Cheff v. BNSF Ry. Co., DA 10-0035.

• Decision Date: 03 November 2010
• Docket Number: No. DA 10-0035.,DA 10-0035.
• Citation: 243 P.3d 1115,358 Mont. 144,2010 MT 235
• Parties: Patrick CHEFF, Plaintiff and Appellee, v. BNSF RAILWAY COMPANY, a Corporation, Defendant and Appellant.
• Court: Montana Supreme Court

243 P.3d 1115

358 Mont. 144

2010 MT 235

Patrick CHEFF, Plaintiff and Appellee,

v.BNSF RAILWAY COMPANY, a Corporation, Defendant and Appellant.

No. DA 10-0035.

Supreme Court of Montana.

Submitted on Briefs Aug. 10, 2010.

Decided Nov. 3, 2010.

For Appellant: Randy J. Cox and Scott M. Stearns, Boone Karlberg P.C., Missoula, Montana.

For Appellee: Terry N. Trieweiler, Trieweiler Law Firm, Whitefish, Montana, James T. Towe, Towe Law Offices, Missoula, Montana.

Justice MICHAEL E. WHEAT delivered the Opinion of the Court.

¶ 1 The Eighth Judicial District Court, Cascade County, granted Patrick Cheff's (Cheff) cross-motion for summary judgment, setting aside the settlement and release agreement ("Release") entered into between Cheff and Burlington Northern Santa Fe Railway Company (BNSF) upon grounds of mutual mistake of material fact, constructive fraud in the inducement, and lack of consideration. BNSF appeals the court's invalidation of the Release. BNSF also appeals the court's ruling prohibiting the use of statements contained in medical records to cross-examine Cheff about how he was injured. Finally, BNSF appeals the court's denial of an interest offset against the judgment. We affirm.

¶ 2 Cheff cross-appeals the court's submission of the issue of contributory negligence tothe jury. Cheff also cross-appeals the court's $300,000 offset against the judgment. We affirm.

BACKGROUND

¶ 3 On January 14, 2006, Cheff, a conductor for BNSF, slipped and fell on an icy and snow-packed walkway while entering the locker area on BNSF's Whitefish, Montana, railyard and injured his back. No one witnessed Cheff's fall. Shortly after, Cheff reported his fall to a co-worker and his supervisor, Doug Schuch, but he did not submit an injury report at the time.

¶ 4 On January 27, 2006, Cheff was examined by orthopedic surgeon Dr. David Sobba, who requested that Cheff undergo an MRI. Dr. Sobba concluded Cheff had herniated discs in his lower back and congenital stenosis with short pedicles. Dr. Sobba recommended conservative treatment, including physical therapy and anti-inflammatory medication. Some notes taken by medical personnel refer toweightlifting as a potential cause of Cheff's lower back injury, while other notes refer to an occupational injury or a slip and fall.

¶ 5 When conservative treatment proved unsuccessful, Cheff was referred to Kalispell neurosurgeon Dr. Robert Hollis and examined in June 2006. Dr. Hollis's physician's assistant advised Cheff that surgery was necessary to prevent further nerve damage. On June 15, 2006, Cheff turned in an injury report to BNSF regarding his back injury. Five days later, Cheff met with Dr. Hollis, and surgery was scheduled for June 30.

A. Release

¶ 6 On June 21 and 22, 2006, Cheff met with BNSF claims manager Gregg Keller. Keller interviewed Cheff and the two visited the scene of Cheff's fall. Keller told Cheff that if he settled his claim for $300,000 and entered into the Release, BNSF would extend his medical coverage to January 1, 2010. Cheff was not aware, nor advised, that he had a right, pursuant to BNSF policy, to extended medical coverage beyond termination of employment. Cheff executed the Release on June 22.

¶ 7 After signing the Release, Cheff cancelled his surgery, but he continued to see Dr. Hollis. In early 2007, following a third MRI ordered in anticipation of re-scheduling surgery, Dr. Hollis advised Cheff that he was no longer a candidate for surgery due to a newly discovered pre-existing spinal condition. While surgery remained an option, it was of a different nature than initially planned and only appropriate in an emergency situation.

¶ 8 In August 2008, Cheff filed suit against BNSF pursuant to 45 U.S.C. §§ 51-60 (2006), Federal Employers Liability Act (FELA), to recover damages for the lower back injury he had allegedly suffered when he fell on the BNSF walkway. Cheff alleged the Release he had executed was void for lack of consideration, mutual mistake, and fraudulent inducement. Both parties moved for summary judgment on the issue.

¶ 9 The District Court invalidated the Release upon several independent grounds. The court concluded the parties were mutually mistaken regarding the nature and extent of Cheff's injury:

Although the parties were fully aware of a diagnosed L-3/L-4 herniation and resulting permanent disability, they were not aware of the long-term extent of the injury as a result of [Cheff's] then-unknown preexisting spinal condition that would preclude the mutually contemplated corrective fusion/ decompression surgery, thus compounding the long-term extent and consequence of the injury beyond the contemplation of the parties.

¶ 10 The court also concluded that BNSF had committed constructive fraud in the inducement because BNSF claims agent Keller had made material misrepresentations that Cheff's medical coverage would be extended until January 1, 2010, only if he entered into the Release. Finally, the court concluded the Release lacked consideration because, while extended medical coverage was bargained for under the Release, Cheff already had a right to receive continued medical coverage under BNSF policy. On appeal, BNSF argues that no mutual mistake of fact existed as to the nature of the injury; actual intent to deceive is required to invalidate theRelease on fraud grounds; and, the $300,000 paid to Cheff under the Release constitutes adequate consideration.

B. Medical Records

¶ 11 Prior to trial, Cheff moved in limine to exclude any medical records that referred to events other than his fall as a cause(s) of his injury. He asserted that such medical records lacked foundation and expert testimony, which, he argued, is required to apportion damages. The District Court granted Cheff's motion, reasoning that both apportionment and proof of causation required expert testimony; BNSF had not disclosed an expert; and, the court had broad discretion to prevent unfairness created by insufficient disclosure. In addition, the court found that such evidence could not be used for the sole purpose of impeaching Cheff's claim. On appeal, BNSF argues that it sought to use the evidence to show Cheff's injury did not arise from the slip and fall, that expert testimony is not required to challenge causation, and that the evidence should have been admitted to challenge the credibility of the sole witness to the accident.

C. Contributory Negligence

¶ 12 At trial, Cheff moved for judgment as a matter of law on the issue of contributory negligence. The District Court denied his motion, and the jury found Cheff fifteen percent negligent. Cheff cross-appeals on the basis that no act or omission existed upon which the jury could base its finding.

D. Judgment Offsets

¶ 13 The jury returned a verdict in favor of Cheff in the amount of $1.6 million, which was reduced by $240,000 due to Cheff's contributory negligence. BNSF moved to offset the damage award by the $300,000 it had paid Cheff pursuant to the Release, plus interest. The District Court granted the $300,000 offset but denied interest. Cheff cross-appeals, arguing that permitting an offset was inappropriate because BNSF did not meet its burden in establishing that the $300,000 and verdict were for the same damages. BNSFappeals the denial of the interest offset.

¶ 14 BNSF raises the following issues on appeal:

¶ 15 Issue 1: Did the District Court err in setting aside the Release?

¶ 16 Issue 2: Did the District Court err in prohibiting BNSF from using statements contained in medical records to impeach Cheff about how he injured his back?

¶ 17 Issue 3: Did the District Court err in denying BNSF an interest offset on the settlement proceeds it paid pursuant to the Release that was later invalidated?

¶ 18 Cheff raises the following issues on cross-appeal:

¶ 19 Issue 4: Did the District Court properly submit the issue of contributory negligence to the jury?

¶ 20 Issue 5: Did the District Court err in offsetting Cheff's damage award by the $300,000 that was previously paid pursuant to the Release?

STANDARD OF REVIEW

¶ 21 This Court reviews a district court's grant or denial of a motion for summary judgment de novo, applying the same criteria set forth in M.R. Civ. P. 56. Sinclair v. Burlington N. & Santa Fe Ry. Co., 2008 MT 424, ¶ 26, 347 Mont. 395, 200 P.3d 46. The moving party has the burden of demonstrating the absence of genuine issues of material fact and entitlement to judgment as a matter of law. Id. Once the moving party has met its burden, the opposing party must present substantial evidence, as opposed to mere denial, speculation, or conclusory statements, to raise a genuine issue of material fact. Peterson v. Eichhorn, 2008 MT 250, ¶ 13, 344 Mont. 540, 189 P.3d 615. The district court's determination that there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law is a conclusion of law, which we review for correctness. Sinclair, ¶ 26.

¶ 22 A district court's evidentiary ruling is reviewed under an abuse of discretion standard. The district court has broad discretion in determining the admissibility of evidence.Olson v. Shumaker Trucking & Excavating Contractors, Inc., 2008 MT 378, ¶ 22, 347 Mont. 1, 196 P.3d 1265.

¶ 23 Our standard of review for the denial of a motion for a new trial is whether the district court manifestly abused its discretion. Bailey v. Beartooth Commun. Co., 2004 MT 128, ¶ 10, 321 Mont. 305, 92 P.3d 1.

¶ 24 A district court's decision to deny a motion for judgment as a matter of law is reviewed de novo. Tucker v. Farmers Ins. Exch., 2009 MT 247, ¶ 23, 351 Mont. 448, 215 P.3d 1.

¶ 25 Judgment offsets are conclusions of law, which we review de novo. Id.

DISCUSSION

¶ 26 Issue One: Did the District Court err in setting aside the Release?

¶ 27 Whether a FELA release is valid is a federal question that must be determined by federal law. Bevacqua v. Union P. R.R. Co., 1998 MT 120, ¶ 70, 289 Mont. 36, 960 P.2d 273 (citing Wilson v. CSX Transp., Inc., 83...