Brian and Lisa Terry v. Megan Dorothy

IN THE COURT OF APPEALS OF IOWA

No. 18-1545
Filed February 5, 2020

BRIAN and LISA TERRY,
Plaintiffs-Appellants,

vs.

MEGAN DOROTHY,
Defendant-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Story County, Bethany Currie,

Judge.

Brian and Lisa Terry appeal the grant of summary judgment dismissing their

civil claims against Megan Dorothy. REVERSED AND REMANDED.

Sarah M. Baumgartner of Hedberg & Boulton, P.C., Des Moines, for

appellants.

Valerie A. Foote and Charles A. Blades of Smith Mills Schrock Blades

Monthei, P.C., Cedar Rapids, for appellee.

Heard by Tabor, P.J., and Mullins and May, JJ.
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MULLINS, Judge.

Brian Terry was allegedly injured at work. When Brian settled his workers’

compensation claims, he signed compromise settlement documents, which were

approved by the workers’ compensation commissioner (“commissioner”). Those

documents included a listing of released parties including the employer and its

employees. Later, Brian and his wife sued one of Brian’s co-employees, Megan

Dorothy, alleging gross negligence in relation to the work injury caused them

damages. Dorothy moved for summary judgment. The district court granted

Dorothy’s motion. We reverse and remand for further proceedings.

I. Background Facts and Proceedings

In 2015, Brian and Dorothy were employed by Lutheran Services of Iowa,

Inc. (LSI). In October 2015, Brian was allegedly injured during the course of his

employment with LSI. Brian pursued a workers’ compensation action against LSI

and its insurer, West Bend Mutual Insurance (West Bend).

In July 2017, Brian, LSI, and West Bend executed settlement documents

for submission to and approval by the commissioner. The documents were

submitted pursuant to Iowa Code section 85.35(3) (2017)1 and began with the

following recitation:

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.

1
Section 85.35, concerning settlements, provides, “The parties may enter into a
compromise settlement agreement of the employee’s claim to benefits as a full and
final disposition of the claim.”
3

The first document then recited Brian’s claims of injury and damages and

summaries of opinions and conclusions of medical and mental-health providers,

which the parties represented established the dispute. The first document included

a statement of awareness that Brian had read the “compromise settlement and

attached page(s),” and he understood the settlement was all the money he would

receive for his claim and that he would be “barred from future claims or benefits

under the Iowa Workers’ Compensation Law for the injuries compromised.”

Several attachments were identified in the first document, including one

called “Additional Terms of Settlement,” which provided, in relevant part, that in

exchange for a specified “lump sum” of “new money,” LSI and West Bend agree

to pay Brian

as a full and final compromised settlement, satisfaction, and final
discharge of all claims and demands that may exist against [LSI and
West Bend], and any of their officers, directors, employees, agents,
subsidiaries, affiliates, and parent companies (“Released Parties”),
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 parties stipulate that the
date of injury released in this document represents any and all claims
of injuries that Claimant may have against the Released Parties
relating to any of the body parts or systems as set forth in the
following paragraph.

The additional terms also recited the payment “represents the final and only

monetary payment the Claimant will ever receive from his employer or its workers’

compensation carrier with respect to the contested workplace injury alleged

herein.” The commissioner approved the settlement.

In October, Brian and his wife, Lisa, filed a civil petition at law alleging

Dorothy’s gross negligence in carrying out her duties as Brian’s supervisor caused

(1) Brian’s work injury and (2) Lisa to suffer loss of consortium with Brian.
4

Dorothy filed a motion for summary judgment. She argued the Terrys’ suit

should be dismissed “on one or more” of three “alternative grounds”: (1) the

compromise settlement acts as a final bar to the co-employee gross negligence

claim; (2) “[t]he language of the settlement agreement” between Brian, LSI, and

West Bend “includes release language that releases” Dorothy from liability for

gross negligence as a co-employee; and/or (3) the claims are barred by the

doctrine of election of remedies.

In its summary judgment ruling, the district court reasoned:

By entering a compromise settlement—and by virtue of the
Commissioner’s subsequent approval thereof—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 regarding the subject matter of
the compromise.

The district court granted Dorothy’s motion and dismissed the Terrys’ suit. The

Terrys now appeal.

II. Standard of Review

“We review a district court’s summary judgment ruling ‘for correction of

errors at law.’” Bandstra v. Covenant Reformed Church, 913 N.W.2d 19, 36 (Iowa

2018) (quoting Walderbach v. Archdiocese of Dubuque, Inc., 730 N.W.2d 198, 199

(Iowa 2007)). Summary judgment is proper if the record shows “that there is no

genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” Iowa R. Civ. P. 1.981(3).
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III. Analysis

The Terrys argue on appeal that section 85.20 allows both a workers’

compensation claim and a gross negligence claim, that the compromise settlement

was by its terms limited to the workers compensation claim, and “the

Commissioner would have denied for lack of jurisdiction” the compromise

settlement documents if they had specified they were releasing a gross negligence

claim.

Dorothy argues on appeal the district court correctly concluded the gross

negligence claim was a claim “under” section 85.20. Thus, the compromise

settlement of the workers’ compensation claim and the release of the parties to the

workers’ compensation claim as approved by the commissioner was a final bar to

any rights under chapter 85, which included the gross negligence claim.

In Brian’s workers’ compensation case, the parties submitted the

compromise settlement documents to the commissioner for approval pursuant to

Iowa Code section 85.35(3). A compromise settlement agreement is permissible

to resolve a contested workers’ compensation claim. Iowa Code § 85.35(1); see

also Iowa Admin. Code r. 876—6.1(1). The parties represented to the

commissioner that the dispute being settled was whether Brian’s “alleged October

14, 2015 work injury caused permanent impairment and permanent disability and,

if so, the extent of permanent disability.” The attached additional terms of

settlement also set forth the manner of calculating the value of the settlement as

required by workers’ compensation rules. The commissioner had the authority to

approve the compromise settlement of the dispute as represented by the
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settlement documents, as the documents show Brian was represented by counsel.

See Iowa Code § 85.35(8)(b).

In the present gross negligence action, Dorothy, by written and oral

argument in support of her motion for summary judgment, argued that the co-

employee gross negligence claim was in effect a claim under Iowa Code chapter

85 and was thus extinguished by the compromise settlement agreement approved

by the commissioner. See id. § 85.35(9) (“[A]n approved compromise settlement

shall constitute a final bar to any further rights arising under this chapter [85] . . .

regarding the subject matter of the compromise . . . .”) The district court granted

the motion, reasoning the gross negligence claim was “under Iowa Code section

85.20,” and thus the commissioner’s approval of the settlement agreement

extinguished any further claims, including the Terrys’ gross negligence claims

against co-employee Dorothy.

Prior to 1974, the statutory immunity afforded employers under our workers’

compensation statutes did not extend to co-employees or fellow workers of an

injured worker. See Craven v. Oggero, 213 N.W.2d 678, 680–81 (Iowa 1973).

The express language of Iowa Code section 85.22 “authorize[d] employee actions

against ‘some person other than the employer’ when the circumstances show[ed]

legal liability of such third party.” Id. at 680. In 1974, section 85.22 was changed

from “some person other than the employer,” to “some person, other than his

employer or any employee of such employer as provided in section eighty-five

point twenty (85.20) of the Code.” See 1974 Iowa Acts ch. 1111, § 2. The

legislature concomitantly amended section 85.20 to provide that the rights and
7

remedies of chapters 85 and 85A are the exclusive and only rights and remedies

of an employee against:

(1) his employer; or
(2) any other employee of such employer, provided that such
injury or occupational disease arises out of and in the course of such
employment and is not caused by the other employee’s gross
negligence amounting to such lack of care as to amount to wanton
neglect for the safety of another.

Id. § 1 (emphasis added); accord Gourley v. Nielson, 318 N.W.2d 160, 161 (Iowa

1982) (explaining section 85.22 was amended “to limit recovery against a fellow

employee to only those cases in which the injury had been caused by the fellow

employee’s gross negligence”). In summary, in 1973 and before, the statutory

immunity provided in the Iowa workers’ compensation laws applied to employers,

but not to co-employees or fellow workers. Thus, common law claims could be

pursued against co-employees. In 1974, the legislature extended the employers’

statutory immunity to co-employees so long as the injury was not caused by the

co-employee’s gross negligence.

While it is true that section 85.20(2) recognizes a possible gross negligence

claim and sets the parameters for such a claim, the existence of the right to pursue

the claim predated section 85.20. In fact, the right to pursue any negligence claim

against a co-employee existed until the 1974 legislation. That legislation ended

the right to pursue a common law negligence claim against a co-employee, but it

preserved the preexisting common law right to pursue a gross negligence claim if

the work injury is “caused by the other employee’s gross negligence amounting to

such lack of care as to amount to wanton neglect for the safety of another.” Iowa

Code § 85.20(2); see also McGill v. Fish, 790 N.W.2d 113, 120 (Iowa 2010)
8

(acknowledging prior cases had “referred to coemployee gross negligence as an

‘action under Iowa code section 85.20,’” but clarifying that “such references have

only identified the statutory source that excepted the claims from the exclusivity of

the workers’ compensation scheme” and making “it clear that section 85.20 does

not recognize or create a cause of action based on gross negligence, but merely

recognizes a restriction on an existing common law right of action against a

coemployee for negligence by including a portion of the claim within the exclusivity

of the workers’ compensation scheme” (citations omitted)).

Therefore, the Terrys’ claims against co-employee Dorothy alleging gross

negligence are common law claims, not subject to the commissioner’s authority or

jurisdiction to resolve. The commissioner’s approval of the compromise settlement

could have no legal effect on any co-employee gross negligence claim because it

is excepted from exclusivity by section 85.20(2). Therefore, the district court erred

as a matter of law when it concluded the commissioner’s approval of the

compromise settlement under section 85.35(9) was a final bar to the Terrys’ pursuit

of co-employee gross negligence claims.

The dissent addresses an issue not raised by the parties: whether the

settlement documents released the Terrys’ common law claims. Dorothy argues:

There is no limitation on the extent of the release and discharge in
the compromise settlement other than it pertains to matters covered
by chapter 85 of the Iowa Code. The commissioner would not have
approved the compromise settlement if it pertained to matters
outside of chapter 85. By approving settlements including releases
in favor of employees [as] occurred in this case, the commissioner
acknowledges that the release of claims against co-employees is
within his purview.

(Emphasis added.)
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The first sentence of the quote above argues: “There is no limitation on the

extent of the release and discharge in the compromise settlement other than it

pertains to matters covered by chapter 85 of the Iowa Code.” That sentence

acknowledges the release is limited to matters covered by chapter 85. The second

sentence asserts: “The commissioner would not have approved the compromise

settlement if it pertained to matters outside of chapter 85.” The Terrys argue a

similar proposition: “[T]he commissioner would have denied for lack of jurisdiction”

if the compromise settlement documents had specified they were releasing a gross

negligence claim. We need not decide what the commissioner would have done.

But, Dorothy’s entire argument concerning the propriety and enforcement of the

release language of the settlement is premised on the argument that the co-

employee gross negligence claim is a chapter 85 claim, the release of which was

subject to approval and in fact approved by the commissioner. The argument in

her brief concerning the alleged breadth of the release language remains in the

context of a chapter 85 claim and approval by the commissioner. The conclusion

in her brief argues we should affirm the district court

because the compromise settlement of plaintiff’s workers’
compensation claim involving the same subject matter as plaintiff’s
co-employee gross negligence claim, [the settlement] bars the co-
employee gross negligence claim pursuant to the final bar set forth
in Iowa Code § 85.35(9) and/or plaintiffs have released the co-
employee gross negligence claim pursuant to the clearly stated
language set forth in the compromise settlement approved by the
commissioner.

Although Dorothy argues that our law favors settlements—with which the

district court agreed, as do we—a careful reading of Dorothy’s argument reveals it

was all in the context of what the commissioner could approve and ultimately did
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approve. The parties asked the commissioner to approve their compromise

settlement of the pending workers’ compensation claims. Iowa Code section 85.35

identifies the specific types of settlements that are authorized for workers’

compensation claims. The compromise settlement documents identified a

contested dispute that related strictly to the workers’ compensation claim. The

documents did not identify any other dispute. The settlement proceeds were

calculated with specificity as required by the commissioner’s rules2 and were

represented to the commissioner as a compromise of workers’ compensation

benefits. Dorothy’s argument on appeal is that the law favors settlements and the

release language in the settlement agreement was broad enough to release all

claims because the claims were under chapter 85 and were within the jurisdiction

and authority of the workers’ compensation commissioner, and his approval made

the release binding.3

2
The compromise settlement recited: “In 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.”
The additional terms of settlement included an agreement to pay a lump sum to
claimant, as “the final and only monetary payment the Claimant will ever receive
from his employer or its workers’ compensation carrier with respect to the
contested workplace injury alleged herein and that it should, therefore, be
allocated” as provided in the workers’ compensation rules. Claimant’s age and life
expectancy were stated, the reduction for attorney fees was disclosed and the net
weekly and monthly settlement rates were agreed.
3 66 Am. Jur. 2d Release § 29 (Nov. 2019 update) explains:

[W]hen a release contains both general and specific language, the
general language will be presumed to have been used in
subordination to the specific language and will be construed and
limited accordingly. In other words, when specific recitals in a release
are followed by general language, the specific language restricts the
scope of the general release language. If an apparent conflict exists
between specific release language and the terms of a general
release, some courts apply a rule of construction such that the words
of general application used in the release that generally follow a
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Dorothy has not asked us to affirm based on any argument that a non-

chapter 85 claim—i.e., a common law claim—was released by the terms of the

settlement agreement. In fact, her argument that the release was a release of a

chapter 85 claim is to the contrary. We need not and cannot decide whether a

release contained as part and parcel of a compromise settlement of a workers’

compensation case approved by the commissioner could release a claim that is

beyond the jurisdiction and authority of the commissioner. That issue is not before

us. It was not briefed and no authority was cited in support of any such proposition.

We reverse the grant of summary judgment in favor of Dorothy and remand

for further proceedings.

REVERSED AND REMANDED.

Tabor, P.J., concurs; May, J., dissents.

specific recital of the subject matter concerned are not to be given
their broadest significance but will be restricted to the particular
matters referred to in the recital.
(Footnotes omitted.) Accord Seymour & Co. v. Butler, 8 Iowa 304, 304 (1859) (“A
release is to be construed according to the particular purpose for which it was
made, and a particular recital in such an instrument will restrain its general
words.”); 76 C.J.S. Release § 50 (Sept. 2019 update) (“General words in a release
are limited and restricted by particular or specific words in a release.”).
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MAY, Judge (dissenting).

This case turns on a transaction between Brian Terry, his employer (LSI),

and his employer’s insurer (West Bend). LSI and West Bend paid $45,000 to

Brian. In return, Brian signed a settlement agreement.4

When Brian signed the settlement agreement, whom did he release from

liability? In the Terrys’ view, Brian only released LSI and West Bend. In Dorothy’s

view, Brian released not only LSI and West Bend but also any of LSI’s employees,

including Dorothy.

The words of the settlement agreement show that Dorothy is correct. The

agreement states that Brian “release[d] and discharge[d]” certain “Released

Parties from all liability . . . related to” Brian’s work injury. The “Released Parties”

are defined to include LSI, West Bend, “and any of their officers, directors,

employees, agents, subsidiaries, affiliates, and parent companies.” (Emphasis

added.)

This language is not ambiguous. It released LSI’s “employees.” Dorothy

was one of those “employees.” So the settlement agreement released Dorothy

from “all liability” related to Brian’s work injury. Under established principles of

contract law, the settlement agreement provides Dorothy a complete defense

against this civil suit, through which the Terrys seek to hold Dorothy liable for

Brian’s work injury.5 See, e.g., Thornton v. Hubill, Inc., 571 N.W.2d 30, 33 (Iowa

4 The parties’ “settlement agreement” consisted of two documents. The first
document is entitled “Compromise Settlement.” The second document is entitled
“Additional Terms of Settlement.” Both documents were signed by Brian and his
attorney on July 21, 2017. Brian’s signatures were notarized.
5 Although only Brian signed the settlement agreement, Lisa Terry does not

contend she should be treated differently from Brian.
13

Ct. App. 1997) (noting “[a] release is a contract”; further noting unambiguous

contracts “will be enforced as written”).

So I would affirm the district court’s grant of summary judgment in Dorothy’s

favor. I respectfully dissent.

Certainly, there has been confusion about the proper grounds for summary

judgment. Dorothy has advanced—and the district court accepted—a statutory

theory based on Iowa Code chapter 85 (2015). As the majority correctly explains,

that statutory theory is not valid.

But this does not mean we must reverse. “When we review a district court’s

ruling, [w]e first examine the basis upon which the trial court rendered its decision,

affirming on that ground if possible.” In re Det. of Anderson, 895 N.W.2d 131, 138

(Iowa 2017) (alteration in original) (citation omitted). In this case, the district court

based its grant of summary judgment on two grounds: (1) the invalid statutory

theory just mentioned; and (2) a valid contractual theory. Indeed, as the Terrys

note in their appellate brief, the district court “focused on the contractual nature of

a settlement.” (Emphasis added.) The district court said this:

The law favors settlement of controversies. A
settlement agreement is essentially contractual in
nature. The typical settlement resolves uncertain
claims and defenses, and the settlement obviates the
necessity of further legal proceedings between the
settling parties. We have long held that voluntary
settlements of legal disputes should be encouraged,
with the terms of settlements not inordinately
scrutinized.
Waechter v. Aluminum Co. of America, 454 N.W.2d 565, 568 (Iowa
1990) (citing Wright v. Scott, 410 N.W.2d 247, 249 (Iowa 1987)).
“[B]ecause settlement agreements are essentially contracts, we look
to the legal principles applicable to contracts when interpreting them.
When we do interpret settlement agreements, our primary concern
is to ascertain the intention of the parties.” Id. (citing Mensing v.
14

Sturgeon, 97 N.W.2d 145, 151 (1959)). By the plain language of the
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.

(Emphasis added.)

As this excerpt shows, the “contractual . . . nature” of the settlement

agreement—and its effect under the “legal principles applicable to contracts”—was

indeed one of the “bas[e]s upon which the trial court rendered its decision.”

Anderson, 895 N.W.2d at 138 (citation omitted). I believe we should “affirm[] on

that ground.” See id. (citation omitted).

A final note: It is true Dorothy’s appellate brief does not draw a sharp line

between her valid contractual theory and her invalid statutory theory. Even so, she

does argue that the settlement agreement “is a contract and the principles of

contract law apply.” She does contend that, when “[l]ooking at all of the clearly

stated language” in the settlement agreement, “the only conclusion that can be

reached is that plaintiff Terry released any and all claims he may have against not

only his employer and its insurer, but also against their employees.” And she does

maintain that, because she “is one of the employees covered by the language in

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

granted.” So, in my view, Dorothy’s brief adequately raises a contractual basis to

affirm. Even if it does not, we could still affirm on that basis because it was litigated

below and, ultimately, it was one of the “bas[e]s upon which the trial court rendered

its decision.” See Anderson, 895 N.W.2d at 138; see also King v. State, 818

N.W.2d 1, 12 (Iowa 2012) (noting “[o]ur rules provide that an appellee need not
15

even file a brief in our court”; further noting “we may choose to consider only

grounds for affirmance raised in the appellee’s brief, but we are not required to do

so, so long as the ground was raised below”).