Lead Opinion
Opinion
Plaintiff Ronald Lee Cline was severely injured when his motorcycle collided with a turning car driven by a teenager with a provisional license. He settled with the driver and the driver’s parents for their $100,000 insurance policy limit. Cline executed a release that released the driver and his parents “and any other person, corporation, association, or partnership responsible in any manner or degree” for the accident.
Cline subsequently sued defendant Berniece Delores Homuth, the driver’s grandmother and the sole adult in the car with him at the time of the collision, for negligent supervision. Homuth raised the release as an affirmative defense. She moved for summary judgment; the trial court denied the motion. A court trial followed, centering on the validity of the release and whether Homuth was an intended third party beneficiary of the release. Relying on Rodriguez v. Oto (2013)
Cline appeals from the judgment in favor of Homuth. He contends the extrinsic evidence demonstrates that Homuth is not an intended beneficiary of the release. As we explain, Cline failed to provide sufficient evidence to counter Homuth’s showing that she was an intended beneficiary of the release. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The Accident
On April 9, 2007, Colby Homuth (Colby), who had a provisional driver’s license requiring immediate supervision by an adult (Veh. Code, § 12814.6), was driving his parents’ car on O’Byrnes Ferry Road. Homuth, his grandmother, was the sole passenger in the car. As Colby turned left onto Pheasant Run Drive, Cline’s motorcycle approached and struck the back of the car. The traffic collision report concluded Colby caused the accident. Cline was severely injured, suffering numerous broken bones.
Settlement and Release
Colby’s parents, Wade and Leslie Homuth, had automobile insurance with California State Automobile Association (CSAA). The policy’s limit for bodily injury claims was $100,000 per person. Cline’s attorney, Gerald Emanuel, made a demand to Angelo Rodriguez, CSAA’s claims representative, for the policy limit.
Rodriguez knew Cline’s medical expenses exceeded the policy limits and believed payment of the policy limit was appropriate. On March 26, 2008, Cline signed a settlement agreement with CSAA. The “Release of All Claims” was a printed form with blanks for the name of the party signing and the parties released, as well as the amount of compensation and the date and location of the accident. The portions filled in were in all capitals. The release stated in part: “To be executed by RONALD CLINE. The undersigned do(es) hereby acknowledge acceptance of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) Payable to RONALD CLINE & GERALD E. EMANUEL AS ATTORNEY AND MEDICARE which payment is accepted in full compromise settlement and satisfaction of and as sole consideration for the final release and discharge of all actions, claims and demands whatsoever, that now exist, or may hereafter accrue against LESLIE & WADE HOMUTH; COLBY HOMUTH and any other person, corporation,
The Lawsuit
Cline filed a lawsuit against Homuth for damages based on negligent supervision. She moved for summary judgment, contending she was released from all claims by the unambiguous “any other person” language of the release.
The trial court denied the motion, finding a triable issue of fact as to whether the release was intended to benefit Homuth. The court found Cline had submitted evidence showing he had no such intent. This evidence included declarations from Cline and his attorney stating that he would not have signed the release if it had named Homuth as a releasee, that neither Cline nor his counsel intended to release Homuth, and that although Homuth was known by the parties to the settlement, she was not named in the release.
Homuth moved to have the trial court determine the legal effect of the release. The court granted that motion.
The Trial
Portions of Rodriguez’s deposition were admitted at trial, as he was unavailable. Rodriguez testified he needed management approval to change the terms of the release; in 13 years working in claims, he had seen changes to the form only once or twice. He had completed the blanks on the release form and chose to include only the named and covered insureds, Wade, Leslie. and Colby Homuth. He described the form release: “In the context of the language that’s used in the industry we are releasing the world, if you will.” He also described the language as “pretty self-explanatory.” Rodriguez explained he did not consider adding Homuth’s name to the release because she was not a named or covered insured. His duty was only to the insureds and he had authority to settle only as to them. There was no discussion, negotiation, or consideration of an intention to release others or to add Homuth’s name to the release. Rodriguez was aware that Homuth was in the car at the time of the accident.
Emanuel testified he investigated a possible claim against the state or county for the road construction and intended to investigate Homuth. He never expressed an intention to release Homuth, but Cline would not have signed the release if Homuth had been named. Emanuel did not believe the boilerplate release applied to Homuth. He was aware of her potential liability when the release was signed.
Cline testified he signed the release while on heavy medication and did not really understand it. He intended to sue Homuth, the city, and the construction site. He had discussed the release with a friend and believed he could still pursue others. He told his attorney other people were responsible for the accident, and did not intend to release those not named. He would not have signed the release if it had named Homuth. Cline had no documents showing his intent to sue others.
Clinton Miller testified as an expert on insurance claims. He testified “almost everything” in insurance companies is boilerplate, and that a claimant could not modify a release; it was offered on a take-it-or-leave-it basis. Miller attempted to testify that the industry standard was that only those persons specifically named in the release were actually released, but the trial court sustained Homuth’s objections to this testimony.
The trial court, relying on Rodriguez, supra,
I
The Law
A. Third Party Beneficiaries and Contract Interpretation
A release given in good faith to a tortfeasor does “not discharge any other such party from liability unless its terms so provide.” (Code Civ. Proc., § 877, subd. (a).) To determine whether the “ ‘terms so provide,’ ” we apply the rules governing contract interpretation. (Hess v. Ford Motor Co. (2002)
A third party may enforce a contract that is expressly made for his benefit. (Civ. Code, § 1559.) The third party need not be named in the contract, but he has the burden to show the contracting parties intended to benefit him. (Garcia v. Truck Ins. Exchange (1984)
A contract must be interpreted to give effect to the mutual intention of the parties at the time of contracting. (Civ. Code, § 1636.) The intention of the parties to a written contract is to be determined from the writing alone, if possible; subject, however, to other statutory rules of contract interpretation. (Id., § 1639.) These rules include the following. “A contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates.” (Id., § 1647.) “However broad may be the terms of a contract, it extends only to those things concerning which it appears that the parties intended to contract.” (Id., § 1648.) The written provisions of the contract prevail over printed portions. (Id., § 1651.)
“As has been recognized by our Supreme Court, it is often impossible for the parties to be precise in expressing their intent in a written document. Therefore, even if the trial court personally finds the document not to be ambiguous, it should preliminarily consider all credible evidence to ascertain the intent of the parties. ‘The test of whether parol evidence is admissible to construe an ambiguity is not whether the language appears to the court to be unambiguous, but whether the evidence presented is relevant to prove a
B. Third Party Beneficiaries of a General Release — Case Law
Many releases, such as the one involved here, are general releases and have broad language purporting to release every person or entity. As Witkin has noted, “The courts have differed regarding the effect of a general release.” (5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 73, p. 146.)
In General Motors Corp. v. Superior Court (1993)
In another personal injury case arising from an automobile accident, a general release applied to the driver’s employer. (Lama v. Comcast Cablevision (1993)
In Appleton, supra,
The issue of the scope of a general release where an injured party settles with an alleged tortfeasor’s insurer, signing a release that ostensibly releases everyone, and then proceeds against another alleged tortfeasor who raises the general release as a defense arose again in Neverkovec v. Fredericks (1999)
Although the Neverkovec court spoke of extrinsic evidence, the major piece of evidence that created a doubt as to the parties’ intention, and thus a triable issue of fact, was another provision of the release. That provision required the plaintiff to repay any amounts that anyone chargeable with liability for the plaintiff’s injuries might be compelled to pay in the future. (Neverkovec, supra,
The Hess court found Hess offered no reasonable alternative construction of the broad language of the release and failed to allege any ambiguity so his only defense to Ford’s claim was mutual mistake. (Hess, supra,
Justice Kennard’s concurring opinion, joined by two other justices, offered a different analysis, but reached the same result. It found that Ford failed to carry its burden to show it was a third party beneficiary of the release. (Hess,
“[T]he question of how much evidence a defendant must present to establish a right to summary judgment under a global release by the plaintiff of ‘all persons’ exposed to liability for his personal injuries” was addressed again recently in Rodriguez, supra,
As we have described ante, the cases vary as to their approach in determining the scope of a general release and what evidence is necessary to obtain or defeat summary judgment on the basis that the general release bars a claim against another tortfeasor. It is consistently clear, however, that the law permits a plaintiff who opposes enforcement of a general release by a
II
Analysis
Unlike General Motors, Appleton, Neverkovec, and Rodriguez, this case comes to us not after a motion for summary judgment, but after a court trial at which extrinsic evidence was heard (although later “stricken”). Unlike in Rodriguez, Homuth did not rely solely on the language of the release, but also offered excerpts of the deposition of Rodriguez in which he stated he understood the release to cover “the world,” the language was “self-explanatory,” and that there was no discussion, negotiation, or consideration as to whether the release applied to Homuth. We need not take sides in the dispute between the Rodriguez and Neverkovec courts (and the Hess majority and concurring opinions) and decide whether the language of a general release is sufficient alone to establish a prima facie case for enforcement of the release by a third party. Here, as we explained ante, Homuth offered additional evidence which was properly heard. Therefore, we consider it, in addition to the general release.
Cline contends the release itself was ambiguous as to both its temporal and geographic scope. The release refers to any “accident, casualty or event which occurred on or about the 9TH day of APRIL 2007 at or near STR: O’BYRNES FAIRY [sic] RD CITY, COUNTY: COPPEROPOLIS, CALA-VERAS ST: CA.” Cline contends the “on or about” language makes the release uncertain as to whether it covers a subsequent act of medical
Cline contends the language of the release shows it was intended to affect the liability of only those specifically named. After specifying the time and place of the accident, the release states: “for which the undersigned claims the above named persons or parties are legally liable in damages which legal liability and damages are disputed and denied . . . .” Cline reads that language to mean the release covers only the named parties. We disagree with Cline’s reading. This language merely provides additional details about the covered event; it does not narrow or limit its coverage.
Cline contends the deposition testimony of Rodriguez as to releasing the world is ambiguous and confusing because he conceded the release may not apply if an ambulance taking Cline to the hospital was involved in an accident, because that event would be a separate occurrence. Again, we disagree. Rodriguez’s concession that the release may not apply to an accident involving the ambulance speaks to what events the release covers, not what persons it covers.
Cline next contends the release is ambiguous because Homuth’s name was not written directly into the form release with the other three members of her family. Relying on Appleton, supra,
Cline points to Rodriguez’s testimony that Homuth was not named in the release because he had a duty to protect only named and covered insureds. Cline interprets this testimony as showing that Rodriguez intended to release only Colby, Wade and Leslie Homuth. Rodriguez, however, also testified he
Cline also relies on the disparity between the amount of the settlement, $100,000, and the amount of his damages. In Hess, our Supreme Court opined a small settlement of $15,000 for an accident that rendered Hess a paraplegic arguably suggested the release was not intended to cover Ford. (Hess, supra,
The remaining evidence that Cline offers is his testimony and that of his attorney that they did not intend to release Homuth and that Cline would not have signed the release had he understood it to release her. Neither Cline nor his attorney, however, disclosed their subjective intent regarding Homuth and the scope of the release to Rodriguez or anyone else representing Colby or otherwise involved in the release. This evidence of undisclosed subjective intent of Cline and his attorney is insufficient to establish that the parties intended that Homuth be excluded from the release.
In Neverkovec, supra,
In the alternative, Cline argues there was a mutual mistake as to the scope of the release, as in Hess. As we have explained, Cline has failed to show a mistake on the part of Rodriguez, CSAA, or Colby and his parents. The only mistake Cline has shown is the unilateral mistake of Cline and his attorney. Since that mistake was neither known nor suspected by the other parties to the release, it is insufficient to obtain reformation of a contract. (Civ. Code, § 3399; Cedars-Sinai Medical Center v. Shewry (2006)
DISPOSITION
The judgment is affirmed. Homuth shall recover costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
Notes
Here, after hearing all the extrinsic evidence, the trial court found the release was unambiguous and granted Homuth’s motion to strike the extrinsic evidence. The trial court nevertheless summarized this evidence in its decision. Therefore, we presume the trial court determined Cline failed to present sufficient evidence to overcome Homuth’s evidence that the parties intended the release to benefit Homuth as a member of the class of “all other persons.” Because we conclude the trial court was correct in its ultimate determination, we need not address Cline’s argument that it erred in striking the extrinsic evidence.
Concurrence Opinion
Concurring. — Although unnecessary to our disposition here, I feel compelled to echo the concerns expressed by my colleagues in other districts regarding the use of “overly broad, loose terms in release agreements.” (Neverkovec v. Fredericks (1999)
The widespread use of global “all other persons” releases raises policy concerns as to fairness. (See Rodriguez v. Oto (2013)
As others have written, counsel should “study the language of the release carefully to ascertain whether it may impair claims the plaintiff should