This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALS
Jerry Wayne Smith,
Bonnie J. Topeff,
Claim Specialist, et al.,
Filed September 30, 2003
Washington County District Court
File No. C5-02-4484
Jerry Wayne Smith, 2548 – 32nd Avenue South, Minneapolis, Minnesota 55406 (pro se appellant)
Gary W. Hoch, Erin M. Wessling, Meagher & Geer, PLLP, 33 South Sixth Street, Suite 4200, Minneapolis, Minnesota 55402 (for respondents CNA Insurance Company, Bette Wheaton and Bonnie J. Topeff)
Considered and decided by Halbrooks, Presiding Judge; Randall, Judge; and Hudson, Judge.
Appellant, Jerry Wayne Smith, settled with his insurer after receiving compensation for injuries suffered in a car accident. He later sued, contending that he had reserved his right to lost wages on a variety of grounds and asserting that he was mentally incompetent at the time he signed the release. The district court granted summary judgment and denied his motion for an order vacating or amending the summary judgment order. Appellant contends (a) he was mentally incompetent at the time he signed the release, thus tolling the statute of limitations; (b) there were genuine issues of material fact; and (c) the district court erred when it did not allow further testimony at the hearing for reconsideration. Because we conclude that the district court did not err in granting summary judgment on the validity of the release and did not abuse its discretion in declining to allow testimony at the reconsideration hearing, we affirm.
This case involves a wage-loss claim made by appellant Jerry Wayne Smith (Smith) after he settled a claim with respondent CNA Insurance Companies (CNA) for injuries he sustained in a motor vehicle accident on January 21, 1993. Smith was injured as a pedestrian when two cars collided and the second car hit him. CNA insured the first driver, who was acting within the scope of his employment with Holiday Inn. Smith first recovered no-fault benefits, including wage-loss benefits, from his no-fault insurer, State Farm Insurance Companies. He then received a letter from Bonnie J. Topeff, who was then a claims specialist with CNA, requesting medical authorization and sending a wage loss verification form. After Smith provided wage loss information, CNA paid Smith the sum of $4,541.46 for lost wages in May 1993.
After CNA stopped paying wage loss benefits in 1993, Smith sued Holiday Inn in October 1993 for bodily injury. Because Smith alleged that he had sustained lost earnings greater than the no-fault weekly maximum, he sought additional lost wages. On January 25, 1994, in the presence of his attorney, Smith signed a release, releasing Appletree Motel Partnership, d/b/a Holiday Inn International, and Continental Casualty Co. (apparently a division of CNA), from all claims arising out of the January 21, 1993 accident, for the sum of $18,000. CNA issued the check, which was marked “bodily injury settlement,” to Smith and his attorney in January 1994. Smith endorsed and cashed the check.
In March 2002, Smith apparently wrote to Bonnie Topeff (who was no longer employed at CNA) to claim compensation for further wage loss arising out of the accident. Bette Wheaton, outside claim specialist for CNA, answered the letter, stating that Smith’s claim had expired due to the six-year statute of limitations. In June, Smith filed another complaint for the “difference of wage loss [currently] . . . held by CNA” of $126,000. The respondents then moved to dismiss, or, in the alternative, for summary judgment, on the grounds that: (1) the claim was barred by the statute of limitations; (2) a valid contract did not exist between Smith and CNA; and (3) that if a contract did exist, Smith signed a release of all claims against CNA and its agents.
At the summary judgment hearing, Smith argued that because he was incompetent at the time he signed the check, the release was not valid, and further that the statute of limitations for any cause of action that he had against the insurance company was tolled due to his mental illness. To support his contention, Smith submitted several confidential reports from mental health professionals, as well as a letter from a sentencing judge in connection with Smith’s conviction and sentence for bank robbery in March 1995. The sentencing judge indicated that he granted Smith a substantial downward departure because of Smith’s diminished mental capacity. The medical reports also indicated that Smith suffered from major depression and post-traumatic stress disorder and was impaired at the time of the bank robbery in 1993.
The district court granted the respondents’ motion for summary judgment and dismissed Smith’s claims with prejudice. The court found that when the release was signed, Smith was not incapacitated to the extent that the release was rendered invalid, and that even if he had been, there was no evidence CNA knew about Smith’s incapacity. The court also found that: (a) eight years elapsed between the signing of the release and Smith’s attempt to avoid it; (b) Smith was represented by independent counsel when he signed the release; (c) the plain language of the release discharged CNA from all liability for claims arising out of the accident; (d) Smith received $18,000 for signing the release; and (e) the wage loss damages were merely a consequence flowing from an injury known to Smith at the time he signed the release.
Smith then filed a motion, which the district court deemed a motion for reconsideration. At the reconsideration hearing in January 2003, Smith argued that the court had not considered the medical reports and sentencing letter regarding his mental status. The district court judge replied, however, that it had considered this evidence in reaching its conclusion. The court stated on the record:
. . . if what you’re saying is you think I didn’t look at [the doctor’s] letter or the things in your motion paper or [the judge’s] letter, the transcripts, all of the stuff you submitted, that would be incorrect. I read everything that was submitted in this file, and I also had the assistance of a law clerk. So, two sets of people; two people read through all of it. I think what you are saying is, I didn’t agree with you as to the relevance and germaness of the materials that you submitted to me.
It isn’t that I didn’t consider them; I considered them and rejected them in reaching the conclusion that I reached regarding the validity of the settlement.
The district court stressed the fact that Smith had counsel in signing the release, that the insurance company had no notice about any mental incapacity, and that if Smith had needed a guardian or conservator, it would have been up to his attorney to get one appointed. The court denied Smith’s motion to present testimony from his attorney and from a mental health professional who had previously evaluated him, observing that motion hearings were not evidentiary hearings, and that the court did not intend to take testimony at the hearing.
The district court concluded that even if the court had found that Smith lacked contractual capacity at the time of the release, the court would still have granted summary judgment because Smith failed to produce evidence that CNA knew of his incapacity at the time the release was signed. Furthermore, the district court concluded that even if the court had found that CNA knew of the incapacity, the other factors cited in the previous summary judgment order warranted granting summary judgment. This appeal follows.
D E C I S I O N
On appeal from summary judgment, this court determines whether there are any genuine issues of material fact and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990); see Minn. R. Civ. P. 56.03 (setting forth district court standard for summary judgment). No genuine issue of material fact exists “[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.” DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (alteration in original) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356 (1986)). A genuine issue for trial must be established by substantial evidence. Murphy v. Country House, Inc., 307 Minn. 344, 351, 240 N.W.2d 507, 512 (1976).
The law favors the settlement of claims without recourse to litigation. Keller v. Wolf, 239 Minn. 397, 399, 58 N.W.2d 891, 894 (1953). A valid release constitutes a defense to any action on the claims released, and a release is generally presumed valid. Sorensen v. Coast-to-Coast Stores (Cent. Org.), Inc., 353 N.W.2d 666, 669 (Minn. App. 1984), review denied (Minn. Nov. 7, 1984). Because the compromise and settlement of a lawsuit is contractual in nature, the validity of releases is evaluated by the principles of contract law. Beach v. Anderson, 417 N.W.2d 709, 711 (Minn. App. 1988), review denied (Minn. Mar. 23, 1988). The following factors may be considered in determining the validity of a release: (a) the length of time between the injury and the settlement; (b) the amount of time between the settlement and the attempt to avoid the settlement; (c) the presence or absence of independent medical advice before and at the time of the settlement; (d) the presence or absence of legal counsel of the plaintiff’s choice before and at the time of the settlement; (e) the language of the release; (f) the adequacy of consideration; (g) the competence of the releasor; and (h) whether the injury complained of was an unknown injury at the time the release was signed or merely a consequence flowing from a known injury. Karnes v. Quality Pork Processors, 532 N.W.2d 560, 562 (Minn. 1995).
Smith claims that the district court erred in failing to find that he was incompetent in January 1994, when he signed the release settling all claims arising from the January 1993 accident. Incompetence or incapacity is a question of fact. See State Bank of Cologne v. Schrupp, 375 N.W.2d 48, 51-52 (Minn. App. 1985), review denied (Minn. Dec. 13, 1985). In Minnesota, a presumption of competence exists. Jasperson v. Jacobson, 224 Minn. 76, 82, 27 N.W.2d 788, 792 (1947). Mental competence is measured at the time the party signs the document in question. Sullivan v. Joint Indep. Consol. Sch. Dist. No. 102, 251 Minn. 378, 382, 88 N.W.2d 1, 4-5 (1958). “Mere mental weakness” does not equate with incapacity to contract. Fisher v. Schefers, 656 N.W.2d 592, 596 (Minn. App. 2003) (citing Timm v. Schneider, 203 Minn. 1, 4, 279 N.W. 754, 755 (1938) (quotation omitted)). For contractual capacity, “[i]t is sufficient if [a person] has enough mental capacity to understand, to a reasonable extent, the nature and effect of what he is doing.” Id. The Minnesota Supreme Court has held that
a contract with a person of unsound mind will not be set aside or annulled . . . after recovery from his disability where it appears that it was entered into in good faith, for a fair consideration, and without notice to the other party of facts or circumstances sufficient to put a prudent person upon inquiry as to such mental capacity, and no inequitable advantage has been derived therefrom.
Wood v. Newell, 149 Minn. 137, 140, 182 N.W. 965, 966 (1921). In Wood, the court refused to void a contract entered into by the plaintiff, noting that he was not insane and that he was rapidly recovering at the time of the transaction. Id.
Smith argues that he was mentally ill at the time he signed the release and that the district court erred by failing to make findings concerning the professional reports he submitted detailing the nature of that illness. But we conclude that the district court did not err in granting summary judgment on this issue. Mental illness does not by itself presume incompetency. Although the evidence shows that Smith suffered from mental illness around the time he signed the release, there are no facts to support his assertion that he did not understand the nature of his act in signing the release. Minnesota law is clear that competency “cannot be changed from a shield of protection to a rapier of offense.” Schultz v. Oldenberg, 202 Minn. 237, 245, 277 N.W. 918, 922 (1938). Smith was represented by counsel from a well-established firm, and the record fails to show that the consideration he received was not fair compensation for his claims. In addition, no evidence was submitted to show that CNA knew that Smith was incompetent when the release was signed. Finally, the district court judge at the reconsideration hearing specifically stated that she considered the medical evidence Smith presented.
Further, we are not persuaded by Smith’s argument that his “insanity” tolled the statute of limitations with regard to the release. Minn. Stat. § 541.15 (a)(2) provides that the statute of limitations is tolled during a period of disability, including the plaintiff’s insanity. Minn. Stat. § 541.15 (a)(2) (2002). But there is no evidence that Smith was ever judged insane, or that a guardian or conservator was ever appointed for him. See L.A.B. v. P.N., 533 N.W.2d 413, 417 (Minn. App. 1995) (holding that a psychiatric patient was not disabled by “insanity” despite an affidavit from her treating therapist stating she was incapable of prosecuting her claim and her testimony that she was depressed and suicidal). We also note that Smith’s retention of counsel is evidence, although not conclusive, of Smith’s sanity or legal capacity for the purpose of the running of the statute of limitations. Harrington v. County of Ramsey, 279 N.W.2d 791, 796 (1979). We conclude that the district court properly determined that Smith was not incapacitated at the time he signed the release.
Smith characterized his January 2003 motion variously as a motion for amended findings of fact, for a new trial, and for reconsideration. Under Minn. R. Civ. P. 52.01, findings of fact are not to be set aside unless clearly erroneous. The findings of the district court are supported by the evidence in the record and are not clearly erroneous. Additionally, Smith’s rule 59 motion for a new trial was not properly made because there had been no trial. The district court therefore appropriately considered Smith’s motion a request for reconsideration. See Minn. R. Gen. Pract. 115.11 (providing that motions to reconsider are to be granted by express permission of the court).
Smith objects to the district court’s decision not to allow him to present witness testimony at the reconsideration hearing. Although the court, on a motion hearing, has discretion whether to hear the matter on oral testimony, ordinarily no oral testimony should be received. Minn. R. Civ. P. 43.05; Saturnini v. Saturnini, 260 Minn. 494, 496, 110 N.W.2d 480, 482 (1961). The Minnesota Supreme Court has noted that
if parties were permitted, as a matter of course, to have every issue of fact in every action tried on oral testimony, and to require the formalities of a final trial of an action on its merits to be observed, it would result in vexatious and burdensome delays, and in many cases a miscarriage of justice.
Id. (quoting Strom v. Mont. Cent. Ry. Co., 81 Minn. 346, 349, 84 N.W. 46, 47 (1900)). In this case the district court indicated that it reviewed the medical information submitted in support of Smith’s position. In its sound discretion, the district court declined to allow him to present oral testimony at the hearing on reconsideration. The district court did not abuse that discretion.