| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
|
You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Leona Seal, as Personal Representative of the Estate of Nicholson J. Tinker v. Mark C. Welty d/b/a North Country Services (12/18/2020) sp-7494
Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
LEONA SEAL, Personal )
Representative of the Estate of ) Supreme Court No. S-17540
NICHOLSON J. TINKER, )
) Superior Court No. 3AN-17-10122 CI
Appellant, )
) O P I N I O N
v. )
) No. 7494 - December 18, 2020
MARK C. WELTY, d/b/a NORTH )
COUNTRY SERVICES, )
)
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Thomas A. Matthews, Judge.
Appearances: David Murrills, Schlehofer Law Offices, P.C.,
Anchorage, for Appellant. Susan Orlansky, Reeves Amodio
LLC, Anchorage, for Appellee.
Before: Bolger, Chief Justice, Winfree, Maassen, and
Carney, Justices. [Stowers, Justice, not participating.]
WINFREE, Justice.
I. INTRODUCTION
A worker died at a construction site when a retaining wall collapsed.
Neither the putative employer, who claimed the worker was an independent contractor,
nor the property owner, who hired the putative employer, had workers' compensation
----------------------- Page 2-----------------------
coverage. The worker's mother, who also was the personal representative of the
worker's estate, filed both a workers' compensation claim against the Alaska Workers'
Compensation Benefits Guaranty Fund and a superior court wrongful death action
against both the putative employer and the property owner. The Fund later caused the
property owner, the putative employer, and the worker's father to be joined as parties to
the workers' compensation claim before the Alaska Workers' Compensation Board.
All parties to the workers' compensation proceeding, except the putative
employer, entered into a settlement agreement; in the settlement the estate elected the
wrongful death suit as its remedy, agreed to dismiss the workers' compensation claim
entirely to effectuate its remedy election, received a settlement payment from the
property owner's general liability insurer, and dismissed the wrongful death claim
against the property owner. The agreement explicitly preserved the estate's wrongful
death claimagainst the putativeemployer. TheBoard evidently approved theagreement,
and the superior court dismissed the property owner from the wrongful death action
based on a separate stipulation.
The putative employer then sought dismissal of the wrongful death suit,
contending that the Alaska Workers' Compensation Act's exclusive liability provision
precluded the lawsuit because the settlement effectively paid workers' compensation
benefits to the estate. The superior court granted the putative employer summary
judgment, relying on the Act to decide that the Board's approval of the settlement
transformed the settlement money into workers' compensation benefits. Because the
superior court misinterpreted the settlement agreement and the Act, we reverse the grant
of summary judgment and remand for further proceedings.
-2- 7494
----------------------- Page 3-----------------------
II. FACTS AND PROCEEDINGS 1
David Michaelson contracted with Mark Welty, d/b/a North Country
Services, to demolish and rebuild a retaining wall at Michaelson's 4-unit rental property.
Nicholson Tinker worked for Welty at the construction site. In September 2016 the
retaining wall collapsed, killing Tinker.
Welty had no workers' compensation insurance; he had a general
commercial liability insurance policy, but the insurer denied coverage for the accident.
Michaelson had no workers' compensation insurance, but he had a landlord liability
policy through Allstate with a $300,000 policy limit.
Tinker was unmarried and had no children. He shared an apartment and
some living expenses with his mother, Leona Seal, who was appointed personal
representative of Tinker's estate. Seal filed, in her own name, a written workers'
compensation claim for death benefits in late 2016. She included a claim against the
Fund and informed the Board that she was "pursuing employers / project owners directly
for personal injury . . . but reservin[g] rights so also making guaranty fund claim." As
personal representative of Tinker's estate, Seal also filed a wrongful death action against
both Welty and Michaelson in late 2017. Welty answered and denied he was Tinker's
employer; Welty has consistently maintained that Tinker was an independent contractor.
The Fund petitioned to join Welty, Michaelson, and Tinker's father to the
Board proceeding. Welty opposed joinder; Michaelson did not oppose joinder but
contended that Seal could not proceed with both the compensation claim and the civil
1
Some facts related to the Board proceeding are derived from the settlement
agreement, which is part of the appellate record in this case.
-3- 7494
----------------------- Page 4-----------------------
2
case. The Board joined all three parties in August 2018, but "with the agreement of the
parties" did not schedule hearings because Seal wanted to pursue the civil action.
In August 2018 Michaelson offered to settle the wrongful death claim
against him with the full amount of the available Allstate insurance funds in exchange
for a release of all claims made against him in both the superior court and Board
proceedings. Michaelson informed Seal that the Fund would "need to agree" to the
settlement and that, although the estate could "continue its third party action against . . .
Welty," the estate could not further pursue the workers' compensation claim because
3
doing so would expose Michaelson to additional liability.
The parties initially planned to use two documents to memorialize the
agreement. Michaelson drafted a release stating that the settlement agreement
represented "an election pursuant to AS23.30.055to maintain acivil actionagainst Mark
Welty d/b/a North Country Services and David Michaelson." Under the release's terms
2 Alaska Statute 23.30.055 sets out what is referred to as an election of
remedies; it provides, in relevant part:
[I]f an employer fails to secure payment of compensation as
required by [the Act], an injured employee or the employee's
legal representative in case death results from the injury may
elect to claimcompensation under this chapter, or to maintain
an action against the employer at law . . . for damages on
account of the injury or death. In that action, the defendant
may not plead as a defense that the injury was caused by the
negligence of a fellow servant, or that the employee assumed
the risk of the employment, or that the injury was due to the
contributory negligence of the employee.
3 Under AS 23.30.045(a) Michaelson could be liable for workers'
compensation as a project owner if Welty were determined to be Tinker's employer. A
project owner is "a person who, in the course of the person's business, engages the
services of a contractor and who enjoys the beneficial use of the work."
AS 23.30.045(f)(2).
-4- 7494
----------------------- Page 5-----------------------
Seal and the estate "waive[d] any rights to workers' compensation benefits," and Seal
was to notify the Fund that the workers' compensation claims were being withdrawn,
with prejudice, against both Michaelson and Welty. Michaelson required an agreement
betweenSeal and theFund"dismiss[ing]allpotential claimsforever against [Michaelson
and Welty] filed contemporaneously with the . . . [B]oard" before paying the estate.
The Fund requested that the settlement be filed with the Board and
ultimately drafted the settlement agreement as one document. Because the Board had
joined Tinker's father, who was self-represented, the Board had to approve any workers'
4 The parties do not dispute that the Board approved the
compensation claim settlement.
settlement, although the superior court record does not contain a copy signed by the
Board.
In late November 2018 Michaelson and Seal stipulated to dismiss the
estate's claims against Michaelson in the wrongful death suit; the stipulation included,
in bold typeface, a sentence stating that the estate's claims against Welty were not
dismissed. The superior court signed the accompanying order dismissing claims against
Michaelson in December 2018. Welty then sought summary judgment, asking the court
to dismiss the estate's claims against him based on the settlement agreement. Welty's
only exhibits were: (1) the settlement agreement without the Board's endorsement;
(2) the Board's decision in Shepard v. New City Painting, LLC;5 and (3) an Alaska
4 See AS 23.30.012(b) (requiring Board review and approval of settlement
when claimant is not represented by Alaska attorney). If all parties are represented by
Alaska counsel, a settlement is exempt under AS 23.30.012(a) from the requirement for
Board review and approval; such a settlement agreement "is enforceable as a
compensation order" after it is filed with the Division of Workers' Compensation.
5 AWCB Dec. No. 13-0001 (Jan. 10, 2013) (holding that injured employee
unable to collect on civil judgment against uninsured employer was not barred under
(continued...)
-5- 7494
----------------------- Page 6-----------------------
Workers' Compensation Appeals Commission decision reversing the Board's Shepard
6
decision.
Welty asserted that under AS 23.30.055, Seal was "required to elect a
7 and "[a]s a matter of undisputed fact, . . . has elected workers' compensation
remedy"
benefits." He contended that Seal had "claimed compensation" by entering into the
settlement agreement and filing it with the Board for approval. Alleging that the
settlement money "came from Allstate," Michaelson's insurer, "through the Alaska
Workers' Compensation Benefits Guaranty Fund," Welty argued that the Board's
approval under AS 23.30.012 effectively made the settlement a final judgment of the
Board and showed that Seal had elected compensation. Relying on the Commission's
Shepard decision, Welty contended that Seal had "obtained a final decision in the
workers' compensation proceeding," precluding her from continuing the civil case
against him.
Seal filed a lengthy opposition with multiple exhibits. She disputed some
"facts" in Welty's motion; she pointed out, for example, that Welty's assertion about the
settlement money coming through the Fund was incorrect and that his purported citation
was "flat out wrong." She disputed Welty's arguments about the settlement agreement's
5 (...continued)
AS 23.30.055 or AS 23.30.105 from filing a workers' compensation claim).
6 State, Workers' Comp. Benefits Guar. Fund v. Shepard , AWCACDec. No.
190 (Dec. 20, 2013), http://labor.state.ak.us/WCcomm/memos-finals/D_190.pdf
(reversing Board's decision and holding workers' compensation claim barred under
AS 23.30.055).
7
See AS 23.30.055 (providing when employer is uninsured employee "may
elect to claim compensation . . . or to maintain an action against the employer at law").
-6- 7494
----------------------- Page 7-----------------------
meaning and effect, noting that settlement agreements are interpreted "using basic
contract principles."
Seal argued that the estate did not elect a compensation remedy against
Welty, maintaining that she had filed the workers' compensation claim against the Fund
as a direct beneficiary rather than as the estate's representative and pointing out that she
believed the Fund improperly sought the other parties' joinder. She relied on the
settlement agreement's language to support her argument that she had settled with
Michaelson in the civil case, not the workers' compensation case. She contended that
if the settlement before the Board represented an election of remedies under
AS 23.30.055, the Board had sanctioned her choice of the civil suit by granting approval.
The settlement said explicitly that "by entering into [the] Agreement . . . [she] ha[d] . . .
made an election of remedies under AS 23.30.055 to pursue a civil action against Welty
and Michaelson." Seal contended that as a matter of law AS 23.30.055 did not foreclose
her suit because "no [workers' compensation] benefits have been paid" and the civil suit
had "not been resolved by a judgment." She ended by asserting that Welty's motion was
"both factually and legally flawed" and noting that Welty was not even a party to the
settlement agreement filed with the Board.
In reply Welty insisted that Seal had "received hundreds of thousands of
dollars of benefits through the workers' compensation process," resulting in a final
Board order. Welty argued: "By receiving benefits, she pursued her workers'
compensation claims to a successful conclusion." Welty acknowledged that the
settlement agreement preserved Seal's rights to pursue a civil action but said that the
parties to the settlement - presumably including the Fund - could "not evade the law,
as they attempt to do here, by crafting a Settlement Agreement that provides on the one
hand that a workers' compensation claimant receives benefits approved by the [B]oard
. . . but at the same time continue to maintain [a civil] action." According to Welty,
-7- 7494
----------------------- Page 8-----------------------
Seal's contention that the settlement payment did not represent workers' compensation
benefits was "mistaken." Welty argued that it was immaterial that Allstate, rather than
a workers' compensation insurance carrier, was the settlement money's source.
The superior courtgranted summary judgment toWelty. The court decided
there were no material factual disputes and determined first that the plaintiff in the civil
action and the claimant in the workers' compensation case were the same. The court
then decided that the settlement proceeds "constitute workers' compensation benefits
because the proceeds were derived from a workers' compensation settlement agreement
approved by the Board" under AS 23.30.012. The court reasoned that because the
agreement was "equivalent to an order of the Board" after the Board approved it, "the
settlement proceeds are equivalent to a workers' compensation award" and therefore
"compensation" as a matter of law. According to the court, "the source of the proceeds
ha[d] no bearing on [the] outcome"; "[t]he only material fact is that the Board approved
the Settlement Agreement." The court said that under any interpretation of the election
of remedies issue, Seal had elected workers' compensation as her remedy; the court
concluded that allowing the negligence action to proceed would "contravene[] the intent
of the statute requiring an election." Addressing Seal's argument about applying
contract interpretation principles, the court acknowledged the settlement agreement's
express languagebut decided that "self-serving contract language"served to "contravene
the legal effects of [the Act] under the undisputed facts." The court entered final
judgment against Seal. Seal, as personal representative of Tinker's estate, appeals.
III. STANDARD OF REVIEW
8 "Questions regarding
We review the grant of summary judgment de novo.
the interpretation and application of a statute are questions of law to which we apply our
8
Christensen v. Alaska Sales &Serv., Inc., 335 P.3d 514, 516 (Alaska 2014).
-8- 7494
----------------------- Page 9-----------------------
9
independent judgment." Contract interpretation generally is a question of law that we
review de novo, but interpretation can involve factual questions "when the meaning of
contract language is dependent on conflicting extrinsic evidence." 10
IV. DISCUSSION
A. Relevant Workers' Compensation Principles
Workers' compensation generally is the exclusive remedy that an
"employee, the employee's legal representative, . . . parents, dependents, next of kin, and
anyone otherwise entitled to recover damages" has against an employer "on account of
11 Because the exclusive remedy provision
[an] injury or death" covered under the Act.
applies to any action "on account of the injury," the claimant's identity does not
determine whether the exclusive remedy provision bars suit. We have, for example,
interpreted the phrase "on account of the injury" in AS 23.30.055 as barring a spouse's
loss of consortium claim against an employer because her claim resulted from her
husband's work-related injury for which he received compensation.12 If a death is work
related and an employer has compensation coverage, the exclusive remedy provision
generally bars the worker's estate's wrongful death claim against the employer.13
If an employer is uninsured, AS 23.30.055 permits "an injured employee
or the employee's legal representative in case death results from the injury [to] elect to
claim compensation under [the Act], or to maintain an action against the employer at law
9 State v. Jeffery , 170 P.3d 226, 229 (Alaska 2007).
10 Norville v. Carr-Gottstein Foods Co., 84 P.3d 996, 1000 n.1 (Alaska 2004).
11 AS 23.30.055.
12 Wright v. Action Vending Co., 544 P.2d 82, 86 (Alaska 1975).
13 Taylor v. Se.-Harrison W. Corp., 694 P.2d 1160, 1161 (Alaska 1985).
-9- 7494
----------------------- Page 10-----------------------
. . . for damages on account of the injury or death." An uninsured employer is prohibited
by AS 23.30.055 from asserting certain defenses, such as contributory negligence, in a
civil suit. But the Act, and therefore AS 23.30.055, applies only if an injury arises out
of and in the course of employment. 14
The Board is an administrative agency with limited jurisdiction prescribed
by the Act; it cannot adjudicate civil claims.15 Parties cannot by stipulation expand an
administrative agency's subject matter jurisdiction any more than they could by
stipulation expand a court's jurisdiction;16 the legislature determines an administrative
agency's jurisdiction.17 When resolving disputes about the Act's applicability, we have
held that the superior court and the Board have concurrent jurisdiction.18 Included in
14 AS 23.30.010.
15
Gunter v. Kathy-O-Estates, 87 P.3d 65, 69 (Alaska 2004) (describing
Board's authority as "limited to the powers and duties prescribed by [the Act]"); see also
Alaska Pub. Interest Research Grp. v. State, 167 P.3d 27, 36-37 (Alaska 2007) ("Neither
the Appeals Commission nor the Board has jurisdiction to hear any action outside of a
workers' compensation claim.").
16 20 AM. JUR. 2D Courts § 90 (2015); see also Holdsworth v. Greenwood
Farmers Coop., 835 N.W.2d 30, 55 (Neb. 2013) (holding parties could not "by private
agreement" deprive workers' compensation court of jurisdiction), superseded by statute
on other grounds as recognized in Dragon v. Cheesecake Factory, 915 N.W.2d 418, 422
(Neb. 2018).
17 Alaska State Comm'n for Human Rights v.Anderson , 426 P.3d 956, 962-63
(Alaska 2018) ("Administrative agencies are created by statute 'and therefore must find
within the statute the authority for the exercise of any power they claim.' " (quoting
McDaniel v. Cory, 631 P.2d 82, 88 (Alaska 1981))).
18 Ehredt v. DeHavilland Aircraft Co. of Canada, 705 P.2d 446, 450 (Alaska
1985) (citing Alaska Workmen's Comp. Bd. v. Marsh (Marsh I), 550 P.2d 805, 808 n.8
(Alaska 1976)); see also Nelson v. Municipality of Anchorage , 267 P.3d 636, 643-44
(continued...)
-10- 7494
----------------------- Page 11-----------------------
disputes about the Act's applicability are disputes related to whether the injured person
19
is an employee or an independent contractor.
AlaskaStatute23.30.012 permitsresolving aworkers' compensation claim
dispute by filing with the Division of Workers' Compensation a settlement agreement
meeting certain requirements.20 When all parties are represented by Alaska attorneys the
statute does not mandate Board approval,21 and the agreement is enforceable as a
compensation order.22 If a party is not represented by an Alaska attorney, and in other
specific circumstances, a Board panel must review a proposed settlement agreement.23
Once the Board reviews and approves a settlement agreement, "the agreement is
18 (...continued)
(Alaska 2011) (recognizing concurrent superior court and Board jurisdiction about
"employee's status at the time of injury"); Himschoot v. Shanley, 908 P.2d 1035, 1040
(Alaska 1996) (affirming superior court's jurisdiction to decide whether accident was
work related).
19 See, e.g., Odsather v. Richardson, 96 P.3d 521, 522 (Alaska 2004)
(reversing summary judgment and remanding to determine employee or independent
contractor status); see also Searfus v. N. Gas Co., 472 P.2d 966, 969 (Alaska 1970)
(adopting "relative nature of the work" test to determine employment status). The
legislature in 2018 amended the Act to exclude independent contractors from the
definition of "employee"and toprovideastatutory test for independent contractor status.
Ch. 91, § 17, SLA 2018.
20 See also 8 Alaska Administrative Code (AAC) 45.160 (2011) (setting out
necessary provisions in Board settlement).
21 AS 23.30.012.
22 AS 23.30.012(a).
23 AS 23.30.012(b) (requiring review when claimant or beneficiary is not
represented by Alaska attorney, beneficiary is minor or incompetent, or claimant waives
future medical benefits).
-11- 7494
----------------------- Page 12-----------------------
enforceable the same as an order or award of the [B]oard." 24 The statute thus does not
always require Board approval for a settlement agreement to be enforceable as a
compensation order.
25 An employee may file a claim
The legislature created the Fund in 2005.
against the Fund only when an employer "fails to meet the requirements of AS 23.30.075
and . . . fails to pay compensation and benefits due to the employee under [the Act]."26
Civil penaltypaymentsfromuninsured employers and appropriations financetheFund.27
Alaska Statute 23.30.082 contemplates that the Fund may have insufficient reserves to
pay all claims and provides that "when sufficient money has been deposited . . . and
appropriated," the Fund must "satisfy unpaid claims in the order in which the claims
were originally filed."28
B. Application Of Relevant Workers' Compensation Principles To This
Case
Seal argues that the superior court erred by failing to distinguish her status
as personal representative of an estate from her status as a potential workers'
compensation beneficiary.29
She also contends that she never made a workers'
24 Id.
25 Ch. 10, § 31, FSSLA 2005.
26 AS 23.30.082(c). Under the Act " 'compensation' means the money
allowance payable to an employee or the dependents of the employee as provided for in
[the Act], and includes the funeral benefits provided for in [the Act]." AS 23.30.395(12).
27 AS 23.30.082(a).
28 AS 23.30.082(e).
29 Seal's assertion that a claim on behalf of a deceased worker can be filed
against the Fund only by a dependent is incorrect but immaterial. A deceased worker's
(continued...)
-12- 7494
----------------------- Page 13-----------------------
compensation claim against Welty in her capacity either as a possible beneficiary or as
personal representative, insisting that her claim was against only the Fund. In her view
any election of remedies required under AS 23.30.055 cannot bar her claim because she
elected a workers' compensation remedy against the Fund alone, but she elected a civil
remedy against Welty and Michaelson. She notes that she "could only have recovered
30 but that to settle her
a maximum of $30,000" for workers' compensation benefits
wrongful death suit against Michaelson Allstate paid $300,000. She argues that joinder
of Welty and Michaelson to the workers' compensation claim "was improper" and does
not change the legal analysis in any event. She maintains that the superior court
conflated distinct legal entities and roles in making its decision.
Because the exclusive remedy provision is related to claims made "on
31 whether Seal filed the workers' compensation claim as
account of the injury or death,"
a potential beneficiary or as personal representative of the estate was immaterial to the
32 Had Seal or the estate received workers'
questions before the superior court.
29 (...continued)
estate can claim funeral expenses under AS 23.30.215 as well as any compensation the
worker may have been entitled to before death. AS 23.30.195 (allowing award of
impairment or disability compensation after death); see, e.g., Estate of Stark, AWCB
Dec. No. 05-0171 (June 23, 2005) (awarding estate medical and transportation benefits
and funeral expenses).
30 Death benefits include up to $10,000 in funeral expenses.
AS 23.30.215(a)(1). In some circumstances parents of a worker who dies on the job may
receive compensation of up to "$20,000 in the aggregate." AS 23.30.215(a)(4).
31 AS 23.30.055; see also Wright v. Action Vending Co., 544 P.2d 82, 86
(Alaska 1975) (holding that AS 23.30.055 barred wife's loss of consortium claim for
husband's work-related injury).
32 See AS 23.30.215(a) ("If the injury causes death, the compensation is . . .
(continued...)
-13- 7494
----------------------- Page 14-----------------------
compensation benefits, the estate's wrongful death suit would be barred by the exclusive
33
remedy provision.
Seal cites a number of our cases holding that AS 23.30.055 did not
bar an employee's injury-related civil action even though an employeereceivedworkers'
compensation, but those cases are distinguishable. She did not allege an intentional tort
34 illegality in Tinker's contract,35 or a maritime claim against Welty.36
in the civil suit,
It also was immaterial whether Seal's workers' compensation claim was
against the Fund or Welty. The Fund has no independent liability to a compensation
claimant. When an employer fails to provide compensation coverage and "fails to pay
compensation and benefits due,"37 the Act allows a claimant to file a claim against the
32 (...continued)
payable in the following amounts to or for the benefit of the following persons:
(1) reasonable and necessary funeral expenses not exceeding $10,000; . . . (4) if there is
no widow or widower or child or children, then for the support of father, [or] mother, . . .
if dependent upon the deceased at the time of injury, . . . not to exceed $20,000 in the
aggregate . . . .").
33 See Taylor v. Se.-Harrison W. Corp., 694 P.2d 1160, 1161 (Alaska 1985).
34 See Elliott v. Brown, 569 P.2d 1323, 1327 (Alaska 1977) (holding that
exclusive remedy provision did not shield co-worker who allegedly committed
intentional tort).
35 See Whitney-Fidalgo Seafoods, Inc. v. Beukers, 554 P.2d 250, 251, 253-54
(Alaska 1976) (holding that exclusive remedy provision did not preclude suit against
employer who knowingly hired employee in violation of child labor law, even though
employee had received compensation benefits).
36 See Barber v. New Eng. Fish Co., 510 P.2d 806, 811-12 (Alaska 1973)
(holding that receipt of workers' compensation benefits did not bar unseaworthiness
claim under federal maritime law).
37 AS 23.30.082(c); see also 8 AAC 45.177 (detailing procedure for claim
when employer is uninsured and providing that Fund "may not be obligated to pay"
(continued...)
-14- 7494
----------------------- Page 15-----------------------
Fund. Because the Fund's liability derives solely froman employer's liability, any claim
against the Fund necessarily required a claim against Welty.
Welty contested the Act's applicability by contending that Tinker was an
independent contractor and not an employee; under our precedent the Board and the
38 The parties in the civil case discussed
superior court thus had concurrent jurisdiction.
the possibility of bifurcating trial, with employee status tried separately before a
negligence trial.39 The settlement set out Tinker's employee status as an issue but did not
resolve it, and for the Act's purposes the issue has not been determined as a factual
matter. Until Tinker's employee status is decided, the Act's applicability is not
established.
Finally, in light of statutory provisions governing the Fund's financing and
40 we see nothing supporting Welty's superior court assertion that
its payment of claims,
Allstate paid the settlement money "through" the Fund. Nothing in the statute suggests
the Fund may act as some type of conduit for private settlement funds.
37 (...continued)
claim unless, inter alia, parties stipulate that "employee's claim is compensable" or
Board so determines).
38 See, e.g., Nelson v. Municipality of Anchorage, 267 P.3d 636, 643-44
(Alaska 2011) (recognizing concurrent superior court and Board jurisdiction about
"employee's status at the time of injury").
39 See Nickels v. Napolilli, 29 P.3d 242, 246 (Alaska 2001) (summarizing trial
court proceedings, including bench trial to determine whether worker was employee for
Act's purposes).
40 AS 23.30.082(a).
-15- 7494
----------------------- Page 16-----------------------
C. The Settlement Agreement
The superior court decided the settlement agreement, which the Fund
drafted as a single document, was "a workers' compensation settlement agreement"
because the Board had approved it; the court explained that the only material fact
relevant to its decision was the Board's approval. Although the court mentioned the
parties' dispute about the agreement's meaning and purpose, the court neither cited nor
applied contract interpretation principles until after determining the agreement was "a
workers' compensation settlement agreement." The court viewed the matter as one of
statutory construction, possibly because the parties focused their arguments on
41 According to the court, the settlement's
AS 23.30.055 and election of remedies.
language "contravene[d] the legal effects of [the Act]" by using a single document to
resolve both the wrongful death claim against Michaelson and the workers'
compensation claim in its entirety; the Board's approval demonstrated that Seal had
"elected an administrative remedy," received workers' compensation, and thereby
foreclosed her ability to continue the wrongful death claim against Welty.
On appeal Welty acknowledges that Seal "plainly did not intend to lose her
ability to sue Welty," but he asserts that under AS 23.30.055 Seal nonetheless elected a
workers' compensation remedy by entering into the settlement agreement. Welty
suggests that Seal might "rescind" the settlement agreement, but he takes no position on
that issue's merits.
Seal maintains that the settlement agreement was a resolution of the
wrongful death claim against Michaelson, not the election of a workers' compensation
41 As we have noted, the applicability of AS 23.30.055 had not been
established when Welty sought summary judgment. We therefore need not decide the
AS 23.30.055 election of remedies issue that the parties presented to the superior court
and briefed on appeal.
-16- 7494
----------------------- Page 17-----------------------
claim. She contends that her ability to continue the civil suit against Welty was a
material term of the contract and that the superior court could not interpret the contract
"contrary to the clear intent of the parties."
We conclude that the superior court erred by failing to first interpret the
settlement agreement to determine the contracting parties' reasonable expectations in
light of the requirement that Seal elect between a civil remedy and a workers'
compensation remedy. We interpret the agreement as establishing Seal's election of a
civil remedy rather than a workers' compensation remedy and resolving both the
wrongful death and workers' compensation claims against Michaelson. This purpose is
evident from the settlement's language and is supported by the extrinsic evidence Seal
provided the court. As required to elect the civil remedy, Seal dismissed the workers'
42 - because Michaelson's (and the Fund's) potential
compensation claim in its entirety
liability for compensation benefits was dependent on Welty's potential liability as
43 - and she received no compensation for that claim.
Tinker's employer
A settlement agreement, includingaworkers' compensation settlement, "is
interpreted in the same manner as any other contract."44 The goal of contract
interpretation "is to give effect to the reasonable expectations of the parties."45 To
determine the parties' expectations, "the court looks to the language of [a] disputed
provision, the language of other provisions of the contract, relevant extrinsic evidence,
42 See AS 23.20.055.
43 See AS 23.30.045(a), .082(c).
44 Williams v. Abood , 53 P.3d 134, 144 (Alaska 2002) (quoting Cameron v.
Beard, 864 P.2d 538, 545 (Alaska 1993)).
45 Peterson v. Wirum, 625 P.2d 866, 872 n.10 (Alaska 1981).
-17- 7494
----------------------- Page 18-----------------------
46
and case law interpreting similar provisions." Contract interpretation is usually a
question of law; a court may consider " 'extrinsic evidence surrounding disputed terms,'
. . . to determine if those terms are ambiguous - that is, if they 'are reasonably subject
47 "When the court finds ambiguity, it must attempt to
to differing interpretation.' "
resolve it by determining the reasonable expectations of the contracting parties."48
This case is unusual because the dispute about the contract's meaning is
related to its effect as a whole rather than a specific term's construction. Moreover, the
dispute is not between contracting parties; Welty was not a party to the contract. The
superior court nonetheless needed to consider the contracting parties' reasonable
expectations and their reasons for entering into the contract before deciding that the
contract was solely a workers' compensation claim settlement.
Any possible ambiguity in the settlement came from using one document
rather than two to finalize what in essence was a global settlement of two claims in
49 We have held that global settlements of workers' compensation
different forums.
46 Id.
47 Zito v. Zito, 969 P.2d 1144, 1147 n.4 (Alaska 1998) (quoting Wessells v.
State, Dep't of Highways, 562 P.2d 1042, 1046 (Alaska 1977)).
48 Id.
49 See Rosales v. Icicle Seafoods, Inc. (Rosales I), 316 P.3d 580, 584-85
(Alaska 2013) (describing global settlement of workers' compensation and maritime
claims as having "two separate documents, one for each case"); see also Dimeff v. Estate
of Cowan, 300 P.3d 1, 4 (Alaska 2013) (describing global settlement of claims in
different forums using one document).
At least one state court has disallowed using a standard workers'
compensation release form to settle claims outside the workers' compensation system
and suggested that parties to such agreements execute two documents, one for the
workers' compensation claim and one for the claim outside the workers' compensation
(continued...)
-18- 7494
----------------------- Page 19-----------------------
50
claims and related civil claims are permissible; as a policy matter nothing was
impermissible in a settlement encompassing both the wrongful death and workers'
compensation claims. Welty asserts that Seal "might have a valid point" about
interpreting the settlement had she dismissed her workers' compensation claim
"unilaterally" and "without any kind of agreement," but he instead concludes that she
effectively elected workers' compensation by "dismiss[ing] her workers' compensation
claims . . . as part of a settlement." In short, Welty seizes on the form of an agreement
to which he was not a party in an attempt to escape liability for Tinker's death.
Wehaveupheld using asettlement agreement to decidewhichforumwould
hear a claim when the compensability of an injury was at issue and a claimant filed both
51 In Marsh I different insurers
a workers' compensation claim and a negligence action.
participated in a Board proceeding and a related court proceeding; the employer's
general liability insurer and the employee entered into a settlement that "shift[ed] the
litigation from the superior court to the compensation board, thus placing the burden of
defense on the [employer's] compensation carrier instead of its general liability
carrier."52 We held that the agreement was not void as against public policy53 and
required the Board to hear the merits of that case, even though the Board argued that the
49 (...continued)
system. See Claxton v. Waters, 96 P.3d 496, 502-03 (Cal. 2004).
50 Rosales I, 316 P.3d at 585 (holding in dispute about settlement of
compensation and maritime claims that "nothing prohibits a global settlement of related
claims").
51 Marsh I, 550 P.2d 805, 806-08 (Alaska 1976).
52 Id. at 807.
53 Id. at 808.
-19- 7494
----------------------- Page 20-----------------------
settlement converted the Board proceeding into one for a declaratory judgment, which
was beyond its jurisdiction. 54
Similar to Marsh I, the parties to the two proceedings were not identical;
in this case the settlement agreement specifically dismissed the Board proceeding,
shifting the litigation from the Board to the superior court.55 In Marsh I we considered
the parties' intent in settling and gave it effect; we do the same in this matter.
Thesettlement agreementlanguageread as awholesupports theconclusion
that it was a global settlement in which the estate elected to pursue the wrongful death
case and forgo any potential workers' compensation benefits. The settlement agreement
contained detailed information about both claims, and the caption included both the
Board's case number and the superior court case number, supporting the conclusion that
the settlement affected both claims. The settlement agreement explicitly stated that the
estate elected the wrongful death action as its remedy against both Michaelson and
Welty: "Seal and Michael Tinker also agree that by entering into this Agreement, Seal
has made an election of remedies under AS 23.30.055 to pursue a civil action against
Welty and Michaelson . . . ." (Emphasis added.) No money was explicitly allocated to
settlement of the workers' compensation claim in the settlement agreement,56 and the
settlement agreement's provisions for costs and attorney's fees were based on Alaska
54 Id. at 807-09. The Board ultimately decided the claim was not
compensable. Marsh v. Alaska Workmen's Comp. Bd. , 584 P.2d 1134, 1135 (Alaska
1978).
55 Cf. Marsh I, 550 P.2d at 808-09 (observing that civil suit was "pending in
a technical sense only" after employee "contractually abandoned his right to litigate his
tort claim" when he entered into contingent settlement).
56 See Rosales I, 316 P.3d 580, 582-83 (Alaska 2013) (describing allocation
of global settlement funds between maritime and workers' compensation cases); see also
Marsh I, 550 P.2d at 807 (describing settlement agreement).
-20- 7494
----------------------- Page 21-----------------------
Civil Rules 79 and 82, governing civil cases, not on the Act and ancillary Board
57
regulations.
The parties agree that Allstate paid the settlement money under
58 The
Michaelson's landlord liability policy, not under a workers' compensation policy.
settlement agreement does not indicate that Allstate was a party to the Board
proceedings, as a compensation carrier would be.59 Although Welty contends the
settlement funds' source is immaterial to the legal conclusion that the funds were
compensation benefits,60 Allstate fulfilling its contractual obligation under Michaelson's
landlord liability policy evinces an intent to settle a tort claim, not a workers'
compensation claim. If the injury were not conceivably within Allstate's contract with
Michaelson, Allstate would have no reason to pay the estate a significant sum of money,
as it agreed to do in the settlement.
57 See AS 23.30.145 (authorizing Board to award attorney's fees and costs);
8 AAC 45.180 (setting out procedure for Board award of attorney's fees and costs).
58 The Act has provisions specific to workers' compensation insurance, see
AS 23.30.025, .030, and it defines "carrier" as "a person authorized to insure under [the
Act] and includes self-insurers," AS 23.30.395(6). There is no suggestion in the record
that Allstate's policy with Michaelson met the statutory standards.
59 8 AAC 45.170(b)(2) (designating "employer and its insurance carrier, if
any" as parties to proceeding).
60 The out-of-state case Welty cites to support his argument is unpersuasive.
Workers' compensation claim coverage by the errors and omissions insurer of a broker
who failed to procure workers' compensation insurance on a client's behalf is not
analogous to this dispute. See Vogel v. Hochhalter, 516 N.W.2d 214, 216-17 (Minn.
App. 1994). The Minnesota court observed that the employer had "fulfilled the duty
imposed on employers" under Minnesota law by "appl[ying] for workers' compensation
insurance through his agent"and thus should be granted the protection against tort claims
provided to insured employers. Id. No one in Seal's case had compensation coverage,
and Welty's general liability insurer denied coverage for the claim.
-21- 7494
----------------------- Page 22-----------------------
Extrinsic evidence also supports interpreting the agreement as an election
and settlement of the tort claim against Michaelson with a dismissal of the workers'
compensation claim. Seal plainly told the Board her primary goal was pursuing a tort
remedy when she filed her written workers' compensation claim. The Board, "with the
agreement of the parties," delayed action in the compensation proceeding so that Seal
could pursue the civil litigation. Seal supplied the superior court email correspondence
between her attorney and Michaelson's attorney showing an intent to settle the wrongful
death action. She also provided an earlier draft settlement agreement from Michaelson's
attorney. Under its terms she would have settled with Michaelson and agreed to dismiss
the compensation claim; an accompanying email asked the estate to provide a separate
agreement with the Fund to dismiss the compensation claim. Seal asserted that the Fund
61 and the
then requested the settlement be submitted to and approved by the Board,
agreement is on Department of Law letterhead. Welty's attorney was included in the
email correspondence related to the settlement, and Welty offered no evidence rebutting
Seal's evidence or her assertion about the Fund's request that the settlement be placed
before the Board.
Weltycontendsthatthesettlementagreement violates publicpolicy because
it would allow the estate to continue the wrongful death action against him after the
estate received workers' compensation. But we find nothing in the record supporting
Welty's argument that the money paid to Seal was a workers' compensation benefit or
that the parties to the settlement agreement were attempting to "evade the law" by
drafting one document. Nor is there support for the superior court's implication that the
61 Seal included in her supplemental excerpt of record more emails to
substantiate these arguments. But the emails do not appear to be part of the superior
court record, and we disregard them.
-22- 7494
----------------------- Page 23-----------------------
contracting parties attempted to "avoid the effects of the law" through "self-serving
contract language."
62
We repeatedly have held that settlements of disputed claims are favored.
We also have said that "[a]s a matter of judicial policy the court should maintain and
63 Although we have refused to enforce settlements that are against
enforce contracts."
public policy,64 Welty's public policy argument rests entirely on the faulty premise that
thesettlement was aworkers' compensationsettlementprovidingworkers'compensation
benefits to the estate.
D. Alaska Statute 23.30.012 And Its Application To The Settlement
Agreement
The superior court interpreted AS 23.30.012 to mean that the settlement
funds "consitute[d] 'compensation' under [the Act] as a matter of law." Because under
AS 23.30.012 a Board-approved agreement "is enforceable the same as an order or
award of the Board," the court reasoned that "the settlement proceeds are equivalent to
a workers' compensation award," even if the settlement agreement made plain Seal's
election of the civil suit as a remedy.
62 E.g., Kazan v. Dough Boys, Inc. , 201 P.3d 508, 514-15(Alaska2009) ("We
encourageand favor settlementsbetweenparties becausetheyreducedemand for judicial
resources.").
63 Id. at 514 (quoting Inman v. Clyde Hall Drilling Co., 369 P.2d 498, 500
(Alaska 1962) (citing Baltimore & Ohio Sw. Ry. v. Voight, 176 U.S. 498, 505 (1900)).
64 See McKeown v. Kinney Shoe Corp., 820 P.2d 1068, 1070-71 (Alaska
1991) (holding private settlement of liquidated damages claims under Alaska Wage and
Hour Act void as against public policy); Juliano v. Angelini, 708 P.2d 1289, 1291
(Alaska 1985) (holding settlement provision classifying proceeds as capital gain rather
than income void as against public policy).
-23- 7494
----------------------- Page 24-----------------------
Alaska Statute 23.30.012 allows parties to "reach an agreement in regard
to a claim for injury or death under [the Act]." The statute requires that "a memorandum
of the agreement in a form prescribed" be filed with the Division of Workers'
65 agreements that do not conform to this requirement are "void for any
Compensation;
purpose."66 As we noted earlier, if a party to a settlement is not represented by Alaska
counsel, the Board is required to review and approve the settlement.67 Board approval
is not required when all parties are represented by Alaska counsel.68 In either event, the
settlement is "enforceable as a compensation order."69
Welty asks us to affirm the superior court's decision, contending, as he did
in the superior court, that the Board's approval of the settlement agreement transmuted
money Allstate paid as part of its coverage under Michaelson's landlord liability
insurance policy into workers' compensation benefits. In Welty's view, the settlement
agreement "became enforceable for any purpose to the same extent as an order or award
of the Board," making it "equivalent to a final judgment of the Board." He reasons that
the Board "would have no jurisdiction to approve or reject the settlement agreement if
it did not involve a claim for workers' compensation benefits against an employer."
Because the settlement agreement contained provisions related to the
wrongful death claim, the Board did not have jurisdiction over all of its aspects. But the
Board, and the Board alone, had jurisdiction to dismiss the workers' compensation claim
65 AS 23.30.012(a).
66 Id.
67
AS 23.30.012(b).
68 AS 23.30.012(a).
69 Id.
-24- 7494
----------------------- Page 25-----------------------
against Welty, the Fund, and Michaelson. To determine whether dismissal was in the
70
claimants' best interests, theBoardneededinformation about therelated tort settlement.
The resolution gave the Board that information by expressing Seal's election of a civil
remedy and merging the tort settlement and the workers' compensation claim dismissal
into one global settlement agreement.71 The Board's approval of the workers'
compensation claim dismissal did not change the nature of the underlying settlement.
Using two documents rather than one might have avoided some of this litigation,72 but
we see nothing in the statute prohibiting the settlement agreement form the parties used.
Interpreting the statute as the superior court did could result in expanding
the Board's granted jurisdiction by sanctioning its enforcement of provisions not within
the Act. Alternatively, the parties to such a settlement could be left with limited or no
73 For example, Welty does not explain
remedies in the event of a later disagreement.
howthe Board, as anadministrativeagency with limited powers and statutory constraints
70 See 8 AAC 45.160(d)(2)(A) (requiring Board to find that settlement is in
employee's best interests beforeapproval); seealso Rosales I , 316 P.3d 580, 583 (Alaska
2013) (noting that Board initially rejected settlement because it could not determine
claimant's best interests).
71 The Board's regulation requires, inter alia, a statement fromthe parties that
the settlement "contains the entire agreement among the parties" and "is not contingent
on any undisclosed agreement." 8 AAC 45.160(c)(7).
72 But seeRosalesI,316 P.3dat 580 (addressing disputesbetween parties who
had settled using two separate documents).
73 Disagreements about a settlement's meaning and effect are not uncommon
in either the civil arena or workers' compensation. See, e.g., Dimeff v. Estate of Cowan,
300 P.3d 1 (Alaska 2013); Rosales I, 316 P.3d at 580.
-25- 7494
----------------------- Page 26-----------------------
74
on enforcement, could have ordered Seal to dismiss the civil claim against Michaelson
had she not done so after Allstate's payment. Nor does he explain how the Board, after
approval of the settlement and dismissal of the workers' compensation claim, could have
required Allstate to pay the promised funds had it failed to do so. And if the money paid
under the settlement were "compensation," as the superior court decided, Allstate or
Michaelson would have limited means of recovering the money had Seal refused to
comply with the settlement agreement. 75
In Rosales I the parties used two documents to finalize their global
settlement; we noted that the Board had jurisdiction only to approve the workers'
compensation settlement, not the maritime settlement, and that nothing in the record
supported Rosales's argument that the Board took any action on the maritime
76 We do not have the Board's record before us in this case and thus do not
settlement.
know whether the Board questioned the parties about the settlement agreement, but the
superior court had no evidence suggesting that the Board had approved anything beyond
the agreement provisions within its jurisdiction: dismissing with prejudice the workers'
compensation claim to effectuate Seal's election of remedies. The form parties use for
a global settlement agreement cannot expand an agency's jurisdiction, and AS 23.30.012
did not transmute funds paid for a civil settlement into workers' compensation benefits.
74 See AS 23.30.170 (setting out Board's enforcement powers, including, in
case of default, issuing supplementary order for filing in superior court).
75 See AS 23.30.155(j) (providing that employer may recover compensation
overpayment by withholding up to 20% of future compensation payments); Croft v. Pan
Alaska Trucking, Inc. , 820 P.2d 1064, 1066 (Alaska 1991) (holding that AS 23.30.155(j)
is sole method for employer to recover compensation overpayment).
76 316 P.3d at 585.
-26- 7494
----------------------- Page 27-----------------------
Because AS 23.30.012 permits the Board to sanction only agreements
regarding workers' compensation claims, the only part of the settlement agreement
subject to Board approval and enforceable as an order of the Board was the estate's
dismissal with prejudice of the workers' compensation claim. Nothing in the Act
prohibits theestatefromelecting todismisstheworkers' compensation proceeding, settle
the wrongful death claim against Michaelson, and continue to litigate a wrongful death
claim against Welty. The money Allstate paid to settle the wrongful death claim against
its insured remained tort settlement proceeds.
V. CONCLUSION
We REVERSEthe superior court's grant of summary judgment, VACATE
the final judgment, and REMAND for further proceedings.
-27- 7494
 |
| Case Law Statutes, Regs & Rules Constitutions Miscellaneous |
|
