Motor Control Specialties, Inc. (Employer) and The Ohio Casualty Company (its Insurer) appeal the trial court's judgment denying their petition for declaratory judgment and awarding Mr. Stephen Petelik (Claimant) attorney fees. We affirm.
An administrative law judge (ALJ) determined an injury Claimant sustained to his back was compensable under Workers' Compensation Law and granted a temporary or partial award to Claimant against Employer and its Insurer. Petelik v. Motor Control Specialists, 190 S.W.3d 517, 518 (Mo.App. E.D.2006). Employer and its Insurer filed an application for review of the ALJ's temporary award with the Labor and Industrial Relations Commission (Commission). Id. at 518-19. The Commission applied regulation 8 CSR 20-3.040
Thereafter, Employer and its Insurer filed a petition for declaratory judgment against the Commission and Claimant under section 536.050, asking the trial court to declare regulation 8 CSR 20-3.040 unconstitutional. Motor Control Specialties, Inc. v. Petelik, 258 S.W.3d 482, 485 (Mo. App. W.D.2008). The petition also requested an injunction to "stay the award of temporary total disability ... pending resolution of this matter" for Claimant's back injury and a writ of mandamus to compel the Commission to review the temporary award. The Claimant filed an answer raising affirmative defenses and counterclaims
Employer and its Insurer voluntarily dismissed the count for writ of mandamus. The trial court entered judgment granting Claimant's motion to dismiss. Thereafter, Claimant filed a request for attorney fees. The trial court denied the request. Subsequently, the trial court entered a final judgment reflecting its decisions stating "no just reason for delay [existed] pursuant to Rule 74.01(b)."
On appeal, we reversed the dismissal of the declaratory judgment action and remanded the case to the trial court "to
On remand, the trial court allowed Employer and its Insurer to amend the petition, over Claimant's and the Commission's objections, to include an argument that regulation 8 CSR 20-3.040 "contravenes portions of Chapter 287." Additionally, Employer and its Insurer voluntarily dismissed Claimant from the suit. The trial court thereafter allowed the Claimant to request attorney fees and put on evidence of attorney fees.
At the conclusion of the hearings on the petition and application for attorney fees, the trial court found that regulation 8 CSR 20-3.040 was constitutional and did not contravene the Workers' Compensation statutes. It granted attorney fees to Claimant for $81,609. Employer and its Insurer (collectively, "Appellants") appeal the judgment, raising fourteen points.
We review a declaratory judgment under the principles set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Psychiatric Healthcare Corp. of Mo. v. Dep't of Soc. Servs., 100 S.W.3d 891, 899 (Mo.App. W.D.2003). We will affirm the trial court's judgment unless it erroneously declares or applies the law. Id. Questions of law such as statutory interpretation are reviewed de novo. Id. Therefore, we provide the court no deference in its legal conclusions. Id.
We review the granting of attorney fees for an abuse of discretion. Auto-Owners Ins. Co. v. Ennulat, 231 S.W.3d 297, 307 (Mo.App. E.D.2007).
In the first three points, Appellants argue that the trial court erred in denying the declaratory judgment because regulation 8 CSR 20-3.040: (1) conflicts with section 287.610.6; (2) was promulgated without authority; and (3) violates due process rights under the United States Constitution and the Missouri Constitution. In the remaining eleven points, Appellants argue that the trial court erred either in awarding attorney fees or in awarding the amount of attorney fees.
In the first point, Appellants argue that regulation 8 CSR 20-3.040 conflicts
When interpreting statutes, this court ascertains the legislature's intent from the language used. Sheedy v. Mo. Highways & Transp. Comm'n, 180 S.W.3d 66, 72 (Mo.App. S.D.2005). Section 287.610.6 states, in relevant part, "Any award by an administrative law judge upon an original hearing shall have the same force and effect, shall be enforceable in the same manner as provided elsewhere in this chapter for awards by the labor and industrial relations commission, and shall be subject to review as provided by section 287.480." Section 287.480 states, in relevant part, "If an application for review is made to the commission within twenty days from the date of the award, the full commission, if the first hearing was not held before the full commission, shall review the evidence, or, if considered advisable, as soon as practicable hear the parties at issue."
Section 287.480 has been interpreted to constitute the deadline in which to file an application for review of an award in order to have a timely request before the Commission. Phelan v. Treasurer, 249 S.W.3d 260, 263 (Mo.App. W.D.2008). We have also concluded that this deadline is jurisdictional such that the Commission is without jurisdiction to review an ALJ's decision beyond the twenty days. Merritt v. Shoney's Inc., 925 S.W.2d 494, 495 (Mo. App. E.D.1996). Thus, the legislature intended for "any" ALJ's award, as stated in section 287.610.5, to be subjected to this deadline.
Regulation 8 CSR 20-3.040(1) states:
Thus, 8 CSR 20-3.040(1) delays the application of the statutory filing deadline of twenty days when an award is designated partial or temporary. In delaying review, in essence, the Commission interpreted "award," as used in section 287.480, to exclude a "temporary or partial award." Because the statutory deadline of twenty days is jurisdictional, we must determine whether excluding a "temporary or partial award" from the term "award" was consistent with the legislature's intent.
In discerning the legislature's intent, "we consider the statute in the context of the entire statutory scheme on the same subject" to avoid unjust, unreasonable, or absurd results. Sheedy, 180 S.W.3d at 72 (internal citation and quotation marks omitted). In section 287.510, the legislature provides that in "any case," a temporary or partial award "may be made, and the same may be modified from time to time to meet the needs of the case." And in section 287.495, the legislature provides a deadline for appeals from the Commission's awards that are final awards. Thus, the Missouri Supreme
By using "any case" in section 287.510 and not specifying cases before the Commission, the legislature also authorizes an ALJ to issue temporary or partial awards that may be "modified from time to time." The Commission has the authority to promulgate rules to govern "its proceedings in connection with the exercise of its quasi-judicial functions." § 286.060(8). To subject an ALJ's temporary or partial award to the same standard employed to prevent review of the Commission's award in its tentative state is consistent with the legislature's intent. It would be absurd to construe the statute to require the Commission to review a temporary or partial award at that time when it precludes reviewing courts from doing so. Consequently, the Commission's regulation delaying review of temporary or partial awards is consistent with the legislature's statutory scheme. Because the regulation is consistent with the legislature's intent, it is valid. Consequently, Appellants' first point is denied.
In the second point, Appellants argue that regulation 8 CSR 20-3.040 was promulgated without authority because section 287.410 provides that the "power and duty to review any award made under the workers' compensation law" resides with the Commission and cannot be delegated, but the regulation precludes the Commission from reviewing the ALJ's award. The regulation does not delegate the review of an ALJ's award to any other body and only precludes the Commission from reviewing the decision in its tentative state. Thus, regulation 8 CSR 20-3.040 does not contravene section 287.410. Appellants' second point is denied.
In the third point, Appellants argue that regulation 8 CSR 20-3.040 violates due process of law because due process requires the taking of an appeal if permitted by law and article V, section 18 of the Missouri Constitution states that all final decisions by administrative agencies are subject to judicial review, but the regulation precludes awards designated "temporary" from being considered "final" for purposes of review even though the practical effect of the temporary award has finality. Appellants argue that we should adopt the United States Supreme Court's definition of "final," and that under that definition, the temporary award would be final. Applying that definition, Appellants argue that the Commission is denying employers due process because the regulation delays review of a "final" decision.
In Darby v. Cisneros, the case Appellants rely on, the Supreme Court did not define "final" but distinguished between the doctrines of "finality" and "the exhaustion of administrative remedies" under the Administrative Procedure Act by noting
Intermediate decision-making steps within the agency, before its decisions become final, are constitutionally permissible. See State ex rel. AG Processing, Inc. v. Pub. Serv. Comm'n, 276 S.W.3d 303, 309-10 (Mo.App. W.D.2008) (citing Asbury, 846 S.W.2d at 201); Parker v. City of St. Joseph, 167 S.W.3d 219, 222 (Mo.App. W.D. 2005) (same). It is only after an administrative decision is final that intervening steps between judicial review become unconstitutional because they preclude direct review of that final decision. Asbury, 846 S.W.2d at 202. The regulation only addresses intermediate decision-making before the decision becomes final. Thus, the regulation is constitutional because it does not thwart judicial review of a final decision. The trial court did not err in its declaration of the law. Accordingly, Appellants' third point is denied.
In the remaining points, Appellants argue that the trial court erred in awarding attorney fees because: (4) the trial court exceeded this court's mandate; (5) the issue of attorney fees was beyond the scope of the pleading; (6) Claimant was not a prevailing party under section 536.050.3; (7) the award was not supported by substantial and competent evidence; (8) the award was erroneously based on a finding that Claimant was an improperly joined defendant; (9) the award was erroneously based on a finding that Claimant had to defend against the declaratory judgment action; (10) a declaratory judgment action is not within the "very unusual circumstances" exception to the American Rule; (11) the evidence does not support applying the collateral litigation exception to the American Rule; (12) the award was unnecessary and unreasonable; (13) the award was not supported by substantial and competent evidence and was against the weight of the evidence; and (14) the attorney fees were not segregated as required by law. For ease of analysis, we do not address these points in sequential order.
First, we address whether the trial court exceeded our mandate in considering
Appellants argue that the trial court exceeded the scope of the mandate because neither the mandate nor our opinion contemplated the reconsideration of attorney fees. Appellants reason that the trial court could not reconsider awarding Claimant's attorney fees because our mandate did not address attorney fees and the opinion did not order the court to reconsider attorney fees on remand. Appellants rely on Tillis for support. The Tillis court determined that the trial court would have exceeded its mandate in awarding attorney fees on remand because the specific mandate did not mention an award of attorney fees, although it mentioned other awards. 975 S.W.2d at 952.
Our mandate in Motor Control states in pertinent part: "the cause is remanded to the Circuit Court of Cole County for further proceedings in conformity with the opinion of this Court." Because our mandate does not contain a specific directive, it is general. See Pope, 298 S.W.3d at 58 n. 4 (listing examples of specific mandates). Nor does our opinion contain a specific directive indicating limits placed on the trial court's discretion. See Associated, 918 S.W.2d at 782 (stating mandate must be read in conjunction with opinion). We ordered the trial court to "convert its decision to a ruling on the merits of the petition." Motor Control, 258 S.W.3d at 488. We stated that "[o]ur disposition of Motor Control's and Ohio Casualty's appeal renders moot [Claimant]'s appeal of the denial of his application for attorney fees and his request for attorney fees on appeal." Id. Contrary to Appellants' contention, the mooting of the issue of attorney fees did not impliedly affirm the trial court's denial of attorney fees.
We reversed the trial court's dismissal because section 536.050 authorized the declaratory judgment action and because the issue of the regulation's constitutionality was not barred under the doctrine of res judicata. Id. at 486-87. Missouri requires litigants to pay their own attorney fees, following the American Rule, unless an exception applies. Gebru v. St. Louis Cnty., 136 S.W.3d 89, 93 (Mo.App. E.D.2004). Under any exception, the litigant must be the prevailing party to be entitled to an award of attorney fees. Id. Because we reversed the dismissal, Claimant was no longer the prevailing party. See Wall USA, Inc. v. City of Ballwin, 53 S.W.3d 168, 173 (Mo.App. E.D.2001); see also Monsanto Co. v. Garst Seed Co., 241 S.W.3d 401, 417 (Mo.App. E.D.2007) (stating litigant must ultimately prevail on appeal to be deemed the "prevailing party" in litigation). Thus, the propriety of the denial of the application for attorney fees was rendered moot.
Based on our disposition, it was logical for the trial court to reconsider awarding attorney fees on remand after ruling on the merits. See Associated, 918 S.W.2d at
Second, we address Appellants' challenges to the trial court's authority to grant attorney fees. Appellants argue that the trial court awarded attorney fees beyond the scope of the pleadings because Claimant did not plead attorney fees under the collateral litigation exception. Our review of the record shows that Claimant did request attorney fees. Upon remand, Claimant was dismissed from the lawsuit and, thereafter, submitted an application to the trial court for attorney fees based on, inter alia, the collateral litigation exception. Thus, the issue was properly pleaded before the trial court. Appellants' fifth point is denied.
Appellants also argue that Claimant was not a prevailing party under section 536.050 and was not entitled to attorney fees under any of the exceptions to the American Rule. The trial court awarded fees under the collateral litigation exception to the American Rule and not under section 536.050. As stated earlier, a litigant must prevail to be entitled to attorney fees under any exception to the American Rule. A litigant may be the prevailing party when he "obtain[s] a settlement, obtain[s] a voluntary dismissal of a groundless complaint, or obtain[s] a favorable decision on a single issue if the issue is one of significance to the underlying case." Greenbriar Hills Country Club v. Dir. of Revenue, 47 S.W.3d 346, 353 (Mo. banc 2001). A litigant may also be the prevailing party even if he obtains a dismissal without prejudice of the cause against him when the plaintiff abandons the claim and the litigant thereby receives a benefit. See Melahn v. Otto, 836 S.W.2d 525, 528 (Mo.App. W.D.1992).
Contrary to Appellants' contention, Claimant is a prevailing party because Appellants dismissed him from the action upon remand; abandoned the declaratory judgment action against him; and Claimant benefited from the dismissal because he no longer had to defend against the action and did not have to prosecute his counterclaims.
A successful litigant may be awarded attorney fees under one of the exceptions to the American Rule if the litigant demonstrates the existence of special circumstances surrounding the litigation. Grewell v. State Farm Mut. Auto. Ins. Co., 162 S.W.3d 503, 507 (Mo.App. W.D.2005). Some examples of special circumstances include "where very unusual circumstances exists so it may be said equity demands a balance of the benefits" and "where the attorney fees are incurred because of involvement in collateral litigation." Lett v. City of St. Louis, 24 S.W.3d 157, 162 (Mo.App. E.D.2000).
The trial court found that the "equities in this case between a well-funded employer and insurer with assets and means to litigate this issue far exceed those assets of an injured worker" and noted that Claimant "had still not received anything in terms of his temporary award at time of the hearing on attorney fees." It stated that applicable case law prevented an appeal from a temporary award in which some of the issues were in dispute.
Appellants argue that granting attorney fees under this exception was erroneous because there was no showing of "third-party litigation, no evidence that plaintiffs breached a duty in bringing the action and/or that the attorney fees were necessary." "`Where the natural and proximate result of a wrong or breach of duty is to involve the wronged party in collateral litigation, reasonable attorney fees necessarily and in good faith incurred in protecting himself from the injurious consequence thereof are proper items of damages.'" Essex Contracting, Inc. v. Jefferson Cnty., 277 S.W.3d 647, 657 (Mo. banc 2009) (quoting Johnson v. Mercantile Trust Co. Nat'l Ass'n., 510 S.W.2d 33, 40 (Mo. 1974)). Collateral litigation with a third-party is not mentioned, but rather collateral litigation as a "natural and proximate" result of a wrong or breach of duty is required for the exception. See id.
Here, Appellants breached a duty to Claimant in filing their petition. Appellants are correct that they had a right to bring a declaratory judgment action challenging the constitutionality of the regulation. As previously stated, we found that the declaratory judgment action was not challenging the agency's application of the rule but the agency's rule. Motor Control, 258 S.W.3d at 486. However, the petition also requested an injunction to stay the enforcement of the temporary award. A temporary award is compensation granted to the injured worker. Motor Control as an employer has a duty to pay injured workers who receive an award pursuant to Workers' Compensation Law. See § 287.060. Under section 287.510, an employer risks the award being doubled at the time of the final award if the employer fails to pay the temporary award. Appellants requested an injunction to protect themselves from this risk "pending the resolution of [the declaratory judgment action]." Thus, Motor Control breached its duty to Claimant, an injured worker, when it requested an injunction in the courts for protection against the Workers' Compensation Law.
Appellants further claim that the petition for declaratory judgment, injunction, and writ of mandamus was not collateral litigation because the ALJ's award was not final. They rely on Barry, Inc. v. Falk, 217 S.W.3d 317, 320 (Mo.App. W.D. 2007). Barry found that an employer's failure to comply with a statutory provision providing review of a final award by trying to prevent enforcement in a court of equity was a collateral attack. Id. at 320. The Barry court's reasoning, although applied to final awards, is seemingly applicable to temporary awards because the statutes provide for review of temporary awards, which are also enforceable. Thus, contrary to Appellants' argument, seeking a stay, which is a prevention of enforcement for a limited time, constitutes a collateral attack.
Finally, Appellants assert that Claimant did not necessarily incur the fees to protect himself from injury because according to this court's language in Motor Control, the litigation did not place the award at risk. In Motor Control, we stated that the declaratory judgment did not interfere with the Commission's decision as to whether Claimant was entitled to workers' compensation benefits for his back injury. See Motor Control, 258 S.W.3d at 487. However, we did not address
Because Motor Control breached a duty to Claimant in seeking an injunction, which constituted collateral litigation, and required Claimant to incur attorney fees to defend against it, the trial court did not err in awarding attorney fees under the collateral litigation exception. Appellants' eleventh point is denied.
Appellants argue in their sixth, eighth, ninth, and tenth points that Claimant was not entitled to attorney fees based on several grounds. Because we have upheld the trial court's basis for awarding attorney fees, these points are also denied.
Third, we address Appellants' arguments challenging the sufficiency and competency of the evidence supporting the award of attorney fees. Appellants argue that the award was not supported by substantial and competent evidence because "the trial court had previously entered an order denying attorneys' fees and denied [Claimant]'s motion to intervene." They argue because these previous decisions were inconsistent with the trial court's grant of attorney fees, the trial court abused its discretion. Appellants rely on Burton v. Donahue, 959 S.W.2d 946 (Mo. App. E.D.1998).
Burton states, "[A] judgment which is based on findings that are inconsistent and ambiguous does not allow for adequate appellate review and must be reversed." 959 S.W.2d at 948. The order that Appellants mention is the original decision denying attorney fees, which was appealed and reversed in Motor Control. In determining that the ruling was erroneous, remanding the case for a ruling on the merits, and finding the attorney fees issue had been rendered moot, we necessarily reversed the trial court's judgment regarding attorney fees. Thus, the trial court's denial of attorney fees became void; hence, the subsequent granting of attorney fees on remand was a separate and distinct judgment. Additionally, the denial of the motion to intervene was also a separate and distinct decision from the award of attorney fees. Accordingly, Burton, which applies to inconsistencies within the same judgment, is inapplicable here. Appellants' seventh point is denied.
Appellants also argue that the attorney fees were not supported by substantial and competent evidence and were against the weight of the evidence because the award was granted upon an "offer of proof" rather than an "evidentiary hearing." We agree that an offer of proof is not evidence. See Russell v. Dir. of Revenue, 35 S.W.3d 507, 510 (Mo.App. E.D. 2001) ("Generally, in order to preserve an issue of exclusion of evidence for appeal, a definite and specific offer of proof demonstrating why the evidence is relevant and admissible must be made at trial.").
Here, the trial court did not sustain Appellants' objection to the evidence offered for attorney fees but rather acknowledged Appellants' continuing objection to the application for attorney fees. The trial court granted Claimant's motion for an evidentiary hearing on its request for attorney fees. Appellants had filed a memorandum in opposition to Claimant's application
During the hearing, Appellants cross-examined the witnesses, challenged the evidence, adduced evidence, and argued against the authority and reasonableness of the requested fees. The trial court then took the matter with the case. Thus, the presentation of evidence was not an offer of proof but an evidentiary hearing to determine whether the trial court would grant Claimant's application or dismiss it. See Forester v. Dir. of Revenue, 85 S.W.3d 122, 125 (Mo.App. W.D.2002) (stating offer of proof inadmissible because testimony was not cross-examined). Appellants' thirteenth point is denied.
Finally, we address Appellants points challenging the amount of the attorney fees. Appellants argue that the grant of attorney fees was unnecessary and unreasonable because the fees included expenses for counsel to respond to claims that were not directed against Claimant, to prosecute counterclaims, and to research the same issues by different individuals. The amount of attorney fees is within the trial court's discretion. Essex, 277 S.W.3d at 656-57. We will affirm it unless "`the amount awarded is arbitrarily arrived at or is so unreasonable as to indicate indifference and a lack of proper judicial consideration.'" Id. at 657 (quoting Nelson v. Hotchkiss, 601 S.W.2d 14, 21 (Mo. banc 1980)). We presume the amount of attorney fees is reasonable absent evidence to the contrary. Id.
Since Claimant had to defend against the injunction to protect himself from injury, it was reasonable for Claimant's attorney fees to encompass time expended addressing the declaratory judgment action. An injunction is granted, inter alia, upon the showing of a probability of success on the merits of the claim. State ex rel. Dir. of Revenue, State of Mo. v. Gabbert, 925 S.W.2d 838, 839 (Mo. banc 1996). Here, the declaratory judgment action was the claim upon which Appellants sought an injunction. Consequently, the attorney fees were incurred to defend against both claims.
Testimony and affidavits were presented to the trial court stating that the amount of attorney fees was reasonable and that there was no duplication and repetitiveness of work between the two law firms or within the firms. Thus, there was substantial evidence supporting the decision. Appellants' twelfth point is denied.
Appellants also argue that the amount of attorney fees awarded was not valid because Claimant did not distinguish between fees incurred for defending against the petition and prosecuting the counterclaims. Claimant only requested fees for defending against the claims and adduced detailed billing statements from both firms in support of the request. The trial court believed this evidence, and Appellants do not highlight specific matters within the exhibit showing fees for labor expended on prosecuting counterclaims. Because Appellants do not show evidence to the contrary, the trial court did not abuse its discretion. Thus, Appellants' fourteenth point is denied.
Claimant requests attorney fees and expenses on appeal under this court's Special Rule XXIX, which states that a party may file a motion in this court for attorney fees "pursuant to contract, statute, or otherwise." Claimant requests attorney fees and costs to respond to appeal on the same
Therefore, we affirm the trial court's declaratory judgment finding regulation 8 CSR 20-3.040 valid and its grant of Claimant's attorney fees at trial. We grant Claimant's request for attorney fees on appeal and remand to the trial court for a hearing and judgment entered accordingly.
HOWARD, P.J., and WITT, JJ. concur.
At the time the judgment was entered, Claimant's counterclaims were still pending.
