Hansen v. Ford Motor Co.

Decision Date07 July 1995
Docket NumberNo. 21987,21987
Citation1995 NMSC 44,120 N.M. 203,900 P.2d 952
PartiesBrenda K. HANSEN, f/k/a Brenda K. Sims, Plaintiff-Appellant, v. FORD MOTOR COMPANY, a Delaware corporation, Al Allred Ford Lincoln-Mercury, Inc., a New Mexico corporation, and TRW, Inc., an Ohio corporation, Defendants-Appellees.
CourtNew Mexico Supreme Court
OPINION

RANSOM, Justice.

Brenda Hansen was injured in January 1990 when the car she was driving collided with a car driven by Della Irene Pease. In settlement of her claims against Pease, Hansen executed a general release in April 1991. Two years later Hansen sued Ford Motor Company, Al Allred Ford Lincoln-Mercury, Inc., and TRW, Inc. (collectively, "Ford"), claiming that the air bag in her automobile malfunctioned during the collision, causing her injury. Ford moved for summary judgment, claiming that the general release signed by Hansen released Ford from all liability arising from the accident.

Ruling that the release unambiguously includes Ford, the trial court entered summary judgment. Hansen appeals to this Court pursuant to SCRA 1986, Section 12-102(A)(1) (Repl.Pamp.1992) (count sounding in contract). We question whether under principles of traditional contract law the terms of a general release facially and unambiguously include third parties who are not specifically identified as beneficiaries. The better policy, in any event, is to recognize an inherent circumstantial ambiguity as to the intentions of the parties to a general release. Because boilerplate language purporting to discharge all persons whose conduct may have contributed to Hansen's injuries is not sufficiently specific to identify Ford as a third-party beneficiary of the release, we reverse and remand for a determination of the parties' intentions under a rebuttable presumption that the release benefits only those persons specifically designated.

Facts and proceedings. The release in question--a standard form which includes blanks for entering the amount of consideration paid, the names of releasees, and the date and location of the accident--provides:

For the Sole Consideration of [$29,000] to be paid the undersigned hereby releases and forever discharges Paul M. Pease, Della Irene Pease, and American National Property and Casualty Company[,] their heirs, executors, administrators, agents and assigns, and all other persons, firms or corporations liable or, who might be claimed to be liable ... from any and all claims, demands, damages, actions, causes of action or suits ... on account of all injuries ... which have resulted or may in the future develop from an accident which occurred on or about the 31st day of January....

....

Undersigned hereby declares that the terms of this settlement have been completely read and are fully understood and voluntarily accepted ... for the express purpose of precluding forever any further or additional claims arising out of the aforesaid accident. (Emphasis added.)

Hansen has conceded that she had seen releases of this type before and routinely used them as part of her job as an insurance claims adjuster for State Farm. She argues that the release is ambiguous because it is "reasonably and fairly susceptible of different constructions" and that she in fact had intended to release only the persons specifically named in the release--Paul Pease, Della Pease, and the Peases' insurance company, American National Property and Casualty Company. Hansen proffered her deposition testimony as to her intent and also requested the court to hold an evidentiary hearing to determine the intent of the parties to the release. Ford countered that Hansen's products-liability claims arose out of the accident and that it was thus included within the language of the general release. Relying on Hendren v. Allstate Insurance Co., 100 N.M. 506, 672 P.2d 1137 (Ct.App.1983), the trial court stated that it was "convinced that the law in New Mexico declares that the general release signed by Plaintiff ... necessarily includes all Defendants in the case at bar."

Hansen appeals the entry of summary judgment, citing four grounds for reversal: the trial court erroneously applied the "four-corners" standard of contract interpretation; the terms of the release are ambiguous, and the trial court should have held an evidentiary hearing to determine the intent of the parties; the release should be rescinded or reformed because there was a mutual mistake; and the release should be rescinded because there was no "meeting of the minds."

Burden is on third party who neither negotiated nor gave consideration for release to prove that it was an intended beneficiary of the release. Ford seeks to be discharged as a third-party beneficiary of the general release. It is undisputed Ford neither took part in the settlement negotiations that culminated in the execution of this release nor contributed any money to the consideration paid for the release. Hansen contends that Ford had the burden to prove that she and the Peases intended by the release to discharge Ford from liability.

In Hoge v. Farmers Market & Supply Co., 61 N.M. 138, 143, 296 P.2d 476, 479 (1956), this Court agreed that "one claiming to be a third party beneficiary of an agreement made by others has the burden of proving that he was intended by the makers of the agreement to be such beneficiary." A prospective third-party beneficiary may prove the intent of the parties to an agreement by relying on the unambiguous language of the agreement itself, Valdez v. Cillessen & Son, Inc., 105 N.M. 575, 581, 734 P.2d 1258, 1264 (1987), or, in the absence of such language, on extrinsic evidence such as the circumstances surrounding the execution of the agreement, Permian Basin Inv. Corp. v. Lloyd, 63 N.M. 1, 7, 312 P.2d 533, 537 (1957).

A number of courts have applied these general principles of contract law in cases involving the scope of a general release. See, e.g., Neves v. Potter, 769 P.2d 1047, 1053-54 (Colo.1989) (en banc) (holding that parol evidence is admissible to determine intent of parties); Harris v. Grizzle, 599 P.2d 580, 586 (Wyo.1979) (allocating burden of proof to prospective third-party beneficiaries). We agree that "alleged wrongdoers who were not parties to the release and made no payment toward satisfaction can fairly be called on to show that ... the release which they rely on was intended to discharge them." Harris, 599 P.2d at 586. Hence, consistent with well-established principles applicable to contracts in general, and releases in particular, Ford had the burden to prove that it was an intended beneficiary of the release executed by Hansen and the Peases.

An inherent ambiguity in any general release is recognized as a matter of policy. Hansen asserts that the trial court committed error by refusing to consider parol evidence to determine whether the terms of the release were ambiguous. Ford counters that the trial court did consider parol evidence but that the evidence adduced was insufficient to show an ambiguity, grounds to void the release, or grounds to reform the release. Hence, argues Ford, the court properly entered summary judgment.

Under previous New Mexico decisions, releases have been interpreted using general contract law principles. See, e.g., Ratzlaff v. Seven Bar Flying Serv., Inc., 98 N.M. 159, 162, 646 P.2d 586, 589 (Ct.App.), cert. denied, 98 N.M. 336, 648 P.2d 794 (1982). Hansen thus correctly asserts that under this Court's decisions in Mark V, Inc. v. Mellekas, 114 N.M. 778, 781, 845 P.2d 1232, 1235 (1993), and C.R. Anthony Co. v. Loretto Mall Partners, 112 N.M. 504, 508-09, 817 P.2d 238, 242-43 (1991), the trial court could consider extrinsic evidence to determine whether the facially unambiguous terms of the release are in fact ambiguous. Hansen incorrectly asserts, however, that her deposition testimony established an ambiguity and that it was thus error for the court not to consider it.

On the third-party-beneficiary issue--whether the general release executed by Hansen and the Peases inures to the benefit of Ford--the intent of the parties controls. Neves, 769 P.2d at 1053-55. Hansen presented evidence that discloses her subjective understanding that the release did not include Ford. Nothing indicates that the Peases thought so or knew this to be Hansen's understanding. A "unilateral, subjective intent not to include" third parties as beneficiaries of the agreement is not determinative. Jaramillo v. Providence Washington Ins. Co., 117 N.M. 337, 342, 871 P.2d 1343, 1348 (1994). From the deposition testimony presented by Hansen, we are able to discern nothing new about the meaning attributed to the language of the release by the Peases and their insurance company.

Because Hansen's deposition discloses only her unilateral, subjective intent, it was insufficient in itself to establish an ambiguity in the terms of the release. For similar reasons, Hansen's testimony was insufficient to establish a mutual mistake. Finally, Hansen did not adduce any evidence of fraud or overreaching that would establish grounds to void the release. Thus, even if the trial court refused to consider Hansen's deposition testimony, we would not reverse the entry of summary judgment on this...

To continue reading

Request your trial
32 cases
  • Neverkovec v. Fredericks
    • United States
    • California Court of Appeals Court of Appeals
    • 18 d3 Agosto d3 1999
    ...be consulted to resolve an ambiguity. (See, e.g., Noonan v. Williams (D.C.App.1996) 686 A.2d 237, 241-244, Hansen v. Ford Motor Co. (1995) 120 N.M. 203, 900 P.2d 952, 956-958, and Sims v. Honda Motor Co. (1993) 225 Conn. 401, 623 A.2d 995, 999-1001.)same privilege to rely on the four corner......
  • Noonan v. Williams
    • United States
    • D.C. Court of Appeals
    • 12 d4 Dezembro d4 1996
    ...compensation for the injuries sustained." Neves v. Potter, supra, 769 P.2d at 1053 (citing cases); accord, Hansen v. Ford Motor Co. supra note 4, 120 N.M. at 205, 900 P.2d at 954.7 Advocates of the "intent" rule argue that both the "flat bar" and "specific identity" rules are too extreme an......
  • Ormrod v. Hubbard Broad., Inc., CIV 17-0706 JB/KK
    • United States
    • U.S. District Court — District of New Mexico
    • 6 d1 Agosto d1 2018
    ...not state there was any sufficient consideration to establish a contract or the specificity required under Hansen v. Ford Motor Co.," 1995-NMSC-044, 120 N.M. 203, 900 P.2d 952. Motion at 4.Ormrod then asserts that KOB 4 has not pled facts sufficient to satisfy promissory estoppel's elements......
  • Gutierrez v. City of Albuquerque
    • United States
    • Court of Appeals of New Mexico
    • 6 d1 Novembro d1 1995
    ...bar relief against the City is one that raises factual issues concerning the intent of the parties, see generally Hansen v. Ford Motor Co., 120 N.M. 203, 900 P.2d 952 (1995), we believe that the City acted too late in first raising the issue after the trial was over and the evidence See SCR......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT