Edwards v. Comstock Insurance Co.

Decision Date10 November 1988
Citation205 Cal.App.3d 1164,252 Cal.Rptr. 807
CourtCalifornia Court of Appeals Court of Appeals
PartiesVincent EDWARDS et al., Plaintiffs and Appellants, v. COMSTOCK INSURANCE COMPANY et al., Defendants and Respondents. Civ. B031563.

LaFollette, Johnson, DeHaas & Fesler, Alfred W. Gerisch, Jr., and Melinda W. Ebelhar, Los Angeles, for defendants and respondents.

BOREN, Associate Justice.

The trial court granted an insurer's motion for summary judgment against its insureds on the ground that the insureds, by signing a general release of all claims, had relinquished their right to pursue an action against the insurer for unfair claims settlement practices. We affirm.


In May of 1984, Vincent and Laura Edwards were injured in an automobile accident. The driver of the other vehicle was uninsured. The Edwards, through an attorney, presented a claim for damages to their own carrier, Comstock Insurance Company, under the uninsured motorist provisions of their policy. Comstock made a settlement offer to the Edwards within three weeks after receiving documentation of their claims, but the Edwards rejected it. 1 The rejection letter announced that the Edwards considered Comstock's offer to have been made in bad faith. A second offer from Comstock was likewise rejected, and the Edwards' attorney once again threatened to bring an action against Comstock for unfair claims settlement practices.

The Edwards' attorney delivered on his threats by filing suit against respondents on October 14, 1986. The complaint sets forth 11 causes of action alleging, in essence, that respondents acted according to a preconceived scheme designed to delay and underpay valid insurance claims against them.

On August 25, 1987, respondents filed the motion for summary judgment which concerns us here. In their motion, respondents presented evidence that the Edwards--before instituting their "bad faith" action--had accepted settlement payments of $5,000 and $6,750. In connection with this transaction, both of the Edwards had signed documents entitled "Release of All Claims" in which they agreed to release respondents "from any and all rights, claims, demands, actions, causes of action and damages of whatever kind whatsoever including general, special, compensatory and punitive damages known or unknown, whether in contract, tort or otherwise resulting from the loss sustained by [the Edwards] which occurred on or about May 2, 1984 at or near Los Angeles County, California." The releases also provide that the Edwards "understand and agree that this Release extends to and includes any and all damages, injuries, including, but not limited to emotional distress, and claims which were not anticipated, expected, known about or suspected to exist, or claims which exist and to any and all damages, injuries or claims which may develop in the future." Respondents showed that the Edwards were represented by an attorney at the time the releases were signed.

In their opposition to respondents' motion for summary judgment, the Edwards do not deny signing the releases, but contend that their intent was only to release respondents from the personal injury claims. They each aver that "it was specifically not my intention to release the Comstock Insurance Company nor [sic ] any of the other defendants from any claims for bad faith, unfair practices, or violations of California Insurance Code Section 790.03 which I might, and subsequently did, allege due to their handling of my uninsured motorist claim." They do not state that they communicated this intention to their insurer at the time they signed the "Release of All Claims."

The trial court granted respondents' motion for summary judgment. It concluded that parol evidence of the Edwards' intent not to release their bad faith claims was inadmissible to defeat the "clear and unambiguous" language of the release agreements, which bars "all" claims. The court added that even if extrinsic evidence were admitted to explain the release agreement its judgment in favor of respondents would not be altered because the Edwards' intentions in regard to a bad faith suit were not disclosed to the respondents at the time the Edwards released them from all claims. The Edwards appeal from this judgment.


Appellants urge us to interpret the plain language in their release agreements discharging respondents from "any and all claims, demands, actions and causes of actions" to mean "all claims except claims for bad faith, unfair practices or violations of the Insurance Code." Under the circumstances presented here, we decline to rewrite appellants' release agreements to include a concept they failed to enunciate at the time they accepted the terms of the settlement with their insurer.

"The general rule is that when a person with the capacity of reading and understanding an instrument signs it, he is, in the absence of fraud and imposition, bound by its contents, and is estopped from saying that its provisions are contrary to his intentions or understanding; but it is also a general rule that the assent of a party to a contract is necessary in order that it be binding upon him, and that, if the circumstances of a transactions are such that he is not estopped from setting up his want of assent, he can be relieved from the effect of his signature if it can be made to appear that he did not in reality assent to it." (Smith v. Occidental Etc. Steamship Co. (1893) 99 Cal. 462, 470-471, 34 P. 84.)

In the Smith case, the Supreme Court permitted the introduction of extrinsic evidence as proof that the circumstances surrounding the execution of a release indicated a lack of assent. The testimony showed that the releasor was incapacitated by his injuries and that he could not and did not read the release before signing it. (Id. at p. 471, 34 P. 84.) Similarly, releases were invalidated in Tyner v. Axt (1931) 113 Cal.App. 408, 298 P. 537, where an insurance adjustor extracted a release from a 60-year old woman "suffering from nervous shock and ... bodily injuries" (id. at p. 415, 298 P. 537) while she was still hospitalized shortly after an accident, and in Megee v. Fasulis (1943) 57 Cal.App.2d 275, 134 P.2d 815, where the releasor was induced by an insurance adjustor to sign a release while he was hospitalized and lacked funds to pay for treatment. By contrast, in Haviland v. Southern California Edison Co. (1916) 172 Cal. 601, 158 P. 328, the Supreme Court refused to allow a releasor to escape the effect of a release providing for a "discharge from any and all actions or causes of action, claims, demands and liability of every kind and nature whatsoever" (id. at p. 607, 158 P. 328) when there was no evidence showing that the releasor was not in full possession of his faculties and did not know the meaning of the words to which he was agreeing. Said the court, "The plaintiff knew that he was signing a paper which, by its plain terms, released the defendant from liability. He was under no misapprehension regarding its language or its meaning. His claim is that he was deceived into the belief that the...

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