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:
Filed:
DCT 2 2 y3:,
Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of
t h e Court.
T h i s i s a n a p p e a l by a n i n j u r e d workman from a judgment
of t h e Workers' Compensation C o u r t which d e n i e d c l a i m a n t ' s
p e t i t i o n t o reopen a f u l l and f i n a l compromise s e t t l e m e n t
agreement.
Kenneth Kienas ( h e r e i n a f t e r c a l l e d c l a i m a n t ) w a s i n -
j u r e d i n a n i n d u s t r i a l a c c i d e n t w h i l e working f o r h i s e m -
p l o y e r , James C. P e t e r s o n . A t t h e t i m e of t h e i n j u r y , t h e
employer was e n r o l l e d under P l a n 3 of t h e Workers' Compen-
s a t i o n A c t , w i t h t h e S t a t e Compensation I n s u r a n c e Fund
( h e r e i n a f t e r c a l l e d S t a t e Fund) b e i n g t h e i n s u r e r .
Claimant i s a thirty-two-year-old man from M i s s o u l a ,
Montana. H e was i n j u r e d i n a n i n d u s t r i a l a c c i d e n t on Sep-
tember 25, 1977, w h i l e working a s a cook a t t h e Country
K i t c h e n R e s t a u r a n t i n M i s s o u l a , Montana. C l a i m a n t was
i n j u r e d when, on h i s way t o a c o o l e r l o c a t e d i n t h e k i t c h e n
a r e a , he s l i p p e d and f e l l . I n a n a t t e m p t t o b r e a k o r slow
h i s f a l l , c l a i m a n t g r a s p e d a c o u n t e r n e a r him, b u t t h e
c o u n t e r c o l l a p s e d and a r a c k f u l l o f d i s h e s and c a r t o n s f e l l
on him.
C l a i m a n t f e l t p a i n i n h i s lower back immediately a f t e r
the 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. L a t e r he was r e f e r r e d t o D r . P a t r i c k R. Robins,
a n o r t h o p e d i c surgeon. Dr. Robins o b s e r v e d 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 r e v e a l any
e v i d e n c e of any r e c e n t bony o r s o f t t i s s u e . A physical
e x a m i n a t i o n was conducted on c l a i m a n t which r e v e a l e d t e n d e r -
n e s s and spasms i n t h e lower back a r e a . Dr. 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
n e u r o l o g i c a l problems. C l a i m a n t h a s n o t been a b l e t o work
f o r the e n t i r e period. H e was referred t o rehabilitation
c e n t e r s and o t h e r c l i n i c s - - a l l t o no a v a i l . A radiologist
a t t h e c l i n i c found " r a t h e r s i g n i f i c a n t d e g e n e r a t i v e changes
f o r a p a t i e n t o f h i s a g e , 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 p o s s e s s i o n o f
t h e D i v i s i o n of Workers' Compensation and t h e S t a t e Fund
b e f o r e any s e t t l e m e n t was made w i t h c l a i m a n t .
A f t e r numerous o t h e r e x a m i n a t i o n s , D r . Robins d e t e r -
mined t h a t c l a i m a n t had p r o g r e s s e d a s f a r as he was g o i n g
t o , and, t h e r e f o r e , D r . Robins f e l t he w a s u n a b l e t o g i v e a n
impairment r a t i n g . However, he e s t i m a t e d c l a i m a n t ' s i m p a i r -
ment r a t i n g t o be 5 p e r c e n t and s u p p l i e d t h i s i n f o r m a t i o n t o
t h e f i e l d r e p r e s e n t a t i v e of t h e S t a t e Fund. Testimony
r e v e a l e d t h a t a t t h e 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 t a k e i n t o a c c o u n t c l a i m a n t ' s p r e e x i s t i n g
neurological condition. Claimant has c e r e b r a l palsy.
C l a i m a n t asserts t h a t t h e a c c i d e n t a g g r a v a t e d t h i s p r e e x i s t -
i n g c o n d i t i o n and t h a t t h e s e t t l e m e n t o f f e r e d t o c l a i m a n t
d i d n o t take t h i s f a c t o r i n t o account,
A t no t i m e from t h e d a t e of c l a i m a n t ' s i n j u r y t o h i s
a c c e p t a n c e o f t h e s e t t l e m e n t was c l a i m a n t r e p r e s e n t e d by a n
a t t o r n e y , nor d i d he have c o u n s e l a s t o h i s c l a i m . The
S t a t e Fund was aware o f c l a i m a n t ' s f i n a n c i a l d i f f i c u l t i e s ,
i n c l u d i n g h i s i n a b i l i t y t o make c h i l d s u p p o r t payments. The
S t a t e Fund w a s aware of c l a i m a n t ' 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 p a l s y , h i s p e r s i s t e n t back p a i n , and
o f m e d i c a l r e p o r t s showing d e g e n e r a t i v e changes i n c l a i m a n t ' s
s p i n a l cord.
The S t a t e Fund o f f e r e d a s e t t l e m e n t on a " f u l l and
f i n a l compromise b a s i s , " p r e v e n t i n g r e v i e w o r a l t e r a t i o n by
statute. C l a i m a n t c o n t e n d s t h a t t h e S t a t e Fund d i d n o t
i n f o r m him of o t h e r p o s s i b l e s e t t l e m e n t p l a n s nor of t h e
chance t o r e c e i v e g r e a t e r b e n e f i t s .
A c l a i m 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 c l a i m a n t 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 p a i d b e n e f i t s c o n t i n u o u s l y from September 26, 1977
t h r o u g h J u n e 1 8 , 1978.
C l a i m a n t s i g n e d 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 s e t t l e m e n t on J u n e 1 5 , 1978. T h i s p e t i t i o n was ap-
proved by t h e d i v i s i o n a d m i n i s t r a t o r on J u n e 20, 1978, and
was c o n c u r r e d i n by t h e Workers' Compensation judge on J u n e
26, 1978. The t o t a l amount of t h e s e t t l e m e n t was $4,040.54.
On October 1, 1979, c l a i m a n t f i l e d i n t h e Workers' Com-
p e n s a t i o n C o u r t a p e t i t i o n f o r a h e a r i n g t o reopen c l a i m -
a n t ' s f i l e and t o s e t a s i d e t h e f u l l and f i n a l compromise
s e t t l e m e n t of J u n e 1978 on t h e b a s i s of c o n s t r u c t i v e f r a u d
on t h e p a r t of t h e S t a t e Fund. On December 11, 1979, t h e
c a s e was h e a r d b e f o r e t h e Workers' Compensation C o u r t .
The Workers' Compensation C o u r t 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 c o u l d n o t b e charged w i t h
knowing t h a t t h e c o n d i t i o n of c l a i m a n t p r i o r t o h i s a c c i d e n t
would be a g g r a v a t e d 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 i t
would make him t o t a l l y d i s a b l e d and r e f u s e d t o s e t a s i d e t h e
f u l l and f i n a l compromise s e t t l e m e n t .
Subsequent e x a m i n a t i o n s by D r . Gary D. Cooney, a neu-
r o l o g i s t , found c l a i m a n t t o t a l l y d i s a b l e d and t h a t t h e
a c c i d e n t c o u l d have a g g r a v a t e d t h i s muscular c o n d i t i o n . A
t o t a l l y d i s a b l e d p e r s o n 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 . C l a i m a n t 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 c a s e i s whether t h e f u l l
and f i n a l compromise s e t t l e m e n t agreement e n t e r e d i n t o by
t h e p a r t i e s was e n t e r e d i n t o by mutual m i s t a k e ; and, i f s o ,
whether t h e c o n t r a c t s h o u l d be s e t 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 e n t e r e d 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 o f c o n t r a c t s a p p l i e s
i n c o n s t r u i n g and d e t e r m i n i n g t h e v a l i d i t y and e n f o r c e -
a b i l i t y of t h e s e t t l e m e n t agreement. The p e r t i n e n t s t a t u t e s
provide:
S e c t i o n 28-2-102, MCA:
" I t i s e s s e n t i a l t o t h e e x i s t e n c e 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 c a p a b l e of c o n t r a c t -
ing;
" (2) t h e i r consent;
" (3) a l a w f u l o b j e c t ; and
" (4) a s u f f i c i e n t cause o r consideration. I'
S e c t i o n 28-2-301, MCA:
"The c o n s e n t 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 ) m u t u a l ; and
" ( 3 ) communicated by e a c h t o t h e o t h e r . "
S e c t i o n 28-2-401, MCA:
" (1) An a p p a r e n t c o n s e n t i s n o t r e a l o r
f r e e when o b t a i n e d through:
" (e) mistake.
" ( 2 ) Consent i s deemed t o have been o b t a i n e d
t h r o u g h one o f t h e c a u s e s mentioned i n sub-
s e c t i o n (1) o n l y when i t would n o t have been
g i v e n had such c a u s e n o t e x i s t e d . "
S e c t i o n 28-2-408, MCA:
"Mistake may b e e i t h e r of f a c t o r law."
S e c t i o n 28-2-409, MCA:
"Mistake - - f a- t i s a m i s t a k e - c a u s e d by
of - c not
t h e n e g l e c t - -a l e g a l d u t y - -e p a r t -r
of on t h o
t h e p e r s o n making t h e m i s t a k e and c o n s i s t i n g
" ( 1 ) an unconscious ignorance o r f o r g e t f u l n e s s
o f-a f a c t , -s t o r p r e s e n t , m a t e r i a- -o t h e
- - pa - l t -
contract; o r
" ( 2 ) b e l i e f - -e p r e s e n t e x i s t e n c e - -a
i n th of
t h i n g m a t e r i a l - -e c o n t r a c t which d o e s
t o th
n o t e x i s t o r i n t h e ~ a s e x i s t e n c e of such a
t
t h i n g which h a s n o t i x i s t e d . " (Emphasis
-
added. )
W e f i n d b o t h p a r t i e s w e r e m i s t a k e n , and t h e r e i s e v i -
dence of a n u n c o n s c i o u s i g n o r a n c e o f a f a c t t h a t i s m a t e r i a l
t o the contract. N e i t h e r p a r t y a t t h e t i m e of e n t e r i n g t h e
f u l l and f i n a l compromise s e t t l e m e n t knew of t h e e x a c t
n a t u r e o r e x t e n t of t h e i n j u r y s u f f e r e d by c l a i m a n t .
N e i t h e r p a r t y was aware o f any p o s s i b l e d i s a b i l i t y c a u s e d by
i n j u r y on t h e p r e e x i s t i n g c e r e b r a l p a l s y c o n d i t i o n . This
i n f o r m a t i o n r e g a r d i n g t h e s t a t e of c l a i m a n t ' s i n j u r y w a s n o t
a v a i l a b l e t o c l a i m a n t o r t o t h e S t a t e Fund a t t h e t i m e of
e n t e r i n g i n t o t h e f u l l and f i n a l compromise s e t t l e m e n t . It
was n o t u n t i l t h e h e a r i n g t o reopen t h e agreement t h a t
t e s t i m o n y from a n e u r o l o g i s t i n d i c a t e d t h a t t h e i n j u r y c o u l d
have a g g r a v a t e d o r a c c e l e r a t e d t h e p r i o r c e r e b r a l p a l s y .
The Workers' Compensation C o u r t n o t e d i n i t s c o n c l u s i o n s of
law: " I t i s u n f o r t u n a t e t h a t t h e i n f o r m a t i o n f u r n i s h e d by
Dr. Cooney w a s n o t a v a i l a b l e p r i o r t o J u n e , 1978 when
c l a i m a n t made h i s s e t t l e m e n t . . ."
The f a c t s i n t h i s c a s e a r e unique. The p a r t i e s were
l a b o r i n g under a m a t e r i a l m i s t a k e a s t o t h e n a t u r e of and
t h e e x t e n t of c l a i m a n t ' s i n j u r i e s . The need t o f a i r l y
compensate t h e i n j u r e d worker i s t h e i n t e n t and t h e p u r p o s e
of t h e w o r k e r s ' compensation law. The f u l l and f i n a l com-
promise s e t t l e m e n t , t h e r e f o r e , must b e s e t a s i d e f o r mutual
m i s t a k e of a m a t e r i a l f a c t a s t o t h e n a t u r e and t h e 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