Opinion
We address in this case the 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 Lability for his personal injuries. Plaintiff contends that the trial court here erred by granting summary judgment because defendant relied solely upon the language of the release. According to plaintiff, a defendant in such a case must present additional evidence, extrinsic to the written agreement, of the parties’ “actual intent to benefit the third party.” We have concluded that insofar as some language in the cases might appear to support such a rule, it arises from, and should be confined to, the distinct issue whether a stranger to a contract, who stands to benefit from its performance, is an “incidental” beneficiary, rather than an “intended” one entitled to enforce its terms. In that context, extrinsic evidence is commonly necessary to ascertain the intended effect of the contract on the third party. It nonetheless remains the rule that where a clear intent can be ascertained from the parties’ written agreement, that agreement is at least prima facie evidence of their “actual intent.” Thus where its language unambiguously expresses a mutual intent to benefit a class of third persons, a member of that class makes a prima facie case of entitlement to its enforcement by proving the agreement—unless some cause to go outside the terms of the instrument, such as fraud, mistake, or latent ambiguity, appears. Here the only potentially sufficient cause suggested by the record is the mere possibility, raised belatedly by plaintiff, that a claims adjuster involved in negotiating the settlement might provide evidence that plaintiff did not expect the release to sweep as broadly as its language indicated. We find no abuse of discretion in the trial court’s denial of plaintiff’s tardy request for a continuance to explore that possibifity. Accordingly, we will affirm the judgment.
Background
On March 22, 2007, a vehicle operated by defendant Takeshi Oto collided with a vehicle operated by plaintiff Heriberto Ceja Rodriguez. Unbeknownst to plaintiff, Oto was driving from an event related to his employment with a
Plaintiff engaged counsel the day after the accident. Some seven months later, he settled with Hertz for $25,000, the limit of its coverage for bodily injury or death. As part of the settlement he executed a written release in favor of “Takeshi Oto and The Hertz Corporation, its employees, agents, servants, successors, heirs, executors, administrators and all other persons, firms, corporations, associations or partnerships (hereafter Releasees).”
On February 18, 2009, plaintiff filed this action against Oto and “Toshiba America,” alleging that Oto injured plaintiff through negligent operation of a vehicle, and that defendants, “and each of them,” negligently “owned, operated, used, drove, maintained, loaned and/or entrusted their motor vehicle,” so as to cause his injuries. Defendants answered the complaint, аsserting the release as an affirmative defense. On September 13, 2010, they moved for summary judgment on this basis. Plaintiff opposed the motion on the merits but also requested a continuance to conduct discovery. The trial court granted summary judgment, finding that the undisputed evidence established that the release explicitly exonerated Oto from further liability and that it also extended to Toshiba. The court found plaintiff’s undisclosed intentions insufficient to raise a triable issue of fact, and that the extrinsic evidence established no ambiguity. The court denied plaintiff’s request for a continuance, ruling that he had failed to show that such a continuance would enable him to discover facts essential to opposing the motion. The court duly entered judgment, and plaintiff brought this timely appeal.
I. Summary Judgment
A. Standard of Review
A summary judgment “shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c (section 437c), subd. (c).) A defendant seeking summary judgment meеts his burden by showing that an element of the plaintiff’s cause of action cannot be established or that a complete defense to the cause of action exists and cannot be successfully contested by the plaintiff. “Once the defendant . . . has met that burden, the burden shifts to the plaintiff ... to show that a triable issue of one or more material facts exists as to that cause of action or . . . defense . . . .” (§ 437c, subd. (p)(2).) “In determining whether the papers show that there is no triable issue as to any material fact the court shall consider all of the evidence set forth in the papers, except that to which objections have been made and sustained by the court . . . .” (§ 437c, subd. (c).) Because the existence of a triable issue of fact is itself a question of law, we review without deference a ruling by the trial court that the evidence presented on summary judgment raised no such issue. (See Denevi v. LGCC, LLC (2004)
Defendants’ showing in support of summary judgment consisted basically of the undisputed fact that plaintiff signed the release, coupled with the
In support of the third fact, plaintiff offered two letters from his counsel to Hertz Claims Management dated May 10, 2007, and October 15, 2007, and one letter from Don Beierschmitt of Hertz Claims Management to plaintiff’s counsel dated November 2, 2007, reflecting a policy limit demand of $25,000, and a settlement in that amount. To establish the fourth fact, plaintiff simply cited his own deposition statement that he did not believe hе was releasing Oto’s employer from liability when he signed the release.
B. Claim Against Oto
A release is an instrument by which the signing party (releasor) relinquishes claims or potential claims against one or more persons (releasees) who might otherwise be subject to liability to him. The existence of a valid release is a complete defense to a tort action against the releasee. (E.g., Donnelly v. Ayer (1986)
C. Claim Against Toshiba
The real point of controversy below and here is the effect of the release on plaintiff’s claims against Toshiba, which for purposes of this appeal may be deemed Oto’s employer (see fn. 1, ante). In the context of summary judgment, this question raises two subsidiary inquiries: (1) Was the evidence in support of the motion sufficient to constitute a prima facie showing, without factual controversy, that the release was effective to preclude a judgment against Toshiba? (2) If so, did plaintiff present evidence raising a triable issue of fact on that point, or establish his entitlement to a continuance to secure such evidence?
Plaintiff contends that a third party who is not named in a release, but who seeks to bring himself within its terms, bears the burden of showing that the lease applies to him—and, moreover, that “[t]his burden is ordinarily not met by simply relying on a literal interpretation of the contract.” (Italics omitted.) In addition, he asserts, a third party must present “evidence of the contracting parties’ actual intent to benefit the third party.” (Original italics.) Later he asserts that Toshiba failed to carry this burden because it presented no “testimony or other extrinsic evidence that would support the issue of the intention of the parties who actually made out the release.” We do not find this approach consistent with the governing principles of contract law; nor do we believe it is sustained by the authorities plaintiff cites.
A contract is “an agreement to do or nоt to do a certain thing.” (Civ. Code, § 1549.) As such it requires mutual assent. (Civ. Code, § 1565, subd. 2.) It is fundamental, however, that “there need not be a subjective meeting of the minds; in the absence of fraud, mistake, etc. . . . , the outward manifestation or expression of consent is controlling. In other words, mutual consent is gathered from the reasonable meaning of the words and acts of the parties, and not from their unexpressed intentions or understanding.” (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 116, p. 155, citation omitted, some italics added; see Civ. Code, § 1565, subd. 3 [contract requires consent “[c]ommunicated” by each party “to the other”].) In the absence of fraud, mistake, or another vitiating factor, a signature on a written contract is an objective manifestation of assent to the terms set forth there. (See Stewart v. Preston Pipeline Inc. (2005)
It is true that in determining the meaning of a contract, the dominant objective is to “give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” (Civ. Code, § 1636.) But in ascertaining the parties’ mutual intention, their agreed
There are of course many exceptions and qualifications to these principles. But the principles do not become inoperative merely because the contract is invoked by someone who was not a party to it. The question in such a case is whether the parties intended to confer enforceable rights on the party now asserting them. The governing substantive principle is that a nonparty who claims benefits under the contract is entitled to do so as long as the claimed benefit does not flow to him as a mere incident of the agreement, but is one the contracting parties intended to confer. (Rest.2d Contracts, § 302; see Civ. Code, § 1559 [contract “made expressly for the benefit” of third person “may be enforced by him at any time before the parties thereto rescind it”]; Spinks v. Equity Residential Briarwood Apartments (2009)
The rights of a third party beneficiary thus depend upon the intent of the contracting parties. (Hess v. Ford Motor Co. (2002)
Plaintiff’s contention to the contrary is traceable to judicial pronouncements which we believe have little proper bearing on language like that here, which unambiguously grants legal rights to one or more third parties. In a case of this kind, the contract either grants an intentional benefit to the person asserting rights under it, or it affords him no benefit at all. The language on which plaintiff’s argument depends arose in, and should be largely confined to, cases where performance of the contract may benefit the third party but leaves open the question whether this is an intended object of the agreement, such that recognition of enforceable rights in the third party is necessary to carry out the contracting parties’ intentions—or is merely incidental thereto, i.e., a collateral and inessential consequence of the transaction contemplated
Plaintiff’s chief authority is Neverkovec v. Fredericks (1999)
The Court of Appeal reversed. It acknowledged that “[r]elease agreements are governed by the generally applicable law of contracts.” (Neverkovec, supra,
We have no doubt that for a contract to confer rights on a third party, the contracting parties must intend it to do so. Beyond that we have grave reservations about the reliability of the above passage as a statement of the law applicable to a case where, as here, the contraсt expresses unambiguously an intent to confer rights on a class of persons including the third party asserting rights under the contract. The gravamen of the passage appears to be that even where the contract plainly expresses an intent to grant rights to the party claiming them, he can only establish those rights by presenting extrinsic evidence sufficient to show that the parties really meant what they said. Such an approach flies in the face of “the generally applicable law of contracts” (Neverkovec, supra,
For that reason we cannot subscribe to several other premises emanating from the above passage, as applied to an instrument such as the release before us. Thus we do not accept it as a general rule that, in a case such as this one, the rights of a third party cannot be determined without “considering] the circumstances of the contracting parties’ negotiations.” (Neverkovec, supra,
Nor can we endorse the corollary of the above premise, that a third party belonging to a class unambiguously exonerated by a release cannot ordinarily carry its prima facie burden of establishing standing under the release by relying solely on the language of the release. If a contract expressly and unambiguously grants rights to a class including the person now seeking to enforce it, proof of the contract makes out the third party’s threshold case. It is of course competent for the party opposing enforcement to establish grounds to avoid the apparent effect of the agreement. But there is no general burden on the person invoking the agreement to find a way to prove, as plaintiff insists, an “actual intent to benefit the third party.” (Original italics.) The agreement itself is such proof.
We recognize that to grant literal enforcement to a global “all persons” clause may raise questions concerning the fair and efficient allocation of social costs and the economical use of judicial resources. In the typical scenario, an injured claimant, often represented by counsel, negotiates
These possible consequences do not by themselves provide this court with grounds to deny effect to the plain language of the release before us. But they may suggest policy concerns deserving the attention of the Legislature
In Appleton v. Waessil (1994)
Perhaps most instructive of the cases in this area is the Supreme Court’s decision in Hess, supra,
After the Court of Appeal affirmed a judgment for the plaintiff, the Supreme Court granted review to consider, as pertinent here, “whether . . . language in an agreement releasing ‘all other persons, firms, corporations, associations or partnerships’ from liability encompasses a tortfeasor who was not a party to the settlement negotiations.” (Hess, supra,
Here plaintiff offered no evidence other than his own subjective intent, and even that evidence was strikingly vague at best. He cited only his own deposition testimony to support the assertion that “it was not the intention of either Hertz, Oto, or [himself] to release Toshiba from liability.” His testimony, however, consisted of negative answers to the questions, “Did you think you were, when you signed [the release], releasing others besides Mr. Oto and Hertz from responsibility?” and “When you signed [the release],
If anything, Toshiba’s omission from the release suggests that the adjuster himself was unaware of the facts potentially exposing Toshiba to liability, i.e., that Oto was driving from a company function when the accident occurred. In contrast to the adjuster in Hess, Hertz’s adjuster at least arguably had a reason to ensure that the release extended to the third party, namely that the coverage afforded to Oto had in effect been purchased by Toshiba under the blanket rental agreement between Toshiba and Hertz. Had Toshiba thereafter been exposed to liability to plaintiff, it might have taken the position that Hertz had breached a duty to Toshiba by failing to secure its release. Therefore, had the subject of Toshiba’s potential liability come up in the settlement negotiations, Hertz might well have refused to settle without an explicit release of Toshiba. This of course is speculation, but that is all the present record permits. Neither the failure to name Toshiba in the release, nor plaintiff’s deposition testimony about his subjective understanding of its effect, was sufficient to raise a triable issue of fact concerning thе mutual intention of the parties. So far as this record shows, that intention was fully and accurately expressed by the language of the release.
II. Failure to Grant Continuance
A. Background
The motion for summary judgment was filed on or about September 13, 2010, with a hearing date of January 20, 2011. In a declaration filed in opposition to the motion on about January 5, 2011, counsel for plaintiff stated
On January 20, at the hearing on the motion for summary judgment, counsel for plaintiff told the court that Beierschmitt had been located “last night.”
The court then asked plaintiff’s counsel, “[A]re you representing that you know what this individual would testify to and that he would testify that Hertz intended to exclude Toshiba?” Counsel replied that he сould not “make that representation.” He asserted that he had “contacted” Beierschmitt, but
Based on this last remark, defense counsel pointed out that the issue was the parties’ “disclosed intentions” and that since counsel’s own office was negotiating with Beierschmitt, “someone from Plaintiff’s counsel’s office could testify” if Beierschmitt had “said that . . . Hertz did not intend to include Toshiba.” Counsel also alluded to the unexplained delay between the lodging of defense objections to the proposed deposition and plaintiff’s request for a continuance. Plaintiff’s counsel pointed out that a continuance had been requested in the written opposition to summary judgment, but then addressed the more pertinent matter of delay in seeking to compel discovery, stating that when he filed opposition to the summary judgment motion, he “intended to file the motion [to compel] against Hertz, but we found a better way without having to stall off the Court with a discovery motion and its intended sanctions. I’d rather go to the—straight to the horse’s mоuth than spend my time pitting counsel against other counsel from what I consider to be frivolous objections. Let’s hear it from Byer Smith [sic] directly. We’re able to find him.”
Finding that plaintiff had failed to satisfy the “statutory requirements,” the court denied the request for a continuance and adopted its tentative ruling to grant the motion for summary judgment. The court’s written order, drafted by defense counsel, provided in pertinent part, “Plaintiff fails to show that he may be able to discover facts essential to opposing Defendants’ Motion for Summary Judgment. (See Code Civ. Proc., § 437c, subd. (h).)”
B. Discussion
As relevant here, section 437c, subdivision (h), provides, “If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication or both that facts essential to justify opposition may exist but cannot, for reasons stated, then be presented, the court
Where a party requests a сontinuance under the statute and satisfies its conditions, the determination whether to grant the request is vested in the discretion of the trial court, and will not be disturbed on appeal unless an abuse of discretion appears. (Knapp v. Doherty (2004)
No abuse of discretion appears here. First, plaintiff has offered no cogent justification for the extreme tardiness of his attempts to gather evidence concerning the understanding of Hertz’s agent Beierschmitt with respect to the scope of the release. The action was filed in February 2009 and defendants raised the release as an affirmative defense in their answer filed in May of that year. There is no suggestion that plaintiff was surprised by
Conspicuously absent from this account is any attempt to explain why counsel did not seek to discover the whereabouts of Mr. Beierschmitt in June or July of 2010, why he still failed to act for two months after the motion for summary judgment was filed, and why he did not discover prior to January of 2011 that he had the means to find the adjuster without resort to formal discovery. So far as the record shows, counsel simply neglected to investigate the subject until the evening before the motion for summary judgment was heard.
Nor was this the only deficiency in plaintiff’s showing in support of a continuance. It appears that the law office representing plaintiff in the court below also represented him throughout the settlement with Hertz. Yet no explanation was offered for counsel’s apparent failure to offer a basis from his own knowledge, or from plaintiff’s file, for inferring what the testimony of Hertz’s agent would be.
We need not attempt to determine whether the record’s silence on thesе points was the product of neglect, or of a deliberate attempt to create a factual lacuna as a basis for preventing or delaying the entry of summary judgment. The trial court was more than entitled to conclude that in view of this gap in the evidence, plaintiff had failed entirely to show that relief under section 437c, subdivision (h) would serve the interests of justice. The court thus acted within its discretion in denying the request for a continuance.
The judgment is affirmed.
Premo, J., and Elia, J., concurred.
Notes
The parties attribute no legal significance to the separate corporate personality of Oto’s employer, and often refer to the two entities indiscriminately as “Toshiba." We will do likewise.
The release stated, in pertinent part, “That the Undersigned, being of lawful age, for the sole consideration of **Twenty Five Thousand Dollars** 00/100 ($25,000.00) to the undersigned in hand paid, receipt whereof is hereby acknowledged, do hereby and for my heirs, executors, administrators, successors and assigns release, quit and forever discharge Takeshi Oto and The Hertz Corporation, its employees, agents, servants, successors, heirs, executors, administrators and all other persons, firms, corporations, associations or partnerships (hereafter Releasees) of and from any and all claims, actions, causes of action, demands, rights, damages, costs, loss of service, expenses and compensation whatsoever, which the undersigned has or which may hereafter accrue on account of or in any way growing out of any and all known and unknown, foreseen and unforeseen bodily and personal injuries and proper [.«c] damages and the consequences thereof resulting or to result from the unknown, foreseen and unforeseen bodily and personal injuries and property damage and the consequences thereof resulting or to result from the accident, casualty or event which occurred on or about the 21st day of March, 2007 at or near Sunnyvale, CA.
“In consideration of this above sum, the undersigned further agrees to release The Hertz Corporation, it [sz'c] agents, servants, employees, and all Releasees above named, from any and all further causes of action as they may relate or pertain to the above entitled claim, including but not limited to costs and expenses incurred by the undersigned in pursuit of this claim, said costs and expenses which the undersigned expressly agrees to satisfy and pay.”
The release also contained an express waiver of the protection of Civil Code section 1542, which provides that a general release does not extend to claims which the releaser “does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”
The suggestion that the promise must be made “to” the releasee is perplexing. We are aware of no such requirement, and can conceive of no reason for it. The authorities sometimes speak of promises made for the releasee, which is a far more accurate description of the situation generally contemplated by the law of third party beneficiaries. (Murphy v. Allstate Ins. Co., supra,
The cases cited in the relevant segment of Neverkovec are Murphy v. Allstate Ins. Co., supra,
Indeed the Harper case, among others, contains language at odds with, if not contradictory to, the approach espoused in Neverkovec: “A third party may qualify as a beneficiary under a contract where the contracting parties must have intended to benefit that individual and such intent appears on the terms of the agreement.” (Harper, supra,
Parsing is indeed often necessary, since ascertaining the scope of a release may require reading and analytical skills far exceeding those of the ordinary layperson, and perhaps even some lawyers. The “all other persons” clause in the present release appeаrs about 60 words into a sentence of some 175 words. Online reading comprehension calculators corroborate our impression that its reading comprehension level is virtually off the charts. Its intelligibility is constrained further by the 14 words ahead of it, naming two specific releasees and describing several more specific classes of releasees. All of this language is rendered logically superfluous by the “all other persons” clause. If all persons are released, a release of specific ones is redundant. Further redundancy appears in the following paragraph, which appears simply to repeat the substance of the preceding paragraph, but without the “all other persons” clause.
The release is, in short, a classic example of that arcane language, virtually foreign to most citizens, known as legalese. One possible solution to the problems raised by these cases is a rule predicating enforcement of personal injury releases on thеir comprehensibility to persons of ordinary understanding.
The adjuster’s name appears throughout the reporter’s transcript as “John Byer Smith” but we are confident this is a mistranscription of “Don Beierschmitt.”
A number of decisions have stated that the statute mandates a continuance whenever the requesting party files an affidavit fulfilling the statutory conditions. We question this reading, which is certainly not compelled by the terms of the statute. It plainly states that when a complying affidavit is filed, the court “shall” deny summary judgment or grant a continuance (perhaps with additional ancillary orders), “or may make any other order as may be just.” (§ 437c, subd. (h), italics added.) This third option would appear to encompass a denial of relief, and plainly contemplates an exercise of discretion, presumably to be informed by the kind of factors traditionally considered in such contexts, including the requesting party’s diligence or lack thereof. However, we need not set ourselves at odds with the decisions suggesting otherwise, because no complying declaration was filed here and the request for continuance therefore fell squarely within the rule entrusting the matter to the court’s discretion.