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South v. Transportation Ins. Co.3/18/1996
ienas and its progeny have their basis in these fundamental principles of contract law, they must not be construed in such a way as to defeat those same fundamental principles.
Moreover, while Montana workers' compensation cases have only addressed rescission for mutual mistake of fact in the context of the claimant's injury , other states have recognized that other types of mutual mistakes may also warrant rescission. The Arizona Court of Appeals set aside a worker's compensation settlement when the parties mistakenly stipulated that the claimant had no loss of earning capacity, when in fact he had. Dutton v. Industrial Com'n of Arizona (Ariz. Ct. App. 1989), 784 P.2d 290. The Minnesota Supreme Court set aside a workers' compensation settlement that mistakenly listed an incorrect date of injury, when the mistake materially affected the claimant's rights under the settlement. Heath v. Airtex Industries (Minn. 1980), 297 N.W.2d 269. As these cases illustrate, the operative question is whether a mutual mistake existed which justified rescission, without limitation to how or when the mistake was made.
We find no error in the Workers' Compensation Court's conclusion that the parties were not mistaken regarding the nature and extent of South's injury at the time the contract was formed. As set out above, however, the inquiry cannot end with that question alone. Accordingly, we do find error in the Workers' Compensation Court's failure to consider South's contention of mutual mistake regarding the propriety of the job approved for her to do.
In South's settlement agreement, seven jobs were set out, with a doctor's approval, as appropriate for her to pursue. One of these jobs was massage therapist. In accordance with the terms of the agreement, South elected to begin massage therapist training in order to pursue the career she had chosen from the approved list. While in training, she re-injured her back, was forced to quit the training program, and subsequently required additional surgery.
The Workers' Compensation Court focused on the testimony of South's doctor, who testified that "something new" must have occurred after the settlement agreement to cause the re-injury to her back. Relying on that testimony, the court refused to rescind the agreement, because the occurrence of a re-injury did not necessarily indicate that the parties were mistaken regarding the initial injury when the contract was formed.
The mutual mistake that South alleged, however, was not regarding the injury itself, but rather regarding the propriety of "massage therapist" as a potential career for one who has an injured back. South's doctor testified unequivocally that such a career was entirely inappropriate for someone in South's condition because it involved repeated bending as well as standing for extended periods of time. South contended that both parties mistakenly believed such training to be acceptable at the time the settlement was signed because both parties relied upon the erroneous opinion of the doctor who approved the list of possible jobs.
The Workers' Compensation Court noted that "something new" must have occurred to cause the re-injury. It therefore concluded that the re-injury cannot be related back to the first injury . But South alleged that the "something new" which caused her to re-injure her back was the massage training itself. She contended that it was her good-faith pursuit of an inappropriate job that led to the second injury — a job she never would have attempted if it had not been approved by and included in the settlement agreement.
The insurer argues, however, that even if such a mistake was made,
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