DUARTE, J. —
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) 212 Cal.App.4th 1020 [151 Cal.Rptr.3d 667]
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.
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.
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,
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.
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, 212 Cal.App.4th 1020, found the language of the release "unambiguously expresses a mutual intent to benefit a class of persons of which [Homuth] is a member"; thus Homuth was entitled to enforce the release. The court granted Homuth's motion to strike the parol evidence which was admitted to show the intent of Cline, Emanuel and Rodriguez and entered judgment in favor of Homuth.
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) 12 Cal.App.4th 435 [15 Cal.Rptr.2d 622] (General Motors), the release in a personal injury case following an automobile accident released the other driver and "`any and all person[s], firms and corporations, whether herein named or referred to or not.'" (Id. at p. 439.) The court held the clear, unambiguous language was sufficient to release General Motors, the manufacturer of the car, where there was no competent evidence to suggest any other possible meaning of the language. (Id. at p. 441.) The surrounding circumstances also supported the intention to release General Motors as the parties were aware of a potential claim against the manufacturer and the other driver had an incentive to release all other potential tortfeasors to "avoid being dragged into any lawsuits." (Id. at pp. 442-443.)
In another personal injury case arising from an automobile accident, a general release applied to the driver's employer. (Lama v. Comcast Cablevision (1993) 14 Cal.App.4th 59 [17 Cal.Rptr.2d 224] (Lama).) The release stated it released the driver and the owner of the car "`and any other person, corporation, association or partnership charged with responsibility for injuries to the person or property of the Undersigned ... as a result of an accident ....'" (Id. at p. 61.) After executing the release, the plaintiff dismissed his entire complaint with prejudice and subsequently, with new counsel, filed suit against the employer of the other driver, alleging that driver was driving in the course and scope of employment. (Id. at pp. 61-62.) The plaintiff's first attorney had conducted no discovery as to whether the other driver was acting in the course and scope of employment and the evidence showed the insurance company had no such knowledge. (Id. at pp. 62-63.) The appellate court found any mistake as to the scope of the release was the unilateral mistake of the plaintiff's first counsel; the insurance company intended to obtain a full release to protect the insured. (Id. at p. 63.)
In Appleton, supra, 27 Cal.App.4th 551, the plaintiff filed a personal injury action against the other driver in the accident, the owner of the other car, and
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) 74 Cal.App.4th 337 [87 Cal.Rptr.2d 856] (Neverkovec). The Neverkovec court concluded "that principles of contract law governing the rights of third party beneficiaries, and related rules of evidence, provide the best approach for resolving such cases." (Id. at p. 341.) Under the law of third party beneficiaries to a contract, the third party had the burden of proving he was an intended beneficiary. "The circumstance that a literal contract interpretation would result in a benefit to the third party is not enough to entitle that party to demand enforcement. The contracting party must have intended to confer a benefit on the third party." (Id. at p. 348.) "Because the court must consider the circumstances of the contracting parties' negotiations to determine whether a third party not named in the release was an intended beneficiary, it will seldom be sufficient for the third party simply to rely on a literal application of the terms of the release." (Id. at p. 349.) The court reversed summary judgment, finding Fredericks did not bear his burden to show he was an intended beneficiary. It found that even if the general release was sufficient to shift the burden, the extrinsic evidence before the court created a triable issue regarding the parties' intent to release Fredericks. (Id. at p. 344.)
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, 74 Cal.App.4th at p. 352.) The court found this provision "curious" and that it created an ambiguity as to the parties' intentions. (Ibid.) "If the release was to be operative against anyone liable for [the plaintiff's] injuries, [the plaintiff] could not be expected to recover further amounts from which to make repayments." (Ibid.)
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, 27 Cal.4th at p. 525.) The court found, however, the uncontroverted extrinsic evidence established a mutual mistake as all the parties to the release did not intend to release Ford. (Id. at pp. 526-527.) The court further noted the language of the release was "hardly conclusive because it arguably supports a finding that the contracting parties did not intend to release Ford from liability." (Id. at p. 527.) The court noted the small settlement despite the severity of Hess's injuries and the failure to name Ford despite everyone's awareness of Hess's claims against Ford arguably supported a finding that the contracting parties did not intend to release Ford. (Ibid.) The court also found its conclusion was consistent with other cases. It noted the lack of extrinsic evidence that the parties did not intend to release other tortfeasors in General Motors and Lama, and the reversal of summary judgment for the defendant in Neverkovec and Appleton where there was such extrinsic evidence. (Hess, supra, at pp. 529-530.)
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 Rodriquez, supra, 212 Cal.App.4th at page 1023, the case on which the trial court relied here. The Rodriguez court disagreed with Neverkovec to the extent that Neverkovec (1) always required consideration of the circumstances of the negotiations of parties to a general release and (2) held that a third party could not rely solely on the language of a general release to carry its prima facie burden to show it was an intended third party beneficiary of the general release. (Rodriguez, supra, 212 Cal.App.4th at p. 1030.) In so doing, the Rodriguez court disagreed with portions of the Neverkovec opinion that were cited or quoted with approval by our Supreme Court in Hess, supra, 27 Cal.4th at page 524. The Rodriguez court, however, did not hold the "all persons" language of the general release was always sufficient to establish an intent to benefit any third party. Rather, it held that such language was sufficient to show a prima facie case and was sufficient to prevail "in the absence of countervailing evidence." (Rodriguez, supra, at p. 1027.) The only evidence the plaintiff offered to counter the language of the release was "his own subjective intent, and even that evidence was strikingly vague at best." (Id. at p. 1034.) The third party seeking to enforce the release was the employer of the other driver in the accident. (Id. at p. 1025.) The court found the omission of the employer from the release was probably because the insurance adjuster who prepared the release was unaware of the employment relationship; further, the adjuster had an incentive to extend the release to the employer because the employer had paid for the insurance. (Id. at p. 1035.)
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, CALAVERAS 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, 27 Cal.App.4th 551, Cline argues Homuth was known to both parties and she was not "just a peripheral actor," so that she was not named created an apparent ambiguity. In Appleton, however, the unnamed tortfeasor was a named party defendant in the personal injury action and the cause of the accident; thus plaintiff's intent to pursue him for damages was known to all parties to the release. (Id. at p. 555.) Here, although Rodriguez knew Homuth was in the car, there was no evidence he knew Cline considered her a potential defendant at the time of the release's preparation. Emanuel never communicated his intent to exclude Homuth from the release.
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, 27 Cal.4th at p. 527.) Cline claims his medical expenses were over $1 million, but he offered no evidence to support this assertion. His attorney testified the potential value of Cline's pain and suffering was in seven figures. This factor was not as strong as in Hess, where the settlement was much smaller and the potential defendant (Ford) was a large corporation. Here, the settlement was not insignificant; it was sufficient to extinguish the Medicare lien. Given the absence of any evidence Rodriguez intended to exclude Homuth from the release, the claimed difference between the settlement and the amount of Cline's damages does not trump the broad language of the release.
In Neverkovec, supra, 74 Cal.App.4th 337, in opposition to a summary judgment motion, the plaintiff offered declarations as to the intentions of the parties to the release. She understood the release to apply only to named parties, counsel declared an intention to proceed against an unnamed party, and the insurer's representative declared the settlements were intended to settle all claims against the named parties. The appellate court held that statements revealing only the declarants' undisclosed intent would be insufficient alone to establish a triable issue as to the intent to release third parties. (Id. at p. 353.) In Neverkovec, however, there was additional evidence, especially the ambiguity of the release itself which included the "curious" repayment provision, sufficient to create a triable issue of material fact. (Ibid.) In Rodriguez, supra, 212 Cal.App.4th at page 1035, the court found the failure to name a known third party in the release and deposition testimony about the plaintiff's subjective understanding of the release were insufficient
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) 137 Cal.App.4th 964, 985 [41 Cal.Rptr.3d 48].)
The judgment is affirmed. Homuth shall recover costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
Nicholson, Acting P. J., and Hoch, J., concurred.
DUARTE, J., 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) 74 Cal.App.4th 337, 354 [87 Cal.Rptr.2d 856]; see Hess v. Ford Motor Company (2002) 27 Cal.4th 516, 530 [117 Cal.Rptr.2d 220, 41 P.3d 46].)
The widespread use of global "all other persons" releases raises policy concerns as to fairness. (See Rodriguez v. Oto (2013) 212 Cal.App.4th 1020, 1031 [151 Cal.Rptr.3d 667].) As we see here, the language of the release may not be given much attention; by signing, a plaintiff (such as Ronald Lee Cline) may give up rights he did not mean to give up, with resulting unfortunate consequences. "... A stranger to the release may receive a windfall, i.e., an excuse from liability the law would otherwise require him to bear; the plaintiff may be deprived of a recovery to which he would otherwise be entitled, and which is necessary to make him whole; and this loss in turn may force the plaintiff to pursue — and the courts to entertain — the less certain and more burdensome remedy of a malpractice action against the attorney." (Id. at p. 1032.)
As others have written, counsel should "study the language of the release carefully to ascertain whether it may impair claims the plaintiff should