Gibson v. Meadow Gold Dairy

• Decision Date: 15 March 2000
• Docket Number: No. 99-429., No. 99-122
• Parties: GIBSON, APPELLEE, v. MEADOW GOLD DAIRY, APPELLANT; ADMINISTRATOR OF WORKERS' COMPENSATION ET AL., APPELLEES.
• Court: Ohio Supreme Court

88 Ohio St.3d 201

724 NE 2d 787

GIBSON, APPELLEE, v. MEADOW GOLD DAIRY, APPELLANT; ADMINISTRATOR OF WORKERS' COMPENSATION ET AL., APPELLEES.

Nos. 99--429.

Supreme Court of Ohio.

Submitted November 3, 1999.

Decided March 15, 2000.

Hochman & Roach Co., L.P.A., Gary D. Plunkett and Cinamon S. Houston, for appellee Don Gibson.

Earl, Warburton, Adams & Davis, Andrew S. Adams, Grier D. Schaffer and Christopher R. Walsh, for appellant.

Betty D. Montgomery, Attorney General, and Gerald H. Waterman, Assistant Attorney General, for appellee Administrator of Workers' Compensation.

Lee M. Smith & Assoc. Co., L.P.A., Elizabeth P. Weeden and Lee M. Smith, for appellee Industrial Commission of Ohio.

COOK, J.

R.C. 4123.65¹ regulates the settlement of workers' compensation claims by providing for administrative review to protect parties against settlements that are "clearly unfair" or that constitute "gross miscarriage[s] of justice." R.C. 4123.65(D). The statute provides that "[n]o settlement agreed to * * * by a self-insuring employer and the self-insuring employer's employee shall take effect until thirty days after * * * the self-insuring employer and employee sign the final settlement agreement," and further provides that "[d]uring the thirty-day period, * * * the employer or employee, for self-insuring settlements, may withdraw consent to the settlement." R.C. 4123.65(C).

It also directs "every" self-insuring employer that enters into a final settlement agreement with an employee to mail a copy of it within seven days of execution to the administrator and the employee's representative, and mandates that the administrator place the copy in the claimant's file. R.C. 4123.65(A). The thirty-day waiting period in R.C. 4123.65(C) applies to every settlement agreed to by a self-insuring employer and its employee. And during the thirty-day period, which runs from the time the agreement is signed, either party may withdraw consent to the settlement. There is no language in the statute excepting settlements reached during a .512 appeal.

Though the general rule is that a trial court may enforce a settlement that was agreed to by the parties in the presence of the court, regardless of whether it has been reduced to writing, Mack, supra, 14 Ohio St.3d 34, 14 OBR 335, 470 N.E.2d 902; Spercel v. Sterling Industries, Inc. (1972), 31 Ohio St.2d 36, 60 O.O.2d 20, 285 N.E.2d 324, that general rule is directed at settlements that affect only the interests of the parties before the court. But settlement of workers' compensation cases necessarily affects the interests of the workers' compensation system itself. Thus, R.C. 4123.65 allows thirty days for administrative review to protect those interests.

Gibson, therefore, properly exercised his right to withdraw his consent to the agreement as allowed by R.C. 4123.65. The oral settlement never legally bound Gibson and thus could not be enforced because Gibson had not signed the agreement and, moreover, would have had thirty days from signing to withdraw his written consent. We agree with the court of appeals' conclusion that the trial court incorrectly sanctioned Gibson with dismissal of his case for his failure to sign and comply with the oral settlement agreement.

In reaching its decision, the court of appeals stated that R.C. 4123.65 applies to all settlements of workers' compensation claims. The administrator has asked us to rule that, as to employers insured by the State Insurance Fund, the statute applies only to settlements at the administrative level, not to settlements reached during an appeal under R.C. 4123.512. We do not address this issue because it is not properly before us in this case. Settlements involving state-fund employers are referred to in the statute with different language. For example, the statute applies to "every" self-insured settlement, but does not have corresponding language encompassing "every" state-fund settlement. We will thus not render an advisory opinion, preferring instead to address the applicability of R.C. 4123.65 to settlements involving state-fund employers in a case where that issue is presented and briefed.

The necessary holding of the court of appeals below, excluding dicta, was that, pursuant to R.C. 4123.65, settlements of claims against self-insured employers reached during the pendency of a .512 appeal are not binding until a final settlement agreement is signed by the parties and thirty days have passed thereafter. Our decision today affirms that limited holding and does not address the enforceability of oral settlements involving state-fund employers.

Finally, Meadow Gold argues that the statute is unconstitutional if it postpones the effective date of a settlement agreement reached during a .512 appeal. According to Meadow Gold, it violates the doctrine of separation of powers by prohibiting a trial court from enforcing a settlement made in a case pending before the court. Further, it abrogates the freedom to contract by postponing the date a settlement becomes binding after the parties themselves sign the agreement. Meadow Gold failed to raise these constitutional arguments in the trial court, so those arguments are waived and we thus do not address them. See, e.g., State v. Awan (1986), 22 Ohio St.3d 120, 22 OBR 199, 489 N.E.2d 277

. Even if they were not waived, they are without merit. First, the statute does not restrict a trial court's power to enforce a binding settlement; rather, the statute identifies the point at which a .512 settlement becomes binding (and, thus, enforceable). Second, because "`"existing laws [are] read into contracts in order to fix obligations between the parties,"'" Middletown v. Ferguson (1986), 25 Ohio St.3d 71, 79, 25 OBR 125, 132, 495 N.E.2d 380, 387, citing El Paso v. Simmons (1965), 379 U.S. 497, 508, 85 S.Ct. 577, 583, 13 L.Ed.2d 446, 454, Gibson and Meadow Gold implicitly agreed to the conditions of finality set forth in R.C. 4123.65 when they initially agreed to settle their .512 appeal.

We hold that the requirement of R.C. 4123.65 that settlements of workers' compensation claims against self-insured employers be in writing and not be effective for thirty days after signing applies to claims on appeal to a common pleas court under R.C. 4123.512 as well as to claims still at the administrative level. The judgment of the court of appeals is affirmed.

Judgment affirmed.

F.E. SWEENEY, J., concurs.

DOUGLAS and RESNICK, JJ., concur in the syllabus and judgment.

MOYER, C.J., PFEIFER and LUNDBERG STRATTON, JJ., dissent. MOYER, CJ., dissenting. The Industrial Commission denied appellee Don Gibson's claims for allowance of additional conditions allegedly resulting from a 1986 incident. Gibson appealed that denial to the common pleas court pursuant to R.C. 4123.512.

On November 14, 1995, the parties met for the purpose of taking Gibson's deposition. Before the deposition began the parties engaged in settlement negotiations and orally agreed to settle Gibson's workers' compensation claim for $5,000. Gibson specifically authorized his counsel to settle for that amount. Thereafter, Gibson's counsel confirmed the terms of the settlement in a letter to counsel for the employer dated November 27, 1995. The parties made a written stipulation of these facts and made that stipulation a part of the trial court's record in the R.C. 4123.512 appeal.

This appeal thus presents a single determinative issue: Did the trial court err in dismissing Gibson's R.C. 4123.512 workers' compensation appeal as a sanction for failing to comply with its order to execute documents implementing the oral settlement agreement made by the parties on November 14, 1995? I believe that the trial court did not violate applicable law in ordering the plaintiff to implement the settlement and that its judgment should therefore be affirmed.

In answer to the certified question, I would hold that settlements entered into between a self-insuring employer and an employee during the pendency of an R.C. 4123.512 appeal in a common pleas court are not subject to the provisions of R.C. 4123.65, including the thirty-day cooling-off period set forth in R.C. 4123.65(C). Accordingly, in my view, R.C. 4123.65 does not provide Gibson with justification for disregarding the trial court's order.

It is well established that trial courts possess power to enforce settlement agreements voluntarily entered into by the parties to a lawsuit. Mack v. Poison Rubber Co. (1984), 14 Ohio St.3d 34, 14 OBR 335, 470 N.E.2d 902. Where allegations are made of fraud, duress, or undue influence, or of any factual dispute concerning the existence of the terms of such an agreement, the court may conduct an evidentiary hearing to determine whether the agreement indeed constitutes a valid contract. Id. Gibson made no allegation of fraud, duress, or undue influence, or of any factual dispute as to the terms of the settlement to which he had previously agreed. He simply changed his mind and decided he did not want to settle.

R.C. 4123.65 is not a model of legislative draftsmanship. Nevertheless, review of divisions (D) and (F) of R.C. 4123.65, read in pari materia with other workers' compensation statutes, leads to the conclusion that the General Assembly...