Brian and Lisa Terry v. Megan Dorothy

                 IN THE SUPREME COURT OF IOWA
                              No. 18–1545

          Submitted September 17, 2020—Filed October 23, 2020


BRIAN TERRY and LISA TERRY,

      Appellants,

vs.

MEGAN DOROTHY,

      Appellee.


      On review from the Iowa Court of Appeals.



      Appeal from the Iowa District Court for Story County, Bethany

Currie, Judge.



      Appellee seeks further review of the court of appeals decision

vacating the district court’s grant of summary judgment. DECISION OF

COURT OF APPEALS VACATED; DISTRICT COURT GRANT OF

SUMMARY JUDGMENT AFFIRMED.


      Appel, J., delivered the opinion of the court, in which all justices

joined.



      Sarah M. Baumgartner (argued) of Hedberg & Boulton, P.C.,

Des Moines, for appellants.



      Charles A. Blades (argued) and Valerie A. Foote of Smith Mills

Schrock Blades Monthei, P.C., Cedar Rapids, for appellee.
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APPEL, Justice.

      In this case, we consider whether settlement documents submitted

to and approved by the workers’ compensation commissioner released

common law claims that the employee brought against a coemployee

alleging gross negligence. On a motion for summary judgment, the district

court found that the settlement precluded the employee from bringing the

gross negligence claim against the coemployee. The employee appealed.

      We transferred the case to the court of appeals. The court of appeals

reversed. We granted further review. For the reasons expressed below, we

affirm the ruling of the district court dismissing the employee’s gross

negligence claim against the coemployee.

      I. Factual and Procedural Background.

      A. Introduction. On October 14, 2015, Brian Terry, an employee

of Lutheran Services in Iowa (LSI) was attacked by a client of LSI, allegedly

causing serious injuries.    Brian filed a workers’ compensation claim

against LSI and its workers’ compensation carrier. The parties ultimately

resolved the workers’ compensation dispute in a compromise settlement.

Two settlement documents were presented to the Iowa Workers’

Compensation Commissioner pursuant to Iowa Code section 85.35(3)

(2015). One was titled “Compromise Settlement” and the other was titled

“Additional Terms of Settlement.” The commissioner ultimately approved

the settlement.

      B. Settlement Documents Presented to Commissioner.

      1. Compromise settlement.      The compromise settlement declared

that “[t]he undersigned parties submit this Compromise Settlement

pursuant to Iowa Code [section] 85.35(3).” The compromise settlement

further described the dispute as follows:
                                     3
      A dispute exists under the Iowa Workers’ Compensation Law,
      which the parties seek to resolve by full and final compromise
      disposition of Claimant’s claim for benefits. The subject and
      nature of the dispute is whether Claimant’s alleged
      October 14, 2015 work injury caused permanent impairment
      and permanent disability and, if so, the extent of permanent
      disability.

      The compromise settlement contained release language. It provided
that “[i]n consideration of this payment, claimant releases and discharges

the above employer and insurance carrier from all liability under the Iowa

Workers’ Compensation Law for the above compromised claim.”

      2. Additional terms of settlement. The parties also presented to the

commissioner a document entitled “Additional Terms of Settlement.” The

compromise settlement expressly incorporated the additional terms of

settlement.

      The additional terms of settlement stated that the “[d]efendants [LSI

and West Bend Mutual Insurance] agree to pay Claimant [Brian Terry] a

lump sum of $45,000 in new money.” In return, the claimant, Brian,

agreed that,

      the payment of $45,000 is acceptable to Claimant as a full
      and final compromised settlement, satisfaction, and final
      discharge of all claims and demands that may exist against
      Lutheran Services of Iowa, Inc, West Bend Mutual Insurance
      Company, and any of their . . . employees . . . by reason of his
      employment and by reason of all injuries or damages
      sustained by Claimant on or about October 14, 2015, through
      his association with the Released Parties.

The additional terms of settlement further provided, “In consideration of

this payment, Claimant releases and discharges the Released Parties from

all liability, including liability under Iowa Workers’ Compensation Law, for

the above injury or injuries . . . known or unknown . . . .”

      C. Proceedings Before the District Court.

      1. Brian and Lisa Terry petition. On October 12, 2017, Brian and

Lisa Terry filed a petition at law in district court. They sought to recover
                                      4

damages from Megan Dorothy, a supervisor of Brian’s when he worked at

LSI, on a gross negligence theory. Count I of the petition alleged gross

negligence when Dorothy put Brian in a one-on-one situation with a client

where the likelihood of assault was probable and the situation ultimately

resulted in injuries to Terry.    Count II of the petition alleged that the

traumatic brain injury suffered by Brian as a result of Dorothy’s gross

negligence had an adverse impact on the Terrys’ marriage.

        2. District court ruling on motion for summary judgment. Dorothy

moved for summary judgment, seeking to dismiss the action.            In her

moving papers, Dorothy asserted alternative grounds, including relying

upon “release language that releases plaintiffs’ co-employee gross

negligence claim against the defendant Dorothy.”

        The district court granted Dorothy’s motion for summary judgment

on both contract and statutory grounds. According to the district court,

        Mr. Terry lost any further rights to pursue damages under
        Iowa Code section 85.20 for gross negligence against a co-
        employee both because the Additional Terms of Settlement
        specifically include a release for all co-employees and because
        Iowa Code section 85.35(9) provides that a compromise
        settlement approved by the Commissioner is a final bar to any
        further rights under chapter 85 . . . .

        The district court next turned to Lisa Terry’s consortium claim. The

district court reasoned that in order to bring a consortium claim, there

must be liability on the underlying claim that caused injuries to the other

spouse.    Because the district court dismissed Brian’s gross negligence

claim, the district court reasoned that Lisa’s consortium claim must also

fail.

        3. Decision of court of appeals. The Terrys appealed. We transferred

the case to the court of appeals. The majority in the court of appeals

reversed. The majority emphasized that a claim of gross negligence is a
                                    5

common law claim distinct and apart from a workers’ compensation claim.

The majority thus reasoned that the statutory settlement before the

workers’ compensation commissioner extinguished all statutory claims

but a settlement with the workers’ compensation commissioner did not

release a common law claim of gross negligence against a coemployee.

While the majority recognized there might be a claim for summary

judgment based upon the contractual terms of the additional terms of

settlement, independent of any approval by the workers’ compensation

commissioner, the majority found that contractual theory was not before

the court. According to the majority, Dorothy exclusively relied upon the

premise that a gross negligence claim against a coemployee was part and

parcel of a workers’ compensation claim and that the commissioner’s

action in approving the settlement extinguished the gross negligence

claim. A dissent, however, agreed that a gross negligence claim against a

coemployee was not a statutory claim under Iowa Code section 85.20 but

reasoned that the contract theory was, in fact, addressed by the district

court and sufficiently presented on appeal to provide a basis to affirm the

district court.

      II. Standard of Review.

      This case involves review of a district court’s order on a motion for

summary judgment.        A district court’s summary judgment ruling is

reviewable for correction of errors at law. Bandstra v. Covenant Reformed

Church, 913 N.W.2d 19, 36 (Iowa 2018).

      III. Discussion.

      A. Summary Judgment Based On Statutory Theory. We first

consider whether a gross negligence claim against a coemployee is a

statutory claim that is extinguished under Iowa Code section 85.20 when

the workers’ compensation commissioner approved settlement of the
                                      6

statutory claim. Dorothy points out that an approved compromise and

settlement is a final bar “without qualification or limitation” to all further

rights under the workers’ compensation statutes. Bankers Standard Ins.

v. Stanley, 661 N.W.2d 178, 181–82 (Iowa 2003). In contrast, the Terrys’

assert that a gross negligence claim against a coemployee is a common law

claim that is outside the scope of the workers’ compensation statutes and,

as a result, a settlement of Brian Terry’s statutory workers’ compensation

claims does not extinguish the gross negligence and consortium claims.

      On this point, we agree with the Terrys. Prior to 1973, the statutory

immunity from claims under our workers’ compensation statute after

settlement applied only to employers and not to coemployees. Craven v.

Oggero, 213 N.W.2d 678, 680–81 (Iowa 1973) (en banc). Thus, as of 1973,

an employee could bring a common law claim against coemployees based

on tort theories. In 1974, the statute was amended to extinguish common

law claims against coemployees except for those founded in gross

negligence.   See 1974 Iowa Acts ch. 1111, § 1 (codified at Iowa Code

§ 85.20 (1975)); Gourley v. Nielson, 318 N.W.2d 160, 160–61 (Iowa 1982).

Thus, the common law claims against coemployees for gross negligence

survived the amendment and are not within the scope of our workers’

compensation statutes.

      B. Summary Judgment Based on Contract Theory. We now turn

to the separate and independent question of whether, as a matter of

contract law, the settlement documents in this case extinguished Brian’s

gross negligence claim and Lisa’s consortium claim.        As a preliminary

matter, we must address whether the contract theory is properly before

the court.
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      We first examine the ruling of the district court. The district court

expressly ruled in favor of Dorothy on both statutory and contract

grounds. The district court, among other things, declared that,

      the plain language of contract (here, the Compromise
      Settlement including the Additional terms of Settlement),
      Mr. Terry released all employees of LSI—including
      Ms. Dorothy—from any and all claims of injuries that he may
      have against them. Therefore, Ms. Dorothy is entitled to
      summary judgment on Mr. Terry’s claim of gross negligence.

Plainly, the contract was preserved in the district court.

      We now turn to the question of whether the contract theory was

waived by Dorothy on appeal.      The header of the argument section in

Dorothy’s brief broadly declares without limitation that the district court

correctly granted summary judgment in favor of the defendant.           The

discussion that follows admittedly concentrates most of its firepower on

the statutory theory that we have rejected.

      Yet, the contract theory was also clearly presented in Dorothy’s

appellate brief. Dorothy stated that “plaintiff Brian Terry’s compromise

settlement agreement with LSI is a contract and the principles of contract

law apply.”   After citing various cases explaining basic principles of

contract law, Dorothy argued “[w]ith the above principles in mind, it is

clear that plaintiff Terry released any claim he might have against the

defendant Dorothy involving his work place injury.”          Dorothy further

claims that because she “is one of the employees covered by the language

in the settlement documents, her motion for summary judgment [was]

properly granted.” Certainly, this is enough to raise the contract theory

on appeal.    “Our issue preservation rules are not designed to be

hypertechnical.” Griffin Pipe Prods. Co. v. Bd. of Rev., 789 N.W.2d 769,

772 (Iowa 2010).
                                           8

       We now turn to the merits of the contract theory. “A release is a
contract, and its validity is governed by the usual rules relating to
contract.” Stetzel v. Dickenson, 174 N.W.2d 438, 439 (Iowa 1970). The
intent of the parties controls, and unless the contract is ambiguous, intent
is determined by the plain language of the contract. Verne R. Houghton
Ins. Agency v. Orr Drywall Co., 470 N.W.2d 39, 42 (Iowa 1991). It is, of
course, true that the compromise settlement is limited to release of
workers’ compensation claims. Considered in isolation, this document
would not provide a basis for summary judgment. But, in addition, the
parties executed the additional terms of settlement. Here, much broader
release language is employed. The additional terms of settlement releases
all employees of LSI from any and all liability. The language is broad,
unqualified, and not ambiguous. It certainly extinguishes common law
claims. And, although Lisa was not a signatory to the additional terms of
settlement, her claim depends on the validity of the underlying claim of
her spouse. 1
       As a result, although the district court’s ruling was flawed when it
reasoned that a statutory workers’ compensation claim extinguishes
common law gross negligence claims against a coemployee, the district
court properly ruled that, as a matter of contract, the language in the
additional terms of settlement extinguished Brian’s gross negligence claim
and Lisa’s consortium claim.
       IV. Conclusion.
       For all the above reasons, we affirm the order of the district court
granting summary judgment against the plaintiffs in this matter.
       DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT
GRANT OF SUMMARY JUDGMENT AFFIRMED.


       1The  appellants did not raise the issue of whether Lisa’s signature was required
to release her loss of consortium claim. We therefore do not consider the issue.
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