, McGinn & Carpenter, P.A., Randi McGinn,

114 P.3d 1053

Albuquerque, NM, for Amicus Curiae New Mexico Trial Lawyers Association

Robert M. Aurbach, Special Assistant Attorney General, Albuquerque, NM, for Amicus Curiae Worker's Compensation Administration.

OPINION

CHÁVEZ, Justice.

{1} Worker prevailed in a heavily litigated worker's compensation claim and was awarded $58,599 in medical expenses, plus $26,761 in past and future weekly benefits. At the hearing on attorney fees, the worker's attorney sought $61,125 in attorney fees, of which the worker would have been liable for $30,562. See NMSA § 52-1-54(J) (2003) (providing worker and employer shall share payment of attorney fees equally except as otherwise provided by the statute). Worker argued the $12,500 limitation on attorney fees in NMSA 1978, Section 52-1-54(I) (1993, prior to 2003 amendment) should not apply because such a limitation violated constitutional guarantees of equal protection and due process.¹ The Workers' Compensation Judge took judicial notice of the chilling effect of miserly fees on representation but found the $12,500 award for attorney fees to be reasonable.

{2} The employer appealed the worker's award to the Court of Appeals and the worker cross-appealed the attorney fee award. The Court of Appeals certified the issue of the constitutionality of the limitation on attorney fees and otherwise proposed affirming the compensation award. We accepted certification to decide whether the limitation on attorney fees in Section 52-1-54(I) of the Workers' Compensation Act violates Worker's state constitutional rights to equal protection and due process.

{3} We review the attorney fee limitation provision under rational basis scrutiny, as the record in this case fails to demonstrate that the limitation has a sufficient impact on important rights to trigger a higher level of scrutiny. We hold that the fee limitation is rationally related to legitimate government purposes, particularly those of maximizing the limited benefits workers may currently obtain through the workers' compensation system. On these facts, were we to declare the fee limitation unconstitutional, the worker's benefits of $26,761 would be insufficient to pay his share of the $61,125 in requested attorney fees. The $12,500 attorney fee limitation, which in this case limits the worker's share of attorney fees to $6,250, still allows the worker to take home $20,511 in benefits. Therefore, while we do not decide whether other provisions of Section 52-1-54 would pass constitutional muster, we uphold the fee limitation itself. We adopt and append the Court of Appeals' analysis to all other issues raised in this appeal and cross-appeal. See Wagner v. AGW Consultants, No. 22,370 (N.M.Ct.App. Oct. 24, 2003) (certification order).

BACKGROUND

{4} David Wagner (Worker) filed a claim for workers' compensation benefits against AGW Consultants, d/b/a Turner Environmental Consultants (AGW), a ground-water hydrology consulting firm where he was injured while employed as a geologist. After realizing that AGW was a business trust, Worker amended his complaint to add as a defendant William Turner, AGW's sole trustee, in the event that Turner was the real party in interest. Turner appeared pro se to challenge Worker's claim, while separate counsel represented AGW.

{5} Several issues were heavily litigated at trial, including the applicability of the Workers' Compensation Act (WCA) to AGW, whether Turner was a real party in interest, the extent of Worker's injury, and the constitutionality of the attorney fee limitation. Turner himself filed a significant number of the roughly 2,500 pages of pleadings, independent of post-judgment motions and this appeal. The Workers' Compensation Judge ("WCJ") noted that although the issues were

114 P.3d 1054

of average complexity, the case had the most extensive pleading record he had ever seen. At one point the WCJ stated on the record that had Turner been an attorney, the WCJ would have issued sanctions against him for repeatedly filing motions without merit. The WCJ did not initially enter findings of fact or conclusions of law regarding whether the parties engaged in bad faith, and therefore whether either party was entitled to additional attorney fees up to $2,500 under Section 52-1-54(I). On appeal the Court of Appeals retained jurisdiction but ordered the WCJ to enter findings and conclusions regarding the issue of bad faith. The WCJ found that some of Turner's pleadings were frivolous and without sound basis in law, but concluded that Turner's bad faith was irrelevant to awarding additional attorney fees under Section 51-2-54(I) because Turner was not Worker's employer. The WCJ ultimately found that Worker was an employee of AGW and that AGW was subject to the WCA, ordering AGW to pay Worker $58,599 in medical expenses and $26,671 in past and future weekly benefits

{6} At the subsequent hearing on attorney fees, Worker's attorney claimed to have worked more than 400 hours, at $150 per hour, on the pre-trial and trial work. Worker's attorney argued the $12,500 statutory limitation on attorney fees was unreasonable in this case given the extraordinary amount of time involved, and that the limitation was unconstitutional due to its chilling effect on workers' ability to obtain adequate representation. Worker presented expert testimony that the fee limitation can be unfair and can make it uneconomical for attorneys to pursue certain time-consuming cases. AGW and Turner challenged the jurisdiction of the WCJ to declare Section 52-1-54 unconstitutional and did not present evidence in support of the fee limitation.

{7} The WCJ awarded Worker $12,500 in attorney fees and made the following findings: (1) Worker's attorney reasonably expended over 200 hours at an hourly rate of $175 per hour,² (2) the miserly fee limitation has a chilling effect on representation, and (3) $12,500 was a reasonable fee in this case. On certification, Worker argues the attorney fee limitation violates state equal protection and substantive due process, claiming that as applied, the limitation unconstitutionally infringes on the right to access the courts and the right to an appeal guaranteed in the New Mexico Constitution. AGW contends Worker does not have standing to challenge the fee limitation and that in any event the fee limitation is constitutional.

I. Worker Has Standing to Challenge Fee Limitation

{8} AGW claims Worker lacks standing to challenge the constitutionality of the fee limitation under Mieras v. Dyncorp, 1996-NMCA-095, ¶ 22, 122 N.M. 401, 925 P.2d 518, because the WCJ specifically found the $12,500 attorney fee to be reasonable and declined to find that Worker's attorney would have been entitled to a higher attorney fee but-for the limitation. We disagree.

{9} To have standing, Worker must either show, or the WCJ must explicitly find, that but for the fee limitation, reasonable attorney fees would have exceeded the awarded amount. See Meyers v. Western Auto & CNA Ins. Cos., 2002-NMCA-089, ¶ 29, 132 N.M. 675, 54 P.3d 79; cf. Mieras, 1996-NMCA-095, ¶ 22, 122 N.M. 401, 925 P.2d 518 (holding the claimant had standing where the WCJ specifically found the value of the attorney's services to exceed the limitation). Although the WCJ found $12,500 to be a reasonable fee, the WCJ also found that Worker's attorney reasonably expended over 200 hours representing Worker at a fee of $175 per hour. While these findings appear inconsistent, the latter indicates at a minimum that but for the limitation, Worker's attorney would have been reasonably entitled to at least $35,000 in attorney fees even before this appeal. Unlike in Meyers, where the claimant lacked standing because he neither reached the fee limitation nor showed that he would have secured a higher attorney fee in the absence of the limitation, 2002-NMCA-089,

114 P.3d 1055

¶ 29, 132 N.M. 675, 54 P.3d 79, here Worker not only reached the limitation, but the WCJ found that his attorney reasonably expended over 200 hours at $175 an hour, bringing him well over the limitation of $12,500.

{10} We note that the fact Worker is represented by counsel, who continues to honor her ethical duty to represent him, does not preclude standing in this case. See Rule 16-116(B)(5) NMRA 2005 (declining or terminating representation). In Corn v. New Mexico Educators Fed. Credit Union, the Court of Appeals held the claimant had standing to challenge the constitutionality of the unilateral limitation on workers' attorney fees although claimant continued to be represented by counsel. 119 N.M. 199, 202, 889 P.2d 234, 237 (Ct.App.1994), overruled on other grounds in Trujillo v. City of Albuquerque, 1998-NMSC-031, ¶ 32, 125 N.M. 721, 965 P.2d 305 (Trujillo III) (overruling Corn to the extent it adopted a fourth tier of scrutiny, while affirming Corn's holding and subsuming its "heightened rational basis" analysis under a "modern rational basis" standard). The WCJ in Corn found that but for the limitation, the claimant's attorney would have been entitled to nearly $20,000, and noted that although attorneys exceeded the limitation in only one of five hundred cases, the limitation caused workers to be at an unfair disadvantage compared to employers and significantly reduced the number of competent attorneys willing to take workers' compensation cases. Id....