Opinion
NO. 2015-CA-000080-WC
05-08-2015
CENGAGE LEARNING, INC. APPELLANT v. REENEACE CLEMONS; HON. J. LANDON OVERFIELD, CHIEF ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD APPELLEES
BRIEF FOR APPELLANT: Jeremy D. McGraw Louisville, Kentucky BRIEF FOR APPELLEE REENEACE CLEMONS: Jillian M. Scheyer Crescent Springs, Kentucky
NOT TO BE PUBLISHED PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-13-75846
OPINION
AFFIRMING
BEFORE: ACREE, CHIEF JUDGE; DIXON AND STUMBO, JUDGES. ACREE, CHIEF JUDGE: Cengage Learning, Inc. appeals from the December 19, 2014 opinion of the Workers' Compensation Board (Board). That judgment affirmed the July 21, 2014 order of the Chief Administrative Law Judge (CALJ), denying Cengage's motion to approve and enforce an alleged settlement agreement with appellee Reeneace Clemons. We affirm.
Clemons sustained a work-related back injury in 2013. The circumstances and medical consequences of that injury are not germane to our review. We are concerned only with the ALJ's refusal to enforce what Cengage alleged was a settlement agreement reached by the parties.
On April 7, 2014, Cengage wrote to Clemons "to discuss potential settlement of [Clemons's] claim." That communication included alternative proposals for settlement: one for weekly benefits with no waivers, and one for a lump sum payment of $10,000.00 for a full and final settlement of Clemons's claim. Following each proposal was a line where Clemons could place her signature if she chose to "accept this option[.]" It was only at the end of this communication that it stated that it was a "settlement offer" as opposed to an initiation of "discuss[ion of a] potential settlement" as it stated at the beginning.
By the time Clemons received Cengage's communication, she had dispensed with legal representation and was functioning pro se. By letter dated April 14, 2014, Clemons obviously accepted Cengage's proposal to "discuss potential settlement" because she proposed "an alternative potential settlement" that roughly doubled the proposed potential settlement with which Cengage had initiated settlement discussions. Her "potential settlement" was, according to her letter, "more in line" with her medical prognosis. To support that position, Clemons submitted to Cengage medical records from three treating physicians. One physician had recommended in March 2014 that Clemons undergo spinal surgery; Clemons had requested additional time to "think it [surgical intervention] over further."
Four days later, Cengage responded. Characterizing its own April 7, 2014 communication as an offer and Clemons's April 14, 2014 letter as a counteroffer, Cengage accepted Clemons's "counter settlement demand of a $20,000.00 lump sum payment [as her] agree[ment] to a full and complete dismissal of [her] claim for past and future workers' compensation benefits." (R. at 38). This April 18, 2014 letter from Cengage enclosed a Form 110-I as a form of "Settlement Agreement" stating that all known medical expenses had been paid and Cengage would be relieved from responsibility for any past or future medical expenses. The Form 110-I provided payments of: $7,889.20 as lost income benefits; $10,000.00 for the waiver of past and future medical benefits; $1,000.00 for the waiver of vocational rehabilitation; and $1,100.80 for waiver of the right to reopen her case.
However, Cengage's self-described acceptance of Clemons's so-called counteroffer also acknowledged that Clemons had "the right to have the Settlement Agreement reviewed and explained to [her] by an attorney of [her] choosing [after which, i]f the Settlement Agreement me[t] with [her] approval [she could] sign . . . and return same to" Cengage's counsel. (R. at 38).
Clemons took Cengage's advice and had the agreement reviewed by an attorney. Clemons was concerned with the language of the agreement, i.e., the Form 110-I, and particularly with whether her spinal surgery - which she subsequently decided to undergo - would be covered. In June 2014, Clemons's counsel informed Cengage that Clemons was no longer interested in settling under the terms proposed in Cengage's April 18, 2014 letter and Form 110-I; she wished to proceed with the spinal surgery and needed those costs covered.
Convinced that the parties had a binding settlement arrangement, Cengage filed a Motion to Enforce Settlement Agreement. The CALJ denied Cengage's motion, finding there was no true meeting of the minds between the parties. Cengage filed a petition for reconsideration, which was denied, and subsequently appealed to the Board. In an opinion dated December 19, 2014, the Board affirmed the CALJ's opinion. It first reasoned that the fact that the Form 110-I was not executed, filed, or approved by an ALJ constituted persuasive evidence that no meeting of the minds occurred. It further found that Clemons's April 14, 2014 letter, which included alternative settlement possibilities, constituted negotiation rather than a counteroffer, and Cengage's April 18, 2014 letter was a new offer, not an acceptance of a counteroffer, which Clemons never accepted. Cengage appealed.
This Court is empowered "to correct the Board only where the . . . Court perceives the Board has overlooked or misconstrued controlling statutes or precedent, or committed an error in assessing the evidence so flagrant as to cause gross injustice." Western Baptist Hosp. v. Kelly, 827 S.W.2d 685, 687-88 (Ky. 1992). This Court, like the Board, may not substitute its judgment for that of the ALJ "as to the weight of evidence on questions of fact." KRS 342.285; FEI Installation, Inc. v. Williams, 214 S.W.3d 313, 316 (Ky. 2007).
Kentucky Revised Statutes
Cengage argues the Board erred in affirming the CALJ's finding that there was not a valid settlement agreement. The parties' correspondence, Cengage contends, outlined all material facts and demonstrates a mutual understanding of a full and complete settlement leaving no term unaccounted for. Therefore, it constitutes a binding memorandum of settlement as envisioned by KRS 342.265(1). We do not agree.
" KRS 342.265(1) promotes the prompt disposition of workers' compensation claims with a minimum of expense by permitting parties to agree to settle their dispute." Hudson v. Cave Hill Cemetery, 331 S.W.3d 267, 271 (Ky. 2011). Generally, to be enforceable a memorandum of agreement must be signed by the parties or their representatives and approved by an ALJ. KRS 342.265(1). In common practice this is accomplished by way of a Form 110-I. However, a binding settlement agreement may be reached even absent a formal declaration of settlement. See Coalfield Telephone Co. v. Thompson, 113 S.W.3d 178, 181 (Ky. 2003).
In Coalfield, our Supreme Court held that an ALJ may approve a settlement based on correspondence between the parties if the correspondence memorializes all of the terms to which they agreed and neither party asserts that the terms are incomplete. Id. "There is no magic about the word 'agreement.' It simply means a mutual understanding." Skaggs v. Wood Mosaic Corp., 428 S.W.2d 617, 619 (Ky. 1968). However, "hastily-drafted and incomplete settlement agreements" are not encouraged or binding. Hudson v. Cave Hill Cemetery, 331 S.W.3d 267, 271 (Ky. 2011).
We agree with the Board that there was an incomplete formation of an agreement in this case. While the parties' correspondence demonstrates great potential generally for settlement and even specific agreement as to some terms, it fails to fully constitute a meeting of the minds. Cengage argues that its April 18, 2014 "acceptance" mirrored the terms set forth in Clemons's "counteroffer." It did not. Instead, Cengage tendered to Clemons a Form 110-I that described in detail, for the first time, the full terms of settlement it was proposing. Upon learning of those specific terms, and particularly that she was waiving her right to future medical benefits which would impact her ability to obtain medically necessary spinal surgery, Clemons refused to sign. This demonstrates to us that the parties had not yet reached an agreement as to all material terms.
Further, Cengage's "acceptance" was conditional, at least arguably so. The letter proposing the settlement and attaching the Form 110-I expressly stated her right to consult with an attorney and was specifically subject to her "approval." (R. 38). We cannot fail to give meaning to Cengage's own words in this letter. If Clemons's failure to consult with an attorney or her failure to approve the settlement proposal had no effect, why did Cengage include those terms in the "settlement discussions"? If the previous correspondence is properly called an offer and counteroffer, then we must call the April 18, 2014 letter a counter-counteroffer because, by its express terms, it required Clemons's approval prior to which Cengage could have withdrawn it. First Development Corp. of Kentucky v. Martin Marietta Corp., 959 F.2d 617, 621 (6th Cir. 1992) (citing Shaw v. Ingram-Day Lumber Co., 152 Ky. 329, 335, 153 S.W. 431, 434 (1913) (offer can be withdrawn any time prior to acceptance). Granting a party the right to approve, or decline to approve, a proposed settlement and then crying foul when she exercises that right is not a strong foundation for argument.
Finally, Cengage urges us not to alter the standard related to settlement negotiations when the claimant is acting pro se. Nothing in this opinion should be construed as doing so. The standard remains constant: does the documentation memorialize all of the agreed upon terms; is any term incomplete; and was there mutual understanding - a meeting of the minds? See Coalfield, 113 S.W.3d at 181; Skaggs, 428 S.W.2d at 619.
Determining whether there was a meeting of the minds sometimes does require that we peek behind the proverbial curtain to assess the parties' relative abilities to comprehend the terms being proposed. When both sides of a dispute are represented by legal counsel, we are justified in making certain presumptions regarding a mutual and comparable understanding of workers' compensation law. Here, however, the fact that Clemons was not as knowledgeable as Cengage's counsel only affects our analysis in one way - Cengage, implicitly acknowledging Clemons's lack of expertise, recommended she have the agreement explained to her by an attorney before exercising her prerogative to determine whether it "meets with your approval" as the April 18, 2014 letter states.
Ultimately, we agree with the Board that Cengage and Clemons engaged in settlement negotiations, but that no meeting of the minds occurred such that a binding settlement agreement was reached. Accordingly, we affirm the December 19, 2014 opinion of the Board affirming the CALJ's July 21, 2014 order denying Cengage's motion to enforce settlement agreement.
ALL CONCUR. BRIEF FOR APPELLANT: Jeremy D. McGraw
Louisville, Kentucky
BRIEF FOR APPELLEE REENEACE
CLEMONS:
Jillian M. Scheyer
Crescent Springs, Kentucky