Appellant, Cross Maintenance, LLC, appeals a Court of Appeals decision regarding an alleged settlement agreement between itself and Appellee, Mark R. Riddle. Cross argues that there was not an enforceable settlement agreement because: 1) the Administrative Law Judge ("ALJ") rendered an opinion and award before the parties reached an agreement and thus KRS 342.285(1) made his findings binding on the parties; 2) the ALJ's opinion and award was unbeknownst to die parties while the negotiations were ongoing creating a mutual mistake of fact which prevents enforcement of the settlement; and 3) the parties' failure to negotiate when the weekly payments would commence shows the settlement agreement was incomplete and therefore unenforceable. Riddle cross-appeals from the Court of Appeals decision arguing that it was error to remand the matter to the ALJ to determine if the settlement agreement reached between the parties was for a complete dismissal of all rights. For the below stated reasons, we affirm the Court of Appeals.
Riddle filed a workers' compensation claim on May 9, 2013, following a work-related accident which caused him to lose range of motion and grip strength in his left hand. In the days surrounding the October 23, 2013 evidentiary hearing, the parties engaged in ongoing settlement negotiations. Riddle was represented by Chris Evensen and Cross by Douglas U'Sellis.
On October 24, 2013, Jason Swinney from U'Sellis's office, sent the following e-mail to Evensen:
Evensen quickly responded with the following e-mail:
Swinney responded that the offer "would be for a complete dismissal."
That same day, Evensen made a counter offer by the following e-mail:
Evensen did not receive the requested quick response to his counter demand because the next correspondence between the parties occurred by the following e-mail on November 22, 2013 written by U'Sellis:
U'Sellis later wrote the following on a print out of that e-mail, "Past meds open through 11-22-13, all other rights waived." After that e-mail was sent, U'Sellis and Evensen had a telephone conversation in which Evensen stated he was going to recommend Riddle accept the settlement. Later that day, U'Sellis sent an e-mail to the ALJ asking that he delay the rendition of his decision because he thought a settlement could be reached.
Also on November 22, 2013, Evensen sent U'Sellis and the ALJ the following e-mail:
Evensen then sent the following e-mail to U'Sellis:
Unbeknownst to either party or their attorneys, the ALJ actually rendered his opinion and award on November 21, 2013, a day before U'Sellis's e-mail was sent.
On November 25, 2013, Evensen sent U'Sellis the following e-mail:
Later that day, U'Sellis responded via the following e-mail:
Evensen sent U'Sellis a completed Form 110 Agreement. The form stated that this was a compromise settlement of a disputed claim. The following monetary amounts were provided as consideration for the following waivers: Waiver or buyout of past medical benefits — $5,000.00; Waiver or buyout of future medical benefits — $25,000.00; Waiver of vocational rehabilitation — $5,000.00; Waiver of the right to reopen — $5,000.00. The form also contained the following language:
U'Sellis sent an e-mail to Evensen on December 4, 2013, stating that he was no longer authorized by Cross to sign the Form 110. By this time, U'Sellis had reconsidered his position that the parties had an enforceable settlement because the agreement was partially negotiated and finalized after the ALJ's opinion and award had been rendered. Evenson filed a motion to enforce the settlement. The ALJ subsequently reopened proof, limiting the evidence to be "solely to the question of whether a meeting of the minds in regard to all terms of the alleged settlement arose, thus rendering the alleged settlement agreement enforceable."
At a hearing held by the U'Sellis provided the following answers to questions on why he changed his mind about the agreement's enforceability:
The ALJ entered an opinion and order sustaining the motion to enforce the settlement. Relying on Coalfield Tel. Co., 113 S.W.3d 178, the ALj found that the parties had a meeting of the minds and reached an agreement to settle the case for a lump sum of $40,000 plus $175.00 per week for 425 weeks. Cross filed a petition for reconsideration arguing that the ALI failed to address several of his arguments in favor of not enforcing the settlement. The petition was denied.
Cross appealed to the Board arguing that there was not a meeting of the minds between the parties because certain details of the settlement were not included in their correspondence and that the ALJ failed to make rulings on material terms of the agreement. Specifically, Cross argued that there was no ruling as to whether: medical benefits would remain open until the day the settlement was reached; the parties agreed that a complete dismissal of Riddle's claim would occur upon approval of the settlement; the parties' failure to set a starting date for the weekly payments invalidates the settlement; and. KRS 342.285(1) bars enforcement of the settlement. The Board found that KRS 342.285(1) and the failure to select a starting date for the payments did not bar enforcement of the settlement. However, the Board agreed with Cross that the ALJ did not make a finding that the parties intended there to be a complete dismissal of Riddle's claim in exchange for the settlement. The Board noted that while the Form 110 listed monetary amounts to be given for the waiver of certain benefits and stated that the claim was to be dismissed upon settling, there was no finding that said terms were included in the correspondence. The Board also found the ALJ did not determine whether the parties agreed to what period of time medical benefits were to remain open. Therefore, the Board vacated and remanded the ALJ's opinion and order for further fact finding.
The Board's instructions on remand included:
Cross appealed and Riddle cross-appealed to the Court of Appeals who affirmed. This appeal followed.
The Board's review in this matter was limited to determining whether the evidence is sufficient to support the ALJ's findings, or if the evidence compels a different result. W. Baptist Hosp. v. Kelly, 827 S.W.2d 685, 687 (Ky. 1992). Further, the function of the Court of Appeals is to "correct the Board only where the Court perceives the Board has overlooked or misconstrued controlling statutes or precedent, or committed an error in assessing the evidence so flagrant as to cause gross injustice." Id. at 687-88. Finally, review by this Court "is to address new or novel questions of statutory construction, or to reconsider precedent when such appears necessary, or to review a question of constitutional magnitude." Id. The ALJ, as fact-finder, has the sole discretion to judge the credibility of testimony and weight of evidence. Paramount Foods, Inc. v. Burkhardt, 695 S.W.2d 418 (Ky. 1985).
Settlement agreements which have not been reduced to a final form can be found to be enforceable if correspondence between the parties indicate they agreed on the material terms. Hudson v. Cave Hill Cemetery, 331 S.W.3d 267 (Ky. 2011) (holding that correspondences between parties can constitute a valid agreement); Coalfield Tel. Co., 113 S.W.3d 178 (Ky. 2003) (holding that letters from both parties to a workers' compensation settlement negotiation are evidence that the parties reached mutual agreement); Skaggs v. Wood Mosaic Corp., 428 S.W.2d 617, 619 (Ky. 1968) (holding that KRS 342.265 does not require a settlement agreement to be in a final written form if there is written evidence of the terms of the agreement).
Cross first argues that the Board and Court of Appeals erred by finding KRS. 342.285(1) did not bind the parties to adhere to the ALJ's original opinion and order. KRS 342.285(1) states:
Cross argues that since the parties were unaware of the terms of the ALJ's opinion and order before they entered into a settlement, the opinion and order became binding upon them, and prevented the settlement agreement from being enforceable. We disagree. KRS 342.285(1) does not prevent the parties from entering into a settlement agreement after the ALJ has ruled. Cross acknowledges in his brief that workers' compensation claims may be settled after the entry of an ALJ's opinion and order. KRS 342.285(1) only stands for the proposition that a party must file a petition for reconsideration to later appeal to the Board a factual finding made by the ALJ. This does not prohibit the parties from making, a motion to enforce a later negotiated settlement. The fact that the parties were unaware of the terms of the ALJ's ruling while negotiating goes to the merits of Cross's second argument, whether there was a mutual mistake of fact which prevents enforcement of the settlement.
Cross's second argument is that there was a mutual mistake of fact between the parties because the settlement negotiations were based on their common belief that the ALJ had not rendered an opinion and order. Cross argues that if the parties knew the ALJ had rendered an opinion and order, one or both of them might have withdrawn from settlement negotiations. Cross analogizes this situation to the "barren cow" scenario as outlined in Sherwood v. Walker, 66 Mich. 568, 22 N.W.919, 923 (1887) (holding that a sale of a supposedly barren cow could be rescinded when it was discovered the cow was actually pregnant). Again, we must disagree.
To prove that a mutual mistake of fact occurred, which caused the parties to not have a meeting of the minds, Cross must prove that: 1) the mistake was mutual, not unilateral; 2) the mutual mistake is proven in the record by clear and convincing evidence; and 3) the parties had actually agreed upon terms different from those expressed in the written instrument. See Abney v. Nationwide Mut. Ins. Co., 215 S.W.3d 699, 704 (Ky. 2006). In this matter, while it is clear that both parties were mutually unaware of the ALJ's opinion and order while negotiating the settlement, it cannot be said at this time that Cross is being held to terms different from those expressed in the correspondence between the parties. The lump sum amount, weekly payment, and duration of payments are all identical to what was negotiated for in the settlement. We do note, however, that this matter is being remanded to the AL.J for further findings of fact regarding if the parties agreed how long medical benefits were to remain open and if the settlement was in exchange for a full waiver of Riddle's rights. If there is insufficient correspondence for the AL.J to make findings regarding those elements of the settlement agreement and those terms are material to the agreement, the Board has instructed the original opinion and award of the ALJ to be reinstated and the motion to enforce the settlement to be dismissed. We agree with the Board that remand for further fact finding is appropriate.
Cross's final argument is that the parties' failure to negotiate a starting date for the payment of the weekly benefits makes the settlement incomplete and unenforceable. The Board and Court of Appeals both held that the failure to select a date was inconsequential and not fatal to the settlement agreement. Cross disagrees, arguing that if the starting date for the payments is set by the AI.0 as the date of the injury, then it would be liable to pay past due benefits in addition to the lump sum amount already negotiated and thus would suffer greater liability.
However, the date for commencement of Riddle's weekly payments was not a term material or essential to the parties' agreement. In fact, without a specific negotiated starting date between the parties it can be presumed the payments will start once the settlement is approved by the A1.0. On remand, we trust that the AI.0 will review the record and determine if the parties came to an agreement on what date payments should commence. If there is no such correspondence we trust the AI.0 will select a date without altering the agreement terms or adversely affecting the rights of the parties.
Riddle has cross appealed arguing that the Board erred by vacating and remanding this matter because by agreeing to enforce the settlement, the AI.0 made an implied finding that the parties agreed the settlement would be entered into in exchange for a complete dismissal of the claim. Riddle argues that his tendered Form 110 stated that there would be a complete dismissal of the claim and that Cross never made a settlement offer that did not include that term. However, while the record may ultimately show that Riddle is correct, the fact remains that the ALJ did not make such a determination when originally adjudicating this claim. The matter needs to be remanded to the AU for proper fact finding and a final determination of whether the parties negotiated for a complete dismissal of the claim in exchange for the settlement.
For the above stated reasons, we affirm the decision of the Court of Appeals.
All sitting. All concur.
