78 Hawai'i 1, Saranillio v. Silva

• Decision Date: 07 February 1995
• Docket Number: 17140,Nos. 17036,s. 17036
• Citation: 78 Hawaii 1,889 P.2d 685
• Parties: 78 Hawai'i 1 Carellyn SARANILLIO, Plaintiff-Appellant, v. William L. SILVA; William L. Silva, Jr.; and Geico Indemnity Insurance Company, aka Geico Indemnity Company, aka Government Employees Insurance Company, Defendants-Appellees. Carellyn SARANILLIO, Plaintiff-Appellant, v. JOLLY ROGER HAWAI'I, INC., Defendant-Appellee.
• Court: Hawaii Supreme Court

Page 685

889 P.2d 685

78 Hawai'i 1

Carellyn SARANILLIO, Plaintiff-Appellant, v. William L. SILVA; William L. Silva, Jr.; and Geico

Indemnity Insurance Company, aka Geico Indemnity

Company, aka Government Employees

Insurance Company,

Defendants-Appellees.

Carellyn SARANILLIO, Plaintiff-Appellant, v. JOLLY ROGER HAWAI'I, INC., Defendant-Appellee.

Nos. 17036, 17140.

Supreme Court of Hawai'i.

Feb. 7, 1995.

Reconsideration Denied March 6, 1995.

Robert A. Smith, Kaneohe, for plaintiff-appellant Carellyn Saranillio.

Jennifer M. Yusi of Rush Moore Craven Sutton Morry & Beh, Honolulu, for defendants-appellees William L. Silva, William L. Silva, Jr., and Geico Indem. Ins. Co., aka Geico Indem. Co., aka Government Employees Ins. Co.

J. Thomas Weber (Curtis E. Aldendifer and Gordon C.F. Chun with him on the brief), Honolulu, for defendant-appellee Jolly Roger Hawai'i Inc.

Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ.

NAKAYAMA, Justice.

These two appeals arise from the same underlying events, and their resolution depends on the same legal issues. We therefore consolidate them for decision.

In No. 17036, plaintiff-appellant Carellyn Saranillio brought an action against defendants-appellees William L. Silva, Jr. (Silva, Jr.), William L. Silva (Silva, Sr.) and GEICO Indemnity Insurance Co. (GEICO) for rescission of a general release agreement (the Release). The Release surrendered all claims Saranillio had against the Silvas and GEICO arising from a car accident involving her and Silva, Jr. In No. 17140, Saranillio filed a complaint against defendant-appellee Jolly Roger Hawaii, Inc. (Jolly Roger), alleging that it was vicariously liable for her injuries under the doctrine of respondeat superior because the accident occurred while Silva, Jr. was acting in the course and scope of his employment with Jolly Roger.

Saranillio's primary basis for seeking rescission of the Release was mutual mistake. She contended that when she signed the Release neither she nor the Silvas and GEICO were aware of the common law rule that the release of an employee automatically releases the employer from vicarious liability. She therefore claimed that their mistaken assumption that the release of Silva, Jr. would not bar a suit against Jolly Roger entitled her to rescind the Release.

Saranillio lost on summary judgment in both cases. In No. 17036, the circuit court ruled that the Release was not subject to rescission due to mutual mistake. In 17140, the circuit court ruled that the Release extended to Jolly Roger. Following the denial of motions for reconsideration in both cases, Saranillio appealed to this court.

For the reasons set forth below, we hold that the common law rule that the release of an employee automatically releases the employer from vicarious liability has been abrogated in Hawai'i by the adoption of our version of the Uniform Contribution Among Tortfeasors Act. See Hawai'i Revised Statutes (HRS) §§ 663-11 to 663-17 (1985 and Supp.1992). Because the common law rule does not bar Saranillio's suit against Jolly Roger, there was no mistake as to the legal effect of the Release. We therefore affirm the circuit court's order granting summary judgment in favor of the Silvas and GEICO in No. 17036. We also hold that the Release does not extend to Jolly Roger. We therefore vacate the order granting summary judgment in favor of Jolly Roger in No. 17140.

I. BACKGROUND

On July 6, 1989, Saranillio and Silva, Jr. were involved in a motor vehicle accident in which Saranillio suffered serious injuries. Silva Jr. was driving his father's (Silva, Sr.) car. The car was insured by GEICO under a policy carrying a bodily injury liability limit of $35,000. GEICO assigned claims adjuster Charles Magda to the case. During the course of his investigation of the accident, Magda uncovered certain facts that led him to conclude that Saranillio could assert a claim against Jolly Roger, Silva, Jr.'s employer, based on the respondeat superior doctrine. Magda informed Saranillio's attorney of Jolly Roger's potential vicarious liability.

On May 11, 1990, Saranillio's attorney wrote to Magda, offering to settle for $35,000. The letter referred to Silva Sr.'s "major exposure and major liability in this case" but did not mention Jolly Roger's potential liability.

On May 31, 1990, Magda telephoned Saranillio's attorney and informed him that he was sending a settlement check for $35,000, along with a release of liability form.

Saranillio signed the Release before a notary public on June 7, 1990, with her attorney and one other person acting as witnesses. The Release was a pre-printed general release form with blank spaces for pertinent information to be filled in. It was not a standard joint tortfeasor release. It stated that, in consideration of $35,000, Saranillio

remise[d], release[d], and forever discharge[d] WILLIAM L. SILVA, WILLIAM SILVA, JR. AND GEICO INDEMNITY INSURANCE COMPANY, Releasee(s), successors and assigns, and/or his, her or their associates, heirs, executors and administrators, and all other persons, firms or corporations of and from any and every claim, demand, right or cause of action, of whatever kind or nature, on account of or in any way growing out of any and all personal injuries and consequences thereof, including, but not limited to, all causes of action preserved by the wrongful death statute applicable, any loss of services and consortium, any injuries which may exist but which at this time are unknown and unanticipated and which may develop at some time in the future, all unforeseen developments arising from known injuries, and any and all property damage resulting or to result from an accident that occurred on or about the 6th of July 1989 at or near FARRINGTON HWY, 3/10 MILE WEST OF MAIPALAOA, WAIANAE, HAWAII, and especially all liability arising out of said accident including, but not limited to, all liability for contribution and/or indemnity. AS A FURTHER CONSIDERATION FOR THE MAKING OF SAID SETTLEMENT AND PAYMENT, IT IS EXPRESSLY WARRANTED AND AGREED: THIS IS A RELEASE FOR GENERAL DAMAGES ONLY AND DOES NOT DUPLICATE NO FAULT BENEFITS ALREADY PAID.

The Release also contained the following language:

I/we do hereby for myself/ourselves, my/our heirs, executors, administrators, successors, assigns and next of kin covenant to indemnify and save harmless the Releasee(s) from any and every claim or demand of every kind or character arising from said accident which may ever be asserted.

Of the above-quoted provisions, (i) the names of the "Releasees," Silva, Sr., Silva, Jr. and GEICO, (ii) the date and location of the accident, and (iii) the provision that the Release was for general damages only and that it did not duplicate no-fault benefits were typed in at Magda's direction.

In early 1992, Saranillio's attorney arranged for another attorney to act as his co-counsel, apparently to assist in preparing and prosecuting a lawsuit against Jolly Roger. Soon thereafter, the new attorney discovered that in addition to surrendering Saranillio's claims against the specifically named Releasees (i.e., Silva, Sr., Silva Jr. and GEICO), the Release might also have extinguished Saranillio's claims against Jolly Roger. He determined that Saranillio's respondeat superior claim against Jolly Roger was potentially barred by the common law rule that a release of a negligent employee also serves to release his/her employer from vicarious liability. He also concluded that the suit against Jolly Roger was potentially barred because the Release expressly extended to "all other persons, firms or corporations" in addition to the named Releasees. That language arguably covered Jolly Roger.

After GEICO rejected a proposal to rescind the Release, Saranillio filed an action in the circuit court against the Silvas and GEICO, seeking an order declaring the Release "voidable and subject to rescission by reason of mistake in basic assumptions, mistake in integration, and misunderstanding." Several days later, on August 3, 1992, Saranillio filed a complaint in circuit court against Jolly Roger, alleging that it was vicariously liable for her injuries.

A. Silva/GEICO Action (No. 17036)

After attempts at settlement failed, the Silvas and GEICO filed a motion for summary judgment on January 6, 1993. Arguing that Saranillio's complaint was "frivolous," they contended that any claim that Saranillio was mistaken about the legal effect of the Release was untenable in light of the express language of the Release, which unambiguously released the Silvas and GEICO and "all other persons, firms or corporations of and from any and every claim" arising from the accident. That language, they argued, extended the Release to Jolly Roger. Because there was no dispute that at the time she signed the Release, Saranillio (through her attorney) was aware of the potential respondeat superior claim against Jolly Roger, the Silvas and GEICO argued that Saranillio could have reserved all claims against Jolly Roger, but chose not to do so. As a consequence, the Silvas and GEICO argued, Saranillio had no basis to rescind the Release.

On February 3, 1993, Saranillio filed an opposition to the Silvas' and GEICO's motion for summary judgment and a cross-motion for summary judgment. Saranillio primarily contended that despite the boiler plate language extending the Release to "all other persons, firms or corporations," neither Saranillio nor the Silvas and GEICO (acting through Magda) ever intended the Release to include Jolly Roger. Saranillio also claimed that they were unaware of the common law rule that the release of an employee serves to release an employer from vicarious liability. The mutual mistake as to the legal effect of the Release, Saranillio claimed, entitled her to rescind it.

Saranillio, however, had a problem in adducing evidence to prove the asserted mistake was mutual: she was unable to locate and depose Magda, who had retired from...