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City of Ottumwa v. Poole9/1/2004
dying an agreement in whole or in part.
(d) where the other person is entitled to know the fact because of a relation of trust and confidence between them.
Restatement (Second) of Contracts § 161 (1981). With respect to paragraph (d) of the Restatement rule, we have recognized that, if a workers' compensation claims representative assumes the role of an advisor to a claimant, all relevant facts must be disclosed in reaching a settlement agreement. Harrison v. Keller, 254 Iowa 267, 271, 117 N.W.2d 477, 480 (1962). The comment to paragraph (d) of the Restatement rule states:
The rule stated in Clause (d) supplements that stated in § 173 with respect to contracts between parties in a fiduciary relation. Where the latter rule applies, as in the case of a trustee, an agent, a guardian, or an executor or administrator, its more stringent requirements govern. Even where a party is not, strictly speaking, a fiduciary, he may stand in such a relation of trust and confidence to the other as to give the other the right to expect disclosure. Such a relationship normally exists between members of the same family and may arise, in other situations as, for example, between physician and patient. In addition, some types of contracts, such as those of suretyship or guaranty, marine insurance and joint adventure, are recognized as creating in themselves confidential relations and hence as requiring the utmost good faith and full and fair disclosure.
Restatement (Second) of Contracts § 161 cmt. f.
In evaluating Lockwood's role in the handling of Poole's workers' compensation claim, we are unable to conclude that it involved a relation of trust and confidence sufficient to invoke an enhanced duty of disclosure. The only actual advice given to Poole by Lockwood, as disclosed by the record, was with respect to the information to be included in a settlement demand. Insurance agents regularly request information from claimants that pertains to their claims. Lockwood's actions in this regard did not establish a relationship of trust and confidence with Poole. It is clear from the record that her dealings with him thereafter were at arms' length. As such she could negotiate with him based on circumstances that she deemed favorable to her evaluation of the claim. She was not required to bring up factors that might militate in favor of a larger award. That would have amounted to bidding against herself.
Poole's claims of falsity and failure of necessary disclosure are that Lockwood misrepresented his functional impairment rating as a body-as-a-whole disability rating and that she misinformed him by stating that he would not be entitled to future medical benefits. In carefully viewing the record with regard to these claims, we are convinced that Lockwood's reference to "a minimal permanent partial disability rating," was understood by both Poole and her as referring to the four-percent functional rating and six-percent functional rating previously obtained from Poole's examining physicians. Those were ratings of which both parties were aware. Although Poole is correct in contending that functional impairment ratings do not equate with body-as-a-whole industrial disability because the latter is based on lost earning capacity, functional impairments can play an important role in settlement negotiations. Poole's contention that Lockwood was treating these ratings as conclusive evidence of the extent of his industrial disability is belied by the fact that the percentage of disability involved in the settlement offer was greater than either of the ratings expressed by the doctors who had examined him. In addition, she invited him to make a counteroffer.
Poole a
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