MUNICIPALITY OF ANCHORAGE, Appellant, v. Lee O. STENSETH, Appellee.
No. S-15546.
Supreme Court of Alaska.
Nov. 25, 2015.
361 P.3d 898
Second, it does not appear that the evidence Bush Planes wanted to submit would have changed the outcome of the liability determination.58 Whether Bush Planes violated Alaska‘s campaign finance laws ultimately depended on the proper determination of “commercially reasonable rate,” and we have reviewed that issue using a standard that not only granted no deference to the Commission‘s interpretation but actually favored Bush Planes. Thus, any bias that the Commission or its staff may have had against Bush Planes would have had no effect on the liability issue.
Finally, the State persuasively argues that the evidence Bush Planes sought to introduce was irrelevant given the context and the timing of the case. We note that the majority of the material Bush Planes wanted to introduce alleged that staff members Anderson and Dauphinais—and to a lesser extent Commission Chair Hickerson—were biased against Bush Planes. The allegations against the other Commissioners—all of whom concurred in the liability, fine, and costs and fees decisions—were based mainly on an affidavit from a former staff member. That staff member recalled specific interactions with Anderson, Dauphinais, and Hickerson that caused him to believe those three were biased against Gillam and his companies. The staff member‘s affidavit complained that the Commission had rejected an advisory opinion he drafted “without a legal basis and primarily because of who requested it,” but Bush Planes never provided any foundation for that allegation. The same lack of specificity significantly weakens the staff member‘s claim that it would be “impossible for [Gillam] to get a fair shake from ... certain members of the Commission.”59 Overall, there was little, if any, reliable evidence that the other members of the Commission were biased individually or even that the alleged bias of Hickerson or the staff members affected the proceeding. Furthermore, Dauphinais‘s allegedly biased statement was made nine months after the administrative decision was issued, suggesting that the allegations have little weight given the timing of this case.
Therefore, we hold that the superior court did not abuse its discretion when it denied Bush Planes’ motion to supplement the record. Given the delay in filing the motion to supplement, the standard of review we applied to the liability determination, and the lack of specificity regarding the allegations against the Commissioners, the superior court‘s decision was not manifestly unreasonable.
V. CONCLUSION
For the reasons stated above, we AFFIRM the superior court‘s decision to affirm the Commission‘s determination that Bush Planes made illegal corporate contributions to candidates for elected office, AFFIRM the fine the Commission imposed, and AFFIRM the superior court‘s denial of Bush Planes’ motion to supplement the record.
FABE, Chief Justice, and MAASSEN, Justice, not participating.
Robert A. Rehbock, Rehbock & Rehbock, Anchorage, for Appellee.
Before: FABE, Chief Justice, WINFREE, STOWERS, MAASSEN, and BOLGER, Justices.
OPINION
STOWERS, Justice.
I. INTRODUCTION
The Alaska Workers’ Compensation Board dismissed an employer‘s fraud petition after deciding that the parties had reached an enforceable settlement. The employer appealed the dismissal, arguing that any settlement of its fraud petition was void because the settlement did not meet the requirements set out in the Alaska Workers’ Compensation Act and the Board‘s regulations. The Alaska Workers’ Compensation Appeals Commission affirmed the Board‘s decision. The employer appeals, arguing that the Commission‘s interpretation of the statute is incorrect and that the Commission incorrectly interpreted our decisions about estoppel. We affirm the Commission‘s decision.
II. FACTS AND PROCEEDINGS
Lee Stenseth was injured at work many years ago. He and his employer, the Municipality of Anchorage, entered into a compromise and release agreement (C & R) in August 1996 in which Stenseth waived all future benefits except medical benefits in exchange for $37,000. Stenseth retired from the Municipality in 1996, but he continued to receive medical benefits for his work-related injury, including narcotic pain medication.
In late 2006 Stenseth was charged with multiple felonies related to selling or delivering narcotics that he had acquired, some from forged prescriptions modeled on the prescriptions for his work-related injury. Stenseth pleaded guilty to a number of felonies and served time in jail; he was released in June 2010.
In April 2012 the Municipality filed a petition under
The parties agreed to mediate their dispute, with an Alaska Workers’ Compensation Board hearing officer, William Soule, acting as the mediator. The mediation occurred in early November 2012. The letter from hearing officer Soule confirming the mediation asked that the parties “come with authority to settle, or a way to obtain adequate authority, during normal [ ] Alaska business hours.” At the time the Municipality was represented by attorney Trena Heikes; Law Henderson, the Municipality‘s workers’ compensation administrator, did not attend the mediation in person but participated by telephone. Henderson later testified that Heikes called him periodically throughout the day to discuss the negotiations. Both Heikes and Henderson thought they had authority to settle the case.
The parties reached some type of agreement at the mediation. The following week Heikes wrote to attorney Robert Rehbock, who was representing Stenseth, to “summarize the settlement reached at mediation last Friday.” Heikes summarized the agreement as follows:
MOA has agreed to accept either $30,000.00 cash to be paid within 90 days from today or a Promissory Note for $40,000.00 secured by a Confession of Judgment Without Action and a Deed of Trust on the home ... in Wasilla, Alaska in exchange for its waiver of over $125,000.00 it claims is due under
AS 23.30.250(b) . The note will be payable at $500.00 per month and will accrue interest at 3.5%. Mr. Stenseth is to commence these monthly payments immediately with the balance either in cash within 90 days or execute the Note, Confession of Judgment and have his daughter execute the Deed of Trust.
Heikes then memorialized a post-mediation exchange:
I have since discussed the matter with Mr. Henderson today and spoken with you regarding that discussion. As I explained, Mr. Henderson prefers to either wait on the C & R until payment has been made OR make the agreement voidable at MOA‘s option in the event of default.... You claim this changes the terms of the settlement. I am not so sure. Rather, MOA believes this merely is a way of moving forward in the manner in which I initially expressed: to wait to file the C & R until all payment was made.
She gave a deadline for a response.
Rehbock responded, essentially rejecting the Municipality‘s new proposal; he wrote, “We were and remain prepared to [compromise] on the original terms.” He also said that he had been “directed to make a one-time further offer directly to the MOA, your principal[,] if you will allow your client to receive it.” His letter did not contain the “further offer,” but a letter from Heikes dated December 5 said:
This will confirm MOA‘s response to your client‘s new settlement proposal.... I have tendered Mr. Stenseth‘s proposal to my client and, as I explained, have been advised MOA wishes to maintain the previous settlement amounts verbally agreed to by the parties at the November 9, 2012 mediation. Thus, in exchange for $30,000.00 in certified monies by February 22, 2013 (90 days from the November 13, 2012 letter of confirmation), MOA would execute any and all documents necessary for its full release of Mr. Stenseth from any further liability to MOA under
AS 23.30.250 .
Rehbock wrote and accepted the Municipality‘s offer on December 11, saying: “My client accepts your post mediation offer to pay $30,000.00 by latest February 22, 2013 in exchange for a complete release of all rights and claims against Mr. Stenseth arising of or in connection with
Heikes emailed Rehbock six days later, informing him of “an internal glitch,” a “need to get higher ups to sign off.” She then wrote, “Higher ups demand closure of narcotics. Under [the] circumstances that shouldn‘t be a problem, ... right?” Rehbock responded in less than an hour, “No it is not ok. The offer was accepted.” Rehbock tendered the funds, in the form of two cashier‘s checks, to the Municipality on or about December 18, 2012; the tender was refused.
The “glitch” to which Heikes referred was a misunderstanding about the limit of her and Henderson‘s settlement authority. Henderson later testified that the limit for settlement without approval was $50,000, but evidently neither Heikes nor Henderson understood the limit applied to forbearance. They thought they could settle as long as the amount set out in the agreement was $50,000 or less. Someone later corrected their misunderstanding.
The Board limited the February hearing to consideration of Stenseth‘s petition to dismiss the Municipality‘s fraud claim; it declined to consider the Municipality‘s petition, made orally at a prehearing conference, that the written evidence of settlement negotiations be excluded. In her opening statement, Heikes said that both she and Henderson thought they had authority to settle for the agreed-upon amount, but they did not in fact have authority. The Municipality argued that the settlement was void because it had not been submitted to the Board as required by
Henderson and Stenseth were the only hearing witnesses.5 Henderson agreed that he had authorized Heikes to write the letter memorializing the agreement reached through mediation; he said he thought the letter “was an offer” and that he intended to bind the Municipality when he authorized it. Henderson also testified that he authorized Heikes to write the letter in which the Municipality rejected Stenseth‘s post-mediation offer and said it wanted to return to the original agreement. Henderson agreed that he was aware Heikes could bind the Municipality and that nothing in the letter suggested she did not have that authority; he acknowledged that the letter did not “discuss authority.” The parties ultimately agreed that the tender was made on December 18.
Henderson explained the basis of the misunderstanding about authority. The limit for settlement without approval from others was $50,000, but because he generally negotiated payments to others rather than from them, it did not occur to either him or Heikes that the limit applied to the amount the Municipality would forbear. They both thought they had authority to settle when they attended the November mediation because they evidently thought they could settle as long as the amount in the agreement was $50,000 or less, even if the Municipality was compromising a claim that it alleged exceeded $100,000. In answer to a question from Heikes about whether there had “been a settlement agreement in this case,” Henderson answered, “Not that I know of.”
Stenseth testified about his understanding of the negotiations as well as his understanding of and response to the Municipality‘s discovery requests. He was cross-examined about his criminal convictions; he testified that none of the charges was “directly related to workers’ comp.” He agreed that he had not signed a C & R in 2013 as he had in 1996. Stenseth answered questions from his attorney about negotiations that happened after the December 11, 2012 letter accepting the Municipality‘s settlement terms; according to Stenseth, he was willing to agree to some additional conditions but not others.
In closing Stenseth argued that settlement agreements are contracts, that he and the Municipality had entered into a valid contract to settle his case, and that the Board should enforce the settlement. The Municipality argued that the settlement was void because it did not comply with
In its final decision, the Board decided the parties had entered into a contract to settle the case in December 2012, finding the following: “Employer made an offer encompassing all the essential terms. Employee unequivocally accepted those terms. Employee‘s promise to pay and Employer‘s promise to forebear [sic] are consideration, and both parties’ letters evince the intent to be bound.” The Board decided the Municipality should be equitably estopped from denying the authority of its employees to settle the case on the terms set out in the December correspondence because there was no way Stenseth or his attorney could have known prior to accepting the offer that Henderson and Heikes had exceeded their authority.
With respect to the provisions of
The Municipality appealed to the Commission, arguing that the Board erred in finding that there was a binding settlement between the parties. The Commission determined that (1) neither
III. STANDARD OF REVIEW
In an appeal from the Alaska Workers’ Compensation Appeals Commission, we review the Commission‘s decision rather than the Board‘s.8 We apply our independent judgment to questions of law that do not involve agency expertise.9 Interpretation of a statute is a question of law to which we apply our independent judgment, interpreting the statute according to reason, practicality, and common sense, considering the meaning of the statute‘s language, its legislative history, and its purpose.10 We do not mechanically apply the plain meaning rule but use a sliding scale approach to statutory interpretation, in which “the plainer the statutory language is, the more convincing the evidence of contrary legislative purpose or intent must be.”11
We review questions of contract formation de novo when there are no factual disputes.12 We independently review the Commission‘s conclusion that substantial evidence in the record supports the Board‘s factual findings by independently reviewing the record and the Board‘s findings.13
Whether a regulation applies to a case is reviewed using the independent judgment standard.14 We use different standards of review when interpreting regulations: we “typically interpret regulations with some deference to the agency‘s own interpretation,” but when the agency that promulgated the regulation is not a party to the action and “has not otherwise offered an interpretation,” we apply our independent judgment.15 We review an agency‘s application of its regulation to the facts of a case “to determine whether the agency‘s decision was arbitrary, unreasonable, or an abuse of discretion.”16 “We will find an abuse of discretion when we are left with the definite and firm conviction that a mistake has been made.”17
A workers’ compensation settlement is a contract.18 Common law standards of contract formation and rescission apply to workers’ compensation settlements to the extent these standards are not overridden by statute.19 We have recognized a strong policy favoring settlements.20 Here, the Municipality contends that
A. The Commission Correctly Determined That Substantial Evidence In The Record Supported The Board‘s Finding That The Parties Settled The Case In December 2012.
The Municipality does not directly question the Commission‘s decision that substantial evidence supported the Board‘s finding that a settlement contract was formed in the exchange of letters dated December 5 and 11. Instead, the Municipality argues that the Commission and the Board did not enforce the parties’ most recent settlement. Whether a contract of settlement existed and what its terms encompassed is an underlying question that we address first.
We agree with the Commission that substantial evidence supported the Board‘s finding that the parties entered into a binding settlement, the terms of which were set out in the correspondence dated December 5 and 11, 2012 between Heikes and Rehbock. “The formation of an express contract requires an offer encompassing its essential terms, an unequivocal acceptance of the terms by the offeree, consideration[,] and an intent to be bound.”21 All four elements are present here. In its December 5 letter, the Municipality made a written offer to Stenseth with the intent of binding the Municipality. The offer was specific and covered all essential terms. There was mutual consideration: Stenseth agreed to pay $30,000 to the Municipality, and the Municipality agreed to release Stenseth from liability under
The Municipality does not appear to take the position, as it did before the Commission, that no agreement was ever reached. Instead, it contends that, after Stenseth filed his petition to enforce the first settlement, the parties abandoned the December settlement and entered into a second settlement. Although “a party can abrogate an existing contract by accepting a new contract in its place,”22 there is no evidence that the parties here actually reached a new agreement. Pointing to an email from Heikes, the Municipality asserts that in January 2013, after Stenseth emailed a proposed settlement to the Municipality, “[t]he Municipality accepted the terms and advised that it was reviewing the document.” But the email does not show “an unequivocal acceptance” of Stenseth‘s offer, as required for contract formation.23 After noting that Stenseth had “substantially changed” the previous draft settlement, Heikes wrote, “MOA will not sign as written.” She subsequently sent another draft settlement, which Stenseth rejected. The parties attended a second mediation in late January, which included a discussion of a further exchange of consideration. Continuing to negotiate, absent a new agreement, does not abrogate an existing settlement contract.24
The Municipality argues that the continuing negotiations between the attorneys after Stenseth filed his petition to dismiss undercut the notion that the parties intended to be bound by the agreement set out in the earlier letters. But this argument ignores the fact that Stenseth had filed a new petition; resolving that dispute would provide both parties a reason for continuing to negotiate. There is nothing inconsistent in trying to negotiate an agreement on the new petition while continuing to assert that the Municipality was bound by the settlement created when Stenseth accepted the Municipality‘s December 5 offer of settlement. The factual record does not support the Municipality‘s assertion that a later settlement replaced the first.
AS 23.30.012 Did Not Apply To This Settlement.
The Municipality argues that the Commission reversed longstanding law and practice in deciding that
Alaska Statute 23.30.012 provides in relevant part:
(a) At any time after death, or after 30 days subsequent to the date of injury, the employer and the employee ... have the right to reach an agreement in regard to a claim for injury or death under this chapter, but a memorandum of the agreement in a form prescribed by the director shall be filed with the division. Otherwise, the agreement is void for any purpose. Except as provided in (b) of this section, an agreement filed with the division discharges the liability of the employer for the compensation, notwithstanding the provisions of
AS 23.30.130 ,23.30.160 , and23.30.245 , and is enforceable as a compensation order.(b) The agreement shall be reviewed by a panel of the board if the claimant ... is not represented by an attorney licensed to practice in this state ... or the claimant is waiving future medical benefits. If approved by the board, the agreement is enforceable the same as an order or award of the board and discharges the liability of the employer for the compensation notwithstanding the provisions of
AS 23.30.130 ,23.30.160 , and23.30.245 . The agreement shall be approved by the board only when the terms conform to the provisions of this chapter....
This section permits an injured worker and his employer to settle a “claim for injury or death” and requires the parties to an agreement to file it with the Board “in a form prescribed by the director.” The applicability of this section to the agreement the parties reached depends on whether they reached “an agreement in regard to a claim for injury or death under this chapter.”
The Municipality first contends that the Commission erred in deciding that
The Municipality‘s argument is based on a distinction between two uses of the word “claim” in workers’ compensation proceedings,27 but that distinction was immaterial to the Commission‘s decision. The Commission decided that
We agree with the Commission that the Municipality‘s fraud petition is not a claim for “injury” as that term is defined in
The Municipality argues that under the Commission‘s analysis, an employee who waives benefits when settling a fraud petition will not be accorded the protections of
C. The Commission Correctly Concluded That Equitable Estoppel Prevented The Municipality From Avoiding The Settlement.
In addition to relying on statutory and regulatory defenses to enforcing the settlement, the Municipality also asserted that no settlement existed because Henderson and Heikes exceeded their authority when they made the December 5 offer. The Board applied equitable estoppel to prevent the Municipality from avoiding the settlement, finding that all the elements of estoppel were met. The Commission agreed with the Board‘s analysis.
The Municipality argues here that the Commission applied equitable estoppel incorrectly because Stenseth could not reasonably have relied on the settlement and because there was no “resulting prejudice” to him. According to the Municipality, Stenseth‘s continuing efforts to settle the case after he filed his petition in December indicate that the first settlement did not exist and that Stenseth did not rely on it. The Municipality further contends that it would be unjust to make it abide by the terms of the settlement. Stenseth responds that (1) he suffered prejudice in the form of added attorney‘s fees and costs; (2) his reliance on the settlement was reasonable because the offer he unequivocally accepted was made by the Municipality‘s attorney, the Municipality‘s “sole representative” in the case; and (3) no special consideration should be given to the Municipality as a government here because it is acting solely in its capacity as an employer.
We agree with the Commission that equitable estoppel prevents the Municipality from denying the authority of its agents, Heikes and Henderson, to settle this case on the terms in the December 2012 correspondence. Even if the Municipality‘s agents exceeded their actual authority during the settlement negotiations, the Municipality could be estopped to deny their lack of authority if Stenseth proved the elements of estoppel against the government:32 “(1) the governmental body asserts a position by conduct or words; (2) the private party acts in reasonable reliance thereon; (3) the private party suffers resulting prejudice; and (4) the estoppel serves the interest of justice so as to limit public injury.”33 The Commission decided all elements were met, and we agree.
We agree with Stenseth that he suffered prejudice from the Municipality‘s attempt to avoid the settlement. Stenseth incurred additional attorney‘s fees and costs after the Municipality refused the tender of funds from Stenseth; the additional fees were a direct consequence of the Municipality‘s actions.
Finally, the estoppel serves the interest of justice. In evaluating the last element, we have approved balancing “the gravity of the injustice to the citizen if the doctrine is not applied” and “the injury to the commonwealth if the doctrine is applied.”34 The Municipality contends that enforcing the settlement bars it “from any chance of ever recovering” additional money from Stenseth. But the Municipality did not ask Stenseth to pay additional money in the negotiations following discovery of the “glitch.” It would be unfair to Stenseth not to hold the Municipality to its bargain when he could not possibly have known the limits on the scope of the Municipality‘s worker‘s compensation attorney‘s and its workers’ compensation administrator‘s authority. The settlement only involved one party, so there is little injury to the general public, and the claim is unproved. The strong public policy in favor of settling disputes also weighs in favor of estoppel here.35 We agree with the Commission that the Municipality was properly estopped to deny the authority of its agents and the existence of a settlement in this case.
V. CONCLUSION
We AFFIRM the Commission‘s decision.
Notes
At any time after death, or after 30 days subsequent to the date of the injury, the employer and the employee ... have the right to reach an agreement in regard to a claim for injury or death under this chapter, but a memorandum of the agreement in a form prescribed by the director shall be filed with the division. Otherwise the agreement is void for any purpose. Except as provided in (b) of this section, an agreement filed with the division discharges the liability of the employer for the compensation, notwithstanding the provisions of
AS 23.30.130 ,23.30.160 , and23.30.245 , and is enforceable as a compensation order.