Morris v. Hap Taylor & Sons, Inc.

• Decision Date: 23 May 2013
• Docket Number: No. 39747.,39747.
• Parties: Benjamin MORRIS, Claimant–Appellant, v. HAP TAYLOR & SONS, INC., Employer, and Liberty Insurance Corporation, Surety, Defendants–Respondents.
• Court: Idaho Supreme Court

154 Idaho 633

301 P.3d 639

Benjamin MORRIS, Claimant–Appellant,

v.HAP TAYLOR & SONS, INC., Employer, and Liberty Insurance Corporation, Surety, Defendants–Respondents.

No. 39747.

Supreme Court of Idaho, Coeur d'Alene, April 2013 Term.

May 23, 2013.

Starr Kelso Law Office, Chtd., Coeur d'Alene, for appellant. Starr Kelso argued.

Law Offices of Harmon & Day, Boise, for respondents. Kent W. Day argued.

J. JONES, Justice.

Benjamin Morris, a workers' compensation claimant, appeals an order of the Idaho Industrial Commission denying his motion to set aside a lump sum settlement agreement he made with his employer's surety, Liberty Northwest Insurance. Morris initiated his workers' compensation action after he suffered injuries while working construction for his employer, Hap Taylor & Sons, Inc. We affirm the Industrial Commission's order.

I.FACTUAL AND PROCEDURAL HISTORY

Morris sustained a serious head injury on October 18, 2006, when a twenty-five pound rock thrown by a piece of heavy machinery struck him in the head. Morris filed a workers' compensation complaint on November 19, 2007, seeking medical and disability benefits. At that time he was represented by attorney James Hannon. Several months later, Hannon withdrew and attorney Michael Walker substituted as his counsel in the proceeding.

Morris filed a request for calendaring on May 15, 2009, seeking a hearing before the Commission to address his benefits claim. The request stated that settlement negotiations were "being undertaken but have not been successful to date." On June 1, 2009, the Commission granted Morris' request, and set a hearing for January 5, 2010. However, prior to the hearing, the parties settled and the Commission vacated the hearing.

Morris initiated settlement discussions in a fax to Liberty on December 17, 2009, indicating he was willing to "settle the indemnity side of this case for $68,000 in new money." The following day, Liberty responded with a counter-offer—a single lump sum payment of $54,381, which Morris accepted "with the clear understanding this is a partial settlement and does not resolve the medical side." On January 4, 2010, the parties executed a Stipulation and Agreement of Partial Lump Sum Discharge (LSSA) and submitted it to the Commission for approval. Finding that the LSSA was in the best interests of the parties, the Commission approved it by an order dated January 19, 2010.

Approximately eighteen months later, on July 8, 2011, a Notice of Appearance was filed with the Commission whereby Morris substituted Walker with his present counsel, attorney Starr Kelso.¹ On the same day, Morris filed a motion to review the LSSA, accompanied by an affidavit signed by Kelso. Kelso's affidavit expressed concern that Morris may not be "competent to testify" due to his injury—however, no credible evidence of incompetence was ever offered.² Kelso went on to recount the substance of conversations Morris claimed to have had with Walker. Kelso affied that Morris recalled Walker advising him "that he wouldn't get any more money from [Liberty] than the amount of the settlement offer" and that there was a good chance Morris would end up owing a lot of money to expert witnesses if they proceeded to hearing. Kelso conceded in a subsequently filed second affidavit that, "I do not, and never have, professed to state that any or all of the statements of Benjamin Morris to me as set forth in my [first] affidavit are completely true."

On July 22, 2011, Respondents filed an objection to Morris' motion to review. Ultimately, the Commission denied Morris' motion to review the LSSA. Following the Commission's refusal to review the LSSA, Morris filed a Motion to Set Aside Lump Sum Settlement Agreement, seeking to void the LSSA on grounds of illegality and constructive fraud. With regard to the first ground, Morris contended the LSSA was invalid for failing to include his current medical and employment status, as required by a Commission rule. With regard to the second ground, Morris contended that Walker had induced him to sign the agreement based on fraudulent representations. Morris requested that the Commission grant a hearing on his motion.

While Morris' motion to set aside the LSSA was pending, Morris also moved the Commission to provide him with all of the documents that it considered when approving the LSSA. The Commission granted the motion and provided Morris with his entire "benefits file."

The Commission issued an order denying Morris' motion to set the LSSA aside on February 7, 2012. The order found that: (1) the LSSA was not critically flawed because the Commission was adequately informed of Morris' current medical and employment status prior to its approval; (2) Morris had not shown the type of fraud that would allow setting aside the LSSA; and (3) there was no need for a hearing. Morris filed a timely appeal to this Court.

II.ISSUES ON REVIEW

I. Was the LSSA void for its failure to set out Morris' current medical and employment status?

II. Did the Commission err in failing to grant a hearing on Morris' fraud claim?

III. Is Morris entitled to attorney fees on appeal under I.C. § 72–804 ?

III.DISCUSSION

A. Standard of Review.

When reviewing a decision of the Industrial Commission, this Court exercises free review over questions of law, but reviews questions of fact only to determine whether substantial and competent evidence supports the Commission's findings. Substantial and competent evidence is relevant evidence which a reasonable mind might accept to support a conclusion. It is more than a scintilla of proof, but less than a preponderance. All facts and inferences will be viewed in the light most favorable to the party who prevailed before the Industrial Commission.

Fowble v. Snoline Exp., Inc., 146 Idaho 70, 74, 190 P.3d 889, 893 (2008) (citations omitted). "The interpretation of a statute is a question of law over which this Court exercises free review." Williams v. Blue Cross of Idaho, 151 Idaho 515, 521, 260 P.3d 1186, 1192 (2011).

B. The LSSA is not illegal or void for failure to set out Morris' current medical and employment status.

Morris urged the Commission to set the LSSA aside, claiming it to be void because the text of the agreement did not set out his current medical and employment status, as required by Rule 18(C)(1)(c) of the Commission's Judicial Rules of Practice and Procedure (J.R.P.). The Commission denied Morris' motion, stating:

[Morris] first avers that the January 19, 2010 [LSSA] is void because there is no language setting forth [Morris'] current medical status and employment status as required by [J.R.P. 18(C)(1)(c) ]. As stated in Rule 18, the purpose of the requirements are to ensure the Commission has information on which a determination can be made. While the text of the LSSA may not have set forth in detail [Morris'] medical status and employment status, the Commission was apprised of these facts with the supplemental information supplied by the parties through their respective attorneys.

On appeal, Morris raises the same argument, contending that the Commission erred in approving the LSSA because it did not comply with the requirements of J.R.P. 18(C)(1)(c). That provision says:

To ensure the Commission has information on which a determination can be made, the Commission requires the parties to submit the following information and serve a copy on each of the parties:

1. Text of the terms of settlement, which shall include:

c. Claimant's current medical and employment status.

Morris cites to I.C. § 72–508, which states: "Rules and regulations as promulgated and adopted, if not inconsistent with law, shall be binding in the administration of [the workers' compensation] law." Morris argues that the Commission is bound to strictly adhere to J.R.P. 18(C)(1)(c), and that its failure to do so was an act outside of the Commission's statutory power. Further, Morris contends that the LSSA is an illegal contract, subject to being voided by this Court, citing Wernecke v. St. Maries School Dist., 147 Idaho 277, 207 P.3d 1008 (2009) and Trees v. Kersey, 138 Idaho 3, 56 P.3d 765 (2002).

Respondents counter that the Commission's approval was proper because, although the text of the LSSA did not include Morris' current medical and employment status, the Commission considered Morris' medical and employment status prior to approval. Respondents also argue that "[t]raditionally, this Court has not required the Industrial Commission to adhere to strict rules of procedure and evidence in its hearings," and that failing to strictly adhere to the text of J.R.P. 18(C)(1)(c) does not establish that the Commission acted in excess of its power.

The Commission issued its order approving the LSSA on January 19, 2010. The order recited "the above-entitled proceedings are DISMISSED WITH PREJUDICE as to permanent indemnity benefits and WITHOUT PREJUDICE as to medical benefits and time loss benefits relating to any future medical that is causally related to the October 18, 2006 injury." With regard to indemnity benefits, this constituted a final order of the Commission. The Commission's decision to approve a lump sum agreement is a final "decision" of the Commission. Davidson v. H.H. Keim Co., Ltd., 110 Idaho 758, 760, 718 P.2d 1196, 1198 (1986). Thus, the order was appealable pursuant to Idaho Appellate Rule 11(d). No appeal was timely filed from the order.

Since there was no appeal of the order, Morris is clearly faced with an uphill task in seeking to void the LSSA to obtain additional indemnity benefits. According to I.C. § 72–718 : "A decision of the commission, in the absence of fraud, shall be final and conclusive as to all matters adjudicated by the commission." This Court has set aside a lump sum agreement on grounds of illegality but in that case the agreement was violative of the provisions of a workers' compensation statute. See Wernecke, 147 Idaho at 286, 207 P.3d at 1017 (the Commission "erred by approving an agreement" that purported to waive...