1 We also directed the parties to file supplemental briefs addressing whether the doctrine of waiver bars Federated Ins urance from seeking modification of a benefits award based on an inappropriate

method of calculation where the issue was not raised in the initial petition. However, our decision with regard to the primary issue renders analysis of the waiver issue unnecessary.



### IN THE SUPREME COURT OF TENNESSEE

AT KNOXVILLE

FEDERATED INSURANCE COMPANY v. FRANCIS I. LETHCOE, ET AL


### .

Direct Appeal from the Chancery Court for McMinn County

No. 18,715 Earl H. Henley, Chancellor

No. E1997-00048-SC-WCM-CV

—Decided April 3, 2000

This is an appeal from theChancery Court fo r McMinn County whic

h, pursuant to Tenn

essee Rule of Civil Procedure 60.02(5 ), modified a judgment that was previously entered in accord with a settlement

agreement between the parties. The appellants appealed and contended that the trial court improp erly modifi ed the judgment and reduced the benefits they were to receive according to the agreement. The Special Workers’ Compensation Appeals Panel affirmed the judgment of the trial court, and the appellan

ts filed a motion for

full review by this

Court to determine

whether a party

can seek modification of a workers’ compensation judgment for a fixed sum to be paid perio

dically almost two years a

fter entry of j udgment. We hold th at where a part

y agrees to settle

a workers’ compensation claim, and the trial court approves the settlement, the settling party is ge

nerally not entitled to relief

pursuant to Rule 60.02(5). Accordingly, we reverse the judgments of the trial court andthe Special Worke

rs’ Compensation A

ppeals panel and

remand th

is case to t he trial court for further procee

dings.

Tenn. R. App. P. 3; Judgment of the Chancery Court Reversed; and Remanded

B ARKER , J., delivered the opinion of the court, in which D ROWOTA , B IRCH , and H OLDER , JJ. joined.

Peter Alliman, Mad

isonville, Tenness

ee, for the appe

llants, Francis I.

Lethcoe, et al.

David F. Harrod, Athens, Tennessee, for the appellee, Federated Insurance Company.

OPINION The principal issue in this case is whether, pursuant to T ennes see Rule of Civil Procedure 60.02(5), a party is

entitled to relief

from a judgment e

ntered almost two y

ears earlier in

a workers’ compensation case

based upon a mutua

l mistake regar

ding the applica

ble law. 1 We hold that where

a party agrees to settle a

workers’ compensation

claim, and the tria

l court approves t

he settlement,2 The $3,000.00 difference in this portion of Federated’s petition appears to be the result of a typographical error on the part of Federated.

-2- the settling party generally is not entitled to relief from judgment under Rule 60.02(5). Because Rule 60.02(5) is not to be used to relieve a party of its free, calculated, and deliber ate choi ces, we also hold that the trial court abused its discretion in modifying the judgment. Accordingly , f or th e

reasons herein, we reverse the Special Workers’ Compensation Appeals Panel and remand this

case to the trial court f

or further proc

eedings. BACKGROUND On January 7, 19

95, Vernon Le

thcoe died afte

r suffe ring serious injuries sustained in the

course and scope of his employment with Bain & Holden Tire Company , Inc. (Bain & Holden). Shortly thereafter, Bain &

Holden’s workers’ compensation carrier, Federated Insurance Company (Federated), filed a petition to apportion worker

s’ compensation be

nefits among Mr. Lethcoe’s wife andfour children (the Lethcoes). In its petition, Federa ted stated: “Pur s uant to statute plaintiff Federated acknowledges that the maximum bene fit to which defendants are entitled would be One Hundred Fifty-three Thousand One Hundred Sixteen ($156,116.00) Dollars.” 2 The Lethcoes did not dispute Federated’s interpretation of the amount owed. Pursuant to the

un ders tanding of the parties, the chancery court entered a n order on May 12, 1995, requiring Federated to make periodic payments to the Lethcoes pursuant to the statute until it had pa id $153,116.00. The award was based on the state’s average weekly wag e as deter mined by the department of employment security ra ther than on Vernon Lethcoe’s weekly compensation rate. On May 13, 1996, in Spencer v. Towson M oving & Stor age , 922 S.W.2d 508 (Tenn. 1996), this Court rejected a similar interpretation of the Workers’ Compensation Law. In Spencer , we held that [t ]he max imum weekly benefit is to be determined based upon the employ ee’s average weekly wage;not until the sixty-six and two-thirds percent of the employee’s average weekly wages equals or exceeds [the statutorily pr esc ribed] percentage of the state’s average weekly wag e does the court use the figure [based on] . . . the state’s average weekly wage to deter mine the amount of the compensation payable to the dependents. Id. at 510 (quotation marks omitted). Following our decision in Spencer , Federated filed a petition on May 7, 1997, to modify the previous judgment . Federated argued that according to Spencer , the Lethcoes should have been paid sixty-six and two-thirds percent of Ver non Lethcoe’ s average we ekly wage subject to the maximum weekly benefit. See Te nn . Code Ann. §§ 50-6-209(b)(1), -210(e) (1999). At his death, Vernon Lethcoe’s average weekly wage was $395.80, and, consequently, the weekly compensa tion rate for payment of benefits was $263.87. Because the award of benefits was subject to the maximum total benefit of 400 weeks, see id. §§ 50-6-102(13)(C), -205 (b)(1) , the appropriate total award should have been $105,548.00. In accordance with Spencer , the chancery court modified its prior judgment and reduced the amount of benefit

s to $105,548.00. The

Special Workers’ Compensation Appe als Panel affirmed that judgment. The Lethcoes then filed a motion for full review by this Court to determine whether

a part y can seek m odification of a w orkers’ compens

ation judgment fo

r a fixed sum to be pa

id-3-

periodically

almost two ye

ars after entry

of judgment. DISCUSSION Tennessee Rule of

Civil Procedure 60.02 allows a party to seek relief from a final judgment

on specific grounds such as mistake, inadvertence, surprise, excusable neglect, fra ud, or in cases where the judgment is void. In addition to th ese grounds for

relief, Rule 60.0

2(5) also provides that

a court may relieve a pa rty from a final judgment for “any other reason justifying relief from the operation of the judgment.” Pursuant to Rule 60.02(5), Federated filed a petition to modify th

e chancery court’s final judgment in this case. A party seeking

modification of a judgment under Rule 60.02(5) bears the burden of proving that it is entitled to relief. See Banks v. Dement Constr. Co. , 817 S.W.2d 16, 18 (Tenn . 1991 ). In addition, the party must offer proof o f the basis on which rel ief is sough t. See id. Moreover, the motion for relief must be b rought wi thin a reasonable time after the judgment was entered. See Tenn. R. Civ. P. 60.02(5). Relief granted pursuant to Rule 60.02(5) is a matter within the trial court’s dis cret ion , an d th e tr ial cou rt’ s de cis ion wil l be reve rse d on ly f or ab use of that discretion. See Toney v. Mueller Co. , 810 S.W.2d 145, 147 (Tenn. 1991). Relief under Rule 60.02(5) i s only appropri ate in cases of overwhel ming importan ce or in

cases involving extraordinary circumstances or extreme hardship. See Underwood v. Zurich Ins. Co.
, 854 S.W.2d 94, 97 (Tenn. 1993). Federated contends that this is a case of overwhelm ing importance, and that the chancery court’s modification of the original judgment was justified under these circumstan

ces. To support

its position, Federated relies on this Court’s decision in Brown v. Consolidation Co al Co. , 518 S.W.2d 234 (Tenn. 1974). In Brown , the trial court in itially awa

rded workers’

co mpensation benefits to an emp loyee base

d on a rate sched

ule that was in plac

e at the tim

e th e employee’soccupational dise asewas first fo und to be di sabling. See id. at 237. Fourteen months after the trial court’s judgment, the employer filed a petition to correct that judgme nt on the grounds that the trial court should ha ve inste ad used the rate schedule that was in effect on the date the employee last worked. See id. at

236. This Court gr

anted relief to th

e employer

under Rule

60.02(5) and held that the award of

the correct workmen’s compensation rates applicable to any g iven suit under said Act is of such o

verriding im

portance to

employer and employee alike, that, in those cases whe re there is no disp

ute as to the date controlling the compensation rates, authority is vested by Rule 60.02(5) for the correction of error therein on motion made within a reasonable time and not limited to one year.

Id. at 238. Federated’s reliance on Brown , however, is misplaced. This Court granted relief in that case under Rule 60 .0 2(5) because the initial award was based on an incorrect legal construction of the workers’ compensation laws. See id. at 237-38. By contrast, the final jud gme nt originall y entered by the chancery court in this case was the result of an ag reement between Federated and the Lethcoes. Although Feder ated argues be

fore this Court tha

t it had not reache

d an agreemen

t with the Lethcoes concerning the total benefit, we

are convinced o

therwise. In

its petition to

apportion benefits, Federated explic itly stated: “

Pursuant to

statute plaintiff Federated acknowledges that the maximum benefit to which defendants are entitled would be One Hundred

Fifty-three Thousand One3 We note that modification of awards for periodic payments for more than six months may be appropriate in certain limited circumstances pursuant to Tennessee Code Annotatedsection 50-6- 231 (1999).

4 While the parties appear t o contend that Tennessee courts applied a uniform method of computing the avera ge weekly wage, our research does not reveal such a common interpretation. Rather, it appears that the first r eported interpretation of the s tatute at issue wa

s our decision in Spencer

. Nevertheless, even if our decision in Spencer chan ged a commonly understood computation of the average weekly wage, mod

ification of the or

iginal award still w

ould not be appropriate. Cf. Penland v. Penland , 521 S.W.2d 222 (Tenn. 1975) (refusing to permit modification of a property settlement based on a change of law).

-4- HundredSixteen ($156,116.00) Dollars.” Federated additionally states in its petition to modify the original judgment that “all parties hereto were acting in relianc e on existing lega l authority in Tennessee that defendants wo uld be entitled to a total payment, conditioned on their continued dependence, in the amount of $153,116.00.” And the chancery court, in its opinion modifying

the original award, stated that it was acting “upon statement of the attorney a s it was deemed the rate should be up to [78%] of the state average weekly wage.” Thus, the record clea rly re flects the following: Federated pro

posed that the amo

unt to which the Lethco es were entitled was $153,116.00; the Lethcoes

agreed; and th

e chancery

court entered a

n order pursuant

to this agreeme

nt. While Rule 60.02(5) vests broad authority in

the chancery

court, this power

“is not to be used to relieve a party from free, calculated, a nd deliberate choices [it] has made.” Banks , 817 S.W.2d
at 19. We note that Fe

derated could ha

ve attempted to pe

rsuade the Le

thcoes that some oth er method for calculating benefits should be used, or it could have litigated the case rather than reach

an agreement with

the Lethcoes . Federated did not do so. Further

, even if th

e chancery court somehow erred in entering final judgment pursuant to

the agreement, Federated could have appealed that decision. Yet, again, Federated took no action despite this Court’s frequent admonition that “a party rema

ins under a duty

to take legal steps to protect his own interests.” Banks , 817 S.W.2d at 19. Although Rule 60.02(5) is an ave nue of r elief from a final judgment, the Rule is to be construedquite narrowly. See Under wood
, 854 S.W.2d at 97. We have repeatedly expressed

concernthat reopenin

g workers’ compensation agreements frustrates legitimate goals of judicial economy and finality

of settlements. 3 See Cox v. Martin Marietta E nergy Sy s. , 832 S.W.2d 534, 538 (Tenn. 1992); Hale v. CNA In s. Cos. , 799 S.W.2d 659, 661 (Tenn. 1990). Given thes e polic y considerations and the narrow construction of Rule 60.02(5), we are rel uctant to adopt a rule that per mits a party

to deviate from the

terms of a settleme

nt simply bec

ause a more favo

rable construction of the workers’ compensation statutes is subsequ ently annou

nced by a hi

gher court. If a party wants a more favorable construction of the workers’ compensation statutes, it may bargain for one within the limitations imposed by the settlement provisions of

the code. 4 See Tenn. Code Ann. § 50-6-206 (1999). CONCLUSION We hold that where, as here, a party agre es to settle a workers’ compensation claim and a final judgment is enter

ed pursuant to that

agreement, the

settling party

generally is n ot ent itled to-5-

relief from judgment und

er Rule 60.02(5). We further hold that the chancellor abused his discretion in modifying t

he award in

this case because Rule 60. 02(5) may no t be used to reliev

e a party of

its free, calculated, and deliberate choices. Accordingly , we reverse the judgments of the trial court and the Special Workers’ Compensation Appeals Panel, and we remand this case to the trial court for entry of judgment consistent with this opinion. Cos ts o f th is a ppe al a re t axe d to the app ell ee, F eder ate d Ins uran ce C omp any.