Garza v. Perry

• Decision Date: 30 January 2023
• Docket Number: 83377-4-I
• Citation: 523 P.3d 822
• Parties: Brianna GARZA and Mario Garza, wife and husband , Respondents, v. Matthew PERRY, an individual, Defendant. and American Family Insurance Company, Appellant Intervenor.
• Court: Washington Court of Appeals

523 P.3d 822

Brianna GARZA and Mario Garza, wife and husband , Respondents,

v. Matthew PERRY, an individual, Defendant.andAmerican Family Insurance Company, Appellant Intervenor.

No. 83377-4-I

Court of Appeals of Washington, Division 1.

Filed January 30, 2023

Brian Michael Sullivan, Cassidy Drew Spencer, Sullivan Law Group, 2932 Hoyt Ave., Everett, WA, 98201-4003, Philip Albert Talmadge, Gary Manca, Talmadge/Fitzpatrick, 2775 Harbor Ave. Sw, Third Floor Ste. C, Seattle, WA, 98126-2138, for Respondents.

Jodi Ann Mcdougall, Peter James Berg, Cozen O'Connor, 999 3rd Ave. Ste. 1900, Seattle, WA, 98104-4028, Michael Barr King, Linda Blohm Clapham, Carney Badley Spellman PS, 701 5th Ave. Ste. 3600, Seattle, WA, 98104-7010, for Appellant Intervenor.

Patrick A. Trudell, Kornfeld Trudell Bowen & Lingenbrink PLL, 3724 Lake Washington Blvd. Ne, Kirkland, WA, 98033-7802, for Other Parties.

PUBLISHED OPINION

Dwyer, J.

¶1 Brianna Garza and her spouse Mario Garza filed a lawsuit against Matthew Perry premised on injuries she sustained in an automobile collision. Two months prior to the scheduled trial date, the Garzas and Perry reached a settlement agreement by which the Garzas obtained a covenant judgment against Perry in the amount of $2.5 million. Perry's insurer, American Family Insurance Company (AmFam), intervened in the action in an attempt to nullify the settlement agreement based on the language of a mutual release clause contained within the written memorialization of the agreement. The trial court denied AmFam's request and found that the settlement agreement was reasonable. Finding no error, we affirm.

I

¶2 On March 27, 2018, Matthew Perry caused an automobile collision that injured Brianna Garza. Perry was solely at fault for the collision. Brianna¹ suffered extensive injuries as a result of the collision, including a traumatic brain injury (TBI). The TBI caused a complete personality change in Brianna: she now experiences memory problems, cannot multitask, becomes unexpectedly emotional, and is frequently anxious or irritable. Her personal and professional relationships have suffered as a result.

¶3 The Garzas filed suit against Perry on April 10, 2019. The Garzas extended multiple offers to AmFam to settle the matter, but AmFam declined them all.

¶4 After almost two years of failed settlement attempts, the Garzas approached Perry with an offer to settle in exchange for an assignment of rights. Both AmFam and Tyson & Mendes, the law firm it had appointed to represent Perry, advised Perry that he might wish to seek independent legal advice concerning the offer. Perry did so, hiring attorney Patrick Trudell to represent him.

¶5 On December 23, 2020, Perry and the Garzas entered into a settlement, agreeing to a covenant judgment in the amount of $2.5 million. AmFam was not a party to the settlement and played no role in its negotiation.

¶6 Paragraph 20 of the written memorialization of the settlement agreement reads as follows:

This Settlement Agreement shall be provided to Defendant's insurers for review so that Defendant's insurers may consider whether to fully protect Defendant from the claims of plaintiff for injuries and damages Plaintiffs sustained in the crash at issue. If, within 30 days from the date that this Settlement Agreement is signed, Defendant's insurers provide written proof to Defendant, and to Plaintiffs’ attorneys, that Defendant's insurers will pay all injuries and damages sustained by Plaintiffs in the crash at issue for which defendant may be found liable, and to fully indemnify defendant for any final judgment which may be entered against him for these claims, then the parties mutually release each other from all terms and conditions of this Settlement Agreement and all benefits and obligations of both parties to this agreement, including refund by Plaintiffs to Defendant of any payments made by Defendant pursuant to this Settlement Agreement.

¶7 The parties filed a notice of settlement the same day, striking the jury trial scheduled for February 8, 2021. Brian Sullivan, counsel for the Garzas, sent an e-mail to Tyson & Mendes notifying the firm that it had reached a settlement with Perry. A copy of the settlement agreement was attached to the e-mail. In the e-mail, Sullivan asked Tyson & Mendes to relay one final settlement offer to AmFam:

Please tell American Family the following: if we are forced to litigate this matter further, the floor value of this case will be $2.5M. With the assigned bad faith, consumer protection act, and other claims, the final value is much higher. My client wants resolution and hereby makes the following offer to American Family: she will agree to dismiss all potential claims arising from the crash, as well as her claims pursuant to the settlement and covenant judgment, for $2,500,000 if paid in full to my office within 10 business days (4:30 PM Pacific time on January 8, 2021).

¶8 On December 31, 2020, AmFam sent a letter to Sullivan and Trudell, informing them that it "agrees that it will waive the applicable limits of $250,000 so that the matter can proceed to trial. Should a verdict be returned in excess of $250,000 American Family will fully indemnify Mr. Perry and pay the full judgment." In this letter, AmFam further stated, "We understand by waiving the limits in this manner, the parties to the Settlement Agreement have now mutually released each other from all terms and conditions of the Settlement Agreement and all benefits and obligations of both parties to the Settlement Agreement."

¶9 Sullivan responded to AmFam's letter, informing AmFam that its interpretation of the settlement agreement was at odds with the parties’ intent. On January 14, 2021, the parties to the settlement agreement, the Garzas and Perry, executed a document entitled "Supplement to 12/23/2020 Settlement Agreement." The document reads in relevant part as follows:

14. The parties’ intent for paragraph 20 was not for American Family to force a trial and formal judgment to be entered against Mr. Perry, but instead for the Court to approve the reasonableness of the Settlement Agreement with this Supplemental Agreement incorporated, for American Family to promptly pay the approved settlement, with the agreement to pay the approved settlement the triggering event to release further actions by the parties, such as of the assigned claims for bad faith and the required cooperation of Mr. Perry in that subsequent action.

15. The parties did not anticipate the issue that has arisen as a result of the drafting of Paragraph 20, and now acknowledge that Paragraph 20 of the Settlement Agreement has created confusion and by its plain language is subject to interpretation in a manner at odds with the intent of the parties.

16. Therefore, the parties agree, pursuant to Paragraph 21 of the Settlement Agreement that the contents (and any releases) of Paragraph 20 from the Settlement Agreement are hereby stricken from the December 23, 2020 Settlement Agreement, and replaced as follows:

The Settlement Agreement shall be provided to Defendant's insurers for review so that Defendant's insurers may consider whether to fully protect Defendant from the claims of Plaintiffs for injuries and damages Plaintiffs sustained in the crash at issue. Plaintiffs will be noting a reasonableness hearing to approve the Settlement Agreement with the Superior Court. If, within 10 business days of the Court's Order on the reasonableness hearing, American Family pays the approved amount to Plaintiffs’ Counsel, in trust for the Garza Family, then the parties agree to mutually release each other from all claims and to end all claims and litigation over the March 27, 2018 crash forever.

¶10 On January 11, 2021, AmFam moved to intervene in the lawsuit between the Garzas and Perry. The trial court granted the motion.

¶11 On January 22, 2021, the Garzas filed a "Motion for Court Approval of the Reasonableness of Settlement." The Garzas requested that the motion be heard on January 28, 2021.

¶12 Three days later, AmFam filed a motion to either strike or continue the hearing on the Garzas’ motion. In its motion, AmFam indicated that it would be filing a motion "to enforce the contract between AmFam, the Garzas, and Mr. Perry that formed when AmFam unambiguously accepted the terms and conditions of Paragraph 20." AmFam argued that a continuance of the reasonableness hearing would prevent the parties from incurring expenses in preparing for what could be a moot issue and would allow it time to conduct necessary discovery. AmFam further argued that responding to the reasonableness motion would require it to disclose Tyson & Mendes’ litigation strategy, which, if the trial court granted AmFam's motion to enforce and returned the matter to the trial calendar, would provide the Garzas with an unfair advantage in the ongoing proceedings.

¶13 AmFam also filed a motion for partial summary judgment, asking the trial court to enforce the original paragraph 20 of the settlement agreement and reset the matter for trial. This motion was set to be heard on February 23, 2021.

¶14 On January 29, 2021, Judge David Kurtz of the Snohomish County Superior Court struck the reasonableness hearing from the calendar. In his order, Judge Kurtz deemed the reasonableness hearing "premature" in light of the multiple competing motions filed by the Garzas and AmFam. Judge Kurtz did not set a new date for the reasonableness hearing.

¶15 Although Judge Kurtz had already stricken the reasonableness hearing, AmFam nonetheless filed a reply in support of its motion to strike on February 1, 2021. Therein, AmFam reiterated its request to authorize a period of discovery and asked the court to schedule the reasonableness hearing for no earlier than 45 days after the court's decision on its motion for partial summary judgment.

¶16 On February 2, 2021, Judge Richard Okrent issued a ruling resetting the reasonableness hearing for March 2, 2021. Judge Okrent's order reads in relevant part as...