Title: KIENAS v PETERSON
Citation: N/A
Docket Number: 80-100
State: Montana
Issuer: Montana Supreme Court
Date: October 22, 1980

No. 80-100 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980 KENNETH KIENAS, Claimant and Appellant, JAMES G. PETERSON, Employer, and STATE COMPENSATION INSURANCE FUND, Insurer, Defendant and Respondent. Appeal from: Workers' Compensation Court Honorable William Hunt, Judge presiding. Counsel of Record: For Appellant: Datsopoulos, MacDonald and Lind, Missoula, Montana Milton Datsopoulos argued, Missoula, Montana For Respondent: Tim Reardon argued, Helena, Montana Submitted: September 9, 1980 Decided: DCT 2 2 y 3 : , Filed: M r . J u s t i c e John Conway Harrison delivered t h e Opinion of the Court. This i s an appeal by an injured workman from a judgment of the Workers' Compensation Court which denied claimant's p e t i t i o n t o reopen a f u l l and f i n a l compromise settlement agreement. Kenneth Kienas (hereinafter c a l l e d claimant) w a s in- jured i n an i n d u s t r i a l accident while working f o r h i s em- ployer, James C. Peterson. A t the t i m e of t h e i n j u r y , t h e employer was enrolled under Plan 3 of t h e Workers' Compen- s a t i o n Act, with the S t a t e Compensation Insurance Fund ( h e r e i n a f t e r c a l l e d S t a t e Fund) being the insurer. Claimant i s a thirty-two-year-old man from Missoula, Montana. H e was injured i n an i n d u s t r i a l accident on Sep- tember 25, 1977, while working a s a cook a t t h e Country Kitchen Restaurant i n Missoula, Montana. Claimant was injured when, on h i s way t o a cooler located i n the kitchen area, he slipped and f e l l . I n an attempt t o break o r slow h i s f a l l , claimant grasped a counter near him, b u t t h e counter collapsed and a rack f u l l of dishes and cartons f e l l on him. Claimant f e l t pain i n h i s lower back immediately a f t e r t h e f a l l . He w a s i n i t i a l l y examined by D r . C. P. Brooke of Missoula. Later he was r e f e r r e d t o D r . Patrick R. Robins, an orthopedic surgeon. D r . Robins observed a minimal amount of lower lumbar s c o l i o s i s , b u t X-rays d i d n o t reveal any evidence of any r e c e n t bony o r s o f t t i s s u e . A physical examination was conducted on claimant which revealed tender- ness and spasms i n t h e lower back area. D r . Robins a l s o noted the physical condition a t t r i b u t e d t o claimant' s o l d neurological problems. Claimant has n o t been a b l e t o work f o r the e n t i r e period. H e w a s r e f e r r e d t o r e h a b i l i t a t i o n c e n t e r s and other c l i n i c s - - a l l t o no a v a i l . A r a d i o l o g i s t a t the c l i n i c found " r a t h e r s i g n i f i c a n t degenerative changes f o r a p a t i e n t of h i s age, e s p e c i a l l y a t L3-4." These re- p o r t s w e r e made a v a i l a b l e t o and were i n t h e possession of t h e Division of Workers' Compensation and the S t a t e Fund before any settlement was made with claimant. After numerous other examinations, D r . Robins deter- mined t h a t claimant had progressed a s f a r as he was going t o , and, therefore, D r . Robins f e l t he w a s unable t o give an impairment r a t i n g . However, he estimated claimant's impair- ment r a t i n g t o be 5 percent and supplied t h i s information t o t h e f i e l d representative of t h e S t a t e Fund. Testimony revealed t h a t a t the t i m e D r . Robins made h i s impairment r a t i n g , he d i d n o t take i n t o account claimant's preexisting neurological condition. Claimant has c e r e b r a l palsy. Claimant asserts t h a t t h e accident aggravated t h i s preexist- i n g condition and t h a t t h e settlement offered t o claimant d i d not take t h i s f a c t o r i n t o account, A t no time from t h e d a t e of claimant's i n j u r y t o h i s acceptance of t h e settlement was claimant represented by an attorney, nor d i d he have counsel a s t o h i s claim. The S t a t e Fund was aware of claimant's f i n a n c i a l d i f f i c u l t i e s , including h i s i n a b i l i t y t o make c h i l d support payments. The S t a t e Fund w a s aware of claimant's i n a b i l i t y t o work, h i s s u f f e r i n g from c e r e b r a l palsy, h i s p e r s i s t e n t back pain, and of medical r e p o r t s showing degenerative changes i n claimant's s p i n a l cord. The S t a t e Fund offered a settlement on a " f u l l and f i n a l compromise basis," preventing review o r a l t e r a t i o n by s t a t u t e . Claimant contends t h a t t h e S t a t e Fund d i d not inform him of o t h e r p o s s i b l e settlement plans nor of t h e chance t o receive g r e a t e r b e n e f i t s . A claim f o r compensation w a s f i l e d , and compensation b e n e f i t s w e r e i n s t i t u t e d t o claimant a s of September 26, 1977. These b e n e f i t s amounted t o $65.17 p e r week. Claimant was paid b e n e f i t s continuously from September 26, 1977 through June 18, 1978. Claimant signed a p e t i t i o n f o r f u l l and f i n a l compro- m i s e settlement on June 15, 1978. This p e t i t i o n was ap- proved by the d i v i s i o n administrator on June 20, 1978, and was concurred i n by t h e Workers' Compensation judge on June 26, 1978. The t o t a l amount of t h e settlement was $4,040.54. O n October 1, 1979, claimant f i l e d i n t h e Workers' Com- pensation Court a p e t i t i o n f o r a hearing t o reopen claim- a n t ' s f i l e and t o set a s i d e t h e f u l l and f i n a l compromise settlement of June 1978 on t h e b a s i s of c o n s t r u c t i v e fraud on t h e p a r t of t h e S t a t e Fund. O n December 11, 1979, t h e case was heard before t h e Workers' Compensation Court. The Workers' Compensation Court found t h a t t h e f i e l d r e p r e s e n t a t i v e f o r t h e S t a t e Fund could n o t be charged with knowing t h a t t h e condition of claimant p r i o r t o h i s a c c i d e n t would be aggravated by a s l i p and f a l l t o t h e e x t e n t t h a t it would make him t o t a l l y disabled and refused t o s e t a s i d e t h e f u l l and f i n a l compromise settlement. Subsequent examinations by D r . Gary D. Cooney, a neu- r o l o g i s t , found claimant t o t a l l y disabled and t h a t t h e a c c i d e n t could have aggravated t h i s muscular condition. A t o t a l l y disabled person would be e n t i t l e d t o r e c e i v e i n ex- c e s s of $115,000 i n b e n e f i t s . Claimant w a s awarded $4,040.54. The d i s p o s i t i v e i s s u e i n t h i s case i s whether t h e f u l l and f i n a l compromise settlement agreement entered i n t o by t h e p a r t i e s was entered i n t o by mutual mistake; and, i f so, whether t h e c o n t r a c t should be set a s i d e . The f u l l and f i n a l compromise s e t t l e m e n t entered i n t o by t h e p a r t i e s i s a c o n t r a c t . The law of c o n t r a c t s a p p l i e s i n construing and determining t h e v a l i d i t y and enforce- a b i l i t y of t h e settlement agreement. The p e r t i n e n t s t a t u t e s provide: Section 28-2-102, MCA: " I t i s e s s e n t i a l t o t h e existence of a con- t r a c t t h a t t h e r e be: " (1) i d e n t i f i a b l e p a r t i e s capable of contract- ing; " (2) t h e i r consent; " ( 3 ) a lawful o b j e c t ; and " ( 4 ) a s u f f i c i e n t cause o r consideration. I' Section 28-2-301, MCA: "The consent of t h e p a r t i e s t o a c o n t r a c t must be: " (1) f r e e ; " ( 2 ) mutual; and " ( 3 ) communicated by each t o t h e o t h e r . " Section 28-2-401, MCA: " (1) A n apparent consent is n o t r e a l o r f r e e when obtained through: " (e) mistake. " (2) Consent i s deemed t o have been obtained through one of t h e causes mentioned i n sub- s e c t i o n (1) only when it would n o t have been given had such cause n o t e x i s t e d . " Section 28-2-408, MCA: "Mistake may be e i t h e r of f a c t o r law." Section 28-2-409, MCA: "Mistake of f a c t i s a mistake n o t caused by ---- - t h e n e g l e c t - - of a l e g a l duty -- on t h e p a r t - o r t h e person making t h e mistake and consisting " ( 1 ) an unconscious ignorance o r forgetfulness of a f a c t , p a s t o r present, m a t e r i a l t o the - - - -- - - - contract; o r " ( 2 ) belief -- i n t h e present existence of a - - thing material t o t h e c o n t r a c t which does -- n o t e x i s t o r i n the ~ a s t existence of such a thing which has n o t i x i s t e d . " (Emphasis added. ) - W e f i n d both p a r t i e s w e r e mistaken, and t h e r e i s evi- dence of an unconscious ignorance of a f a c t t h a t i s material t o the contract. Neither party a t t h e t i m e of entering the f u l l and f i n a l compromise settlement knew of the e x a c t nature o r e x t e n t of the i n j u r y suffered by claimant. Neither p a r t y was aware of any possible d i s a b i l i t y caused by i n j u r y on t h e preexisting cerebral palsy condition. This information regarding the s t a t e of claimant's i n j u r y w a s n o t a v a i l a b l e t o claimant o r t o the S t a t e Fund a t the t i m e of entering i n t o the f u l l and f i n a l compromise settlement. I t was n o t u n t i l t h e hearing t o reopen the agreement t h a t testimony from a neurologist indicated t h a t t h e i n j u r y could have aggravated o r accelerated the p r i o r c e r e b r a l palsy. The Workers' Compensation Court noted i n i t s conclusions of law: " I t i s unfortunate t h a t the information furnished by D r . Cooney w a s n o t a v a i l a b l e p r i o r t o June, 1978 when claimant made h i s settlement. . ." The f a c t s i n t h i s case a r e unique. The p a r t i e s were laboring under a material mistake a s t o t h e nature of and t h e e x t e n t of claimant's i n j u r i e s . The need t o f a i r l y compensate the injured worker is t h e i n t e n t and t h e purpose of t h e workers' compensation law. The f u l l and f i n a l com- promise settlement, therefore, must be set a s i d e f o r mutual mistake of a material f a c t a s t o t h e nature and the e x t e n t of the injury caused by claimant's accident. Claimant knew of the cerebral palsy; however, claimant, as well as respon- dent, did not know of the extent of the injury caused by the accident. There is ample evidence on the record for this Court to conclude that the injury sustained by claimant could have accelerated the cerebral palsy. Testimony also indicated that the injury superimposed on the serious neuro- muscular disease could cause serious disabling consequences. The full and final compromise settlement is set aside for a mutual mistake of a material fact, and the Workers' Compensation Court is to determine, after a hearing, the extent of claimant's disability. Reversed and remanded for proceedings consistent with this opinion. We concur: u