Standard Fire Insurance Co. v. Continental Resources, Inc.
2017 SD 41
S.D.2017Background
- Dale Denzin injured his pelvis in 1983 while working for Koch Industries; Standard Fire (insurer for Koch) paid medical and disability benefits and later paid for hip-replacement surgeries in 2009–2010.
- Continental Resources acquired the oilfield in 1995 and became Denzin’s employer. Denzin obtained a 50% PPD rating for each lower extremity and filed a workers’ compensation petition in May 2012 seeking PPD benefits.
- Continental Resources filed a third-party claim against Koch/Standard Fire asserting Koch’s liability for impairment benefits. Standard Fire denied liability.
- In December 2013, Denzin, Continental Resources, and Standard Fire executed a settlement agreement by which Continental agreed to pay a lump sum of $99,200 (PPD) to Denzin and the parties agreed to “settle this matter without further litigation”; the Dept. of Labor approved and dismissed the matters.
- Standard Fire later sued Continental (2014) for reimbursement or subrogation of $86,952.46 it paid (medical and indemnity) between 2009–2013, claiming the settlement acknowledged Continental’s responsibility for post-1995 work contributions to Denzin’s need for treatment.
- Continental moved to dismiss under SDCL 15-6-12(b)(5) arguing the settlement/res judicata barred Standard Fire’s claim; the circuit court granted the motion. The Supreme Court reversed and remanded, finding the settlement ambiguous on scope.
Issues
| Issue | Standard Fire's Argument | Continental's Argument | Held |
|---|---|---|---|
| Whether the settlement agreement barred Standard Fire’s reimbursement/subrogation claims | "This matter" in the agreement is limited to the PPD impairment payment ($99,200); medical/indemnity payments are outside the settlement scope | "This matter" is broad and resolves all workers’ compensation benefit matters related to Denzin’s hip surgeries, including medical and indemnity payments | Reversed: agreement is ambiguous as to scope; cannot be read unambiguously to bar Standard Fire’s suit |
| Whether the settlement was a final adjudication invoking res judicata | Settlement and Dept. approval do not unambiguously show dismissal with prejudice or release of all future claims by Standard Fire | Settlement and dismissal resolved the parties’ dispute and precludes further litigation between them | Court declined to apply res judicata because ambiguity in agreement prevented conclusion that it unambiguously precluded the suit |
| Whether impairment and medical benefits are interchangeable for release purposes | Impairment (PPD) and medical benefits are distinct statutory categories; settlement addressing impairment need not cover medicals | A broad settlement phrase can be read to encompass both categories | Court emphasized statutory distinction between PPD and medical benefits, supporting possibility of a narrow reading |
| Whether ambiguity exists in the settlement agreement requiring factual development | Settlement language "capable of more than one meaning" and lacks typical broad-release language or dismissal with prejudice | Agreement language and parties’ inclusion of Standard Fire as a party indicate it resolved all claims | Held ambiguous as a matter of law; remanded for further proceedings |
Key Cases Cited
- Total Auctions & Real Estate, LLC v. S.D. Dep’t of Revenue & Regulation, 888 N.W.2d 577 (standard of review for Rule 12(b)(5) dismissal)
- Dowling Family P’ship v. Midland Farms, 865 N.W.2d 854 (contract ambiguity standard)
- In re Estate of Neiswender, 660 N.W.2d 249 (settlement agreements construed as contracts)
- Streeter v. Canton Sch. Dist., 677 N.W.2d 221 (medical benefits governed by SDCL 62-4-1)
- Cozine v. Midwest Coast Transp., Inc., 454 N.W.2d 548 (PPD benefits governed by SDCL 62-4-6)
- Roden v. Gen. Cas. Co. of Wis., 671 N.W.2d 622 (ambiguity requires more than competing interpretations)
- Gores v. Miller, 875 N.W.2d 34 (example of broad release language in settlement)