Opinion
W.C. No. 4-100-755
February 23, 1999.
ORDER OF REMAND
The respondents seek review of orders of former Administrative Law Judge Wells (ALJ) which set aside the parties' settlement agreement and awarded additional temporary disability benefits. We set aside the orders and remand for entry of a new order.
The claimant suffered a compensable injury in 1991. In 1993, the claimant, who was then pro se, entered into a settlement agreement in which she agreed to release her right to all further benefits except medical benefits, in exchange for a lump sum payment. The ALJ approved the settlement on June 11, 1993. Thereafter, the respondents continued to provide medical benefits.
In 1996, the claimant filed a petition to reopen on the grounds of "change of condition." The respondents do not dispute the claimant's worsened condition. However, the parties dispute whether the settlement agreement allows the claim to be reopened because of a worsened condition. The respondents argue that the terms of the settlement prohibit reopening the claim for indemnity benefits except on the grounds of "fraud or mutual mistake of fact."
In an order dated August 28, 1997, the ALJ found that at the time the settlement was approved the respondents believed "they had bought their peace and were not liable to pay any additional benefits" except medical benefits. However, the ALJ found that the claimant was "considerably confused" and that the claimant credibly believed the agreement allowed her to reopen her claim for additional indemnity benefits if her condition worsened. Therefore, the ALJ determined that there was "never a meeting of the minds between the parties at the time the agreement was approved," and that the agreement should not have been approved. Consequently, the ALJ set aside the agreement. In an order dated September 28, 1998, the ALJ ordered the respondents to pay additional temporary total disability benefits based on the worsened condition. The respondents timely appealed.
Relying on § 8-43-303(1), C.R.S. 1998, the respondents contend that the settlement agreement is enforceable, and may only be reopened upon a finding of "fraud or mutual mistake of material fact." The respondents contend that there is no allegation of fraud, and that the ALJ made no finding of a "mutual mistake of material fact." Therefore, they argue the ALJ's findings do not support the award of benefits. We conclude that the ALJ's findings of fact are insufficient to permit appellate review, and therefore, we remand. Section 8-43-301(8), C.R.S. 1998.
Section 8-43-204(1), C.R.S. 1998, provides that:
"An injured employee may settle all or part of any claim for compensation, benefits, penalties , or interest. If such settlement provides by its terms that the employee's claim or award shall not be reopened, such settlement shall not be subject to being reopened under any provisions of articles 40 to 47 of this title other than on the ground of fraud or mutual mistake of material fact."
It follows that settlement agreements which do not expressly limit the right to reopen may be reopened on the grounds of a "change of condition" as provided by § 8-43-303, C.R.S. 1998.
A settlement agreement is in the nature of a binding contract, and therefore, must be interpreted in accordance with the general rules which apply to the construction of contracts. Cary v. Chevron U.S.A., Inc., 867 P.2d 117 (Colo.App. 1993); Resolution Trust Corp., v. Avon Center Holdings, 832 P.2d 1073 (Colo.App. 1992). The general rules of contract interpretation provide that where the contract terms are unambiguous the contract must be enforced as written. Cary v. Chevron U.S.A., Inc., supra.In determining whether a contract provision is ambiguous, the "instrument's language must be examined and construed in harmony with the plain and generally accepted meaning of the words use," with reference to all of the agreement's provisions. Moreover, the terms of the agreement must be construed against the drafter. Allstate Ins.. Co. v. Avis Rent a Car System Inc., 947 P.2d 341 (Colo. 1997).
A provision is ambiguous "if it is fairly susceptible to more than one interpretation." Dorman v. Petrol Aspen Inc., 914 P.2d 909 (Colo. 1996) citing Fibreglas Fabricators, Inc., v. Kylberg, 799 P.2d 371, 374 (Colo. 1990). Where the contract language is ambiguous the contract must be interpreted to effectuate the parties' intent, and it is proper to consider extrinsic evidence to resolve the factual question of the parties' intent. Werne v. Brown, 955 P.2d 1053 (Colo.App. 1998); Three G. Corp. v. Daddis, 714 P.2d 1333 (Colo.App. 1986). Further, where a contract term is determined to be ambiguous the meaning of the term is generally an issue of fact to be determined in the same manner as other disputed factual issues. Dorman v. Petrol Aspen, Inc., 914 P.2d at 912.
The fact that the parties differ on their interpretation of the settlement agreement does not of itself create an ambiguity. Dorman v. Petrol Aspen, Inc., 914 P.2d 909 (Colo. 1996). However, an enforceable contract requires competent parties, subject matter, a legal consideration, mutuality of agreement and mutuality of obligation, in other words, "a meeting of the minds as to its terms and conditions." Aspen Highlands Skiing Corp. v. Apostolou, 866 P.2d 1384 (Colo. 1994); Recreational Development Co. of America v. American Construction Co., 749 P.2d 1002 (Colo.App. 1987). Where the parties ascribe different meanings to a material term of the contract and that term is ambiguous, the parties have not "manifested mutual assent" and there has been no "meeting of the minds." Consequently, no valid contract exists. Sunshine v. M.R. Mansfield Realty, Inc., 575 P.2d 847 (Colo. 1978); Real Equity Diversification Inc. v. Coville, 744 P.2d 756, 758 (Colo.App. 1987). However, later dissatisfaction with the terms of the agreement is not sufficient to set it aside. Recreational Development Co. of America v. American Construction Co., 749 P.2d at 1005. Moreover, an exception is observed when the meaning that either party gives to the document's language is the only reasonable meaning under the circumstances. In such cases, the parties are bound by the reasonable meaning of the contract's terms. Sunshine v. M.R. Mansfield Realty, Inc., 575 P.2d at 849.
In this case, the ALJ's findings of fact are insufficient for us to ascertain on what basis the ALJ found that the settlement agreement was not binding and set it aside. Moreover, the ALJ failed to make sufficient findings to support his conclusion that the agreement "can and should" be read to permit reopening.
The ALJ found that there was no "meeting of the minds" by the parties at the time the settlement was approved because the agreement was "confusing" and the claimant believed the settlement agreement allowed her to reopen her claim for indemnity benefits if she suffered a worsened condition, while the respondents believed that a worsened condition would only be sufficient to reopen medical benefits. However, the parties' subjective beliefs do not render the agreement invalid. Rather, the ALJ must apply the rules of contract interpretation, and if the agreement is ambiguous consider the extrinsic evidence of the parties intent before setting aside the agreement on grounds of lack of mutuality. The ALJ's findings are insufficient to permit the conclusion that he applied these rules of construction. (Findings of Fact 3, 4, 5). For the same reasons we are unable to ascertain the basis of the ALJ's conclusion that the agreement "can and should" be read to permit reopening based on a worsened condition.
On remand the ALJ must make sufficient findings to determine whether the settlement is ambiguous. If the agreement is ambiguous, the ALJ must determine the meaning of the settlement provisions under the rules of contract construction, and enforce them accordingly.
IT IS THEREFORE ORDERED that the ALJ's orders dated August 25, 1997, and December 10, 1998, are set aside and the matter is remanded for the entry of a new order consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
_______________________________ David Cain
_______________________________ Kathy E. Dean
Copies of this decision were mailed February 23, 1999 to the following parties:
Karen L. Piel, 4946 Durasno Terrace, Security, CO 80911
Schlage Lock Company, 3866 Hancock Expressway, Colorado Springs, CO 80911-1231
CNA Insurance Company, Attn: Lisa C. Biggs, PO Box 17369, T A, Denver, CO 80217
Steven U. Mullens, Esq., PO Box 2940, Colorado Springs, CO 80901-2940 (For Claimant)
Tama L. Levine, Esq., 1515 Arapahoe Street, Tower 3, Suite 600, Denver, CO 80202 (For Respondents)
BY: _______________