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City of Ottumwa v. Poole9/1/2004
Riggens (IME physician) impairment ratings.
We look forward to receiving your response in the near future.
Later, a telephone conversation took place between Poole and Lockwood concerning the foregoing settlement offer. Following this conversation, Poole faxed to IMWCA a written acceptance of the offer.
When the formal documents to be presented to the workers' compensation commissioner were tendered to Poole for his signature, he refused to sign them. The city and IMWCA then brought an action for specific performance of the settlement agreement. Poole filed a counterclaim seeking rescission. The district court heard the evidence and found that an enforceable agreement had been reached between the parties. In considering Poole's counterclaim, the court ruled that he had established grounds for rescission based on a misrepresentation of material facts and a failure to disclose material facts. Other facts of importance will be discussed in our consideration of the legal issues presented.
I. Scope of Review
This was an action in equity for specific performance of a contract in which the defendant counterclaimed for rescission. Consequently, our review is de novo. Iowa R. App. P. 6.5. When considering the credibility of witnesses, the court gives weight to the findings of the trial court but is not bound by them. Iowa R. App. P. 6.14(6)(g).
II. The Specific Performance Issue
Agreements for special case settlements are not binding unless approved by the workers' compensation commissioner pursuant to Iowa Code section 85.35. If an agreement has been reached for the submission of a special case settlement to the commission, it may be specifically enforced to the extent of ordering a party to sign the documents necessary for that purpose. Dillon v. City of Davenport, 366 N.W.2d 918, 925-26 (Iowa 1985). In such specific enforcement actions, the court does not act to influence the decision of the commissioner under section 85.35.
III. Rescission Issue
We have recognized that an action to rescind a contract based on misrepresentations is an equitable action that does not depend on knowledge of the falsity or intent to deceive. Rubes v. Mega Life & Health Ins. Co., 642 N.W.2d 263, 269 (Iowa 2002); Alpen v. Chapman, 179 N.W.2d 585, 590 (Iowa 1970). To prevail on a rescission theory based on misrepresentation, the party requesting relief must prove (1) a representation, (2) falsity, (3) materiality, (4) an intent to induce the other to act or refrain from acting, and (5) justifiable reliance. Hyler v. Garner, 548 N.W.2d 864, 872 (Iowa 1996). We have recognized that in some instances a failure to disclose material facts may be the equivalent of a false assertion. First Nat'l Bank v. Brown, 181 N.W.2d 178, 182 (Iowa 1970).
The Restatement (Second) of Contracts speaks to the issue of nondisclosure as follows:
A person's non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only:
(a) where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material.
(b) where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith in accordance with reasonable standards of fair dealing.
(c) where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embo
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