Bennett v. Shinoda Floral, Inc.

• Decision Date: 02 July 1987
• Docket Number: Nos. 52758-0,52846-2,s. 52758-0
• Parties: James E. BENNETT, Respondent, v. SHINODA FLORAL, INC. and George A. Wasilche, Petitioners. James T. HOGGATT, Jr., a single man, Petitioner, v. Timothy L. JORGENSEN and Susan K. Jorgensen, a marital community, Respondents.
• Court: Washington Supreme Court

Page 386

108 Wn.2d 386

739 P.2d 648

James E. BENNETT, Respondent, v. SHINODA FLORAL, INC. and George A. Wasilche, Petitioners.

James T. HOGGATT, Jr., a single man, Petitioner, v. Timothy L. JORGENSEN and Susan K. Jorgensen, a marital

community, Respondents.

Nos. 52758-0, 52846-2.

Supreme Court of Washington,

En Banc.

July 2, 1987.

Lee, Smart, Cook, Martin & Patterson, P.S., Inc. by John Patrick Cook and Eugene N. Bolin, Jr., Seattle, for petitioners Shinoda Floral, et al.

Harrison, Davis & Calmes, Joseph C. Calmes, Seattle, for petitioner Hoggatt.

Davies, Roberts, Reid & Wacker by Rob Williamson and Bruce Heller, Seattle, for respondent Bennett.

Merrick, Hofstedt & Lindsey, P.S. by Asa D. Glazer, Seattle, for respondent Jorgensen.

Bryan P. Harnetiaux, Harbaugh & Bloom, Gary N. Bloom, Winston & Cashatt, Robert H. Whaley, Spokane, for amicus curiae Washington Trial Lawyers Ass'n.

Stafford, Frey & Mertel, Stephen P. Larson, Marcus B. Nash, Seattle, for amicus curiae Washington Ass'n of Defense Counsel.

DURHAM, Justice.

In these two consolidated cases, the plaintiffs brought actions for damages for personal injuries. In both cases, the trial courts granted defense motions for summary judgment on the ground that the plaintiffs had executed releases of all claims. ¹ The issue we must decide is if the victims are bound, as a matter of law, by releases executed when they knew they had been injured, but did not know the extent or consequences of the injuries. The releases signed by both plaintiffs stated:

It is understood and agreed that this is a full and final release of all claims of every nature and kind whatsoever, and releases claims that are known and unknown, suspected and unsuspected.

We hold that such releases are binding.

Bennett v. Shinoda Floral

On August 23, 1982, James Bennett was driving his automobile when it was struck from behind by a Shinoda Floral, Inc. truck driven by George Wasilche in the course of his employment. Following the collision, Bennett felt back pain. On the day of the collision, he consulted Dr. L.C. Hoover, an osteopathic physician and surgeon. Dr. Hoover Aetna Casualty and Surety Company represented Wasilche and Shinoda Floral. About 2 weeks after the collision, Floyd Barker, a claims adjuster for Aetna, contacted Bennett. Barker assured Bennett that Aetna would pay his medical expenses and lost wages while he was unable to work.

                diagnosed a lumbosacral and dorsal sprain.   Dr. Hoover told Bennett that although his injury would temporarily disable him from working at his job as a truck driver at SafewayStores, it would heal within a reasonable period of time, allowing him to go back to work.   Bennett expected that he would be able to return to work
                

During the fall of 1982, Dr. Hoover continued to treat Bennett for his back pain. In October 1982, Barker received a report from Dr. Hoover stating that Bennett's prognosis, as well as the date he could return to work, was undetermined.

In early December 1982, Barker informed Bennett that Aetna was terminating his wage loss payments. On December 6, 1982, Barker told Bennett that Aetna wanted to settle his claim and offered $5,000 as a final payment, telling Bennett that this was all Aetna would pay. Bennett discussed the offer with his wife. The Bennetts thought that the $5,000, along with vacation pay due him from Safeway in January 1983, would be sufficient to meet their needs until Bennett could return to work. The same day the offer was made, Bennett accepted it and signed a release "of all claims of every nature and kind whatsoever ... that are known and unknown, suspected and unsuspected."

In the early spring of 1983, Bennett's back condition worsened. Dr. Hoover eventually concluded that, as a result of the collision, Bennett had a herniated intravertebral disc in his low back, and that this was a different and much more serious condition than the sprain which was originally diagnosed. Dr. Hoover concluded that this condition would prevent Bennett from returning to any kind of employment.

In March 1984, Dr. James Mowry, an orthopedic surgeon, examined Bennett and diagnosed degenerative disc disease of the lumbar spine. Dr. Mowry determined that this condition had been slowly progressive for many years, developing as a result of innumerable injuries, and that the violence of the August 23, 1982, accident "finally produced enough symptomatology to prevent his returning to work." Dr. Mowry also observed that

[t]he nature and extent of his injuries as well as their permanence were not readily apparent in December, 1982 ... [I]t would not have been unreasonable for Mr. Bennett to have believed in December, 1982, that he would recover and be able to return to work.... Given his history of prior back problems and successful recovery from them, it would not have been reasonable or possible to have predicted the course of his injuries in December, 1982.

Dr. Mowry concluded that Bennett is permanently and totally disabled.

In April 1983, Bennett brought this action for damages against Wasilche and Shinoda Floral, who asserted the release as an affirmative defense. The trial court granted the defendants' motion for summary judgment and dismissed the action. The Court of Appeals reversed. This court granted the defendants' petition for review.

Hoggatt v. Jorgensen

On March 2, 1980, James T. Hoggatt, Jr. was injured when the motorcycle he was riding left the roadway while he was attempting to pass an automobile driven by Timothy L. Jorgensen. Liability is disputed. Hoggatt was hospitalized and was diagnosed as having compression fractures of two vertebrae. His physicians found that there was no evidence of spinal cord compression or any other complications from these fractures. According to Hoggatt, his physicians told him that the injuries would heal and he would be able to return to work.

Within a few weeks of the accident, Hoggatt began settlement negotiations with Pemco, Jorgensen's automobile After the release was executed, Hoggatt continued to consult various physicians. There was no change in diagnosis until March 9, 1982, when he was examined by Dr. John Mullins, a neurologist. Dr. Mullins diagnosed a probable spinal cord injury with an associated mild paraparesis. Dr. Mullins indicated that the mild spinal cord injury "may well have been due to a contusion or concussion of the spinal cord at the time of [Hoggatt's] accident in March of 1980." On September 22, 1982, Hoggatt was found to be disabled for purposes of receiving social security disability benefits.

                insurance carrier.   Hoggatt authorized Pemco to contact his physicians and obtain his medical records, and a Pemco claims adjuster received information from his physicians.   In a May 13, 1980 letter to Pemco, Hoggatt told Pemco that since the date of the accident he had been in constant pain and was required to take medication;  that he had to wear a back brace;  that he was unable to bend over to put on shoes;  that he had lost 1 1/4 inches in height as a result of the accident;  and that he had been unable to function in his business since the accident.   [739 P.2d 651] In the letter, he offered to grant a full release to Jorgensen if Pemco would pay him the liability insurance policy limits.   On May 15, 1980, Hoggatt and Pemco reached an agreement.   In exchange for a cash settlement of $26,500, Hoggatt signed a release providing:  "It is understood and agreed that this is a FULL AND FINAL RELEASE of all claims of every nature and kind whatsoever, and releases claims that are known and unknown, suspected and unsuspected."
                

In February 1983, Hoggatt brought this action for damages against Jorgensen, who raised the release as an affirmative defense. The trial court granted Jorgensen's motion for summary judgment of dismissal. The Court of Appeals affirmed. This court granted Hoggatt's petition for review.

ANALYSIS

In these cases, we must decide if injury victims are bound, as a matter of law, by releases executed when they knew they had been injured, but did not know the extent or consequences of the injuries. To resolve this issue, we must determine the scope of the decision by this court in Finch v. Carlton, 84 Wash.2d 140, 524 P.2d 898 (1974). In order to establish a context for understanding Finch, we begin our analysis by reviewing Washington law prior to Finch on the voidability of releases.

Before Finch, this court established that traditional contract principles applied in deciding if an injured person could avoid a release that he had signed. Where the release was not induced by fraud, misrepresentation or overreaching, it could be set aside only if there was clear and convincing evidence of mutual mistake in its execution. See Beaver v. Estate of Harris, 67 Wash.2d 621, 626-27, 409 P.2d 143 (1965); Pepper v. Evanson, 70 Wash.2d 309, 312-14, 422 P.2d 817 (1967), overruled on other grounds in Simonson v. Fendell, 101 Wash.2d 88, 675 P.2d 1218 (1984). In Beaver, the injured plaintiff believed he had a strained back at the time he signed a release, and sought to avoid the release after it was determined that he had a herniated disc. We sustained the release, holding that because the insurer's only information about the plaintiff's condition came from the plaintiff himself, the insurer did not independently make a mistake and, thus, there was no mutual mistake. Beaver, 67 Wash.2d at 628-29, 409 P.2d 143. In Pepper, the injured plaintiff signed a release after experiencing pains in the right side of his neck and in his right arm. Later, he sought to avoid the release when a new disability arose on his left side. We upheld the release, concluding that there was no mutual mistake because the insurer depended on the injured plaintiff's assessment of his injuries. Pepper, 70 Wash.2d at 316-17, 422 P.2d 817.

The later case of Finch v. Carlton, supra, presented facts that differed significantly from those in Beaver and Pepper. While the...