747 S.E.2d 178
S.C.2013Background
- Witherspoon sued Ryan McGuire (a minor) and his parents for injuries from a 2003 drunken-driving incident; Witherspoon did not sue the Silver Dollar bar. Progressive insured the McGuires and paid $180,000 of a $200,000 settlement.
- Parties executed a "Covenant Not to Execute" on April 20, 2007 (First Covenant) that reserved claims against other parties and expressly stated it was not a release of others.
- The federal court dismissed the tort action on May 8, 2007; by then Witherspoon’s UIM claim had been resolved.
- After dismissal, parties executed a Second Covenant (July 31, 2007) acknowledging a potential claim against the Silver Dollar and an intent to pursue contribution, but it likewise did not expressly release or extinguish Silver Dollar’s liability and was signed after dismissal.
- Progressive sued Silver Dollar under South Carolina’s UCATA seeking contribution; Silver Dollar moved for summary judgment arguing Progressive failed to extinguish Silver Dollar’s liability as UCATA requires.
- The trial court granted summary judgment for Silver Dollar; the Supreme Court affirmed, holding UCATA precluded Progressive’s contribution claim and reformation was not appropriate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether extrinsic evidence may show parties intended to extinguish Silver Dollar’s liability so Progressive can seek contribution | Progressive: parol evidence (affidavit, Second Covenant) shows mutual intent and scrivener’s error; permit extrinsic evidence/reform instrument | Silver Dollar: First Covenant is unambiguous; extrinsic evidence cannot vary plain terms; no extinguishment occurred | Court: Contract construction rules bar extrinsic evidence only when unambiguous, but reformation claims allow parol evidence; however Progressive did not meet reformation requirements here |
| Whether Progressive preserved contribution rights under UCATA §15-38-40(D)(1) (payment within SOL) | Progressive: settlement preserved contribution rights (argues relation back/reformation) | Silver Dollar: no payment was made within statute of limitations; (D)(1) inapplicable | Court: (D)(1) inapplicable—no payment made before SOL expired |
| Whether Progressive preserved contribution rights under UCATA §15-38-40(D)(2) (agreement while action pending) | Progressive: Second Covenant corrects First and should relate back to while action was pending | Silver Dollar: Second Covenant executed after dismissal, so agreement was not made while action was pending | Court: (D)(2) not satisfied because any agreement extinguishing Silver Dollar’s liability was not made while the action was pending; dismissal occurred before correction |
| Whether equitable reformation can be used to cure the omission and revive a contribution claim after dismissal | Progressive: mutual mistake shown; reformation should relate back to First Covenant date and preserve contribution rights | Silver Dollar: reformation would unfairly impose liability after Silver Dollar’s liability had lapsed and would improperly add a new party to the settlement | Court: Reformation requires clear and convincing proof and cannot be used to resurrect contribution after the tort action was dismissed and Silver Dollar’s exposure had ended; reformation denied |
Key Cases Cited
- Bowers v. S.C. Dep't of Transp., 360 S.C. 149, 600 S.E.2d 543 (Ct.App.2004) (plainly worded releases control without resort to extrinsic evidence)
- G & P Trucking v. Parks Auto Sales Service & Salvage, Inc., 357 S.C. 82, 591 S.E.2d 42 (Ct.App.2003) (statute of limitations running does not equate to liability being extinguished by a settlement)
- C.A.N. Enters., Inc. v. S.C. Health & Human Servs. Fin. Comm’n, 296 S.C. 373, 373 S.E.2d 584 (1988) (contract interpretation principles govern and extrinsic evidence inadmissible when language is unambiguous)
- Crosby v. Protective Life Ins. Co., 293 S.C. 203, 359 S.E.2d 298 (Ct.App.1987) (reformation available for mutual mistake; parol evidence admissible to prove mistake)
- Independence Nat'l Bank v. Buncombe Prof'l Park, L.L.C., 402 S.C. 514, 741 S.E.2d 572 (Ct.App.2013) (equity may not add or substitute parties by reformation to create a new contract)