Bolling Fed. Credit v. Cumis Ins. Soc.

• Decision Date: 21 March 1984
• Docket Number: No. 83-926.,83-926.
• Citation: 475 A.2d 382
• Parties: BOLLING FEDERAL CREDIT UNION, Appellant, v. CUMIS INSURANCE SOCIETY, INC., Appellee.
• Court: D.C. Court of Appeals

Page 382

475 A.2d 382

BOLLING FEDERAL CREDIT UNION, Appellant, v. CUMIS INSURANCE SOCIETY, INC., Appellee.

No. 83-926.

District of Columbia Court of Appeals.

Argued February 7, 1984.

Decided March 21, 1984.

John C. Morrison, Washington, D.C., with whom Paul A. Kiefer, Washington, D.C., was on briefs, for appellant.

F. Joseph Nealon, Washington, D.C., for appellee.

Before FERREN, PRYOR and TERRY, Associate Judges.

PRYOR, Associate Judge:

This case involves the proper construction of a release from liability. The trial court ruled upon cross-motions for summary judgment in appellee's favor, and dismissed appellant's complaint with prejudice. We conclude that there was no genuine issue of material fact, and that the trial court did not err in awarding judgment to appellee, pursuant to Super.Ct.Civ.R. 56, as a matter of law. Hence, we affirm.

Appellant (Bolling) is a credit union regulated by federal law, see 12 U.S.C. §§ 1751-95j (1982), which conducts business in the District of Columbia. Appellee (Cumis) is a Wisconsin corporation which also does business here. In 1972, the parties executed a "Discovery Bond" which provided indemnification upon Bolling's proof of loss, for losses resulting from, inter alia, failure by any Bolling employee "to well and faithfully perform his duties."

In 1979, Bolling presented Cumis with claims for documented losses of over one million dollars. The claims stemmed from nearly seven hundred demonstrably unrecoverable loans, which were made by Bolling's agents assertedly in derogation of the organization's policy. Rather than commit the resources necessary to investigate these claims and defend a resultant lawsuit,¹ Cumis offered a settlement. Bolling agreed, signed a release dated February 7, 1980, and accepted payment of $250,000. The release, waiving all claims as of the execution date, is reproduced in the margin.²

In late 1981 and early 1982, Bolling returned to Cumis with claims for losses arising from an additional twenty-four unrecoverable loans made by the same employees responsible for the losses previously at issue. Indeed, seventeen of the twenty-four loans had been declared in default before the release was signed. Cumis refused to indemnify Bolling for these losses, claiming that such compensation had been waived by the release.

Bolling sued to collect, and has argued throughout these proceedings that although the twenty-four delinquent loans were made prior to February 7, 1980, they had not been charged off as losses before then, and consequently were not covered by the release as "claims of any kind or character which Bolling [had] or may have [had] against Cumis" as of the release date. Cumis contends contrarily that the present claims are barred by the release, which was drafted and intended to preempt any and all claims stemming from transactions occurring prior to the release date.³ Our reading of the release persuades us that Cumis is essentially correct that the plain language determines the outcome here. The language of the release is sufficiently clear to preclude, under parol evidence principles, the use of extrinsic evidence to probe the parties' intentions. Because there were no genuine issues of material fact, the trial court was confronted with a straightforward legal question. We agree with the trial judge that Cumis was entitled to judgment as a matter of law.⁴ Super.Ct.Civ.R. 56(c).

A release is a form of contract. The parties' intentions are paramount to construction of the instrument. Saslaw v. Rosenfeld, 148 A.2d 311, 312 (D.C.1959); see generally COUCH ON INSURANCE 2d § 60:18 (Rev. ed. 1983). If the release is facially unambiguous, we must rely solely upon its language as providing the best objective manifestation of the parties' intent. COUCH, supra, § 60:20; see, e.g., Saslaw, supra, 148 A.2d at 312; Locafrance US. Corp. v. Intermodal Systems Leasing, Inc., 558 F.2d 1113, 1114 (2d Cir.1977).

The present release provides that Cumis is not liable "for all claims of any kind or character which Bolling has or may have against Cumis to the date of this release . . ., including but not limited to all matters relating to Civil Action No. 13573-79. . . ." Addressing the question of intent, Bolling contends that the parties understood that there could be no "claim" prior to a determination of the loss suffered.⁵ Under Super.Ct.Civ.R. 56, the trial court was bound to entertain all favorable inferences from Bolling's pleadings and supporting documents before granting summary judgment in Cumis' favor, McCoy v. Quadrangle Development Corp., 470 A.2d 1256 at 1258 n. 3 (D.C.App.1983), but the language of the release renders Bolling's assertions immaterial to the outcome, even if true.

The release does not solely encompass claims for accrued or imputable losses, as determined by Bolling's accounting department. It expressly releases Cumis from "all claims of any kind or character" (emphasis added). Compare Wells v. Rau, 129 U.S.App.D.C. 253, 256, 393 F.2d 362, 365 (1968). Moreover, the release covers claims "which Bolling has or may have" (emphasis added) as of the execution date. Recognizing that we should "construe the contract as a whole so as to give meaning to all of the express terms," Washington Metropolitan Area Transit Authority v. Mergentime Corp., 200 U.S.App.D.C. 95, 97, 626 F.2d 959, 961 (1980), the language in the release must necessarily be read to encompass losses of which Bolling had knowledge, as well as those which existed but were not yet identified, at the time the release was signed.⁶

In support of its position Bolling also argues, relying heavily upon Fidelity and Deposit Co. of Maryland v. President and Directors of Georgetown College, 483 F.Supp. 1142 (D.D.C.1980), and Russell Gasket Co. v. Phoenix of Hartford Insurance Co., 512 F.2d 205 (6th Cir.1975), that the claims at issue were not, as a matter of law, claims as of the date of the release because actual losses were unknown at that time and a "claim" can only be for an actual, documented loss. We are not persuaded by this argument.

The cases relied upon by Bolling address whether a claim was presented in timely fashion in light of the applicable statutes of limitation. In such a context — statutory preclusion of a bona fide claim — it is reasonable to conclude, as the courts did in those instances, that a claim, which stems from the insured's discovery of a loss, does not arise before the insured has had an opportunity to determine the extent of the loss suffered. See Fidelity and Deposit Co., supra, 483 F.Supp. at 1147; Russell Gasket Co., supra, 512 F.2d at 208 (applying Ohio law).

These cases are inapposite because the context here is not statutory preclusion of a valid claim, but voluntary waiver thereof. When it signed the release, Bolling knew that at least seventeen of the twenty-four loans had been declared in default. On the facts of this case, we think it reasonable to conclude that Bolling should have realized that the agents responsible for these (and nearly seven hundred additional) bad loans may well have made others.⁷ Surely Bolling, which had complete access to its own corporate records, had the responsibility to make at least a cursory check of those records prior to signing a broadly-worded release.⁸ See Consolidated Rail Corp. v. Hudson Cement Corp., 518 F.Supp. 1116, 1117 (S.D.N.Y.1981); cf. Randolph v. Ottenstein, 238 F.Supp. 1011, 1014 (D.D.C.1965) (insurance company had no independent knowledge of plaintiff's injuries), aff'd, 122 U.S.App.D.C. 414, 355 F.2d 839 (1966). In the circumstances of this case, where there is neither allegation nor evidence of fraud, duress, or inequality of bargaining power between the parties, see id., 238 F.Supp. at 1013, Bolling may not have known the extent of its losses when it signed the release agreement, but it did have the means to articulate and bargain for appropriate language of reservation, if that was its intent. See Johnson, Drake & Piper, Inc. v. United States, 209 Ct.Cl. 313, 329-31, 531 F.2d 1037, 1047 (1976).

Terminology similar to that selected by the parties here has been construed consistently by courts as providing for nothing less than a general release. See, e.g., Saslaw, supra, 148 A.2d at 312; Locafrance, supra, 558 F.2d at 1114; Garrett v. Heisler, 149 Ga.App. 240, 241, 253 S.E.2d 863, 865 (1979). There is no reason to reach a contrary conclusion today.⁹ See Randolph supra, 238 F.Supp. at 1013. The judgment is

Affirmed.

FERREN, Associate Judge, dissenting:

I respectfully dissent because I believe there are genuine issues of material fact that preclude summary judgment.

I.

The release at issue provides:

WHEREAS, CUMIS Insurance Society, Inc. ("CUMIS") issued a bond number CPC 09992 dated January 11, 1972, with various endorsements and renewals, to Bolling Federal Credit Union ("Bolling");

WHEREAS, Bolling has made various claims under the bond for losses allegedly resulting from the unfaithful performance of its employees;

WHEREAS, CUMIS and Bolling have agreed to compromise the losses allegedly incurred by Bolling;

THE PARTIES THEREFORE AGREE:

In consideration of the sum of two-hundred and fifty thousand dollars ($250,000) paid by CUMIS to Bolling, receipt of which is acknowledged, Bolling hereby RELEASES, ACQUITS AND FOREVER DISCHARGES CUMIS Insurance Society, Inc., its agents, servants and employees, for all claims of any kind or character which Bolling has or may have against CUMIS to the date of this release under the above referenced bond, its endorsements and renewals, including but not limited to all matters relating to Civil Action No. 13573-79 filed in the Superior Court of the District of Columbia.

IN WITNESS WHEREOF, Bolling Federal Credit Union has affixed its seal by an authorized officer on this the 7[th] day of February, 1980.

This release refers to claims for losses under paragraph A of the bond:

THIS BOND PROVIDES COVERAGE

A. For direct loss of, or...