Maglin v. TschannerlMaglin v. Tschannerl
Lead Opinion
Plaintiff Beth Maglin appeals a Windham Superior Court order granting defendant Janaki Tschannerl’s motion for summary judgment on plaintiff’s personal injury claim for harm suffered in an automobile accident. The court held that a release signed by plaintiff after the accident barred her from seeking further relief. Plaintiff claims that the release should be voided because 1) the release violates the legislative remedy for rush releases, 12 V.S.A. § 1076; 2) there was a mutual mistake of fact concerning her injury; and 3) it is unconscionable to enforce the release. We affirm.
Defendant’s car hit plaintiff’s car from behind in a two-car accident on March 12, 1996. Plaintiff’s car did not sustain major damage, but plaintiff suffered from whiplash. Ten days after the accident, an agent from defendant’s insurance company, State Farm Insurance, visited plaintiff at her home. Plaintiff told the insurance agent she incurred “minor whiplash” from the accident. Plaintiff accepted the insurance agent’s $500 as compensation for the accident in exchange for her agreeing to release defendant from all possible future claims. The release stated:
For the sole consideration of $500.00 the receipt and sufficiency is hereby acknowledged, the undersigned hereby releases and forever discharges [defendant] from any and all claims ... causes of action or suits of any kind or nature whatsoever, and particularly on account of all injuries, known and unknown, both to the person and the property, which have resulted or may in the future develop from an accident which occurred on or about the 12th day of March, 1996.
(Emphasis added.) At the time, plaintiff knew she sustained injury, but believed the $500 to be reasonable compensation for what she viewed as a minor accident with minor injuries. Plaintiff did not consult a physician about her injuries or an attorney about possible claims against defendant. Nevertheless, she signed the release.
Shortly after signing the release, plaintiffs symptoms worsened. She experienced significant neck pain, headaches, nausea, pain in her arms, numbness in her hands, and she could not stand, sit, or lie down comfortably. Plaintiffs chiropractor subsequently diagnosed her symptoms as stemming from whiplash. Her chiropractor explained to her that whiplash injuries are commonly misunderstood and underestimated until serious symptoms occur. Plaintiff incurred medical expenses in excess of $10,000 for treatment for her whiplash injury and other symptoms. These expenses were incurred through numerous diagnostic imaging techniques together with successive chiropractic, physical, and cranial sacral therapy sessions.
Plaintiff filed a complaint for personal injury damages alleging that defendant’s negligence resulted in severe personal injuries to plaintiff. Defendant and plaintiff filed cross-motions for summary judgment. At issue was whether the release signed by plaintiff barred defendant’s liability for damages. In granting defendant summary judgment, the court concluded that the release is valid and enforceable. The court stated that plaintiff’s mistake as to the future consequences of a known injury is not a mutual mistake of fact that can void the contract. The court therefore barred plaintiff’s claims. This appeal followed.
On appeal, plaintiff contends that the release is unenforceable because it violates
Defendant counters that plaintiff cannot raise an argument based on 12 V.S.A. §§ 1076-1077 because she failed to raise it below. Even if this Court considers §§ 1076 and 1077, defendant contends that plaintiff failed to comply with the statute of limitations and other requirements of the statutes; thus, the release is enforceable. Defendant also maintains that there was no mistake of fact that should void the release because, at the time the release was executed, both parties knew of plaintiffs whiplash injury and plaintiff demonstrated an understanding of the terms of the release. Finally, defendant asserts that the release is not unconscionable because any inherent unequal bargaining power was not used coercively, and plaintiff was not subject to any undue pressure or duress.
Before we turn to the specific claims of plaintiff, we note that there is a substantial body of case law with facts similar to those presented here, and that plaintiff is correct that the trend is to avoid releases on the various legal grounds plaintiff has raised here. E.g., Newborn v. Hood,
We are unable to find, however, a decision avoiding a release in the face of a statutory remedy, the terms of which plaintiff has failed to meet. 12 V.S.A §§ 1076, 1077. Because our own Legislature has addressed plaintiff’s problem, and set the terms for avoidance of a release entered into shortly after personal injury, the decision for this Court is more problematic than for courts in other states faced with similar facts. We turn first, then, to the application of the statute and the impact of legislative policy on plaintiffs claims.
Section 1076 governs disavowal of releases for claims of personal injury or death. The statute provides in part that: “[a]n agreement entered into by a person or his legal representative within fifteen days after personal injury to him ... may be disavowed by such person or his legal representative within three years after making the agreement.” Id. In addition, 12 V.S.A. § 1077 further requires that to disavow the release plaintiff must return “any consideration received to the person who paid or delivered the same.”
Plaintiff failed to comply with either of the requirements imposed by the statutes to disavow the release. She did not meet the three-year limitation period, nor did she return the consideration received for the release. She concedes that she did not raise the arguments below. Plaintiff argues here that she satisfied the two requirements of the statutes when she filed the original case on December 15, 1997 and again on April 19, 2000 when she filed the appeal. Even if we were to consider an argument that was not raised below, cf. In re Palmer,
Moreover, in view of the statute, we are constrained, in the absence of extraordinary facts, to find a common law remedy for plaintiff. Plaintiff argues that the release should be avoided on the basis of mutual mistake of fact, because she was mistaken as to the extent of her injuries. Without getting into whether a valid distinction should be made between cases in which the plaintiff does not know of the injury that later manifests itself, and those in which plaintiff has a known injury, but misjudges the future consequences of it, plaintiff has to show, at the very least, that the mistake was mutual. But plaintiff showed only that she was mistaken as to her injuries. Without a mutual mistake of fact “one of the parties can no more rescind the contract without the other’s express or implied assent, than he alone could have made it.” Enequist v. Bemis,
The more probative question in this case is whether the circumstances of the agreement were so unconscionable that we should set aside the release, notwithstanding the clarity of its language and the lack of proof of a mutual mistake of fact. Plaintiff argues that the release should be disavowed for two reasons — the timing of the insurance agent’s visit and the fact that she had unequal bargaining power with the agent.
With respect to the timing issue, the Legislature has already made the value judgment that releases entered into within fifteen days may be set aside for that fact alone, as long as the release is rescinded within three years and the consideration returned. If we allowed plaintiff, who entered into a release on the tenth day following her accident, to rescind on this basis alone or to allow it to weigh heavily in determining unconseionability, we would simply be circumventing the terms of the statute.
The release may still be avoided, however, if an element of oppression infected the bargaining process or its result, but we have been clear that unequal bargaining power alone will not nullify a contract. Lamoille,
evidence of some overreaching on the part of one of the parties such as that which results from an inequality in bargaining power or under other circumstances in which there is an absence of meaningful choice on the part of one of the parties, together with contract terms which are unreasonably favorable to that party.
Davis v. M.L.G. Corp.,
Plaintiff complains that defendant’s insurance agent was in a more powerful bargaining position based on his greater experience with whiplash injuries. Even if this allegation were true, this power differential is not enough to void the release — the power imbalance must have been used to coerce the weaker party. Here, the contract is not unconscionable because there is nothing in the record to indicate that the insurance agent coerced plaintiff into signing the release, or that plaintiff believed that she had no choice but to sign the release. Plaintiff-produced no evidence showing any other circumstances, other than her desire to receive $500 for what she considered a minor injury, that compelled her to sign it. Indeed, in light of the nonpressing circumstances, plaintiff could have chosen not to sign the release at all, or she could have, at the very least, delayed signing the release until she had consulted a lawyer or doctor. As the court held in Morta v. Korea Insurance Corp.,
In sum, plaintiff produced no evidence of extraordinary circumstances that would compel us to overcome, on common law grounds, the effect of the release entered into by the parties. Summary judgment was properly granted. Bacon v. Lascelles,
material fact and that the movant is entitled to judgment as a matter of law.”).
Affirmed.
Notes
The dissent asserts that plaintiffs filing of the suit was sufficient to invoke its protections. At the very least, however, plaintiff had an obligation to mention the statute somewhere in her trial court filings, which she failed to do. The first time plaintiff attempts to invoke the specific protections of the statute was on appeal. The dissent’s suggestion that plaintiff be allowed to hold on to the consideration if and until she receives a favorable verdict larger than the amount received allows her to enjoy both the benefits of the consideration and the potential payoff of a lawsuit with no risk or consequences.
Dissenting Opinion
dissenting. Because of the overwhelming disparity of power between insurance companies and the individual, the difficulty of anticipating the long-term effects of human-tissue injuries and the potential for substantial hardship resulting from hasty settlements, our law provides that agreements for compensation entered into within fifteen days of injury “may be disavowed ... within three years after making the agreement.” 12 V.S.A. § 1076; see generally Annot., Modem Status of Rules as to Avoidance of Release of Personal Injury Claim on Ground of Mistake as to Nature and Extent of Injuries,
Significantly, however, the law is silent on the means required for communicating a decision to “disavow” such an agreement, as well as on the definitive moment required for “tendering” the compensation paid. Although the statute provides for tender “when an agreement is disavowed,” “when” is a notoriously imprecise modifier. See Webster’s New Int’l Dictionary 2910 (2d ed. 1955) (“when” includes “[a]t the time that, during, or after the time that”). Must the claimant “tender” payment at precisely the same moment as the disavowal? May tender be accomplished a day later? A month? A year?
Despite the statutory silence, the Court holds that strict compliance with the statutes is required to invoke their protection. This holding is doubly puzzling. First, despite its holding, the Court provides no guidance as to how to comply with the notice requirements of a statute that contains no notice requirements, or how to timely tender the “consideration received” in the absence of clear time constraints. The Court would appear to require something like a written letter to the insurer, stating as follows: “I hereby disavow the agreement entered on such and such a date under the authority of 12 V.S.A. § 1077; tender of payment previously received is hereby enclosed.” But the fact of the matter is that the statute does not say this; it simply says that the agreement “may be disavowed” and that “when an agreement is disavowed” the payment shall be tendered.
The puzzle is compounded by the Court’s rejection out of hand of the seemingly reasonable statutory construction that would find the agreement to have been “disavowed” when the insurer is put on notice that the plaintiff has determined to set aside the settlement and seek additional compensation. To disavow is to “deny responsibility for,” “to disclaim,” “to disown.” See Webster’s, supra, at 741. Why is it not reasonable to conclude that plaintiff in this case put defendant on notice that she was disavowing or disowning the settlement when she filed a lawsuit — well within the three-year time period — seeking damages from the accident totaling $100,000? Is there any doubt that defendant, at that moment, became fully aware that plaintiff was seeking to disavow the agreement? Defendant immediately invoked the agreement in its answer to the complaint, and subsequently relied on its terms in moving for summary judgment. In her opposition to the motion, moreover, plaintiff explicitly argued that the agreement should be “set aside.”
All of this activity occurred well within the required three-year period of the statute. Why, then, was it insufficient to put defendant on notice that plaintiff was seeking to disavow the agreement? The Court’s only answer is that plaintiff had not actually “invoked the statute” in her pleadings.
Nor does the Court indicate when precisely the tender of-compensation must be received, noting only that plaintiff failed to return it “as required.” Id. Presumably the purpose of returning the money is to prevent the plaintiff from benefitting under an agreement that she has rescinded. See, e.g., Watson v. Bugg,
Although reason and common sense appear to support these alternative readings of the statutes, we need not rely exclusively on such reasoning. In the face of statutory silence or uncertainty, we may consult the common law, of which there is a substantial body addressing the rescission of such agreements. See Swett v. Haig’s, Inc.,
The courts, therefore, have been very liberal in allowing the releaser to meet any requirement of notice of rescission or of timely tender back of the consideration. It is generally held that bringing suit for the later discovered injuries is sufficient notice and that a tender even after the action has been filed is timely, although it is usually stated that it must be prior to trial. It has been recognized, and rightly so, that the important question is whether the releasee has been prejudiced by any delay.
Id. at 589 (emphasis added); see also H. Havighurst, Problems Concerning Settlement Agreements, 53 Nw. U. L. Rev. 283, 311-13 (1958) (noting that numerous courts have allowed plaintiffs to return compensation paid under settlement agreements at or during trial).
This Court has consistently held that remedial statutes should be liberally construed in favor of those who are intended to benefit from the legislation. See, e.g., Muzzy v. Chevrolet Div., General Motors Corp.,