Bennett v. Kisluk

• Decision Date: 26 June 1991
• Docket Number: No. 19294,19294
• Citation: 1991 NMSC 60,112 N.M. 221,814 P.2d 89
• Parties: Joan M. BENNETT, Petitioner, v. Dick KISLUK, Respondent.
• Court: New Mexico Supreme Court

Page 89

814 P.2d 89

112 N.M. 221

Joan M. BENNETT, Petitioner, v. Dick KISLUK, Respondent.

No. 19294.

Supreme Court of New Mexico.

June 26, 1991.

Rehearing Denied Aug. 9, 1991.

[112 NM 221] Morrison & Martinez, Robert Dale Morrison, Albuquerque, for petitioner.

Freedman, Boyd & Daniels, John W. Boyd, Albuquerque, for respondent.

OPINION

RANSOM, Justice.

Joan Bennett sued her former attorney, Dick Kisluk, alleging malpractice, intentional infliction of emotional suffering, and misrepresentations that warranted treble damages under NMSA 1978, Section 36-2-17 (Repl.Pamp.1984) (attorney guilty of deceit or collusion liable for treble damages). The trial court granted summary judgment in favor of Kisluk based upon a release Kisluk gave Bennett for the payment to him of attorney fees for services rendered prior to his discharge in a personal injury suit. Bennett was represented by another lawyer in the settlement of the personal injury suit that resulted in the payment to Kisluk. Relying on the authority of Harrison v. Lucero, 86 N.M. 581, 525 P.2d 941 (Ct.App.1974) (unilateral release effects an accord and satisfaction of all claims between the parties irrespective of actual intent), the court deemed the release to constitute an accord and satisfaction of Bennett's claims. The court of appeals affirmed by an unpublished memorandum opinion. We granted certiorari to review the applicability of Harrison to the facts of this case, and we now reverse.

Facts. In July 1985, Bennett hired Kisluk to prosecute her claims arising from a slip and fall accident in an Albuquerque restaurant. Kisluk filed suit in January 1988, and by May 1988 he had begun to discuss structured settlement offers with the restaurant's insurance carrier. Bennett became dissatisfied with Kisluk's services. In September 1988, Bennett dismissed Kisluk and retained new counsel, Roger Wagman, to pursue her claims. Kisluk refused to withdraw from the case, and he advised Bennett that she would have to pay him forty percent of any recovery, in addition to the customary one-third fee paid to her new attorney. Bennett sought and obtained an order from the district court compelling Kisluk to withdraw.

On December 21, 1988, after receiving notification that Bennett's suit was nearing settlement, Kisluk filed a motion to recover attorney fees, seeking a forty percent share of any recovery by Bennett. In early January 1989, Bennett reached agreement with the restaurant's insurance carrier on settlement of her personal injury claim. However, to consummate the personal injury settlement she was compelled to reach an agreement on the amount of attorney fees to be paid Kisluk. Pursuant to the fee settlement, Kisluk executed both a Stipulation for Settlement and a Release of All Claims. The stipulation reflected settlement of Bennett's claims against the restaurant and the settlement of claims to attorney fees both by Kisluk and Wagman. The release, at issue here, provided that Kisluk, in consideration of receipt of his attorney fees, released Bennett and Wagman from all claims he had or may have against them, including all claims arising from Bennett's personal injury action. Five months after execution of the stipulation and release, Bennett brought this suit against Kisluk.

Summary judgment was improvidently granted. We believe the courts below erroneously applied the rule of Harrison as recently discussed by this Court in Vidal v. American General Companies, 109 N.M. 320, 785 P.2d 231 (1990). Harrison arose from an automobile accident between vehicles driven by Harrison and Lucero, an employee of Universal Constructors, Inc. Two months after the accident, Lucero signed a written release of any claim against Harrison in consideration of $300 paid by Harrison to Lucero. Nine months later, Harrison sued Lucero and Universal. Lucero counterclaimed against Harrison, and Harrison replied by asserting the release as an affirmative defense. Universal filed an amended answer, asserting that the release signed by Lucero barred Harrison's action. The trial court struck Universal's defense, and on interlocutory appeal the court of appeals reversed, holding that a party who obtains a release from another party for adequate consideration to settle any claims that the second party may have had against the first is barred from bringing an action against that second party for damages absent a reservation of rights. Harrison, 86 N.M. at 584, 525 P.2d at 944. The court reasoned:

We are not dealing with the interpretation of the language of the release nor the intention of the parties as expressed therein, because in all probability the parties did not consider the question of whether the release given by Lucero to Harrison would bar future legal action by Harrison against Lucero. On the basis of public policy we therefore conclude that the release given by Lucero to James Harrison without an express reservation of the right to make a claim against Lucero constitutes an accord and satisfaction of all claims between them arising out of the accident and James Harrison is estopped from proceeding against Lucero and therefore constitutes a valid defense.

Id.

In Vidal we explained the basis for the Harrison rule and modified its application. Vidal, insured by American General Companies, was involved in an automobile collision with Hunt. Vidal notified American General of a claim for underinsured motorist benefits because Hunt was insured only for minimum liability limits. Vidal sued Hunt, and Hunt counterclaimed. American General settled Hunt's counterclaim for nuisance value. Apparently without American General's knowledge, Vidal at about the same time settled his claim with Hunt for the limits of Hunt's insurance policy. When Vidal pursued his claim against American General for underinsured motorist benefits, American General denied the claim, maintaining that its subrogation rights had been destroyed by Vidal's settlement without the insurer's consent in violation of the insurance contract.

American General moved for summary judgment. Vidal responded that American General's own settlement with Hunt extinguished its right of subrogation. Summary judgment was awarded American General, and this Court reversed. We agreed with Vidal that, because the purpose of a consent clause is to protect the insurer's right of subrogation, if that right is voluntarily relinquished by the insurer the latter cannot rely on the clause to deny coverage. We held, nonetheless, that while a settlement is presumed to create an accord and satisfaction, the presumption may be rebutted if the appropriate elements are not present, most significantly a meeting of the minds. Id. at 323, 785 P.2d at 234. It was for the factfinder to determine whether the parties intended an accord and satisfaction, considering, inter alia, whether the settling party expressly reserved its right to assert its own claims and whether claims of which it was not aware at settlement arose subsequently.

We noted in Vidal that the presumption of accord and satisfaction operates independently of contributory negligence principles. We observed that the Harrison rule was founded upon a legal presumption that the release and settlement were intended by the parties to resolve conclusively their dispute. That presumption arises not from an express or implied admission of liability that would preclude recovery by the releasee under the doctrine of contributory negligence, but on the presumption that the parties intended a complete accord and satisfaction of their respective claims against each other arising out of the accident. The presumption advances public policy interests in avoiding needless litigation and places on the releasee a burden to prove the contracting parties did not, by the release and settlement, intend an accord and satisfaction. Id. at 323-24, 785 P.2d at 234-35. Under the facts of that case, Vidal was entitled to the presumption of an accord and satisfaction between American General and Hunt; and American General consequently had the burden of proving that Hunt's release, given to American General who paid Hunt the nuisance value of Hunt's claim, was not intended to settle the subrogation claim of American General.

The releasee's burden is greatest in attempting to overcome a presumption of accord and satisfaction under a contributory negligence regime, wherein a release and settlement raise a strong inference of an express or implied admission of liability. The doctrine of proportionate fault under comparative negligence or, as here, the enforcement of any rights that are correlative but not mutually exclusive gives rise to less compelling implications. In any event, it is incumbent upon the releasee to prove the parties did not intend a universal accord and satisfaction. Discharge of an existing contractual obligation or settlement of a cause of action by an accord and satisfaction means (1) substituting an agreement (accord) for the obligation or cause of action, and (2) performing the substituted agreement (satisfaction). National Old Line Ins. Co. v. Brown, 107 N.M. 482, 484, 760 P.2d 775, 777 (1988). As with any contract, an accord requires offer and acceptance. Id.¹ Therefore, in the face of a presumption that the parties intended a complete settlement of their respective claims, Bennett had the burden of proving the offer that was accepted encompassed only Kisluk's claim. In doing so, she cannot rely simply upon the negative inference of a release that names certain claims and not others that potentially might arise out of the same general circumstances. That is what the presumption is meant to overcome.

Here, each party speculates the other party was "lying in the weeds" in an attempt to "sandbag" the first party by not expressly including or excluding the right of the releasee to make a claim against the releasor. Admittedly, no overt manifestation of agreement encompassed the claims of...