THE STANDARD FIRE INSURANCE COMPANY, A SUBSIDIARY OF TRAVELERS INSURANCE, Plaintiff and Appellant,
CONTINENTAL RESOURCES, INC., Defendant and Appellee.
CONSIDERED ON BRIEFS NOVEMBER 7, 2016
FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT HUGHES
COUNTY, SOUTH DAKOTA THE HONORABLE MARK BARNETT Judge
J. VON WALD of Boyce Law Firm, LLP Sioux Falls, South Dakota
Attorneys for plaintiff and appellant.
MICHAEL F. SHAW of May, Adam, Gerdes & Thompson LLP
Pierre, South Dakota Attorneys for defendant and appellee.
Standard Fire Insurance Co. appeals from a circuit court
order dismissing its case against Continental Resources Inc.
Standard Fire sued Continental Resources for reimbursement or
in the alternative subrogation of workers' compensation
benefits paid to an employee between 2009 and 2013. The
circuit court dismissed the case pursuant to SDCL
15-6-12(b)(5), finding that the terms of a settlement
agreement barred further litigation and that res judicata
applied. We reverse and remand.
and Procedural History
Dale Denzin sustained a work-related injury while employed at
one of Koch Industries' oilfields. The accident occurred
on March 23, 1983, and crushed Denzin's pelvis. Standard
Fire, a subsidiary of Travelers Insurance, provided Koch
Industries workers' compensation insurance and paid
Denzin temporary total disability and permanent partial
disability (PPD) benefits. Denzin resumed work in January
1984. In 1995, Continental Resources acquired Koch
Industries' interest in the oilfield and became
Denzin's employer. Denzin underwent hip-replacement
surgeries in 2009 and 2010. Standard Fire agreed to pay for
the operations. Following the surgeries, Denzin received a
permanent partial impairment rating of 50% in both the
lower-right and lower-left extremities.
In May 2012, Denzin filed a workers' compensation
petition against Continental Resources with the Department of
Labor and Regulation. Denzin sought PPD benefits related to
his hip-replacement surgeries. Under SDCL 62-4-6, Denzin
qualified for the maximum weekly benefit of $620 per week and
was entitled to 160 weeks of compensation, totaling $99,200
in permanent partial impairment payments.
On June 22, 2012, Continental Resources filed a third-party
petition against Koch Industries and Standard Fire.
Continental Resources claimed that Koch Industries-as
Denzin's employer at the time of the accident-was
responsible for any benefits that were then due and owing.
Standard Fire answered and denied any obligation to pay
Denzin additional workers' compensation benefits,
claiming that Continental Resources was responsible for
payment of any such benefits.
In December 2013, Denzin, Standard Fire, and Continental
Resources entered into a settlement agreement. The agreement,
entitled "Settlement Agreement and Dismissal of Petition
for Hearing," reprised the foregoing facts and
stipulated that Continental Resources would accept
Denzin's claim, pay a lump sum of $99,200, and dismiss
its third-party action against Koch Industries and Standard
Fire. The agreement further provided that "the parties
agree to settle this matter without further
litigation[.]" The Department of Labor and Regulation
approved the agreement, dismissed Continental Resources'
claim against Koch Industries and Denzin's workers'
compensation petition for hearing, and ordered Continental
Resources to pay Denzin within ten days.
On November 10, 2014, Standard Fire commenced a civil action
against Continental Resources seeking reimbursement or
subrogation for workers' compensation benefits paid to
Denzin between 2009 and 2013. Standard Fire claimed that it
paid $82,276.26 in medical bills on Denzin's behalf and
$4,676.20 in indemnity benefits directly to Denzin. Standard
Fire sought reimbursement pursuant to SDCL 62-7-38 for these
amounts, which totaled $86,952.46. Standard Fire alleged that
Continental Resources stipulated in the settlement agreement
that Denzin's work duties after Continental
Resources' acquisition of the oilfield in 1995
contributed independently to Denzin's need for medical
treatment in 2009 and beyond. Standard Fire also asserted an
alternative claim for equitable subrogation. Continental
Resources answered, denying these claims and asserting
various affirmative defenses. Continental Resources filed a
motion to dismiss pursuant to SDCL 15-6-12(b)(5) on October
9, 2014, arguing that res judicata barred Standard Fire's
claims and that any equitable claims were "barred by the
Settlement Agreement of the parties, Plaintiff's
available remedies at law, and Plaintiff's voluntary
payment of workers' compensation benefits to Dale
On January 19, 2016, the circuit court set the matter for
hearing. Because Continental Resources moved to dismiss under
SDCL 15-6-12(b)(5), the parties asked the court to consider
the complaint and attached pleadings and documents from the
administrative proceeding. The parties did not ask the
circuit court to take judicial notice of the administrative
record and agreed that there were no material facts in
After oral argument, the circuit court observed that both the
identity of the parties and the issues of "who's on
the risk, [and] who's got to pay for the hips" were
identical to those resolved in the settlement agreement. The
court noted that the agreement stated that "the parties
agree to settle this matter without further litigation,"
and deemed this language a "shotgun clause." The
court refused "to surgically interpret . . . 'this
matter' . . . as dissecting out disability from
medicals," which the court viewed as calling for "a
mighty fine scalpel." The court then orally granted
Continental Resources' motion to dismiss. It concluded
that the language of the settlement agreement resolved all
the issues concerning workers' compensation benefits
related to Denzin's hip surgeries, including the benefits
previously paid and the most-recently-requested impairment
benefits. In its written order, the court found that Standard
Fire's "case involves identical parties [and]
identical issues"; that the Department of Labor entered
a final judgment on the merits; that "both parties had a
full and fair opportunity to litigate the issues involved in
this matter"; and that "the parties entered into a
Stipulation settling the matter without reimbursement to
[Standard Fire] for any reason and agreed to a settlement
'without further litigation.'" The court
concluded that "the parties' settlement agreement
and [dismissal of ...