Gonzales v. Atnip

• Decision Date: 29 November 1984
• Docket Number: No. 7826,7826
• Citation: Gonzales v. Atnip, 692 P.2d 1343, 102 N.M. 194, 1984 NMCA 128 (N.M. App. 1984)
• Parties: Barry GONZALES, Plaintiff-Appellant, v. James Dwight ATNIP and John David Hodges, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

Page 1343

692 P.2d 1343

102 N.M. 194

Barry GONZALES, Plaintiff-Appellant, v. James Dwight ATNIP and John David Hodges, Defendants-Appellees.

No. 7826.

Court of Appeals of New Mexico.

Nov. 29, 1984.

Writ of Certiorari Denied Jan. 9, 1985.

Anthony F. Avallone, Law Systems of Las Cruces, P.A., Las Cruces, for plaintiff-appellant.

Jerald A. Valentine, Las Cruces, for defendants-appellees.

OPINION

WOOD, Judge.

The historical and current public policy of this state is to favor the settlement of disputed claims. Ratzlaff v. Seven Bar Flying Service, Inc., 98 N.M. 159, 646 P.2d 586 (Ct.App.1982). This policy applies to the settlement of lawsuits. Jones v. United Minerals Corp., 93 N.M. 706, 604 P.2d 1240 (1979); Bogle v. Potter, 68 N.M. 239, 360 P.2d 650 (1961); Esquibel v. Brown Construction Co., 85 N.M. 487, 513 P.2d 1269 (Ct.App.1973). The settlement of a lawsuit will be enforced by the courts. Jones. A party seeking relief from such a settlement has the burden of persuasion. Marrujo v. Chavez, 77 N.M. 595, 426 P.2d 199 (1967).

Plaintiff (Gonzales) filed this lawsuit seeking damages for personal injuries allegedly sustained in an automobile accident. The parties orally settled the lawsuit. Gonzales reneged, refusing to carry out the settlement. Defendants moved that the settlement be enforced. Gonzales contended the settlement could not be enforced because of the Release Act, NMSA 1978, Sections 41-1-1 and -2 (Repl.Pamp.1982). The trial court ordered Gonzales to comply with his settlement. Gonzales appeals. The question is whether noncompliance with the Release Act bars application of the public policy and prevents settlement of this lawsuit. We hold that the Release Act does not apply. We (a) state the background facts; (b) identify items not used in deciding the appeal; and (c) state the basis for our decision.

Background

The accident occurred in January 1981. Gonzales, the driver, and Castro, a passenger, sued. Castro's complaint was filed in July 1982, Gonzales' in September 1982. The cases were consolidated for trial, which was scheduled to begin February 6, 1984. An oral agreement of settlement was reached on January 19, 1984. The settlement provided that each plaintiff was to receive $32,500 and was on the condition that both plaintiffs settled all claims against defendants based on the accident. The trial setting and the depositions of two physicians were vacated because of the settlement.

Gonzales' attorney was the person who agreed to the settlement with defendants. The attorney's agreement to the settlement was conveyed to defendants only after a conference among Gonzales, Castro and their respective attorneys. There is no issue in this case concerning Gonzales' assent to the settlement or concerning his attorney's specific authority to settle. Augustus v. John Williams & Associates, Inc., 92 N.M. 437, 589 P.2d 1028 (1979). There is no issue in this case involving fraud, misrepresentation, overreaching of authority or mutual mistake. See Garcia v. Middle Rio Grande Conservancy District, 99 N.M. 802, 664 P.2d 1000 (Ct.App.1983). There is no claim that a settlement of a lawsuit is unenforceable if the settlement is oral. See Augustus and Esquibel.

In seeking to meet his burden of persuading the trial court that the settlement should not be enforced, Gonzales relies solely on the Release Act.

Section 41-1-1 provides:

A. No person whose interest is or may become adverse to a person injured who is either under the care of a person licensed to practice the healing arts, or confined to a hospital or sanitarium as a patient shall, within fifteen days from the date of the occurrence causing the person's injury:

(1) negotiate or attempt to negotiate a settlement with the injured patient; or

(2) obtain or attempt to obtain a general release of liability from the injured patient; or

(3) obtain or attempt to obtain any statement, either written or oral[,] from the injured patient for use in negotiating a settlement or obtaining a release.

B. Any settlement agreement entered into, any general release of liability or any written statement made by any person who is under the care of a person licensed to practice the healing arts or is confined in a hospital or sanitarium after he incurs a personal injury, which is not obtained in accordance with the provisions of Section 2 [41-1-2 NMSA 1978] of this act, requiring notice and acknowledgment, may be disavowed by the injured person within fifteen days after his discharge from the care of the persons licensed to practice the healing arts or his release from the hospital or sanitarium, whichever occurs first, and such statement, release or settlement shall not be evidential in any court action relating to the injury.

C. Any settlement agreement, any release of liability or any written statement shall be void unless it is acknowledged by the injured party before a notary public who has no interest adverse to the injured person.

Section 41-1-2 states a procedure for effecting a settlement with a person coming within the provisions of Section 41-1-1(B).

Gonzales testified, at the hearing on the motion to enforce the settlement, that he changed his mind about the settlement because "I didn't realize that I still had to be under the doctor's care" and "I just made a mistake." Gonzales' reliance on the Release Act involves being under the care of a physician, Section 41-1-1(B), the failure to follow the procedures of Section 41-1-2, and the failure of the settlement to be acknowledged by Gonzales before a notary public, Section 41-1-1(C).

The trial court ruled:

In this case the oral settlement was made after the controversy had been pending in court for almost a year and a half, and after extensive pre-trial discovery. The plaintiff Gonzales was represented by competent counsel. The oral settlement was not in the nature of a rush release, nor was such the subject of an oppressive practice, which are the acts prohibited by the Release Act * * * * To deny enforcement might prejudice the settlement made by the co-plaintiff Castro since the offer was to pay a total of $65,000.00, i.e., $32,500.00 each on condition that such would settle all matters in controversy with both parties * * * *

* * * [T]he facts in this proceeding are such that the statute is not applicable. The oral settlement agreement was made by the attorney for Gonzales, with his express authorization, and such was within the scope of his duties in representing his client in this proceeding, and the agreement is enforceable.

The trial court was of the view that its ruling was in accordance with, and not contrary to, Bolles v. Smith, 92 N.M. 524, 591 P.2d 278 (1979).

Items Not Used

In considering the impact of the Release Act upon Gonzales' settlement, the following items have not been considered.

(a) Do subparagraphs B and C of Section 41-1-1 have independent effect or do they depend upon subparagraph A of Section 41-1-1? This issue has not been expressly decided. Bolles and Mitschelen v. State Farm Mutual Automobile Insurance Co., 89 N.M. 586, 555 P.2d 707 (Ct.App.1976), suggest that subparagraphs B and C have independent effect. We assume that subparagraphs B and C have independent effect and, thus, we do not consider the interrelationship of the subparagraphs in Section 41-1-1. The assumption is pertinent because subparagraph A is not involved in this case.

(b) Subparagraphs B and C of Section 41-1-1 refer to both settlement agreements and releases of liability. The terms are not necessarily synonymous. See Burton v. Jennings Brothers, 88 N.M. 95, 537 P.2d 703 (Ct.App.1975); Financial Indemnity Co. v. Bevans, 38 Or.App. 369, 590 P.2d 276 (1979). Inasmuch as the statute refers to settlement agreements, and this case involves a settlement agreement, we do not consider any distinction between a settlement and a release.

(c) Sections 41-1-1(B) and 41-1-2 refer to one who is under the care of a person licensed to practice the healing arts. Gonzales testified he "had to be under the doctor's care." We assume, but do not decide, that this sparse testimony was sufficient to infer that the doctor's care was provided in good faith, was reasonably required, and was being provided at the time of the oral settlement or within the time for disavowal of a settlement. See Bolles and Section 41-1-1(B). Thus, we assume there was a factual basis for Gonzales' reliance on Sections 41-1-1(B) and 41-1-2.

(d) There are facts raising questions as to equity or "fairness." Gonzales settled. Deposition settings and the trial setting were vacated on the strength of the settlement. Should Gonzales' attempt to renege be successful, what is the impact on defendants' opportunity to dispose of this case by trial at the scheduled time? The settlement was conditioned on both plaintiffs settling their claims. Should Gonzales' attempt to renege be successful, it would deprive Castro of his settlement; Castro wants to retain his settlement. We have not considered these matters in reaching our decision.

Basis for Decision

This appeal involves the impact of the Release Act upon the settlement of a lawsuit. Three of the four New Mexico appellate decisions which discuss the Release Act did not involve this impact. In Ratzlaff, Catalano v. Lewis, 90 N.M. 215, 561 P.2d 488 (Ct.App.1977), and Mitschelen, the release was signed before there was a lawsuit concerning the injuries involved. Ratzlaff states: "Releases, being contractual in nature, are governed by the laws of contracts generally, as well as any specific legislative acts prescribing the manner by which such agreements may be validated." 98 N.M. at 162, 646 P.2d 586. We are not concerned with legislative requirements for a valid release where there is no litigation. The Ratzlaff statement is not controlling because it did not consider the issue we must decide. That issue is whether the Release Act operates to invalidate the settlement of a lawsuit.

Although the...