Alabama Farm Bureau Ins. Co. v. Hunt

• Decision Date: 23 December 1987
• Docket Number: CENTER-CHILTON
• Citation: 519 So.2d 480
• Parties: ALABAMA FARM BUREAU INSURANCE COMPANY v. Ricky HUNT and Laura Hunt. Rita W. MOORE, Administratrix of the Estate of Dr. Arthur E. Moore, Deceased v. Ricky HUNT and Laura Hunt. BAPTIST MEDICALv. Ricky HUNT and Laura Hunt. 86-590, 86-597 and 86-632.
• Court: Alabama Supreme Court

Page 480

519 So.2d 480

ALABAMA FARM BUREAU INSURANCE COMPANY v. Ricky HUNT and Laura Hunt.

Rita W. MOORE, Administratrix of the Estate of Dr. Arthur E. Moore, Deceased v. Ricky HUNT and Laura Hunt.

BAPTIST MEDICAL CENTER-CHILTON v. Ricky HUNT and Laura Hunt.

86-590, 86-597 and 86-632.

Supreme Court of Alabama.

Dec. 23, 1987.

W.J. McDaniel and William A. Mudd of McDaniel, Hall, Conerly & Lusk, Birmingham, for appellant Ala. Farm Bur. Ins. Co.

Fred W. Tyson of Rushton, Stakely, Johnston & Garrett, Montgomery, for appellant Rita W. Moore, Administratrix, etc.

C. Jeffery Ash of Carpenter & Gidiere, Montgomery, for appellant Baptist Medical Center-Chilton.

John W. Haley and Francis H. Hare, Jr., of Hare, Wynn, Newell & Newton, Birmingham, for appellees.

PER CURIAM.

The defendants--Alabama Farm Bureau Insurance Co. (hereinafter "Farm Bureau"), Rita Moore (hereinafter "Moore"), and Baptist Medical Center-Chilton (hereinafter "Baptist")--appeal from a summary judgment for the plaintiffs, Ricky and Laura Hunt. We affirm the judgment reforming a general release, pursuant to Ala. Code 1975, § 8-1-2, to reflect "the true intention of the parties," a pro tanto release.

The Hunts filed a petition for reformation of a general release executed by them on September 17, 1983. The trial court entered an order granting the reformation and converting the general release to a pro tanto release, releasing only Farm Bureau and the insureds, Danny and Frances Gilmore, based upon the trial court's finding of the true intention of the parties. The trial court's order further declared that the pro tanto release entitled other defendants to a credit of $25,000, the amount of consideration expressed in the release, if a judgment were rendered against them.

Issues Presented

1. Whether the trial court erred in granting the Hunts' motion for summary judgment to reform the release.

2. Whether the settlement and "general" release of the original tort-feasors, Danny and Frances Gilmore, bar the plaintiffs' wrongful death claim against the admitting hospital and the treating physician for alleged subsequent acts of negligence.

The Facts

On March 22, 1983, Sonya Nicole Hunt, age 3, fell down a flight of stairs, while she was visiting in the home of her aunt and uncle, Frances and Danny Gilmore. The Gilmores took her to Baptist, where she was X-rayed and examined by Dr. Moore, and then released. Later that night, Sonya went into a coma. The Gilmores called rescue personnel, who called a helicopter. Sonya was transported to University Hospital in Birmingham, where numerous doctors treated her for a skull fracture and a blood clot. Sonya died on March 28, 1983.

The Gilmores, as the insureds under a homeowners' insurance policy with Farm Bureau, reported the accident to the insurer, whose adjuster, Don Hale, conducted an investigation and discussed the accident with the Gilmores. On September 12, 1983, at Hale's request, Mrs. Gilmore went to the Farm Bureau office and picked up a $25,000 check made payable to the Hunts. At that time, Hale advised her that the Hunts had to sign a release in order to cash the check. Hale did not show Mrs. Gilmore the release document, nor did he explain its contents to her.

On September 17, 1983, Mrs. Gilmore and the Hunts went to the Farm Bureau office. Neither Hale nor the Gilmores' agent, Bob Cook, was present. Two Farm Bureau employees, Evelyn Champion and Wanda Hewitt, were in the office when Mrs. Gilmore and the Hunts arrived. Mr. Hunt read the filled-in blanks on the form but did not read the entire form. According to the Hunts, after Mrs. Champion explained to them that the form released the Gilmores and Farm Bureau, they executed the document.

The Hunts petitioned for reformation of contract against the Gilmores and Farm Bureau, alleging that they understood the release to be a pro tanto settlement with the Gilmores and Farm Bureau only, and that the Hunts would have the right to proceed against any other responsible parties. By amendments, the Hunts first added Baptist and Dr. Moore as parties to their petition for reformation and then added a claim for wrongful death based on the alleged negligence of Baptist and Dr. Moore. After Dr. Moore died, his widow and administratrix, Rita Moore, was substituted as a party defendant.

All the defendants appeal from the trial court's order granting the Hunts' motion for summary judgment and reforming the release. (The partial summary judgment as to Baptist and Moore was made final pursuant to Rule 54(b), A.R.Civ.P.)

Appellants' Argument

Appellants rely on Baker v. Ball, 473 So.2d 1031 (Ala.1985), and Conley v. Harry J. Whelchel Co., 410 So.2d 14 (Ala.1982), for the following propositions:

"[B]y executing a general release ... a party releases all tort-feasors against whom a cause of action is not specifically reserved, regardless of whether those tort-feasors are parties to the release or are expressly mentioned therein."

Baker, 473 So.2d at 1035.

"In the absence of fraud, a release supported by a valuable consideration, unambiguous in meaning, will be given effect according to the intention of the parties to be judged from what appears within the four corners of the instrument itself and parol evidence is not admissible to impeach it or vary its terms."

Conley, 410 So.2d at 15.

Alternatively, the appellants contend that 1) the testimony of Farm Bureau's claims agent creates a triable factual issue with respect to the "intention of the parties," which precludes disposition by summary judgment on the plaintiffs' claim for reformation of the contract of release; and 2) parol evidence is not admissible to prove "intention of the parties."

Appellees' Response

Primarily, the Hunts rely on Irvin v. Griffin Corp., 808 F.2d 802 (11th Cir.1987), expressly adopting this Court's dictum in Conley, supra, as the basis for upholding the reformation of a general release. Alternatively, the Hunts contend that, in no event, could the parties to the instant contract have intended to release an independent and unrelated cause of action against other tort-feasors.

The Decision

Although we reject the Hunts' alternative "independent cause of action" contention as a basis for upholding the trial court's reformation of the release, ¹ we accept the holding and rationale of the 11th Circuit's Irvin case, supra, as a correct expression of Alabama law. Except for a collateral "necessary parties" issue in Irvin, which is not in issue here, Irvin and the instant case are virtually identical. ² Therefore, at the risk of overburdening this opinion, we quote at length from Irvin:

"Under Alabama law, an injured party's execution of a general release arising from a tort claim operates as a bar to any other potential claim of the party arising from the same tort. The general release operates in favor of other alleged tortfeasors and releases them from liability. This is simply a reflection of the old common law rule, that one who accepts payments from one tortfeasor and executes a release, which, in express terms, releases 'any and all persons' is held to have discharged both the payer party as well as other tortfeasors not party to the release agreement. Thompson v. N.C. St. L. Railway, 49 So. 340 (Ala.1909); Wright v. McCord, 88 So. 150 (Ala.1922). However, the common law rule has been modified by statute and a release executed in writing in a general form[,] as was the case below, does not[,] ipso facto, discharge all other potential parties from liability. By statute, the Legislature has provided for an 'intention of the [parties'] test.' Alabama has codified the general rule regarding release as follows:

" 'All receipts, releases and discharges in writing, whether of debt or record, a contract under seal or otherwise, must have effect, according to the intention of the parties.'

"Section 12-21-109, Code of Alabama (1975). The major substantive change in the common law rule was that of modifying the law regarding settlements or releases, and changing it according to the law of contracts, that is, that the release must be given effect according to the intentions of the parties. Thus, under Alabama law, the common law rule on the subject of general releases has been modified by the intention of the [parties] standard of contract law. In so doing, courts have recognized the validity of both pro tanto releases and general releases. In the instant case, the appellant sought a reformation of the release executed between her and the insured, Z.D. Burgett, and his insurance company, to effect the true intention of the parties to execute a pro tanto relelase only, releasing the parties to the agreement from liability. The reformation of the release was sought pursuant to § 8-1-2 of the Alabama Code of 1975, which provides that:

" 'When, through fraud, a mutual mistake of the parties or mistake of one party which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised by the court on the application of the party aggrieved so as to express that intention, so far as it can be done without prejudice to the rights acquired by third persons in good faith and for value.' (Emphasis added.)

"The circuit court of Marshall County, in granting the appellant's petition, found that it was the intent of all the parties concerned to release only Z.D. Burgett and Alabama Farm Bureau Insurance Company and that no other entity was involved in the compromise and release; that the parties executed the release on a general form although not intending a general release of all parties. The circuit court held that they intended to execute only a pro tanto release. Clearly, Alabama law provides for a pro tanto release. In Steenhuis v. Holland, 217 Ala. 105, 115 So. 2 (1926), the court construed Alabama statute § 12-21-109 as providing for the right of an injured party to accept satisfaction in part from one tortfeasor, release...