Estate of Ed Albaugh v. UPS Freight

IN THE COURT OF APPEALS OF IOWA

No. 20-0070
Filed April 14, 2021

ESTATE OF ED ALBAUGH,
Plaintiff-Appellant,

vs.

UPS FREIGHT,
Defendant-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Polk County, David Porter, Judge.

The Estate of Ed Albaugh appeals from the grant of summary judgment for

UPS Freight on the Estate’s application to enforce workers’ compensation

settlement. AFFIRMED.

Channing L. Dutton and Robert R. Conklin of Lawyer, Lawyer, Dutton,

Drake & Conklin, L.L.P., West Des Moines, for appellant.

Donna R. Miller of Miller, Zimmerman & Evans, PLC, Des Moines, for

appellee.

Heard by Bower, C.J., and Doyle and Mullins, JJ.
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DOYLE, Judge.

Contending settlement of Ed Albaugh’s petition for partial commutation of

workers’ compensation benefits had been reached before he died, the Estate of

Ed Albaugh applied to the district court to enforce the settlement. The Estate and

UPS Freight filed dueling motions for summary judgment. The district court found

“that the parties engaged in settlement negotiations that did not result in an

agreement on its final terms.” So the court found there was no agreement for the

court to enforce. It denied the Estate’s motion and granted UPS’s motion. The

Estate appeals.

I. Facts and Procedural History.

Ed Albaugh was a driver for United Parcel Service. In 2005, while on the

job, he was injured in a serious collision with another tractor-trailer. He was off

work for about a year due to his injuries. He returned to work at UPS in 2006 and

continued to work until 2012, but only because his manager and co-workers

informally accommodated him. UPS removed Albaugh from his job in 2012 and

did not allow him to work since that time. Albaugh filed for workers’ compensation

benefits. In a 2014 arbitration decision, a deputy workers’ compensation

commissioner found that Albaugh sustained a permanent and total industrial

disability as a result of his 2005 injuries, and awarded him lifetime permanent total

disability benefits of $676.38 per week.

In March 2017 Albaugh petitioned the workers’ compensation

commissioner for a partial commutation of his benefits.1 He calculated the 1102

1The partial commutation allows the claimant to receive a lump sum
of the discounted value of some, but not all, of the future weekly
3

remaining weeks of benefits (based on his life expectancy) to total $745,370.76.

He sought a lump-sum payment of $562,229.82 for the commuted value of the first

1101 weeks. He requested the last week of benefits remain open, as well as

medical benefits. UPS answered the petition denying that Albaugh had correctly

calculated his benefits and denying that he established commutation of benefits

was in his best interests. In June 2017, UPS’s counsel faxed a letter to Albaugh’s

counsel:

UPS has authorized me to settle this claim for a partial
commutation (leaving the last week pending) as long as Mr. Albaugh
will agree to settle the medical with an MSA[2] administered by
Ametros that has a revisionary interest with Gallagher Bassett/UPS.
Is this something he is interested in?”

UPS requested a response to its offer several times. Albaugh’s attorney

responded in September 2017. He emailed UPS’s counsel, “[W]e are interested

in getting more information about the CMS idea. I cannot tell you he will do the

CMS plan, but he is willing to look at the idea . . . which is progress. What triggers

this is the willingness to do the partial commutation.” The attorneys continued to

communicate about the medical-benefits issue. By November, UPS’s counsel

benefits to which he is entitled. This type of commutation is, for
some, the best of both worlds. It allows a lump sum fund to pay
outstanding debts and attorney’s fees. At the same time, it preserves
the worker’s right to lifetime medical benefits related to the injury and
right to review-reopening if the medical condition changes.
John Lawyer & James R. Lawyer, 15 Iowa Practice Series, Workers’
Compensation 2020-2021, § 27.2, p. 380 (Thomson Reuters 2020).
2 A Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) is a

financial agreement that allocates a portion of a workers’ compensation settlement
to pay for future medical services related to the workers’ compensation injury,
illness, or disease. These funds must be depleted before Medicare will pay for
treatment related to the workers’ compensation injury, illness, or disease. Albaugh
was on Medicare at the time of UPS’s closed file request.
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emailed: “Are they3 in agreement?” Albaugh’s counsel responded, “So far, not a

word back. I’ve learned to leave them alone. I will find a way to nudge them.”

In February 2018, the Worker’s Compensation Commissioner scheduled a

hearing for May 1 on Albaugh’s partial-commutation petition. Parties’ counsel

continued their discussions about the medical-benefits issue—some by telephone.

On Saturday, April 21, UPS’s counsel emailed Albaugh’s counsel:

UPS will agree to the commutation and will run a new MSA
evaluation to address the change in amount that concerns your
clients.
I will prepare the settlement documents.
With this, are we OK informing the WCC that we do not need
the hearing?

The following Monday, Albaugh’s attorney answered by email: “Let me call Ed.”

Later that day, counsel for UPS reported to her clients:

The attorney is going to discuss our agreement to the partial
commutation this afternoon. He says if they do not agree, he will just
dismiss the petition. That would mean they could not get a
commutation in the future unless you agreed to it (the law has
changed since they first filed). He understands that you will get new
MSA numbers.
I will let you know what they agree to.

The next day, April 24, UPS’s counsel emailed Albaugh’s counsel: “The commuted

numbers are attached. I will let you fill in the use of the money and your fee.”

Attached was a partial-commutation petition page-one with commuted numbers

filled-in. But the numbers were not based on Albaugh’s correct age. So later that

day, UPS’s counsel sent another email with a partial-commutation petition page-

one; this time with corrected numbers:

Sorry about the mis-calculation re: his age. I have attached
the corrected numbers using age 62. I will ask my clients if they are

3 A reference to Ed Albaugh and his wife.
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willing to adjust the interest rate. I did take a look at the decisions
and it they are consistent that the rate used is that in place at the
time of decision.

The revised figures showed a partial commutation lump sum pay-out for 1060

weeks to be $481,147.21. Albaugh’s counsel responded:

Thanks Donna, and let me know. I think there is room to compromise
on this issue. I could not find the interest rate from the month of 9-
17 but did see that August 17 was 1.24 and November was 1.50. We
could use 1.50 as a compromise.

Two days later, on Thursday April 26, UPS’s counsel emailed back:

I spoke to my clients regarding your request/proposal. They are not
in agreement to pay any more than the commuted value at the
current interest rate. Please let me know how Mr. Albaugh wants to
proceed.

On that same morning, Albaugh’s counsel replied: “Thanks Donna, I will talk to

them.”

On Sunday, April 29, two days before the scheduled May 1 hearing, UPS’s

counsel emailed Albaugh’s counsel: “Channing—I did not notify the deputy that we

would not need her time on Tuesday. Are you ok with me doing that now?” On

Monday April 30, Albaugh’s counsel responded:

Yes, we don’t need a hearing. I have a final PC with them today but
they did not set a time. I’ll let you know right away what they want
me to do.

UPS’s counsel then emailed the deputy commissioner: “Channing and I have an

agreement that will not require the hearing scheduled for tomorrow morning.” By

email, the deputy thanked UPS’s counsel for the notification. Three days later,

Albaugh and his wife were tragically killed in a motorcycle collision.

In January 2019, Eric Albaugh, as personal representative of Ed Albaugh’s

estate, signed a revised petition for partial commutation using the same figures
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that appeared on UPS’s April 24, 2018 proposed partial commutation petition, and

submitted it to UPS for signature. UPS and its workers’ compensation carrier

refused to sign the petition or pay any settlement monies to the estate. After failing

to obtain relief from the workers’ compensation commissioner, Albaugh’s estate

applied to the district court seeking to enforce the partial-commutation settlement

agreement.4 UPS answered and later filed a motion for summary judgment

asserting there was no settlement agreement. The estate countered with its own

motion for summary judgment. After vigorous briefing by both parties and a

hearing, the district granted summary judgment for UPS and against the Estate.

Albaugh’s estate appeals.

II. Standard of Review

"We review a district court's grant of summary judgment for correction of

errors at law.” Hedlund v. State, 930 N.W.2d 707, 715 (Iowa 2019). “Summary

judgment is appropriate only when the record shows no genuine issues of material

fact and the moving party is entitled to judgment as a matter of law.” Id. (citing

Iowa R. Civ. P. 1.981(3)). “We view the summary judgment record in a light most

favorable to the nonmoving party.” Id. “[O]ur review is ‘limited to whether a

genuine issue of material fact exists and whether the district court correctly applied

4 The application alleges the workers’ compensation commissioner refused to
enforce the settlement “based on its belief it does not have enforcement powers,
and not based on the merits of the Albaugh claim.” It also alleges the
commissioner directed the estate “to file this action in the district court seeking an
order deeming the employer to have signed the settlement documents, or other
appropriate remedy, consisting of signing the commutation petition so that it might
be approved by the commissioner.”
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the law.’” Id. (citing Pillsbury Co. v. Wells Dairy, Inc., 752 N.W.2d 430, 434 (Iowa

2008)).

III. Analysis

After considering the parties’ arguments and reviewing the record, the

district court found there was no agreement to enforce. We agree.

“[O]ral settlement agreements are binding so long as there is an offer, an

acceptance, and a meeting of the minds regarding the terms of the agreement.”

15A C.J.S. Compromise and Settlement § 21, at 96 (2012). “Settlement

agreements are essentially contracts, and general principles of contract law apply

to their creation and interpretation.” Sierra Club v. Wayne Weber LLC, 689 N.W.2d

696, 702 (Iowa 2004) (citations omitted). “In order to be bound, the contracting

parties must manifest their mutual assent to the terms sought to be enforced.” Id.

(citation omitted). In other words, the parties must express their mutual assent to

the terms of the contract. Schaer v. Webster Cty., 644 N.W.2d 327, 338 (Iowa

2002). Mutual assent depends on objective evidence, not the hidden intent of the

parties. Id. “Mutual assent is present when it is clear from the objective evidence

that there has been a meeting of the minds.” Royal Indem. Co. v. Factory Mut.

Ins. Co., 786 N.W.2d 839, 846 (Iowa 2010).

The mode of assent is termed offer and acceptance. Heartland Express,

Inc. v. Terry, 631 N.W.2d 260, 268 (Iowa 2001). Although on April 21, 2018, UPS

agreed to a commutation, it wasn’t until April 24 that UPS made a specific offer

through its counsel’s April 24, 2018 email. Even then, the interest rate issue—

which affects the amount of the lump sum—remained up in the air: “I will ask my

clients if they are willing to adjust the interest rate.” To which Albaugh’s attorney
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responded: “Thanks Donna, and let me know. I think there is room to compromise

on the issue.” On April 26, UPS’s counsel informed Albaugh’s counsel that UPS

was “not in agreement to pay any more than the commuted value at the current

interest rate.” So at this point there was a hard offer by UPS. Now the question

becomes whether Albaugh accepted that offer.

A binding contract also requires acceptance of the offer. Magnusson

Agency v. Pub. Entity Nat’l Co.-Midwest, 560 N.W.2d 20, 26 (Iowa 1997).

Acceptance of an offer is a manifestation of assent to the terms thereof made by

the offeree in a manner invited or required by the offer. Heartland Express, 631

N.W.2d at 270 (citing Restatement (Second) of Contracts § 50). “The rule is well

settled that in a contract by offer and acceptance, the acceptance must conform

strictly to the offer in all its conditions, without any deviation or conditions

whatever,” or otherwise “there is no mutual assent and therefore no contract.”

Shell Oil Co. v. Kelinson, 158 N.W.2d 724, 728 (Iowa 1968). After telling Albaugh’s

counsel that UPS was unwilling to compromise on the interest issue, UPS’s

counsel requested: “Please let me know how Mr. Albaugh wants to proceed.” The

response was: “Thanks Donna, I will talk to them.” This cannot be construed as

an acceptance to the offer.

Here, the back and forth correspondence between counsel shows any

agreement was subject to approval by the Albaughs—“I’ll let you know right away

what they want me to do.” And the ball was last left in their court—“I will talk to

them.” Unfortunately, they tragically were killed before they responded to UPS’s

last offer. The parties never got on the same page about the interest rate to be
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applied to the commutation. Albaugh did not agree to the last interest rate

proposed by UPS. There was no mutual assent. So no contract to enforce.

Cancellation of the May 1 hearing is not objective evidence that the parties

reached an enforceable agreement. Albaugh’s attorney was still awaiting

marching orders from his clients. The hearing could have been rescheduled.

That Albaugh’s counsel now argues the interest rate was nonnegotiable5

and left nothing for Albaugh to accept after UPS agreed to a commutation does

not obviate the need for Albaugh’s express assent to the agreement. The interest

rate had a direct effect on the lump sum amount. So Albaugh’s counsel, rightly or

5 Iowa Code section 85.48 (2017) states:
When partial commutation is ordered, the workers’ compensation
commissioner shall fix the lump sum to be paid at an amount which
will equal the future payments for the period commuted, capitalized
at their present value upon the basis of interest at the rate provided
in section 535.3 for court judgments and decrees.
“Nothing in this rule is to prevent waiver of the discount in subrule 6.3(2) by the
employer or insurance carrier.” Iowa Admin. Code § 876-6.3. “Insurance
companies sometimes waive the discount as part of a settlement.” John Lawyer
& James R. Lawyer, 15 Iowa Practice Series, Workers’ Compensation 2020-2021,
§ 27.2, p. 380 n.11 (Thomson Reuters 2020).
When an original notice and petition for commutation of remaining
future weekly benefits, either full or partial, is filed, the remaining
future benefits may be commuted to present dollar value. If the
remaining future weekly benefits are converted to a present value,
the present dollar value shall be determined as provided in this
subrule. A discount will be used to convert the value of remaining
future weekly benefits to present dollar value. The discount will be
based on a compound interest rate calculated pursuant to Iowa Code
section 668.13(3) and in effect on the date informal agreement
between the parties is reached for commutation and the number of
weeks of remaining future benefits. The interest rate used to
determine the discount shall be specified on the original notice and
petition for commutation filed for approval by the commissioner.
Iowa Admin. Code § 876-6.3(2). It seems very odd to us that the discount can be
waived altogether, but that the interest rate cannot be negotiated by the parties.
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wrongly, tried to negotiate the most favorable interest rate for his client. The parties

never got on the same page regarding the interest rate to be applied to the

commutation. Even if the interest rate were nonnegotiable, Albaugh was still in

control with the ability to take the offer or leave it. There was no meeting of the

minds on the issue.

With all applicable principles in mind, we cannot find that the parties ever

mutually assented to the same settlement agreement. We therefore affirm the

district court’s ruling on the parties’ motions for summary judgment.

AFFIRMED.