No. 86-143
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
DARRYL V. WELDELE,
Claimant and Respondent,
-vs-
MEDLEY DEVELOPMENT, Employer,
and
STATE COMPENSATION INSURANCE FUND,
Defendant and Appellant.
APPEAL FROM: The Workers' Compensation Court, The Honorable
Timothy Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Warden, Christiansen, Johnson & Berg; Stephen C Berg,
Kalispell, Montana
For Respondent :
Trieweiler Law Firm; Michael C. Prezeau, Whitefish,
Montana
Submitted on Briefs: Aug. 28, 1986
Decided: June 25, 1987
Filed:
JUN 2 5 1987
Mr. Justice F7illiam E. Hunt, Sr., delivered the Opinion of
the Court.
The State Compensation Insurance Fund (State Fund)
appeals a Workers' Compensation Court order setting aside the
full and final compromise settlement of respondent Darryl
Weldele's Workers' Compensation claim.
We affirm.
The dispositive issue on appeal is whether a mutual
mistake of material fact, at the time the compromise
settlement was entered into, prevented the parties from
effectively consenting to the agreement. The Workers'
Compensation Court found that there was and we agree.
In July, 1978, respondent suffered a work-related
injury while working for Medley Development in Cascade
County, Montana. The State Fund accepted liability for
respondent's injury and paid temporary total disability
benefits to him. At the time of the injury, respondent
experienced pain from the base of his neck down to his wrist
and across his right shoulder and shoulder blade. Several
days after the injury, respondent went to a hospital
emergency room where he was examined by Dr. George Schemm.
Dr. Schemm tested respondent at that time and later testified.
by deposition that the results of the test were consistent
with carpal tunnel syndrome, which is a compression of a
nerve in the wrist. Dr. Schemm also testified that he
considered thoracic outlet syndrome as an explanation for
respondent's neck and arm pain but that he found no evidence
of that problem at that time. Dr. Charles Jennings also
examined respondent and found indications of carpal tunnel
syndrome and rotator cuff syndrome, the latter being an
inflammation of shoulder tendons. Dr. Jennings considered
the possibility that respondent had thoracic outlet syndrome,
but rejected that diagnosis. In August, 1978, Dr. Schemm
operated on respondent to relieve respondent's carpal tunnel
syndrome.
In July, 1980, respondent, with counsel, petitioned the
Workers' Compensation Division for a lump-sum payment of
$14,000 as a full and final compromise settlement of his
claim. At that time, respondent was still experiencing
severe discomfort with his right arm. Respondent testified
that both Dr. Jennings and Dr. Schemm assured him prior to
his petition that the carpal tunnel syndrome had been treated
fairly successfully and that his continuing problems with the
rotator cuff syndrome would very probably dissipate over
time.
The State Fund claims examiner approved a full and
final compromise settlement of respondent's claim for
$14,000. In August, 1980, the Workers' Compensation Division
formally approved the settlement. At that time, the claims
examiner believed respondent's injuries were a right rotator
cuff tear, a healed carpal tunnel syndrome on the right side
and some chronic pain.
Following the execution of the settlement agreement,
respondent experienced increasing difficulties with pain and
loss of feeling in his right shoulder and arm. Respondent
saw a number of doctors in attempting to resolve his
problems. Beginning in 1982, several doctors mentioned the
possibility that respondent might be suffering from thoracic
outlet syndrome. Generally, thoracic outlet syndrome is a
compression of, or pressure on, certain nerves and/or
arteries in the chest around the collarbone area which can
have serious effects on the shoulders, arms and hands of the
afflicted.
In 1982, Dr. Bonvallet diagnosed respondent as having
symptoms of thoracic outlet syndrome on the right side. He
performed an operation on respondent in November, 1982, to
attempt to relieve the thoracic outlet syndrome. During the
course of the operation, Dr. Bonvallet made objective
findings consistent with that condition. He later testified
that he thought that it was more probable than not that
respondent's 1978 work injury was the cause of the thoracic
outlet syndrome symptoms. Initially, the operation was very
successful in relieving respondent ' s discomfort. Within two
months, however, respondent's symptoms had returned almost to
the same degree. In October, 1983, respondent quit his job
on the advice of his doctors and because of worsening
symptoms. He has not been employed since then.
In January, 1985, Dr. Oreskovich diagnosed respondent
as suffering from thoracic outlet syndrome on the left side.
He testified by deposition that he thought respondent
developed thoracic outlet syndrome because of the 1978
work-related injury. He stated that he knew that within a
reasonable degree of medical certainty. Dr. Oreskovich also
stated that thoracic outlet syndrome is difficult to
diagnose. Dr. Bonvallet agreed with Dr. Oreskovich on this
point and added that, in his experience, patients suffering
from thoracic outlet syndrome are commonly misdiagnosed for
three or four years. In June, 1985, Dr. Oreskovich operated
on respondent and performed a first rib resection on the left
side in an attempt to relieve the thoracic outlet syndrome.
During the operation, this doctor also made objective
findings confirming his diagnosis of thoracic outlet
syndrome.
In May, 1985, respondent requested his case be reopened
on the grounds that it had been settled due to a mutual
mistake of a material fact. The allegedly mistaken fact was
the nature, and extent, of respondent's medical condition.
The State Fund declined to reopen the case. The court held a
hearing on respondent's petition in October, 1985, and in
January, 1986, the court issued its decision.
The court found that at the time of the settlement
agreement both the respondent and the State Fund's claims
examiner, believed that respondent's injuries were limited to
a healed carpal tunnel syndrome and a rotator cuff problem.
The court also found that respondent is suffering from
thoracic outlet syndrome, which condition resulted from
respondent's 1978 work injury. The court ruled that both
parties were operating under a mutual mistake of material
fact in entering the settlement agreement. Therefore, the
court held that respondent was entitled to reopen the
settlement.
Generally, S 39-71-204, MCA, limits the power of the
Workers' Compensation Court to amend a compromise settlement:
Except as provided in 39-71-2908, the
division of the workers' compensation
judge shall not have the power to
rescind, alter, or amend any order
approving a full and final compromise
settlement of compensation.
Section 39-71-204 (2), MCA.
Under § 39-71-2908, MCA, the Workers' Compensation
judge may, within ten days of the judge's receipt of the
order, disapprove an order allowing a full and final
compromise settlement. "This Court has held in several cases
that these statutes preclude reopening of [sic] workers '
Compensation settlements." Sollie v. Peavey Co. and
Travelers Indemnity Co. (Mont. 19841, 686 P.2d 920, 41
St.Rep. 1684.
However, in Kienas v. Peterson (Mont. 1980), 624 P . 2 d
1 , 37 St.Rep. 1747, opinion on rehearing, 38 St.Rep. 320,
this Court established that under ordinary contract law a
full and final compromise settlement could be set aside if
the parties to the agreement were operating under a mutual
mistake of material fact. We said "a universally accepted
tenet of contract law, statutory in our state, that consent
to the contract is lacking if it is entered into through
mutual mistake of a material fact by the parties." Kienas,
3 8 St.Rep. at 3 2 1 . It is well settled that if there is no
consent, there is no contract. Section 2 8 - 2 - 4 0 9 , MCA, states
that:
Mistake of fact is a mistake not caused
by the neglect of a legal duty on the
part of the person making the mistake and
consisting in:
(1) an unconscious ignorance or
forgetfulness of fact, past or present,
material to the contract; or
(2) belief in the present existence of a
thing material to the contract which does
not exist or in the past existence of
such a thing which has not existed.
In Kienas, we allowed the claimant to reopen his full and
final compromise settlement because neither party to the
agreement realized that Kienas' work-related injury could
have aggravated or accelerated his prior condition of
cerebral palsy.
Here, the Workers1 Compensation Court found there was a
mutual mistake of fact. From the record before us we find
there is more than sufficient evidence to support the finding
by the lower court of mutual mistake by the parties. This
case is similar to Kienas on that issue and we find that case
to be controlling. Claimant Weldele and the appellant were
mistaken as to the thoracic outlet syndrome. All doctors
interviewed in this case testified that thoracic outlet
syndrome is very difficult to diagnose. One specialist
stated the syndrome is frequently misdiagnosed for three or
four years. The doctors who treated the claimant for this
syndrome believed the syndrome was caused by his 1978
accident. This syndrome is uniquely difficult to diagnose.
The evidence shows an unconscious ignorance of a material
fact on the part of both parties upon which the final
settlement was based.
The need to fairly compensate the injured worker is the
intent and the purpose of the Workers' Compensation law.
Kienas v. Peterson (Mont. 1980), 624 P.2d 1, 3, 37 St.Rep.
1751. We find the final compromise settlement was correctly
set aside by the Workers' Compensation Court.
We affirm the decision of the Workers' Compensation
A
Court.
Justice
We Concur:
Chief Justice
Justices
Mr. Justice L. C. Gulbrandson, dissenting.
I respectfully dissent.
In my view, the Kienas decision, which the majority
found to be controlling, should not be used as authority in
this case. In Kienas, the claimant, who was not represented
by counsel, entered into a full and final compromise
settlement for a payment of $4,040, where the claim involved
potential payments in excess of $115,000. The Workers'
Compensation Court refused to set aside the settlement, and
on appeal, this Court, finding the case to be unique, applied
contract law and reversed and remanded, without discussing
§ 39-71-204, and § 39-71-2909, MCA, which limits the power of
the Workers' Compensation Court to rescind, alter, or amend
an order approving a final compromise settlement. Upon
rehearing Kienas, this Court considered § 39-71-204, MCA and
§ 39-71-2909, MCA, stating the following:
Petitioner argues that the Workers'
Compensation court had no power to alter
or rescind a full and final compromise
settlement agreement four years after the
parties had -executed the same.
- Section
39-71-204, MCA. However, in Kienas, the
Workers' compensation Court did not set
aside the agreement. This Court set
aside the agreement. Our appellate power
--
- - limited to section 39-71-204 -
is not nor
39-71-2909, MCA. See section 3-2-204,
MCA. ( ~ m ~ h aadded. )
s K
Kienas, 37 St.Rep. at 321.
In this case, the claimant was represented by a highly
qualified, experienced attorney who presented the petition
for full and final compromise settlement in July 1980, and
obtained approval in August 1980. The request to reopen was
not made until May 1985, more than four years after the order
approving final compromise settlement.
The Workers' Compensation Court was created by the
legislature and can only act within the jurisdictional limits
established by the legislature. The majority here has, in my
opinion, extended the Kienas doctrine by ignoring the
jurisdictional limits of 5 39-71-2909, MCA, and this Court's
opinion on rehearing Kienas.
As an additional basis for dissent, I note that
5 28-2-409, MCA, requires an unconscious ignorance of a past
or present fact, material to the contract.
For application of that section I quote the following:
The courts have frequently stated, as a
general principle of the law of mistake,
that in order to support a claim for
relief the mistake relied upon must have
been as to a past or existing fact, and
that future developments are matters of
opinion only and mistakes as to such
matters cannot be the basis for relief
from a contract.
This principle has frequently been
invoked in cases where an attempt was
made to avoid a release allegedly
executed under a mutual mistake as to the
nature and extent of the releasor's
injuries, the claim usually being made
that the mistake was only as to the
-
prognosis of known injuries, and so
related only to opinion. This
requirement that the mistake must have
been as to an existing fact has also
given rise in several jurisdictions to a
rule that the mistake must have been as
to an existing but unknown injury, and
that no relief will be afforded because
of a mistake as to the consequences or
developments of an injury known to have
existed at the time the release was
Annot., 71 A.L.R.2d 82, 100 (1960).
In my opinion, this case should be reversed on the
basis of Sollie v. Peavey Co. (Mont. 1984), 686 P.2d 920, 41
Mr. Chief Justice J. A. Turnage, dissenting:
I concur in the foregoing dissent of Mr. Justice
Gulbrandson.