Grzebik v. Kerr

• Decision Date: 26 June 1979
• Docket Number: Docket No. 78-3636
• Citation: 283 N.W.2d 654,91 Mich.App. 482
• Parties: Barbara Rose GRZEBIK, Plaintiff-Appellant, v. Nolan R. KERR, Defendant-Appellee. Harold C. POLING, Defendant, Third-Party Plaintiff, Appellee and Cross-Appellant, v. Nelva Ruth KEEFER, Third-Party Defendant, Appellee, Cross-Appellee. 91 Mich.App. 482, 283 N.W.2d 654
• Court: Court of Appeal of Michigan — District of US

Page 654

283 N.W.2d 654

Barbara Rose GRZEBIK, Plaintiff-Appellant, v. Nolan R. KERR, Defendant-Appellee.

Harold C. POLING, Defendant, Third-Party Plaintiff, Appellee and Cross-Appellant, v. Nelva Ruth KEEFER, Third-Party Defendant, Appellee,

Cross-Appellee.

Docket No. 78-3636.

91 Mich.App. 482, 283 N.W.2d 654

Court of Appeals of Michigan.

June 26, 1979.

Released for Publication Oct. 10, 1979.

[91 MICHAPP 483] Kenneth E. Prather, Detroit, for Barbara Rose Grzebik.

Peter J. Collins, Detroit, for Nolan R. Kerr.

Richard T. Haynes, Plymouth, for Harold C. Poling.

[91 MICHAPP 484] Peter A. Davis, Ann Arbor, for Melva Ruth Keefer.

Before BEASLEY, P. J., and ALLEN and RILEY, JJ.

PER CURIAM.

Plaintiff appeals the circuit court's August 30, 1978 order granting accelerated judgment in favor of defendants on the grounds that a release executed by plaintiff barred her cause of action. GCR 1963, 116.1(5). Defendant Poling cross-appeals the dismissal of his third-party complaint against defendant Keefer.

On April 13, 1974, defendants Kerr and Poling were operating their motorcycles on public roads in Ypsilanti. They were allegedly racing one another. Plaintiff was a passenger on the Poling motorcycle, and one Steven Elkins, not a party herein, was a passenger on the Kerr motorcycle. At an intersection the motorcycles collided with a car operated by Keefer. All four persons on the motorcycles were injured, with plaintiff being the most seriously injured.

The four motorcyclists were then represented by the same counsel. On May 22, 1974, defendant Kerr initiated a negligence suit against Keefer, and Keefer filed a third-party complaint joining Poling as a third-party defendant. Plaintiff never started a suit against Keefer. On July 7, 1975, subsequent to negotiations, Keefer's insurer offered to settle with all parties at the policy limit of $50,000. The $50,000 was divided as follows: Grzebik $33,000, Elkins $4,000, Poling $2,000, and Kerr $11,000. In its offer, the insurer made it clear that the offer was contingent on "full releases of all claims" from all four parties, and dismissal of [91 MICHAPP 485] the Kerr suit. These conditions were met. The releases signed by each party were entitled "RELEASE IN FULL" and were identical except for names and amounts. Plaintiff's release stated that

"I, Barbara Rose (Turner) (plaintiff), for the sole consideration of $33,000 (Thirty Three Thousand) Dollars, to me in hand paid by Nelva Keefer have released and discharged, and by these presents do for myself, my heirs, executors, administrators and assigns, release and forever discharge said Nelva Keefer and all other persons, firms or corporations from all claims, demands, damages, actions, or causes of action, on account of damage to property, bodily injuries or death, resulting, or to result, from an accident to me which occurred on or about the 13th day of April 1974, by reason of an auto/motorcycle accident and of and for all claims or demands whatsoever in law or in equity, which I, my heirs, executors, administrators, or assigns can, shall or may have by reason of any matter, cause or thing whatsoever prior to the date hereof.

"It is understood and agreed that this is a full and final release of all claims of every nature and kind whatsoever, and releases claims that are known or unknown, suspected and unsuspected."

Plaintiff signed this release on July 21, 1975.

The instant case was commenced on January 14, 1977, by plaintiff. She sued Poling and Kerr on their alleged negligence in operating their motorcycles which resulted in the accident which injured her. Poling added Keefer as a third party defendant on the basis of his potential contribution claim against Keefer if plaintiff prevailed in her suit. ¹ Defendants Poling and Kerr interposed [91 MICHAPP 486] plaintiff's release to Keefer as a defense to the suit. The lower court agreed that the release precluded the instant suit and granted accelerated judgment for defendants. Poling's suit against Keefer was dismissed also.

The intent of the parties to a release, expressed in the terms of the release, governs the scope of the release. Detroit Automobile Inter-Insurance Exchange v. Joseph, 67 Mich.App. 393, 241 N.W.2d 221 (1976), Auto-Owners Ins. Co., v. Higby, 57 Mich.App. 604, 226 N.W.2d 580 (1975). A release covers only the claims intended by the parties to be released. Auto-Owners Ins. Co., v. Higby, supra, at 606, 226 N.W.2d 580. A release must be "fairly and knowingly" made. Denton v. Utley, 350 Mich. 332, 342, 86 N.W.2d 537 (1957), Farwell v. Neal, 40 Mich.App. 351, 355, 198 N.W.2d 801 (1972). Hence, equity will intervene where there is concealment, fraud, duress, or mutual mistake, Denton v. Utley, supra, at 342, 86 N.W.2d 537, Detroit Automobile Inter-Insurance Exchange v. Joseph, supra, at 396, 241 N.W.2d 221, and our review is De novo. Farwell v. Neal, supra, at 355, 198 N.W.2d 801.

On appeal and in the court below, plaintiff contends that all parties labored under the mistaken understanding that plaintiff had no negligence cause of action because of the guest passenger statute, M.C.L. § 257.401; M.S.A. § 9.2101, and consequently her release was not intended to be a release of such a claim. Plaintiff makes this argument because when she executed her release on July 21, 1975 (and when all other parties executed their releases), the guest passenger statute precluded guest passenger suits based on ordinary negligence, but this statute was declared unconstitutional on September 8, 1975, in Manistee Bank & Trust Co., v. McGowan, 394 Mich. 655, 232 N.W.2d 636 (1975), and the holding in Manistee Bank was [91 MICHAPP 487] given retroactive effect. Dunham v. Lowinger, 395 Mich. 793, 235 N.W.2d 153 (1975), Old Reliable Fire Ins. Co., v. Schaub, 85 Mich.App. 294, 271 N.W.2d 206 (1978). Defendants, on the other hand, argue that the release is broad enough to cover this situation and it was precisely this type of situation that the release was intended to cover.

The lower court accepted defendants' position, and so do we. The broad language of the release on its face certainly encompasses a negligence claim such as plaintiff's. Indeed, plaintiff does not suggest otherwise. Plaintiff's position, based on the theory of mutual mistake, is that nobody realized that plaintiff was not barred by the guest passenger statute from prosecuting a negligence claim against the operators of the motorcycles. We cannot accept plaintiff's reasoning, since the release was expressly designed to release any and all claims. The fact that the existence of a certain claim was not recognized by the parties would be the very possibility the release was intended to cover. The fact that in reality the parties could not know of this possible claim does not affect our conclusion since, as a matter of law, the claim did exist and the release was therefore intended to cover it.

This is not the usual type of case where a release is attacked on the basis of mutual mistake as to the extent of injury. ² Plaintiff is not claiming additional, previously unknown, injuries. Nor did plaintiff receive an insubstantial sum in releasing her claims for $33,000. Nothing has happened to [91 MICHAPP 488] plaintiff to make the consideration any less fair now than it was when plaintiff agreed to it. This leads us to an important distinction raised in Smith v. City of Flint School District, 80 Mich.App. 630, 264 N.W.2d 368 (1978). In that case plaintiff executed a release with defendant's employee unaware that he was an employee, and under well-settled law the release was held to release the defendant-employer and could not be avoided on the grounds of mistake. The distinction noted by the Smith Court was that in the usual "unforeseen injury" cases it is virtually impossible to discover the injury, whereas in the Smith case an "unknown defendant" was involved which could be discovered, but the plaintiff had simply failed to make the discovery. The instant case falls much closer to the unknown defendant situation than to one of unforeseen injury.

While there is some merit to plaintiff's position that its negligence action against defendants was undiscoverable, under the circumstances of this case it is better to consider the action as one within plaintiff's realm of knowledge. It was common knowledge in the state that the guest passenger statute was under attack. The Manistee Bank case had been argued over a year prior to signing of plaintiff's release, and a decision was anticipated. If the parties had not intended for the release to cover potential guest passenger claims, it would have been a simple matter to provide an exception in the release. Moreover, from the record in this case it is apparent that a possible guest passenger claim was a consideration, since Keefer insisted on full release from all parties. Keefer, settling at the maximum limit of her policy, had just cause for concern about any suit in which she might be added for purposes of contribution. The [91 MICHAPP 489] possibility of a negligence claim against Kerr and/or...