Bernstein v. Kapneck

• Decision Date: 10 June 1981
• Docket Number: No. 77,77
• Parties: Helen M. BERNSTEIN et al. v. Dean Raum KAPNECK et al.
• Court: Maryland Court of Appeals

Page 452

290 Md. 452

430 A.2d 602

Helen M. BERNSTEIN et al. v. Dean Raum KAPNECK et al.

No. 77.

Court of Appeals of Maryland.

June 10, 1981.

Morris Kletzkin, Washington, D. C. (Gerald Herz and Friedlander, Misler, Friedlander, Sloan & Herz, Washington, D. C., Edwin S. Bernstein, New York City, on the brief), for appellants.

Thomas H. Talbott, Rockville (Janet S. Zigler and Brault, Graham, Scott & Brault, Rockville, on the brief), for appellees.

Argued before MURPHY, C. J., and SMITH, DIGGES, ELDRIDGE, COLE, DAVIDSON and RODOWSKY, JJ.

DIGGES, Judge.

Succinctly put, this appeal presents the issue whether a straightforward release of all claims for personal injuries, untainted by unconscionable conduct on the part of the releasee, may be avoided by the releasor when it later appears that unknown wounds existed at the time the document was executed; and, assuming that it may, the further issue arises whether an enrolled consent judgment springing from the release may be stricken under Maryland Rule 625a as mistakenly entered, so as to form no block to the pursuit of additional monetary relief for the later revealed hurt.

On July 25, 1975, petitioner Irene Schulman, at the time a five year old infant, sustained substantial injuries in a two-car accident in Bethesda, Maryland, when the vehicle in which she was a passenger collided with one owned by respondent Barbara Sue Sussman and operated by respondent Dean Raum Kapneck. For a period of at least a year following the collision, Irene was thought by both her doctors and her parents to have suffered only these multiple injuries in the accident: (i) a severe hurt to the face, described by her doctor as an "extensive deep irregular laceration of the forehead which extended from the glabella area down across the nose," (ii) chip fractures of the nasal bones, (iii) a non-displaced fracture of the right shoulder, and (iv) a moderately severe traumatic neurosis.

Acting with the advice of competent counsel and based primarily on the medical diagnosis by and prognosis of the infant's doctors, Irene's mother (as she was authorized to do by Maryland Code (1974, 1980 Repl.Vol.), Courts and Judicial Proceedings Article, section 6-405) settled for $7500.00 the suit pending with regard to the claims she and her daughter possessed against the respondents resulting from the accident. To effectuate this understanding a release was executed by the mother, both individually and on behalf of her infant daughter, on March 2, 1978. In addition, on that same day, upon request of all the parties, a consent judgment in the agreed upon amount was entered by direction of Judge John F. McAuliffe in the damage action which had been instituted in the Circuit Court for Montgomery County on August 22, 1977. ¹

The release purchased by the respondents which formed the basis for the simultaneous entry of the agreed to judgment, reads in pertinent part:

For the sole consideration of Seven Thousand Five Hundred Dollars ... Helen M. Bernstein, individually and as parent and natural guardian of Irene Schulman, a minor, hereby releases and forever discharges Barbara Sue Sussman and Government Employees Insurance Company ... and all other persons, firms or corporations liable for or who might claim to be liable, ... from any and all claims, demands, damages, actions, causes of action, or suits of whatsoever kind or nature, and particularly on account of loss or damage to the property and on account of bodily injuries, known and unknown, and which have resulted or may in the future develop, sustained by Irene Schulman, a minor, born on 3/25/70, or arising out of damage or loss direct or indirect sustained by the undersigned in consequence of an accident involving the automobile accident occurring on or about July 25, 1975....((emphasis supplied).)

Sometime following both consummation of the settlement and enrollment of the judgment, Irene developed epileptic symptoms that were diagnosed by a neurologist at Georgetown University Hospital as indicating a post-traumatic psychomotor seizure disorder resulting from a brain injury she sustained in the 1975 accident. In light of this revelation, the petition now before us to vacate the judgment and avoid the release was filed in the original law action instituted in August, 1977. By that pleading, Irene's mother individually and as her young daughter's next friend, together with the child's step-father (acting individually), sought to set aside both the March 2, 1978, release and judgment, on the ground that these liability acquittals were entered into, executed and delivered as a result of a mutual mistake of fact.

At the hearing on the nullification petition, which consisted of testimony relative to the recently manifested brain injury and argument of counsel, Judge McAuliffe made pertinent factual determinations as follows:

I find from the present evidence that all parties and the Court were unaware that Irene had suffered brain damage as a result of the accident, but that the testimony of Dr. Cohan is clear and convincing that Irene had suffered such injury, and that it existed at the time of the settlement and judgment. I further find that Irene's mother and step-father had exercised reasonable diligence in attempting to ascertain the full nature and extent of Irene's injuries prior to entering into the settlement, and that the amount of the settlement would not have been found to be reasonable by the parties or the Court if the additional element of a serious brain injury had been known.

I ... find that these parties intended to, and did, finally settle all claims for injuries known and unknown, and which had resulted or might in the future develop as a result of this accident.

With these factual determinations established, Judge McAuliffe then concluded that ignorance of the brain injury at the time of settlement constituted neither a mutual mistake of the variety which will in Maryland vitiate a release contract, nor was it a "mistake" as used in Rule 625a so as to authorize a vacation of an enrolled judgment. He accordingly denied the relief requested. On appeal, the Court of Special Appeals agreed and affirmed the action of the trial court. Bernstein v. Kapneck, 46 Md.App. 231, 417 A.2d 456 (1980). We granted certiorari as this case poses issues without precise controlling precedent of this Court.

The releasors urge that we travel one of the circuitous paths tread by what is now a collective majority of our sister states and in this manner allow the petitioners here to avoid the enrolled judgment as well as the release which together place a formidable barricade across the usually traversed road to adequate compensation in personal injury cases. While it is true that a growing number of courts (despite a clear and unambiguous release for consideration of all known and unknown, as well as foreseen and unforeseen, claims for personal injuries) permit repudiation by a releasor when unanticipated injuries surface subsequent to the contract's execution, we do not believe these decisions can withstand critical analysis and decline to follow them.

Within the group of cases which numerically converge to form the majority, there are nuances in and a divergence among the rationales utilized in arriving at concordant results. While most of these authorities treat personal injury releases, because they relate to human interest instead of commercial transactions, as justifying the development of a special body of contract law, they basically utilize two different types of underpinnings to vindicate the results reached. In the words of the Supreme Court of Oregon:

Some cases seem to base relief upon real or supposed mutual mistake. E. g., Clancy v. Pacenti, 15 Ill.App.2d 171, 145 N.E.2d 802, 71 A.L.R.2d 77 (1st Dist., 1951). Contra, Thomas v. Hollowell, 20 Ill.App.2d 288, 155 N.E.2d 827 (4th Dist., 1959). Other cases seem to reform the release. Thus, the court rewrites it as if to read: "I release all claims for injuries presently known and appreciated by me, but reserve all aggravations and future disorders not presently known or discernible." See, e. g., Couillard v. Charles T. Miller Hospital, Inc., 253 Minn. 418, 92 N.W.2d 96; Ruggles v. Selby, 25 Ill.App.2d 1, 165 N.E.2d 733 (1st Dist.1960). (Wheeler v. White Rock Bottling Co. of Oregon, 229 Or. 360, 366 P.2d 527, 529 (1961) (footnote omitted).)

A near exhaustive collection of the cases litigating issues related to the voiding of releases under the mutual mistake of fact theory may be found in the annotation located at 71 A.L.R.2d 82 (1960), and in its later case service. A quick walk through this compendium of cases demonstrates the existence of two conflicting legal principles one imprisons the releasor within the terms of his contract; the other requires the releasee to fully account for his tort. ² As we view it, the resolution of this conflict involves policy considerations, a fact which most of the courts taking the liberal position either fail to recognize or are reluctant to concede. On the one side, there are long established and well understood rules of contract law, which, at least in this State, normally apply to releases. Parish v. Milk Producers Assn., 250 Md. 24, 101, 242 A.2d 512, 555 (1968); Thomas v. Erie Ins. Exchange, 229 Md. 332, 340, 182 A.2d 823, 827 (1962). On the other side there are considerations, largely stemming from compassion, which importune the larger number of courts to treat seemingly unambiguous and freely entered into personal injury releases as sui generis, so as to justify their permitting the releasor to renege on his bargain. We agree with the trial judge when he commented that the general policy considerations to be reckoned with were well articulated by the Supreme Court of Minnesota, when it said:

There are at least two policy considerations that this court must balance in determining when voidance of personal injury releases should be...