Newlon v. Teck American, Inc. , 381 Mont. 378 ( 2015 )


Menu:
  •                                                                                     November 10 2015
    DA 15-0013
    Case Number: DA 15-0013
    IN THE SUPREME COURT OF THE STATE OF MONTANA
    
    2015 MT 317
    NICK NEWLON,
    Petitioner and Appellee,
    v.
    TECK AMERICAN, INC.,
    (formerly Cominco),
    Respondent and Appellant.
    APPEAL FROM:           Montana Workers’ Compensation Court, WCC No. 2012-2947
    Honorable James Jeremiah Shea, Presiding Judge
    COUNSEL OF RECORD:
    For Appellant:
    Larry W. Jones, Wills Law Firm; Missoula, Montana
    For Appellee:
    Margaret Dufrechou, Dufrechou Law Firm; Helena, Montana
    Submitted on Briefs: July 22, 2015
    Decided: November 10, 2015
    Filed:
    __________________________________________
    Clerk
    Justice Michael E Wheat delivered the Opinion of the Court.
    ¶1     Teck American Incorporated (Teck) appeals from the Findings of Fact,
    Conclusions of Law, and Judgment of the Montana Workers’ Compensation Court
    (WCC), finding that Nick Newlon was entitled to medical benefits related to injuries
    sustained while working for Teck, that Newlon’s claim was not barred due to a
    superseding intervening cause, that Teck was estopped from asserting the 60-month time
    bar under § 39-71-704(1)(d), MCA (1991), and that Newlon’s claim was not barred by a
    statute of limitations or statue of repose. We affirm.
    ISSUES
    ¶2     We have restated the dispositive issues as follows:
    1. Did Teck and Newlon form an enforceable contract when both parties agreed
    to close several of Newlon’s claims in exchange for a lump sum payment and
    lifetime health benefits for his knee and back?
    2. If Teck and Newlon formed an enforceable contract, can Teck assert the
    60-month rule under § 39-71-704(1)(d), MCA (1991), to avoid liability for
    payment of Newlon’s benefits?
    FACTUAL AND PROCEDURAL BACKGROUND
    ¶3     Teck is a mining and resource extraction corporation that acquired Cominco
    American (hereinafter referred to as “Teck” for clarity) in its entirety in 2001. Nick
    Newlon worked for Teck as a miner for over 20 years. Originally hired in 1972, he
    worked for Teck until the mine closed in 1993. During his years working at the mine,
    Newlon was injured on the job in several incidents including at least three separate
    injuries involving his left knee. Newlon also reported numerous other work-related
    injuries over the years because Teck’s safety policy required employees to report injuries,
    2
    no matter how minor. While the record reflects some confusion regarding the timing of
    the knee injuries, Newlon’s initial knee injury appears to have occurred sometime in
    1974, with a subsequent injury in 1978, and another injury on October 3, 1991. After the
    October 3, 1991 injury Newlon’s left knee problems continued to get worse. Ultimately,
    Newlon had corrective surgeries on the knee in 1993 and 1996. Despite the surgeries, the
    symptoms and problems persisted.
    ¶4     In 1996, Newlon was approached by Teck’s assistant manager, Hugh Moore, to
    discuss settlement of all Newlon’s existing Workers’ Compensation claims. During their
    settlement negotiations Newlon’s goal was to secure health coverage for his left knee and
    back conditions because his medical providers had warned him that he would probably
    need future treatment for the injuries. After discussions with Moore, Newlon, acting
    without legal representation, agreed to settle all of his outstanding injury claims against
    Teck for a lump sum of $25,000 and lifetime medical care for his left knee and back.
    Newlon agreed to the settlement because he understood that he would be fully covered
    the rest of his life. Under the agreement, Teck gained the benefit of closure of all of
    Newlon’s other injury claims previously suffered by Newlon.             Teck prepared the
    settlement documents and Newlon signed the agreement.               Moore forwarded the
    documents to the Montana Department of Labor and Industry (DOLI) with an enclosed
    note stating, “[t]he special provisions are that the medical is retained by the claimant or
    left open in the two cases indicated but closed in all others.” The DOLI agreement does
    not list the injury dates of the claims settled; it lists the two open claim numbers noting
    that one claim is for “lower back” and the other for the “left knee.”
    3
    ¶5    After the 1996 left knee surgery and the settlement, Newlon did not obtain medical
    treatment for the knee until 2000.   Newlon sought treatment in 2000 because his knee
    continued to swell, give out unexpectedly, and lock up after kneeling. After treatment in
    2000, Newlon did not seek medical treatment for his knee until 2007. Teck authorized
    benefits and paid for Newlon’s left knee treatment from the inception of his injuries
    through September 2010. Newlon still has problems with his knee, including swelling,
    pain, and inability to stand and put weight on the left knee after kneeling. In 2012, his
    doctors recommended a total left knee replacement. On December 21, 2011, Teck’s
    counsel informed Newlon’s counsel that Teck believed it was not liable for further
    medical care under § 39-71-704(1)(d), MCA (1991).           Teck agreed to pay medical
    benefits under a reservation of rights while working toward a resolution.
    ¶6    In anticipation of Teck’s change of position regarding his medical coverage,
    Newlon filed a Petition for Hearing in the WCC on September 2, 2011, asking the court
    to order Teck or the Montana State Fund to pay medical benefits based on his left knee
    claim. The Montana State Fund was subsequently dismissed from the suit and Newlon
    filed a second Petition for Hearing on May 17, 2013, asking the WCC to order Teck to
    continue to provide medical coverage for Newlon’s left knee injury including costs,
    penalties, and attorney fees. The parties prepared for trial. On October 9, 2013, the
    parties filed a joint pretrial order with the WCC and the case was tried in Helena. On
    May 8, 2014, the WCC issued its Findings of Fact, Conclusions of Law, and Judgment in
    the case. The court found that the dispute is governed by the 1991 Montana Workers’
    Compensation Act. The court also found that Newlon’s claim was not barred due to a
    4
    superseding intervening cause, and that Teck was equitably estopped from denying
    medical benefits on Newlon’s claim on the basis of § 39-71-704(1)(d), MCA (1991).
    Finally, the court determined that Teck’s statute of limitations and statute of repose
    defenses were moot, and Newlon’s claim was not barred by estoppel or laches.
    STANDARD OF REVIEW
    ¶7    We conduct de novo review of the WCC’s conclusions of law, including
    determinations of jurisdiction, to determine whether they are correct. Thompson v. State,
    
    2007 MT 185
    , ¶ 14, 
    338 Mont. 511
    , 
    167 P.3d 867
    ; Gamble v. Sears, 
    2007 MT 131
    , ¶ 20,
    
    337 Mont. 354
    , 
    160 P.3d 537
    . This Court accords substantial deference to the WCC’s
    findings of facts and we review those findings to determine whether they are supported
    by substantial credible evidence. Gamble, ¶ 20.
    DISCUSSION
    ¶8     1. Did Teck and Newlon form an enforceable contract when both parties agreed
    to close several of Newlon’s claims in exchange for a lump sum payment and lifetime
    health benefits for his knee and back?
    ¶9    The parties have argued extensively regarding the conclusions in the WCC’s
    judgment and order including disputes over equitable jurisdiction, equitable estoppel, and
    the 60-month rule, § 39-71-704(1)(d), MCA (1991). We find that we do not need to
    address these issues as argued because the issues are resolved under contract law. In our
    view, this is a case in which a promise was made between two parties, a promise that this
    Court will uphold.
    5
    ¶10    The parties made three arguments and we briefly mention these arguments prior to
    our analysis of the contract formed in this case.        First, Teck disputes the WCC
    jurisdiction in this case arguing that the court does not have the authority to exercise
    equitable jurisdiction in Workers’ Compensation cases. Because this argument has no
    bearing on the contract issue we will not address it.      Second, we find that Teck’s
    argument regarding the second element of equitable estoppel is a new theory raised on
    appeal. This argument was not made at the WCC and we will not reach arguments the
    WCC did not have the opportunity to address. (See In re T.E., 
    2002 MT 195
    , ¶ 20,
    
    311 Mont. 148
    , 
    54 P.3d 38
    ). Finally, we review the 60-month rule argument as part of
    the second issue of this opinion.
    ¶11    Under § 28-2-102, MCA, four elements must exist for a valid contract to be
    formed: the parties must have legal capacity, they must consent to the agreement, the
    agreement must be a lawful object, and the parties must give consideration. On review of
    the record of this case, we find all of the necessary elements required for an enforceable
    contract between Newlon and Teck, a fact neither party disputes in this case. Both
    parties agree that each consented to the provisions of the settlement agreement
    memorialized with the DOLI. Second, there is no question that a settlement agreement
    between employers and employees is a lawful objective of a contract. We have reviewed
    numerous cases involving similar settlement agreements and have found that Workers’
    Compensation settlement agreements are enforceable contracts. Gamble, ¶ 24. Finally,
    both parties provided proper consideration as part of their agreements in the contract.
    Newlon agreed to close thirteen of his fifteen open claims in exchange for a lump-sum
    6
    payment and lifetime coverage for his knee and back. Teck provided consideration by
    paying the settlement amount and agreeing to keep the two claims open. We conclude,
    based on the record, that a proper contract was formed between the parties and duly
    memorialized by the DOLI on a standard “Petition for Compromise and Release
    Settlement” fill-in-the-blank form.
    ¶12    A specific review of the WCC findings of fact regarding the promises exchanged
    between these parties further aids our determination regarding the enforceability of this
    contract. In its findings, the WCC found Newlon to be a credible witness and we rely in
    part on his testimony from the record to determine the parties’ positions at the time of
    contracting. The WCC found that Moore, Teck’s agent at the time, contacted Newlon to
    discuss the settlement of all of his outstanding Workers’ Compensation claims. Moore
    promised to pay Newlon $25,000 and agreed that future medical care for his knee and his
    back would be covered by the mining company’s insurer.            Newlon discussed this
    arrangement with Moore and asked for coverage for life on his knee and back. Moore
    agreed to these conditions. Moore drafted the documents and attached a note to the
    settlement papers from the parties to the Montana Department of Labor and Industry
    stating: “[t]he special provisions are that the medical is retained by the claimant or left
    open in the two cases indicated but closed in all others.”
    ¶13    The subsequent actions of the parties under the contract further illustrate the
    understanding of the parties. The WCC found that from the formation of the settlement
    agreement with Teck in 1996 until December 21, 2011, Teck paid Newlon’s medical
    benefits and left open his treatment with no reference to the 60-month rule. From the
    7
    beginning, Teck, through its representative Moore, represented to Newlon that he would
    enjoy medical benefits for life. We find that the WCC’s findings regarding the contract
    are supported by substantial credible evidence. As a result, we find that in 1996, Moore
    and Newlon agreed that Newlon would have coverage on his knee and back injuries for
    life as part of this settlement. We also find that the settlement is a valid and enforceable
    contract.
    ¶14 2. If Teck and Newlon formed an enforceable contract where Teck promised
    Newlon benefits for life, can Teck still assert the 60-month rule under § 39-71-704(1)(d),
    MCA (1991), to avoid liability for payment of Newlon’s benefits?
    ¶15    A fundamental tenet of contract law is freedom of contract; parties are free to
    mutually agree to terms governing their private conduct as long as those terms do not
    conflict with public laws. Winter v. State Farm Mut. Auto Ins. Co., 
    2014 MT 168
    , ¶ 26,
    
    375 Mont. 351
    , 
    328 P.3d 665
    (citing Arrowhead Sch. Dist. No. 75 v. Klyap, 
    2003 MT 294
    , ¶ 20, 
    318 Mont. 103
    , 
    79 P.3d 250
    ). We note that in Wiard we held that the laws
    existing at the time a contract is formed are part of the contract. Wiard v. Liberty
    Northwest Ins. Corp., 
    2003 MT 295
    , ¶¶ 20-21, 
    318 Mont. 132
    , 
    79 P.3d 281
    (citing Earls
    v. Chase Bank of Texas, N.A., 
    2002 MT 249
    , ¶ 12, 
    312 Mont. 147
    , 
    59 P.3d 364
    ).
    ¶16    The WCC concluded that the law in effect at the time of the settlement was the
    1991 Montana Code Annotated, and that § 39-71-704(1)(d), MCA (1991), is the law
    governing the settlement agreement. We agree with the WCC conclusions on governing
    law. In this case however, the governing law (60-month rule) is not dispositive. On
    review of the relevant Workers’ Compensation statutes, we find no provision preventing
    an employer from contracting around the statute, or specifically, preventing an employer
    8
    from promising more than is provided in the statute. Because there is no conflict with the
    relevant statutes, we do not find that the promise of lifetime care is an illegal objective
    that invalidates the contract. Just the opposite, the facts surrounding Newlon’s settlement
    agreement reflect a promise made that effectively extends the coverage beyond the
    statutory rule because ultimately, under a legal contract, a deal is a deal.
    ¶17    Teck also argues that this case is identical to our decision in Wiard and that we
    must conclude similarly that Newlon is barred from his benefits. We disagree. In Wiard,
    we determined that Wiard was barred by § 39-71-704(1)(d), MCA (1991), from further
    benefits under his settlement agreement with his insurer because he failed to access those
    benefits for more than 60 months. Wiard, ¶ 39. However, unlike Newlon, Wiard did not
    have a specific promise from his employer similar to that made in this case. Wiard,
    ¶¶ 8-12, 14-18. While Wiard entered into a settlement agreement with his employer
    closing benefits and keeping some health claims open, the facts of the case do not
    indicate a specific lifetime coverage promise. Wiard, ¶¶ 8-12, 14-18. Teck’s promise to
    Newlon distinguishes this case from Wiard, and we cannot reach the same conclusion
    because the promise must be enforced.
    ¶18    We find that the tenet of freedom to contract allows a party to a settlement
    agreement to make a promise that is durable even beyond the limits of the 60-month rule
    found in § 39-71-704(1)(d), MCA (1991). A specific promise was made in this case to
    Newlon, promising Newlon benefits for life. This tenet is based on the notion that the
    parties are in the best position to decide the contractual provisions based on their own
    interests. Here, in our interpretation of the contract, we “simply [give] effect to the
    9
    agreement between the parties in order to enforce the private law of the contract.”
    Arrowhead, ¶ 20 (citing Ophus v. Fritz, 
    2000 MT 251
    , ¶ 23, 
    301 Mont. 447
    , 
    11 P.3d 1192
    ).
    ¶19      Thus, the 60-month rule does not apply because Teck effectively contracted away
    this right when the parties made the agreement. While we reach our conclusion on
    different grounds than the WCC, we find the same result as the court that Teck cannot
    deny Newlon’s health benefits.       We conclude that the WCC did not err in its
    determination that Teck cannot deny medical benefits under Newlon’s claims on the basis
    of § 39-71-704(1)(d), MCA (1991).
    CONCLUSION
    ¶20      We decline to address Teck’s arguments that the WCC lacks the authority to
    employ equitable remedies. We find Teck’s argument regarding the second element of
    equitable estoppel is newly raised on appeal and we will not reach arguments the WCC
    did not have the opportunity to address. We find that Moore and Newlon created an
    enforceable contract granting Newlon lifetime coverage for his knee and back injuries.
    We simply give effect to a lawful agreement made between the parties. The WCC did
    not err in its conclusion that Teck cannot deny medical benefits to Newlon on the basis of
    § 39-71-704(1)(d), MCA (1991).
    ¶21      Affirmed.
    /S/ MICHAEL E WHEAT
    10
    We Concur:
    /S/ MIKE McGRATH
    /S/ LAURIE McKINNON
    /S/ PATRICIA COTTER
    /S/ JIM RICE
    11