General Releases: Unnamed Parties

By on June 6, 2013 - Comments off

Rodriguez v. Oto, (Sixth District, January 15, 2013) 212 Cal.App.4th 1020, 151 Cal.Rptr.3d 667, 13 Cal. Daily Op. Serv. 602, 2013 Daily Journal D.A.R. 636

A man who was injured in a collision with a rented automobile retained an attorney the day after the accident, and seven months later reached a settlement releasing the rental car company which owned the other vehicle. The settlement, which was for the vehicle’s policy limit of $25,000, was memorialized with a written release which named the other driver, Hertz, and “all other firms, corporations, associations or partnerships.” Almost two years after the accident the plaintiff filed a lawsuit against the other driver and his employer.

The defendants moved for summary judgment on the basis of the release and the plaintiff opposed the motion, contending that he did not believe that by signing the document he was releasing the other driver’s employer. The trial court granted the motion and the court of appeal affirmed, holding that the trial court did not abuse its discretion in denying the plaintiff’s request for a continuance to obtain testimony from the claims adjuster:

“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.

This is the critical moment at which the claimant or counsel ought to study the language of the release carefully to ascertain whether it may impair claims the plaintiff should reserve for further prosecution. Diligent counsel, we trust, undertake this examination and advise the client accordingly. But not all claimants are represented by counsel, and not all attorneys are diligent enough to invest the necessary time and effort parsing the release. The temptation not to do so must be particularly acute when questions about its terms may jeopardize the settlement that has already been negotiated. The path of least resistance is to simply sign. By doing so, as we have said, the claimant objectively manifests his assent to the terms of the release.”

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