KIENAS v PETERSON
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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: Decided: Filed: DCT 2 2 y3:, September 9, 1980 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. Mr. 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' Compens 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 Montana. man from M i s s o u l a , 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' Comp 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 neur 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 exc 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 cont 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. S e c t i o n 28-2-301, I' 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 subs 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: Dr. " 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 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 respondent, 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 neuromuscular 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
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