Shaw v. Dover Furniture Mfg. Co.

700 So. 2d 1382 (1997)

Donna Kay SHAW
v.
DOVER FURNITURE MANUFACTURING COMPANY.

2950807.

Court of Civil Appeals of Alabama.

April 11, 1997. Certiorari Denied July 25, 1997.

Frank G. Alfano and Victoria J. Franklin-Sisson of Gorham & Waldrep, P.C., Birmingham, for appellant.

Bennett L. Pugh and Sarah J. Carlisle of Rives & Peterson, Birmingham, for appellee.

Alabama Supreme Court 1961215.

On Application for Rehearing

CRAWLEY, Judge.

This court's opinion of February 21, 1997, is withdrawn, and the following opinion is substituted therefor.

Donna Kay Shaw appeals from the denial of her motion for relief from judgment, filed pursuant to Rule 60(b), Ala.R.Civ.P. We reverse.

On September 21, 1994, Shaw suffered a neck injury during the course of her employment with Dover Furniture Manufacturing Company ("Dover"). A medical examination revealed that Shaw ruptured two cervical disks. On October 14, 1994, she had surgery to fuse the disks. During a post-operative visit to her doctor on November 10, 1994, Shaw reported severe neck pain, and her doctor ordered a myelogram. When the myelogram revealed nothing remarkable, Shaw's doctor recommended physical therapy and cortisone injections for pain relief.

On December 22, 1994, Shaw returned to her doctor for another post-operative visit. During that visit, Shaw complained of low back pain, and she told the doctor that "the therapy [he] had ordered made her worse." The doctor's notes indicate: "[Shaw] says that she has had [low back pain] all along, but my records do not reflect that." The doctor testified by deposition that December 22 was the first time Shaw had complained of low back pain. The doctor informed Dover's workers' compensation carrier that Shaw's low back pain was unrelated to her on-the-job neck injury.

On June 1, 1995, Shaw and the workers' compensation carrier agreed to a lump-sum settlement of Shaw's workers' compensation claim, future vocational rehabilitation benefits, and future medical expenses. Pursuant to § 25-5-83, Ala.Code 1975, the parties sought the circuit court's approval of the settlement because the agreement was for a lump sum payment.

The circuit court approved the settlement, finding that it was "substantially in accordance with the provisions of the Workmen's Compensation Act of Alabama, as amended," and it entered a judgment for Shaw in the amount of the settlement agreement. Shaw did not appeal from that judgment.

Three months later, Shaw filed a Rule 60(b) motion for relief from the judgment, alleging that the settlement was the product of fraud, undue influence, and financial coercion; that the judgment was due to be set aside because she had newly discovered evidence that could not have been discovered in time to move for a new trial; and that the settlement agreement was invalid because, she says, it was not in compliance with the Workers' Compensation Act.

During the hearing on the Rule 60(b) motion, Shaw argued that her low back pain was the result of an injury that occurred during treatment for her on-the-job neck injury and that, consequently, she was entitled to be compensated for it because it was a product of her work-related neck injury. Specifically, she claimed that during the myelogram ordered by her doctor, she fell and injured her back. Citing Fabarc Steel Supply, Inc. v. Davis, 422 So. 2d 797 (Ala.Civ.App.1982), Shaw alleged that she was entitled to compensation for the second injury because it occurred during treatment for the first injury.

The same circuit judge who approved Shaw's settlement agreement conducted a hearing on her Rule 60(b) motion. At that hearing, Shaw testified that a medical technician at the hospital had informed her that in one of the earlier procedures she had fallen to the floor. After the fall, Shaw said, she began to experience low back pain. Shaw testified that she accepted the settlement agreement because she needed the money to move out-of-state, and when Dover denied responsibility for her back injury, she felt compelled to accept a lump sum covering only her neck injury. Shaw introduced no documentary evidence to support her contention that she had fallen during treatment for her neck injury, and she did not call the medical technician who, she claims, told her she had fallen, to testify.

During the Rule 60(b) hearing, the circuit judge questioned Shaw as to what she remembered of her colloquy with him preceding his approval of the settlement agreement. Shaw told the circuit judge that she recalled the court's telling her that she "shouldn't take the settlement." The judge responded:

"THE COURT: I recommended against it, didn't I?

"[Ms. Shaw]: Yes, sir."

Later, during questioning of Shaw by her lawyer, the circuit judge interrupted and stated the following:

"THE COURT: This is repetitious. Please ma'am, I told you that you would be taking the settlement against my advice, didn't I?

"[Ms. Shaw]: Yes, sir.

"THE COURT: And you insisted on it?

"[Ms. Shaw]: Well, I figured because of what [the adjustor for the compensation carrier] had told me that that's all I could get.

"THE COURT: For whatever reason, the Court didn't mistreat you, did it?

"[Ms. Shaw]: No, sir.

"THE COURT: I had told you it was over and against the Court's advisement?

"[Ms. Shaw]: Yes, sir."

A strong presumption of correctness attaches to a trial court's ruling on a Rule 60(b) motion. Wilson v. Cox, 589 So. 2d 723, 725 (Ala.1991). The decision whether to grant such a motion is within the sound discretion of the trial court. Ex parte Dowling, 477 So. 2d 400, 402 (Ala.1985). The standard of review applied by the appellate court is whether the trial court abused its discretion. Id. Although we do not believe that the circuit court abused its discretion in denying Shaw's Rule 60(b) motion based on the asserted grounds of fraud or newly discovered evidence, we conclude that the circuit erred by failing to find that the settlement agreement was invalid because it was not in accord with § 25-5-83, Ala.Code 1975.

There are two circumstances under which a settlement agreement in a workers' compensation dispute must be approved by the circuit judge: when the worker agrees to accept an amount less than provided for by statute, § 25-5-56, and when the worker agrees to accept a lump sum payment in lieu of periodic payments of compensation, § 25-5-83. Section 25-5-83 provides:

"By agreement of the parties and with approval of the court, the amounts of compensation payable periodically, under this article and Article 4 of this chapter, may be commuted to one or more lump sum payments. No commutation shall be approved by the court unless the court is satisfied that it is in the best interest of the employee ... to receive the compensation in a lump sum rather than in periodic payments."

(Emphasis added.)

Section 25-5-56 provides:

"The interested parties may settle all matters of benefits, whether involving compensation, medical payments, or rehabilitation, and all questions arising under this article and Article 4 of this chapter between themselves, and every settlement shall be in amount the same as the amounts or benefits stipulated in this article. No settlement for an amount less than the amounts or benefits stipulated in this article shall be valid for any purpose, unless ... a judge of the court determines that it is for the best interest of the employee or the employee's dependent to accept a lesser sum and approves the settlement."

(Emphasis added.) "It has long been the rule in Alabama that a settlement by the parties for less than the amount established by the Workmen's Compensation Act must be approved by the court in order to be binding." Phillips v. Opp & Micolas Cotton Mills, Inc., 445 So. 2d 927, 930 (Ala.Civ.App. 1984). "For a settlement ... [under § 25-5-56] to be valid, a circuit judge must determine the bona fides of the claim and the liability of defendant, and that it is for the best interests of the employee...." Ingalls Shipbuilding Corp. v. Cahela, 251 Ala. 163, 166-67, 36 So. 2d 513, 515 (1948).

We hold that the better practice is for the trial judge to make a specific finding on the record that the settlement is in the employee's best interest. If the trial judge does not specifically make such a finding, then the record must affirmatively show that the settlement is in the employee's best interest. In the present case, the circuit judge's own statements at the Rule 60(b) hearing negate a finding that the settlement was in the best interest of the employee. At the hearing, the judge, who had also approved the settlement, reminded the employee that he had "recommended against" her agreeing to the settlement and told her that, if she agreed, she "would be taking the settlement against [the court's] advice."

The judgment of the circuit court denying Shaw's Rule 60(b) motion is reversed, and the cause is remanded for further proceedings.

ORIGINAL OPINION WITHDRAWN; OPINION SUBSTITUTED; APPLICATION OVERRULED; RULE 39(k) MOTION DENIED; REVERSED AND REMANDED.

ROBERTSON, P.J., and YATES, J., concur.

MONROE, J., concurs in the result.

THOMPSON, J., dissents.

THOMPSON, Judge, dissenting.

I respectfully disagree. The requirements of Ala.Code 1975, § 25-5-56, are that the judge determine that it is in the "best interest of the employee" to accept the settlement and that the judge give his approval to that settlement. I believe the trial judge in this case went beyond the necessary lengths to determine that the settlement which Donna Shaw entered into freely with Dover Furniture was truly in her best interest at that time.

Although initially advising Shaw not to accept the settlement, which was for less than the amount established by the Workers' Compensation Act, the judge approved the settlement after discussing with Shaw her personal situation and her reasons for wanting the settlement approved. I find the judge's approval of the settlement to be a clear indication that he found Shaw's description of her personal circumstances to be persuasive and that the settlement was in her best interest at that time.

For this reason and in light of the standard of appellate review attached to a trial court's ruling, I respectfully dissent.