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Frazer v. Montana State Fund

Court of Workers Compensation of Montana

July 20, 2005

DAN FRAZER Petitioner
v.
MONTANA STATE FUND Respondent/Insurer.

          Submitted: June 14, 2005

          DECISION AND JUDGMENT DISMISSING PETITION

          MIKE MCCARTER JUDGE

         Summary: The claimant entered into a disputed liability settlement with the Montana State Fund after his employer reported that the claimant failed to timely notify it of his alleged injury. Several years later he petitioned the Workers' Compensation Court to rescind the settlement based on information he obtained from two co-employees supporting his assertion that he had in fact timely informed his employer of the injury. He alleged that the parties were therefore suffering from a mutual mistake of fact at the time of the settlement. The claimant also alleged that the settlement should be rescinded because he was under financial duress at the time he entered into the settlement.

         Held: The claimant's request to reopen his settlement based on mutual mistake of fact is time-barred and in any event without substance. His allegations also fail to state a claim for reopening based on fraud, duress, or undue influence.

         Topics:

Limitations Periods: Reopening of Settlements. Where a claim was denied for the claimant's alleged failure to timely report his industrial injury to his employer, the claimant then settled with the insurer on a disputed liability basis, and the claimant has consistently maintained since the time of the accident that he timely reported the accident to his employer, the limitations period for reopening the settlement began at the time the settlement was executed since the claimant had knowledge which should have led him to seek further evidence which would have supported his claim. Prior to the settlement he should have identified and interviewed the supporting witnesses he now proffers in support of his request to reopen.
Settlements: Reopening. Mistake of Fact. Where a claim was denied for the claimant's alleged failure to timely report his industrial injury to his employer, the claimant then settled with the insurer on a disputed liability basis, and the claimant has consistently maintained since the time of the accident that he timely reported the accident, the claimant was not operating under a mistake of fact concerning the timeliness of his report of injury.
Settlements: Reopening. Duress and Undue Influence. Settlement agreements in workers' compensation cases may be rescinded (reopened or set aside) upon proof of duress or undue influence. § 28-2-1711, MCA (1999).
Constitutions, Statutes, Rules, and Regulations: Montana Code Annotated: § 28-2-1711, MCA (1999). Since settlement agreements in workers' compensation cases are contracts, Kienas v. Peterson, 191 Mont. 325, 328, 624 P.2d 1, 2 (1980), they may be rescinded (reopened or set aside) for duress or undue influence as provided in section 28-2-1711, MCA (1999).
Settlements: Reopening. Duress and Undue Influence. To reopen a settlement on grounds of duress, the claimant must prove "(1) unlawful confinement of the person of the party, of the husband or wife of such party, or of an ancestor, descendant, or adopted child of such party, husband, or wife; (2) unlawful detention of the property of any such person; or (3) confinement of such person, lawful in form but fraudulently obtained or fraudulently made unjustly harassing or oppressive." § 28-2-402, MCA (1999).
Constitutions, Statutes, Rules, and Regulations: Montana Code Annotated: § 28-2-402, MCA (1999). To reopen a settlement on grounds of duress, the claimant must prove "(1) unlawful confinement of the person of the party, of the husband or wife of such party, or of an ancestor, descendant, or adopted child of such party, husband, or wife; (2) unlawful detention of the property of any such person; or (3) confinement of such person, lawful in form but fraudulently obtained or fraudulently made unjustly harassing or oppressive."
Settlements: Reopening. Duress and Undue Influence. To reopen a settlement based on undue influence, the claimant must prove "(1) the use by one in whom a confidence is reposed by another or who holds a real or apparent authority over him of such confidence or authority for the purpose of obtaining an unfair advantage over him; (2) taking an unfair advantage of another's weakness of mind; or (3) taking a grossly oppressive and unfair advantage of another's necessities or distress." § 28-2-407, MCA (1999).
Constitutions, Statutes, Rules, and Regulations: Montana Code Annotated: § 28-2-407, MCA (1999). To reopen a settlement based on undue influence, the claimant must prove "(1) the use by one in whom a confidence is reposed by another or who holds a real or apparent authority over him of such confidence or authority for the purpose of obtaining an unfair advantage over him; (2) taking an unfair advantage of another's weakness of mind; or (3) taking a grossly oppressive and unfair advantage of another's necessities or distress."
Settlements: Reopening. Duress and Undue Influence. Where a claim is disputed based on an employer's report that it was not timely notified of an alleged industrial injury, the fact that the claimant agreed to settle his claim on a disputed liability basis because of financial pressures is not a basis for finding undue influence on the part of the insurer.
Settlements: Reopening. Duress and Undue Influence. Where a claim is disputed based on an employer's report that it was not timely notified of an alleged industrial injury, the fact that the claimant agreed to settle his case on a disputed liability basis because of financial pressures is not a basis for a finding that the claimant was acting under economic duress which entitles him to rescind (reopen or set aside) the settlement agreement. To prove economic duress, the claimant must show "(1) a wrongful act that; (2) overcomes the will of a person; (3) who has no adequate legal remedy to protect his interests." Somersille v. Columbia Falls Aluminum Co., 255 Mont. 101, 108, 841 P.2d 483, 487 (1992).
Settlements: Reopening. Duress and Undue Influence. Where a claim was denied for the claimant's alleged failure to timely report his industrial injury to his employer and the claimant then settled with the insurer on a disputed liability basis, the claimant is not entitled to reopen his settlement based on allegations that he entered into the settlement agreement based on financial hardship since financial hardship does not constitute legal duress or undue influence.

         ¶1 The petitioner, Dan Frazer (claimant), seeks to rescind (reopen or set aside) a disputed liability settlement agreement on grounds of fraud or duress. The respondent, Montana State Fund (State Fund), moves for summary judgment and to dismiss.

         ¶2 The respondent initially filed a motion for summary judgment. However, that motion was based in part on a Combined Motion and Brief to Reopen Claim that the claimant sent to the Court prior to the filing of his present petition. Since no petition was pending, the Court returned it to the claimant's counsel and it was not resubmitted in conjunction with the summary judgment motion.

         ¶3 Because the combined motion was not on file, and because there was a question on the Court's part as to whether the claimant intended to allege fraud and/or duress in connection with the settlement, the claimant was permitted to file an amended petition. The procedural history that followed is outlined in an Order Regarding Further Proceedings, 2005 MTWCC 31, and will not be repeated here. As set out in that Order, the Court notified the parties that it intended to treat the respondent's Reply to Motion for More Definite Statement as a motion to dismiss fraud and duress claims.

         I. Undisputed Facts

         ¶4 For purposes of the motion for summary judgment, [1] the basic undisputed facts, are as follows:

ΒΆ4a The claimant alleges he suffered an industrial injury on February 9, 2001, while working for Ted's Western Appliance, Incorporated in Park County, Montana. ...

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