NO. 84-554 INTHE SUPREME COURT OF THE STATE OF MONTANA 1985

LEWIS L. BOWEN, Claimant,

-vsTHE ANACONDA COMPANY, Employer, Defendant and Appellant.

APPEAL FROM: The Workers' Compensation Court of the Stateof Montana, The Honorable Timothy R.eardon, Judge presiding.

COUNSEL OF RECORD:

For Appellant: Andrew J. Utick argued, Helena, Montana

For Respondent: R. Lewis Brown argued, Butte, Montana

For Amicus Curiae: Steve Shapiro, Helena, Montana

Filed: Submitted: October 23, 1985 Decided: February 13, 1986

ClerkMr. Justice John ConwayHarrison delivered the Opinion of the Court.

This is an appeal from a judgment of the Workers' Compensation Court of the StateofKontana. Respondent Lewis Bowen (hereinafter Bowen) entered into a full and final compromise settlement a-greementwith the Anaconda Company, appellant,which purported to settle his claim for injuries sustained on October 25, 1974 and March 3, 1977, while working for the Anaconda Company. Bowen subsequently petitioned the Workers' Compensation Court to reopen his compromise settlementwith theAnaconda Company claiming that the agreement only settled his claim for injuries sustained in 1974, and did not cover his injuries sustained in 1977. The Workers' Compensation Court agreed with Bowen and this appeal followed. We affirm. Rowen was employed by the Anaconda Company a-t its copper smelter in Anaconda, Montana. While so employed, Bowen suffered two industrial accidents to his back on October 25, 1974 and onMarch 3, 1977. TheAnaconda Company accepted liability for Bowen's injuries and paid temporary total disability benefits and medical benefits for both accidents in accordancewithMontana law. On July 23, 1981,Bowen,without the assistance ofhis counselof record,entered intoapetition for full and final compromise settlement with Marilyn Nelson, Anaconda's Workers' Compensation adjuster, in which Bowen agreed to accept $14,175 thereby alleged]-y settling both his claims against the Ana.conda Company. The body of the settlement agreementprovided in pertinent part as follows: The undersianed was accidentally injured 

### on October i5, 1974 while employedby The Anaconda Company an employer enrolledunder Compensation Plan No. I of the Montana Workers1 Compensation Act. The claim was filed and accepted by the insurer for the payment of any compensa.tion and medical benefits due. The total compensation paid to date is $16,272.14. The total medical and hospital benefits paid to date are $7,025.61. A controversy exists between this claimant and insurer over the amount and duration of compensation. This controversy has been resolved by an agreement between the claimant and insurer wherein the claimant agrees to accept the sum of fourteen thousand one hundred seventy five and no/100

($14,175.00) in a lump sum (unless such payments are otherwise directed to be paid biweekly by the Division) in a full and final compromise settlement, which represents compensation for 175 weeks. Furthermedical and hospital benefits are expressly hereby reserved by the claimant, unless otherwise indicated in thispetition. The claimant hereby petitions the Division of Workers1 Compensation, with the concurrence of the above named insurer, for approval of this petition and that the case be fully and finally closed on the basis set forthabove. The claimant understands that if this petition is approved, the claim is forever closed, and can never again be reopened. The petition for compromise settlement was then forwarded to the Division of Workers1 Compensation for approval as required by law. The Division reviewed the document and discoveredan ambiguity in the agreement in that while the agreement only referred to the 1974 accidentdate, it also stated the amounts of compensation and medical benefits paid to date on both claims, and it also reflected that the settlementwas computed based upon the 1977 injury compensation rate. The record indicates the Division,after discovering the ambiguity in the settlement agreement,conducted an investigation into the matter and ascertained, to its own satisfaction, that amistake had been made in not includingboth accidentdates in the agreement. The Division subsequently revised the settlement agreement to also include the 1977 accident date, and issued an order approving the settlement agreement stating that both Bowen's 1974 and 1977 injury claims were settled for $14,175. Thereafter, the Workers' Compensation Court approved the Division's order closingboth ofBowen's claims. On December 13, 1982, Bowen filed a Petition for Hearing with the Workers' Compensation Court in which he soughtto setaside the settlement agreement described above. Bowen asked the court to set aside the settlement agreement upon the grounds that his treating physician had misled him into believing that he had sustained no serious permanent injuries as a result of the accidents, and also that he was misled by representativesof the Anaconda Companywho advised him that he was not entitled to a larger settlement. On March 29, 1983, Rowen filed a second Petition for Hearing with the Workers' Compensation Court in which he abandoned his argument set out in the first Petition for Hearing. In the second Petition for Hearing Bowen ad.vanceda new theory that the settlement agreement only settled his claim for injuries sustained in 1974,and did not settle his claim for injuries sustained in 1977. The case proceeded to trial and the parties filed a stipu-lationthat the issues before theWorkers

### ' Compensation Court should be bifurcated as follows: (1) Whether the court had jurisdiction over this matter in view of the provisions of S 39-71-204(2) and S 39-71-2909, MCA; and

(2) Whether the settlement agreement hetween the parties,and the order of the Division of Workers' Compensation approving the agreement, effectuated a compromise settlement of Bowen's claim concerning his 1977 injury. The parties also stipulated that the court should decide these issues based upon the recordmade todate. During trial Bowen argued that he never intended to settle both his claims in the settlement agreement and also, that on its face, the settlement agreement only referred to the 1974 accident date. The Anaconda Company responded by asserting that although the settlement agreement only referred to the 1974 accidentdate, italso included the 1977 accidentbecause the figureson the agreement corresponded to both the 1974 and 1977accidents. Furthermore, theAnaconda Company argued that Bowen fully intended to settle both his claims in the settlement agreement because the extrinsic evidence surrounding the settlement agreement overwhelmingly pointed to this conclusion. The Anaconda Company also vigorously argued that theWorkers' CompensationCourt lacked jurisdiction over thismatter. In a detailed findings of fact,conclusions of law and judgment entered September 28, 1984, the Workers' Compensation Court found that it had jurisdiction over this matter and thatBowenhad only settledhis claim for the 1974 injury in the settlementagreement. In making its decision, the lower court disregarded the order of the Division which revised the settlement agreement and closed both of Bowen's claims. It refused to consider any of the investigation or documentation contained in the Division file. It considered the settlement agreement to be unambiguous within its four corners, thereby negating the need to consider any extrinsic

or par01 evidence to determine themeaning of the agreement.The Anaconda Company presents the following issues for review: (1) Whether the Workers

### ' Compensation Court lacked jurisdiction to alter, rescind or amend the order of the Division of Workers' Compensation which revised the settlement agreementand closedboth ofBowen's claims? (2) Whether the Workers' Compensation Court erred in not upholding the Division's order which revised the settlement agreementand closed both ofBowen's claims? (3) Whether the Workers' Compensation Court erred in not considering theparol evidence introducedby theAnaconda Company at trial to help explain the meaning of the settlementagreement? (4) Whether the Workers' Compensation Court erred in not consideringparol evidence offered into evidence without objection and by stipulation? We hold the firsttwo issues presented by the Ananconda Company to be dispositiveof the instant case,and only these two issueswillbe discussed. The thrust of the Anaconda Company's argument in the instant case is that the Workers' Compensation Court, in general, lacks jurisdiction under Montana law to rescind, alter or amend an order of the Division of Workers' Compensation approving a compromise settlement agreement. The Anaconda Company begins this argument by pointing out that althougha compromise settlement agreement is considered a contract and the law of contracts applies in the construction and enforcement of a settlement agreement, the agreement is not valid until it is approved by the Division of Workers' Compensation. Kienas v. Peterson (Mont. 1980)

## , 624P.2d 1,37 St.Rep. 1747and § 39-71-741,MCA.Next, the Anaconda Company points out that after the Division has issued its order approving a settlement agreement,the order is referredto the Workers' Compensa.tion Court for review pursuant to 

### 5 39-71-2908,MCA. This statute provides that the judgemay disapprove the Division's order, but does not require his approval; although as a matter of practice, the judge has issued an order indicating approvals

aswell asdisapprovals. TheAnaconda Companypoints out, in the case where the judge approves the Division's order, he then loses jurisdiction to consider the agreement further,as specifically indicated in S 39-71-204(2) and 5 39-71-2909, MCA. These statutes pr0vid.ein pertinent part as follows: Section 39-71-204(2). [Elxcept as provided in 5 39-71-2908, the division or theworkers' compensation judge shallnot have the power to rescind, alter, or amend any order approving a full and final compromise settlement of compensation. Section 39-71-2909. [The Workers

### ' Compensation] judge may not change



# ...any order approving a full and final compromise settlement of compensation. The Anaconda Company argues that according to these rules of finality, a settlement agreement can only he reopened by the Workers' Compensation Court upon a showing of fraud,mutual mistake fact, personal incapacity of the claimant make a binding contract. Parrent v. Midway Toyota (Mont. 1981), 626 P.2d 848, 38 St.Rep. 559; Kienas 

### v. Peterson, supra; Williams v. Industrial Accident Board (1939), 109 Mont. 235, 97P.2d 1115. The Anaconda Company argues the Workers' compensation Court was totally without jurisdiction to rescind, alter or amend the order of the Division which determined, a.ftera thorough investigation, that both of Bowen's claims had beenclosed by the settlement agreement. The Anaconda Company argues the Workers' Compensation Court had every opportunity to disapprove the order of the Division when the matter was referred to the court pursuant to the provisions of S 39-71-2908, MCA. The Aria-conda Company stresses that the actions of the Workers1 Compensation Court in the instant

case are exactly what S 39-71-204(2) and S 39-71-2909, MCA,

are designed toprohibit. We disagree. In theory, the argument of the Anaconda Company is sound, but in application to the instant case the argument does not hold water. We agree that S 39-71-204(2) and 5 39-71-2909 seem to state quite clearly that where a Workers1Compensation judge approvesor fails todisapprove a Division order pursuant to S 39-71-2908, he then loses the authority to considerthe settlement agreement further except upon a showing of fraud, mutual mistake of fact, or a personal incapacity of the claimant to ma.ke a binding contract. However, in the instant case, the Workers1 Compensation Court did not violate the provisions of the above statutes because it did not actually rescind,alter or amend the order of the Division approving the settlement agreement. We base this conclusion on the fact that the Division itself has statutory authority unilaterally modify a settlementagreement,as itdid in the instantcase. The function of the Division with respect to the disposition of settlement aqreements is as follows: [Tlhedivision ishereby vested with full power, authority, and jurisdiction to allow and approve compromises of claims under this chapter. All settlements and compromises of compensation provided in this chapter are void without the approval of the division. Approval of the division must 

### be in writing. The division shall directly notify everyclaimant of any division order approving or denying a claimant's settlement or compromise of a claim. (Section 39-71-741,MCA)

# . Clearly,under this statute,the Division has no authority to unilaterally rescind, alter or amend the terms of a settlement agreement. It can only allow and approve or disallowaproffered settlementagreement. In the instant case, the Division discovered an ambiguity in the settlement agreement and concluded,after a thorough investigation, that a mistake had been made in not including both the 1974 and 1977 accident dates in the agreement. The Division subsequently revised the settlement agreement to also include the 1977 accidentdate, and issued an order approving the agreement. Under $ 39-71-741, MCA, the Divisionclearlydoes not have the authoritytomodify or revise a settlement agreement. Therefore, that portion of the Division's order which went beyond its statutory authority in expanding the settlement agreement to also include the 1977 accident date is a nullity and of no force

or effect whatsoever. Consequently, the Workers' Compensation Court did not actually rescind, alter or amend the order of the Division approving the settlement agreement because the Division's order only validly approved Bowen's 1974 injury claim. Therefore, because there is no valid Division order foreclosing Bowen's right to pursue his 1977 injury claim, the remaining issues presented by theAnaconda Companybecome moot and need notbe discussed. The judgment of the Workers' Compensation Court is affirmed.We concur:

Chief JusticeMr. JusticeFred J. Weber dissents as follows: I dissent from the majority opinion which affirms the Workers' Compensation Court. I conclude that the opinion considers only a portion of the pertinent facts and law. Both the majority opinion and the Workers' Compensation decision emphasize that the petition for full and finalcompromise settlement stated "The undersigned claimant was accidentally injured on October 25, 1974

# ...." From that statement in the petition, the Workers' Compensation Court concluded that the wording within the four corners of the contract,was not ambiguous,and therefore no parole evidence could be admitted to show that the settlement petition covered two injuries rather than only the injury of October 25, 1974. The majority opinion then concluded that the Division's revision of the settlement agreement to cover two dates of injurywas beyond the authority of the Division and therefore that portion of the order expanding the settlement to include the 1977 accident was a nullity and of no force and effect. The majority then concluded that the order of the Division a.pproved only claimant's 1974 injury claim. In addition to the foregoing facts, it is important to note that the order approving a full and final compromise settlement stated as follows: Lewis L. Bowen was accidentally injured on October 25, 1974 & March 3, 1977, while employed by the Anaconda Company

# .. . That order was signed on September 28, 1981by the administrator of the Division. The orderwas approved by the workers' compensation judge on September 29, 1981. Under the opinions of this Court, a full and final compromise settlement can only be reopened upon a showing of fraud,mutual mistake of fact, or personal in~~pacity.See Williams 

### v. Industrial Accident Board (1939)

## , 109 Mont. 235, 97 P.2d1115;Kienasv. Peterson (Mont. 1980), 624P.2d 1, 37 St.Rep. 1747. Foradiscussionof the distinction between rescission of a final settlement agreement and rescissionof a full and final compromise settlement, see Hutchinson 

### v. Intermountain Insurance Company (Mont. 1985), 710 P.2d 1810, 42 St.Rep.

Themajority opinion concluded that theWorkers' Compensation Court did not actually rescind, alter or amend the previ-ous order because the Division's order only validly approved the 1974 injury claim. The majority ignores the specific provisions in the Division's order which approved the full and final compromise settlement for both the 1974 and 1977 injuries, as did the Workersf Compensation Court itself. Of particular significance at this point are the provisions of 5 39-71-743, MCA, which in pertinent part states: (4) The division ha.s full power, authority and jurisdiction to allow and approve compromises of claims under this chapter. All settlements and compromises of compensationprovided in this chapter are void without the approval of the division. Approval of the division must be in writing 

# . . .

(Emphasis supplied.) The only settlementapprovedby the Divisioncoveredboth the October 25, 1974andMarch 3,1977 injuries. There isno way in which the Division and WorkersfCompensation order could be classed as an approval only of the 1974 injury. The Division has the fullpower and authority to a.pprovecompromises. It approved a compromise of both the 1974 and 1977 injuries. The settlement of $14,175 is specifically stated to be a settlement of the claim for both injuries. If the Division did not have authority to revise the settlement agreementas stated in themajority opinion,then there isno longer an outstanding settlement agreement. Clearly the settlement approved by both the Division and the courtcovered both claims and cannot be restricted to the 1974 injury. Themajority is incorrect in finding that the Divisionvalidly approved the 1974 injury claim. That isnot the effect of the order. Under the statute,any settlement not approved by the Division is void. The Division has not approved the settlement of $14,175 for the 1974 injury only. In the absence of such an approval, the settlement is void. At theverymost, if an appropriate theory for reopening the order of September 28, 1981 canbe found,the compromise settlement would ha.veto be set aside in full. It is totally inappropriate to call it a settlementof the 1974 injury. I would reverse theWorkers' CompensationCourt.

1 A Justice

Mr. Justice L. C. Gulbrandson joins in the dissentof

Mr. Chief JusticeJ. A. Turnage: Iconcur in the dissentofMr. JusticeWeber. 

# gCT

Ch' f ustice