Maglin v. Tschannerl

• Decision Date: 24 May 2002
• Docket Number: No. 00-182.,00-182.
• Parties: Beth A. MAGLIN v. Janaki N. TSCHANNERL.
• Court: Vermont Supreme Court

800 A.2d 486

Beth A. MAGLIN v. Janaki N. TSCHANNERL.

No. 00-182.

Supreme Court of Vermont.

May 24, 2002.

Kristen P. Swartwout of Crispe & Crispe, Brattleboro, for Plaintiff-Appellant.

James E. Preston and Richard H. Wadhams, Jr. of Pierson, Wadhams, Quinn & Yates, Burlington, for Defendant-Appellee.

Present: AMESTOY, C.J., DOOLEY, MORSE, JOHNSON and SKOGLUND, JJ.

JOHNSON, J.

Plaintiff Beth Maglin appeals a Windham Superior Court order granting defendant Janaki Tschannerl's motion for summary judgment on plaintiff's personal injury claim for harm suffered in an automobile accident. The court held that a release signed by plaintiff after the accident barred her from seeking further relief. Plaintiff claims that the release should be voided because 1) the release violates the legislative remedy for rush releases, 12 V.S.A. § 1076; 2) there was a mutual mistake of fact concerning her injury; and 3) it is unconscionable to enforce the release. We affirm.

Defendant's car hit plaintiff's car from behind in a two-car accident on March 12, 1996. Plaintiff's car did not sustain major damage, but plaintiff suffered from whiplash. Ten days after the accident, an agent from defendant's insurance company, State Farm Insurance, visited plaintiff at her home. Plaintiff told the insurance agent she incurred "minor whiplash" from the accident. Plaintiff accepted the insurance agent's $500 as compensation for the accident in exchange for her agreeing to release defendant from all possible future claims. The release stated:

For the sole consideration of $500.00 the receipt and sufficiency is hereby acknowledged, the undersigned hereby releases and forever discharges [defendant] from any and all claims . . . causes of action or suits of any kind or nature whatsoever, and particularly on account of all injuries, known and unknown, both to the person and the property, which have resulted or may in the future develop from an accident which occurred on or about the 12th day of March, 1996.

(Emphasis added.) At the time, plaintiff knew she sustained injury, but believed the $500 to be reasonable compensation for what she viewed as a minor accident with minor injuries. Plaintiff did not consult a physician about her injuries or an attorney about possible claims against defendant. Nevertheless, she signed the release.

Shortly after signing the release, plaintiff's symptoms worsened. She experienced significant neck pain, headaches, nausea, pain in her arms, numbness in her hands, and she could not stand, sit, or lie down comfortably. Plaintiff's chiropractor subsequently diagnosed her symptoms as stemming from whiplash. Her chiropractor explained to her that whiplash injuries are commonly misunderstood and underestimated until serious symptoms occur. Plaintiff incurred medical expenses in excess of $10,000 for treatment for her whiplash injury and other symptoms. These expenses were incurred through numerous diagnostic imaging techniques together with successive chiropractic, physical, and cranial sacral therapy sessions.

Plaintiff filed a complaint for personal injury damages alleging that defendant's negligence resulted in severe personal injuries to plaintiff. Defendant and plaintiff filed cross-motions for summary judgment. At issue was whether the release signed by plaintiff barred defendant's liability for damages. In granting defendant summary judgment, the court concluded that the release is valid and enforceable. The court stated that plaintiff's mistake as to the future consequences of a known injury is not a mutual mistake of fact that can void the contract. The court therefore barred plaintiff's claims. This appeal followed.

On appeal, plaintiff contends that the release is unenforceable because it violates the statutes designed to provide relief from rushed and unfair release agreements, 12 V.S.A. §§ 1076-1077. Plaintiff argues that even absent strict compliance with §§ 1076 and 1077, the statutes evince the Legislature's general intent to void these types of releases. She claims that because the statutes are designed to protect people like plaintiff from executing rush releases, this Court should allow her to disavow the release. Additionally, plaintiff argues that she and defendant were mistaken as to a material fact when they entered into the release. She claims the relevant inquiry should be what her intent was at the time she signed the agreement. Thus, plaintiff argues, she did not intend to release a claim for the symptoms she later developed, but rather only for the "minor whiplash" she believed she suffered at the time. Finally, plaintiff claims that the release is unconscionable because of the unequal bargaining power between the insurance agent and herself.

Defendant counters that plaintiff cannot raise an argument based on 12 V.S.A. §§ 1076-1077 because she failed to raise it below. Even if this Court considers §§ 1076 and 1077, defendant contends that plaintiff failed to comply with the statute of limitations and other requirements of the statutes; thus, the release is enforceable. Defendant also maintains that there was no mistake of fact that should void the release because, at the time the release was executed, both parties knew of plaintiff's whiplash injury and plaintiff demonstrated an understanding of the terms of the release. Finally, defendant asserts that the release is not unconscionable because any inherent unequal bargaining power was not used coercively, and plaintiff was not subject to any undue pressure or duress.

Before we turn to the specific claims of plaintiff, we note that there is a substantial body of case law with facts similar to those presented here, and that plaintiff is correct that the trend is to avoid releases on the various legal grounds plaintiff has raised here. E.g., Newborn v. Hood, 86 Ill. App.3d 784, 42 Ill.Dec. 96, 408 N.E.2d 474, 476 (1980); see also Annotation, Modern Status of Rules as to Avoidance of Release of Personal Injury Claim on Ground of Mistake as to Nature and Extent of Injuries, 13 A.L.R.4th 686, 694 (1982) (citing cases). Apparently, it is quite common for people to enter into early releases without fully considering the consequences. Because of the unjust results in many of these cases, courts have responded by avoiding releases between injured parties and insurance companies. Newborn, 42 Ill.Dec. 96, 408 N.E.2d at 476 ("facts, when finally known, present an unconscionable result because of the equitable principle of doing justice under the circumstances"). An examination of those numerous decisions reveals at least one truth-that the greater the disparity in the actual damages that manifested themselves after the signing of a release, and the amount paid in the early settlement, the more likely it is that the court will find some manner of voiding the release. The grounds for decision vary, but include avoidance of the release on mutual mistake of fact, or on what courts have found to be a more "objective" view of the parties' intent, or because the surrounding circumstances were considered unconscionable. See, e.g., Witt v. Watkins, 579 P.2d 1065, 1069 (Alaska 1978) (applying objective test to overturn release, yet acknowledging that any mistake of fact was unilateral); Woyma v. Ciolek, 11 Ohio App.3d 288, 465 N.E.2d 486, 488 (1983) (release set aside on the grounds of mutual mistake despite clear language of the release where compensation was deemed inadequate); see also McCamley v. Shockey, 636 F.2d 256, 259 (8th Cir.1981) (language of release was held not to indicate parties' intent to settle claims for unknown injuries when result would be inequitable). To be sure, there are contrary decisions that reject the distortion of mistake of fact doctrine and contract interpretation, and that hold to the competing policies that underlie the validity of releases voluntarily and knowingly given. See, e.g., Bernstein v. Kapneck, 290 Md. 452, 430 A.2d 602, 607-08 (1981) (noting that most cases voiding releases "bastardiz[e]" the concept of mutual mistake of fact, and concluding, "[w]e are not convinced that violence to the human body presents a unique situation such that an independent set of principles is required to interpret contracts concerning the injury"); Raymond v. Feldmann, 120 Or.App. 452, 853 P.2d 297, 299 (1993) ("the settlement of claims prior to litigation [is] in the public interest. There is no reason in principle why an improvident settlement made before trial is any more to be set aside than a judgment . . . that hindsight later proves to have been obtained too soon and for too little.") (citations omitted); Collier v. Walls, 51 Tenn.App. 467, 369 S.W.2d 747, 762 (1962) (refusing to set aside a settlement based on a release "merely because the injuries proved more serious than the releasor . . . believed them to be") (internal citations omitted).

We are unable to find, however, a decision avoiding a release in the face of a statutory remedy, the terms of which plaintiff has failed to meet. 12 V.S.A. §§ 1076, 1077. Because our own Legislature has addressed plaintiff's problem, and set the terms for avoidance of a release entered into shortly after personal injury, the decision for this Court is more problematic than for courts in other states faced with similar facts. We turn first, then, to the application of the statute and the impact of legislative policy on plaintiff's claims.

Section 1076 governs disavowal of releases for claims of personal injury or death. The statute provides in part that: "[a]n agreement entered into by a person or his legal representative within fifteen days after personal injury to him . . . may be disavowed by such person or his legal representative within three years after making the agreement." Id. In addition, 12 V.S.A. § 1077 further requires that to disavow the release plaintiff must return "any consideration received to the person who paid or delivered the same."

Plaintiff failed to comply...