South v. Transportation Insurance

913 P.2d 233, 275 Mont. 397, 53 State Rptr. 196, 1996 Mont. LEXIS 40
CourtMontana Supreme Court
DecidedMarch 18, 1996
Docket95-426
StatusPublished
Cited by16 cases

This text of 913 P.2d 233 (South v. Transportation Insurance) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
South v. Transportation Insurance, 913 P.2d 233, 275 Mont. 397, 53 State Rptr. 196, 1996 Mont. LEXIS 40 (Mo. 1996).

Opinions

JUSTICE HUNT

delivered the Opinion of the Court.

Appellant Suzanne E. South (South) appeals the decision of the Montana Workers’ Compensation Court denying her petition to rescind a settlement agreement arising from her 1986 back injury. We reverse.

The sole issue on appeal is whether the Workers’ Compensation Court erred in refusing to rescind the settlement agreement.

FACTS

South sustained an on-the-job injury to her back in 1986. She underwent back surgery in late 1986 and again in 1988 to alleviate her back problems. Both surgeries were on the “L5/S1” level of her [400]*400spine. In 1990, she entered into a Ml and Mai compromise settlement agreement with her insurer. The settlement agreement provided a list of seven jobs which both parties felt were acceptable for South to do, and which were approved as appropriate by a doctor. One of the approved jobs was that of massage therapist. After accepting and signing the settlement agreement, South moved to Seattle in order to begin massage therapist training. Shortly after beginning the program, however, South began to experience worsening back pain, for which she consulted a Seattle area doctor. When her back pain did not abate, South quit the massage training program and returned to Montana.

In 1994, South underwent a third surgery on her back, at the “L4-5” level of the spine. She subsequently petitioned the Workers’ Compensation Court to rescind the settlement agreement, alleging that both parties were operating under a mutual mistake of fact when it was signed. After trial, the Workers’ Compensation Court denied South’s petition and declined to rescind the settlement agreement. In so doing, the Workers’ Compensation Court pointed out that the current problem area in South’s back is different than the area injured in her 1986 on-the-job accident. The Workers’ Compensation Court further cited testimony given by South’s doctor, who stated that “something new” must have happened around 1991 to cause the re-injury. On this basis, the Workers’ Compensation Court found that the parties were not operating under a mutual mistake regarding the nature or extent of South’s injuries at the time the settlement agreement was reached. It therefore refused to rescind the settlement agreement, and South appeals.

ISSUE

Did the District Court err in refusing to rescind the settlement agreement?

STANDARD OF REVIEW

We review the Workers’ Compensation Court’s findings of fact to determine whether substantial credible evidence supports the findings. Strickland v. State Comp. Mut. Ins. Fund (1995), [273 Mont. 254], 901 P.2d 1391, 1393 (citing Wunderlich v. Lumbermen’s Mutual Casualty Co. (1995), 270 Mont. 404, 892 P.2d 563). We review the Workers’ Compensation Court’s conclusions of law to determine whether they are correct. Strickland, 901 P.2d at 1393 (citing Glaude v. State Comp. Mut. Ins. Fund (1995), 271 Mont. 136, 894 P.2d 940).

[401]*401DISCUSSION

South alleges that the settlement agreement should be set aside because both parties were mutually mistaken regarding the propriety of “massage therapist” as a career for someone who had suffered a back injury. She contends that the settlement agreement should be rescinded because of this mutual mistake. The Workers’ Compensation Court, however, found that no mistake had been made regarding the nature or extent of South’s injury at the time that the settlement agreement was entered into, and therefore declined to rescind it.

Full and final settlement agreements are contracts and are subject to contract law. Giles v. Bozeman Public Schools (1993), 257 Mont. 289, 292, 849 P.2d 180, 182. A contract may properly be rescinded if the parties were laboring under a mutual mistake regarding a material fact at its inception. Wray v. State Comp. Mut. Ins. Fund (1994), 266 Mont. 219, 879 P.2d 725. “A mutual mistake occurs when, at the time the contract is made, the parties share a common misconception about a vital fact upon which they based their bargain.” Mitchell v. Boyer (1989), 237 Mont. 434, 437, 774 P.2d 384, 386 (citations omitted). In order to justify rescission, the mutual mistake must be regarding a fact that is vital to the completion of the contract. Wray, 879 P.2d at 725. Further, it must be “so substantial and fundamental as to defeat the object of the parties in making the contract.” Wyman v. DuBray Land Realty (1988), 231 Mont. 294, 298, 752 P.2d 196, 199 (citing Johnson v. Meiers (1946), 118 Mont. 258, 164 P.2d 1012).

In the field of Workers’ Compensation, the seminal case on rescission for reason of mutual mistake of fact is Kienas v. Peterson (1980), 191 Mont. 325, 624 P.2d 1. Kienas was the first in a string of modern cases to apply the principles of general contract law to workers’ compensation settlement agreements. In Kienas, a final settlement agreement was set aside because the parties were mutually mistaken regarding the nature and extent of the claimant’s injuries at the time the settlement was established. Kienas, 624 P.2d at 3.

Numerous subsequent cases followed the line of reasoning set forth in Kienas. These cases similarly addressed the question of whether a mutual mistake of fact existed regarding the nature or extent of the claimant’s injuries at the time of settlement. See Sanford v. Brandon Owens, Inc. (1994), 268 Mont. 8, 885 P.2d 444; Giles, 849 P.2d 180; Wolfe v. Webb (1992), 251 Mont. 217, 824 P.2d 240; Rath v. St. Labre Indian School (1991), 249 Mont. 433, 816 P.2d 1061; Whitcher v. [402]*402Winter Hardware Co. (1989), 236 Mont. 289, 769 P.2d 1215; Kimes v. Charlie’s Family Dining (1988), 233 Mont. 175, 759 P.2d 986; Weldele v. Medley Development (1987), 227 Mont. 257, 738 P.2d 1281. Some were set aside, some were not, but all confined the inquiry solely to whether or not a mutual mistake existed regarding the nature or extent of claimant’s injuries. Since workers’ compensation settlements by definition involve an injured worker, it is only to be expected that very frequently the alleged mutual mistake would concern the claimant’s injury.

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South v. Transportation Insurance
913 P.2d 233 (Montana Supreme Court, 1996)

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Bluebook (online)
913 P.2d 233, 275 Mont. 397, 53 State Rptr. 196, 1996 Mont. LEXIS 40, Counsel Stack Legal Research, https://law.counselstack.com/opinion/south-v-transportation-insurance-mont-1996.