Castro-Trejo v. Moreno

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NOT DESIGNATED FOR PUBLICATION

No. 121,063

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

MIGUEL CASTRO-TREJO,
Appellant,

v.

YOLANDA MORENO

and

TRAVELERS PROPERTY & CASUALTY COMPANY OF AMERICA,
Appellees.


MEMORANDUM OPINION

Appeal from Workers Compensation Board. Opinion filed January 31, 2020. Affirmed.

Charles S. Scott Jr., of Shawnee, for appellant.

Thomas G. Munsell and Lindsay A. Schermer, of Morrow Willnauer Church, L.L.C., of Kansas
City, Missouri, for appellees.

Before WARNER, P.J., POWELL, J., and LAHEY, S.J.

PER CURIAM: Miguel Castro-Trejo brings this appeal after the Kansas Workers
Compensation Appeals Board affirmed the dismissal of his workers compensation claim
for not bringing his claim within the statute of limitations period. Castro-Trejo argues
equitable estoppel should prevent the dismissal of his claim because his failure to bring
the claim within the allotted time was due to him being in active settlement negotiations.
Finding no error, we affirm.
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FACTUAL AND PROCEDURAL BACKGROUND

On May 15, 2015, Castro-Trejo injured his elbow, wrist, and head when he fell
from the roof of a two-story house during the normal course of his employment. Castro-
Trejo was employed by Charlie Hernandez, a subcontractor of Yolanda Moreno, who was
insured by Travelers Property & Casualty Company of America. On July 8, 2015, Castro-
Trejo filed an application for hearing with the Division of Workers Compensation against
Moreno and Travelers. Then on August 11, 2015, Castro-Trejo filed an application for
hearing against his employer, Hernandez, and his employer's purported insurer,
Travelers. Ultimately, it was discovered that Hernandez did not have insurance, so under
K.S.A. 44-503(g), Moreno insured Castro-Trejo.

Nearly a year and a half passed with no prosecution by Castro-Trejo of his claim.
Then, in January 2017, he filed a notice of intent letter under K.S.A. 44-534a(a), which
requested that Moreno and Travelers provide workers compensation benefits within
seven days of service, and that if the benefits were not provided he would then file an
application for preliminary hearing to request an administrative law judge (ALJ) award
him benefits. No benefits were provided, but no application for a preliminary hearing was
made either.

Seven more months passed. On August 14, 2017, Castro-Trejo's counsel, Charles
S. Scott Jr., submitted a settlement offer to Hernandez' then-counsel, Randall W. Schroer,
to settle for $7,500 plus the payment of Castro-Trejo's medical bills. Schroer indicated he
lacked the authority to respond to the offer at that time, and he was preparing for trial and
probably would not have an answer until the next week. On September 13, 2017, Scott
inquired with Schroer about the status of the settlement offer. Schroer responded that he
did not have a response to the offer and that he was preparing for a trial in St. Louis next
week and would not be able to follow up at this time. Scott asserted that through the rest
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of 2017 and into 2018 he made several unanswered phone calls to Schroer about the
settlement and that those phone calls went unreturned.

Castro-Trejo did not file a motion for extension of time under K.S.A. 2018 Supp.
44-523(f)(1), nor did the claim proceed to a regular hearing, settlement hearing, or an
agreed award within the three-year statute of limitations period contained in K.S.A. 2018
Supp. 44-523(f)(1).

On October 11, 2018, three years after Castro-Trejo filed his two hearing
applications, Moreno and Travelers sought dismissal of Castro-Trejo's claim under
K.S.A. 2018 Supp. 44-523(f)(1). At the hearing on the dismissal request, Scott conceded
that the conditions for dismissal under K.S.A. 2018 Supp. 44-523(f)(1) were met but
argued that the failure to comply with the statute of limitations should be excused under
equitable estoppel because counsel believed ongoing settlement negotiations would
resolve the claim. In support, counsel pointed to the unreturned phone calls as signs of
active negotiations. At the time of the hearing Moreno and Travelers had new counsel,
who stated that she could not speak to the unanswered phone calls by former counsel, but
she argued the plain language of the statute should control and the claim should be
dismissed. Ultimately, the ALJ held that the conditions for dismissal under K.S.A. 2018
Supp. 44-523(f)(1) had been satisfied and denied Castro-Trejo's request to extend the
statute of limitations period under the doctrine of equitable estoppel. The claim was
dismissed with prejudice.

Castro-Trejo appealed the decision to the Kansas Workers Compensation Appeals
Board. The Board held the claim had been properly dismissed because it had not been
brought within the allotted time and Castro-Trejo had not moved to extend the time
limitation. The Board rejected Castro-Trejo's equitable estoppel argument, finding it did
not apply because Castro-Trejo was not "lulled by Travelers into a sense of security that
he need not protect his rights, including the need to file a motion to extend the three year
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time frame set forth in K.S.A. 2018 Supp. 44-523(f)(1)" and concluded: "There was no
proof of established intent by Travelers to deceive Castro-Trejo." The Board explained
that counsel for Travelers' response that he had no answer regarding a settlement did not
show any intent to deceive or that Travelers would abandon application of K.S.A. 2018
Supp. 44-523(f)(1) and that Castro-Trejo's attorney should disregard it. Moreover, the
Board found that counsel for Travelers' failure to respond to settlement offers established
that settlement negotiations were not ongoing. The Board stated that "[a]t best, there was
a monologue from Castro-Trejo; Travelers did not join in on any ongoing dialogue." The
Board affirmed the ALJ's dismissal of the claim.

Castro-Trejo now appeals to us.

WAS CASTRO-TREJO'S WORKERS COMPENSATION CLAIM PROPERLY DISMISSED?

On appeal, Castro-Trejo argues his workers compensation claim was improperly
dismissed. Specifically, he argues that the doctrine of equitable estoppel should extend
the three-year statute of limitations period under which he had to bring the claim because
his employer's active settlement negotiations deterred him from adjudicating the claim.
Moreno and Travelers respond that the plain language of the statute should control and
there is enough evidence to support the Board's finding that Castro-Trejo was not lulled
into inaction by their actions.

K.S.A. 2018 Supp. 44-556(a) directs that final orders of the Workers
Compensation Board are subject to review under the Kansas Judicial Review Act
(KJRA), K.S.A. 77-601 et seq., as amended. The standard of review will vary depending
upon the issue raised. See K.S.A. 2018 Supp. 77-621 (defining and limiting scope of
review of administrative decisions under KJRA).

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Castro-Trejo challenges the Board's factual finding that he was not lulled into
inaction by Moreno and Travelers. "Whether the acts, promises, or representations of
defendants lulled plaintiff into a sense of security, preventing him from filing suit before
the running of the statute is a question of fact." Klepper v. Stover, 193 Kan. 219, 222, 392
P.2d 957 (1964). We review a challenge to the Board's factual findings in light of the
record as a whole to determine whether the findings are supported to the appropriate
standard of proof by substantial evidence. K.S.A. 2018 Supp. 77-621(c)(7). K.S.A. 2018
Supp. 77-621(d) defines "'in light of the record as a whole'" as meaning

"the adequacy of the evidence in the record before the court to support a particular
finding of fact shall be judged in light of all the relevant evidence in the record cited by
any party that detracts from such finding as well as all of the relevant evidence in the
record, compiled pursuant to K.S.A. 77-620, and amendments thereto, cited by any party
that supports such finding, including any determinations of veracity by the presiding
officer who personally observed the demeanor of the witness and the agency's
explanation of why the relevant evidence in the record supports its material findings of
fact. In reviewing the evidence in light of the record as a whole, the court shall not
reweigh the evidence or engage in de novo review."

"Substantial evidence" refers to "'evidence possessing something of substance and
relevant consequence to induce the conclusion that the award was proper, furnishing a
basis [of fact] from which the issue raised could be easily resolved.'" Rogers v. ALT-
A&M JV, 52 Kan. App. 2d 213, 216, 364 P.3d 1206 (2015).

When determining fact questions, we are required to

"(1) review evidence both supporting and contradicting the agency's findings; (2)
examine the presiding officer's credibility determinations, if any; and (3) review the
agency's explanation as to why the evidence supports its findings. The court does not
reweigh the evidence or engage in de novo review. [Citations omitted.]" Williams v.
Petromark Drilling, 299 Kan. 792, 795, 326 P.3d 1057 (2014).
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Our review is unlimited as to questions involving the interpretation or construction
of a statute, and we owe no deference to the Board's interpretation or construction.
Fernandez v. McDonald's, 296 Kan. 472, 475, 292 P.3d 311 (2013).

K.S.A. 2018 Supp. 44-523(f)(1) states:

"In any claim that has not proceeded to a regular hearing, a settlement hearing, or
an agreed award under the workers compensation act within three years from the date of
filing an application for hearing pursuant to K.S.A. 44-534, and amendments thereto, the
employer shall be permitted to file with the division an application for dismissal based on
lack of prosecution. The matter shall be set for hearing with notice to the claimant's
attorney, if the claimant is represented, or to the claimant's last known address. The
administrative law judge may grant an extension for good cause shown, which shall be
conclusively presumed in the event that the claimant has not reached maximum medical
improvement, provided such motion to extend is filed prior to the three year limitation
provided for herein. If the claimant cannot establish good cause, the claim shall be
dismissed with prejudice by the administrative law judge for lack of prosecution."

Under the plain language of K.S.A. 2018 Supp. 44-523(f)(1), a claimant has three years
to either (1) proceed to a regular hearing, a settlement hearing, or an agreed award, or (2)
request an extension of time under which to proceed to a hearing for good cause shown.
If the claimant fails to do either of these things, the employer may request dismissal of
the claim. See Glaze v. J.K. Williams, 309 Kan. 562, Syl., 439 P.3d 920 (2019).

Here, Castro-Trejo conceded that he did not comply with the three-year statutory
time limit. He argues that his failure to comply with the time limit should be excused
under equitable estoppel because counsel believed ongoing settlement negotiations would
resolve the claim. The doctrine of equitable estoppel "can be applied to bar a party from
relying on the defense of the statute of limitations." Rockers v. Kansas Turnpike
Authority, 268 Kan. 110, 116, 991 P.2d 889 (1999).
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"Equitable estoppel is the effect of the voluntary conduct of a party whereby it is
precluded, both at law and in equity, from asserting rights against another person relying
on such conduct. A party seeking to invoke equitable estoppel must show that the acts,
representations, admissions, or silence of another party (when it had a duty to speak)
induced the first party to believe certain facts existed. There must also be a showing the
first party rightfully relied and acted upon such belief and would now be prejudiced if the
other party were permitted to deny the existence of such facts. There can be no equitable
estoppel if any essential element thereof is lacking or is not satisfactorily proved.
Estoppel will not be deemed to arise from facts which are ambiguous and subject to more
than one construction. A party may not properly base a claim of estoppel in its favor on
its own wrongful act or dereliction of duty, or for acts or omissions induced by its own
conduct. [Citations omitted.]" Gillespie v. Seymour, 250 Kan. 123, 129-30, 823 P.2d 782
(1991).

A party must sue within the period statutorily required even if liability has been
admitted and a proposal made to negotiate a settlement in the future has been made. See
Coffey v. Stephens, 3 Kan. App. 2d 596, 598, 599 P.2d 310 (1979).

"[F]raud, bad faith, or the intent to deceive is not essential to create an estoppel. Rex v.
Warner, 183 Kan. 763, 770-72, 332 P.2d 572 (1958). But using equitable estoppel to bar
application of the statute of limitations requires an element of deception. Klepper, 193
Kan. at 222. . . . [I]n order to be estopped by silence, the defendant must have the intent
to deceive, or at least a willingness that others would be deceived, and reason to believe
that others would rely on such silence. Turon State Bank, 235 Kan. at 790." Dunn v.
Dunn, 47 Kan. App. 2d 619, 639, 281 P.3d 540 (2012), rev. denied 296 Kan. 1129
(2013).

Kansas courts have applied the doctrine of equitable estoppel in workers compensation
cases. Marley v. M. Bruenger & Co., Inc., 27 Kan. App. 2d 501, 505, 6 P.3d 421, rev.
denied 269 Kan. 933 (2000).

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A review of the record reflects substantial evidence supporting the Board's finding
that Castro-Trejo was not lulled into inaction by Moreno and Travelers. There is no
evidence that Moreno and Travelers intended to deceive Castro-Trejo to alter his conduct.
Castro-Trejo filed his applications for hearings in July and August 2015. Nearly a year
and a half passed with inaction on Castro-Trejo's part. He then filed a notice of intent
letter which requested that Moreno and Travelers provide workers compensation benefits
within seven days of service; if the benefits were not provided then he would file an
application for preliminary hearing, which would request that an ALJ award him the
benefits. No benefits were provided, and no application for hearing was filed. Nearly
seven more months passed before any more action was taken in the case when Scott
emailed Moreno and Travelers' attorney in August 2017 to confirm Castro-Trejo's
settlement offer. Moreno and Travelers' attorney stated he lacked authority to accept any
settlement offer. Scott emailed again in September 2017 after hearing nothing regarding
the settlement offer, and opposing counsel said he did not have a response to the
settlement offer and that he would not "be able to follow up on this at this time" because
he was preparing for a trial. Scott then alleged that after this email exchange he made
several unanswered phone calls to opposing counsel seeking to get an answer on Castro-
Trejo's settlement offer, but these calls were unreturned.

Regarding the phone calls the Board found:

"Accepting as true the premise that the attorney for Travelers consistently
disregarded, ignored and would not return calls regarding settlement made by Castro-
Trejo's attorney, equitable estoppel still does not apply. Such conduct would establish
that settlement negotiations were not ongoing, such that Castro-Trejo should not have
been lulled into a sense of not protecting his rights under the Kansas Workers
Compensation Act. It seems incongruous to contend that settlement negotiations were
ongoing when they were not. At best, there was a monologue from Castro-Trejo;
Travelers did not join in on any ongoing dialogue."

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We agree. There is no evidence that Moreno and Travelers' counsel ever actively
or substantively engaged in settlement negotiations that would lull Castro-Trejo into a
sense of security. Any attempt to negotiate a settlement appears to be one-sided on
Castro-Trejo's part. As "[e]quity aids the vigilant and not those who slumber on their
rights," Rex v. Warner, 183 Kan. 763, 771-72, 332 P.2d 572 (1958), the lack of opposing
counsel's engagement in settlement discussions should have triggered Castro-Trejo to, at
the least, file for an extension of time to bring the case to a hearing under K.S.A. 2018
Supp. 44-523(f)(1). There was no deception on the part of Moreno and Travelers enough
to lull Castro-Trejo to sleep on his rights.

Castro-Trejo also argues there was deception and estoppel by silence present
because Moreno and Travelers' counsel had a duty to be honest and forthright with
Castro-Trejo's attorney under Kansas Rule of Professional Conduct 4.1 (2019 Kan. S. Ct.
R. 361) (truthfulness in statements to others). However, Castro-Trejo did not raise this
argument before the Board, nor did he raise it in his petition for judicial review. Issues
not raised below cannot be raised on appeal. See Wolfe Electric, Inc. v. Duckworth, 293
Kan. 375, 403, 266 P.3d 516 (2011).

Finally, Castro-Trejo argues that his delay in bringing his claim for hearing or
requesting an extension of time was reasonable to prevent unnecessary costly litigation.
However, like his argument surrounding KRPC 4.1, he did not raise this argument below,
and we will not address it.

The Board correctly declined to apply the doctrine of equitable estoppel and
properly upheld the dismissal of this case because Castro-Trejo failed to exercise his
rights within the time provided for in K.S.A. 2018 Supp. 44-523(f)(1).

Affirmed.