Loyal v. Norfolk Southern Corp.

• Decision Date: 02 October 1998
• Docket Number: No. A98A1852.,A98A1852.
• Citation: 234 Ga. App. 698,507 S.E.2d 499
• Parties: LOYAL v. NORFOLK SOUTHERN CORPORATION et al.
• Court: Georgia Court of Appeals

507 S.E.2d 499

234 Ga. App. 698

LOYAL v. NORFOLK SOUTHERN CORPORATION et al.

No. A98A1852.

Court of Appeals of Georgia.

October 2, 1998.

Reconsideration Denied October 14, 1998.

Edward S. Cook, Lawrence H. Cooper, Atlanta, for appellant.

Hall, Bloch, Garland & Meyer, Mark E. Toth, Kimberly C. Harris, Macon, for appellees.

ELDRIDGE, Judge.

William Loyal filed suit against Norfolk Southern Corporation and Norfolk Southern Railway Company (collectively "Norfolk Southern") under the Federal Employers' Liability Act ("FELA"), 45 USC § 51 et seq., for hearing loss he allegedly sustained related to his employment with the railroad. A Bibb County trial court granted summary judgment to Norfolk Southern. Loyal appeals from that order.

Loyal began employment with Norfolk Southern in 1974 and spent five years as a switchman and eight years as an engineer. In 1987, despite the fact that he had less than 20 years employment with the railroad, Loyal learned that he qualified for a full disability retirement due to a medical condition unrelated to his employment. At the same time, Norfolk Southern offered a compensation package for senior employees who opted for early retirement, with additional benefits in excess of a disability retirement.

Loyal took a disability retirement from the railroad specifically because of his medical condition. Loyal's disability retirement was in no way contingent upon accepting the company's early retirement option.¹ However, Loyal also accepted the early retirement compensation package offered by the railroad that included pension benefits, unpaid wages, earned vacation pay, and $50,000. As a part of the early retirement package, Loyal signed a general release as to all known and unknown occupational diseases and risks, which release stated in pertinent part, as follows: "[I]n consideration of the sum of FIFTY THOUSAND DOLLARS ($50,000), the receipt of which is hereby acknowledged, [I] hereby resign and surrender any right to employment by [Norfolk Southern], and hereby release and forever discharge [Norfolk Southern] from any claim (with the exception of vested pension rights), demand, action or cause of action, of any kind whatsoever, known or unknown, which I have or could have on account of, or in any manner arising out of or connected with, my employment."

Thereafter, Loyal received a compensation check for $34,240.63 ($50,000 minus taxes). In addition, he began receiving disability retirement benefits.²

Nine years later, in the spring of 1996, Loyal saw a notice in his local newspaper advertising "Free health screening for railroad workers" at the Landmark Hotel in Augusta. The screening was sponsored by the Florida law firm of Collins & Wichrowski. Loyal attended the free health screening at the hotel. Among other tests, an audiogram hearing test was performed. At that time, "[i]t was told to me that I had a definitive hearing loss according to that graph." It was only after this hearing test that Loyal first "became aware that [he] had this hearing loss." Apparently, job-related mandatory hearing tests performed prior to his retirement did not indicate any injury. According to Loyal, "I really wasn't—it's just been since I had a hearing test done that I really knew that I did have a hearing problem and have really noticed it so much more."

On September 30, 1996, Loyal and two other retired railroad employees allegedly suffering employment-related hearing loss filed the instant action in the State Court of Bibb County seeking $10 million in damages. The plaintiffs were represented by, inter alia, the law firm of Collins & Wichrowski. As to Loyal's cause of action, Norfolk Southern filed a motion for summary judgment, asserting that Loyal's claim was barred by the release he signed at the time he accepted the railroad's early retirement compensation package. The trial court agreed and granted summary judgment to Norfolk Southern. Held:

In a FELA case, federal law governs substantive issues as to the validity of a release. Dice v. Akron &c. R. Co., 342 U.S. 359, 361, 72 S.Ct. 312, 96 L.Ed. 398 (1952); Eubanks v. CSX Transp., 223 Ga.App. 616, 617, 478 S.E.2d 387 (1996). The party attacking the release "must bear the burden of showing that the contract he has made is tainted with invalidity, either by fraud practiced upon him or by a mutual mistake under which both parties acted." Callen v. Pennsylvania R. Co., 332 U.S. 625, 630, 68 S.Ct. 296, 92 L.Ed. 242 (1948); Eubanks v. CSX Transp., supra at 618, 478 S.E.2d 387.

Here, however, Loyal does not claim fraud, mutual mistake, or lack of consideration. He concedes that he knowingly and voluntarily signed the release in exchange for the $50,000. Instead, Loyal claims that the release is void as a matter of law because it serves to exempt Norfolk Southern from FELA liability which is proscribed by 45 USC § 55, which states: "Any contract, rule, regulation, or device whatsoever, the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this act, shall to that extent be void."

While Loyal recognizes that under federal law a release of a FELA claim may act as a bar to subsequent litigation of that claim, Loyal maintains that such a release is valid only as to claims regarding injuries which are known at the time the release is executed and cannot serve to exempt an employer from liability for an injury that was unknown when the release was executed. Although such is not the law under FELA, Loyal argues that a general release is void ab initio to the extent that it applies to an injury unknown at the time of settlement.

The resolution of this case requires a two-prong analysis: (1) whether, as per Loyal's contention, the instant release is invalid as a matter of law when applied to a claim for an injury that was unknown at the time the release was signed; and (2) if the instant release is not invalid as a matter of law when applied to an injury unknown at the time of execution, whether such release applies to Loyal's claim of job-related hearing loss so as to support summary judgment.

1. In Callen, the United States Supreme Court refused to invalidate a general release of "`all claims and demands which I have or can or may have against the said Pennsylvania Railroad Company,'" id. at 626, 68 S.Ct. 296, even though the plaintiff in Callen contended that such release "violates § 5 of the Federal Employers' Liability Act."³ Id. at 630, 68 S.Ct. 296. Further, in Hogue v. Southern R. Co., 390 U.S. 516, 88 S.Ct. 1150, 20 L.Ed.2d 73 (1968), the Court examined a contract that released an employer for injury in excess of that known at the time the release was signed. The Court determined that there was "no occasion to decide whether the release here involved violated [45 USC § 55]," and the Court specifically noted that a "release may otherwise bar recovery." Id. at 518, 88 S.Ct. 1150. These results could not have been obtained if a general release of claims known and unknown is in violation of 45 USC § 55 as a matter of law, as argued by Loyal.

As a point of law, we do not agree with Loyal that the validity of a release turns upon the status of a claimed injury as known or unknown at the time the release is signed. Instead, we accede to Loyal's request made during oral argument and find guidance with regard to this issue in the recent Third Circuit case of Wicker v. Consolidated Rail Corp., 142 F.3d 690 (3rd Cir.1998). As to a general release regarding claims of injury unknown at the time the release is signed, the Wicker court determined that "it is entirely conceivable that both employee and employer could fully comprehend future risks and potential liabilities and, for different reasons, want an immediate and permanent settlement. The employer may desire to quantify and limit its future liabilities and the employee may desire an immediate settlement rather than waiting to see if injuries develop in the future. To put it another way, the parties may want to settle controversies about potential liability and damages related to known risks even if there is no present manifestation of injury." (Emphasis supplied.) Wicker, supra at 700-701(10). Clearly, in an industry, such as the railroad industry, that has a number of known occupational risks and diseases, it is important to both the employer and employee to be able to settle potential claims regarding injuries or diseases prior to actual discovery.

The correctness of an analysis that turns on the known risk of injury, as opposed to a known actual injury, is completely supported by the Supreme Court's decision in Callen, where the Court held, "It is obvious that a release is not a device to exempt from liability but is a means of compromising a claimed liability and to that extent recognizing its possibility." (Emphasis supplied.) Callen, supra at 631, 68 S.Ct. 296. Under this analysis, a valid release may encompass an injury that is unknown at the time of its execution, if the possibility of such injury is known. Accordingly, we hold that the instant release does not violate 45 USC § 55 as a matter of law simply because it is applied to a claim for an injury that was unknown at the time the release was signed, if the possibility of such injury was known.⁴ In so holding we avoid the set aside of successive settlements of known occupational diseases and repeated litigation when subsequent injuries from such occupational diseases manifest themselves over time.

2. In determining whether the instant release applies to Loyal's claim of job-related hearing loss so as to support summary judgment, we look to the record. "FELA cases are inherently fact-bound. The evaluation of the parties' intent at the time the agreement was made is an essential element of this inquiry." (Citations and punctuation omitted.) Wicker, supra at 700(10). "[T]he meaning to be given to the words of a contract must be the one...