Iqbal v. Ziadeh
10 Cal. App. 5th 1
| Cal. Ct. App. | 2017Background
- Iqbal was severely injured when a vehicle at Yosemite Auto ran over him; he sued Yosemite Auto, its owner Kaid, and Jimmy’s Tow (the former defendants).
- The parties settled: Yosemite Auto and Kaid paid policy limits and Iqbal executed a general release that expressly released the former defendants and their “affiliates” and other persons with whom they "are now or may hereafter be affiliated."
- More than three months later Iqbal sued Ziadeh, the landowner who had leased the property to Yosemite Auto and left several consigned vehicles (including the accident vehicle) for Yosemite Auto to sell.
- Ziadeh moved for summary judgment, arguing he was protected by the prior release as an “affiliate”; he submitted a declaration from the former defendants’ counsel saying he intended the release to cover persons like Ziadeh.
- Iqbal opposed, arguing the release did not reasonably encompass Ziadeh, that extrinsic evidence showed he was not a contemplated beneficiary, and that counsel’s undisclosed intent was irrelevant; the trial court granted summary judgment for Ziadeh.
- The Court of Appeal reversed, holding as a matter of law Ziadeh was not an “affiliate” within the common meaning of the release and therefore was not immunized by it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the release’s terms ("affiliate"/"affiliated") bar Iqbal’s suit against Ziadeh | The release is reasonably read to exclude Ziadeh; "affiliate" implies closer ownership/fiduciary/agency/dependent relationship, which Ziadeh lacked | The plain language of the release (and common definitions) covers any person "in close association or connection," including a less-than-ownership relationship like leasing or consignment | Court: "affiliate" unambiguously requires closer/dependent relationship (ownership, control, agency, subsidiary); Ziadeh’s arm’s-length lease/consignment did not make him an affiliate, so release does not bar suit |
| Admissibility/relevance of extrinsic evidence to interpret the release | Iqbal submitted correspondence and insurer statements showing Ziadeh was not known or intended to be covered; this supports denying summary judgment | Ziadeh submitted his counsel’s declaration (who drafted the release) claiming subjective intent to cover unknown persons like Ziadeh | Court: Extrinsic evidence admissible only if contract is reasonably susceptible; here objective contract language and other provisions (list of specific protected classes; confidentiality) show intent not to protect unknown third parties; counsel’s undisclosed subjective intent is irrelevant |
| Standard for third‑party beneficiary/enforcement of a general release | The release must be interpreted objectively; literal benefit to a third party is insufficient without contracting parties’ intent to benefit that party | Ziadeh contends the release’s language unambiguously makes him an intended beneficiary/affiliate, so he made a prima facie case | Court: Contract interpretation governed by objective intent; the release’s specific enumerated categories control and do not include Ziadeh; because admissible extrinsic evidence is not in conflict, the contract is construed as a matter of law in favor of Iqbal |
| Appropriateness of summary judgment | Iqbal argued triable issues existed about intent and scope of release | Ziadeh argued no triable issue; release barred suit as a matter of law | Court: Summary judgment for Ziadeh was erroneous; undisputed admissible evidence shows Ziadeh is not an affiliate, so summary judgment is reversed and case remanded |
Key Cases Cited
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (summary judgment standard and burdens)
- Guz v. Bechtel National, Inc., 24 Cal.4th 317 (consideration of evidence on summary judgment)
- Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co., 69 Cal.2d 33 (extrinsic evidence admissibility; contract reasonable susceptibility test)
- Hess v. Ford Motor Co., 27 Cal.4th 516 (contract interpretation principles)
- Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc., 109 Cal.App.4th 944 (objective intent controls; undisclosed subjective intent irrelevant)
- Neverkovec v. Fredericks, 74 Cal.App.4th 337 (third‑party enforcement of releases)
- Powers v. Dickson, Carlson & Campillo, 54 Cal.App.4th 1102 (extrinsic evidence admissibility)
- Winet v. Price, 4 Cal.App.4th 1159 (extrinsic evidence and contract interpretation)