Marr Scaffolding Co., Inc. v. Fairground Forms, Inc.

• Decision Date: 30 August 1996
• Docket Number: No. 94-438-M,94-438-M
• Citation: 682 A.2d 455
• Parties: MARR SCAFFOLDING CO., INC. v. FAIRGROUND FORMS, INC., et al. P.
• Court: Rhode Island Supreme Court

Page 455

682 A.2d 455

MARR SCAFFOLDING CO., INC. v. FAIRGROUND FORMS, INC., et al.

No. 94-438-M.P.

Supreme Court of Rhode Island.

Aug. 30, 1996.

Peter Olson, for Plaintiff.

Merlyn P. O'Keefe, Peace Dale, for Defendant.

OPINION

FLANDERS, Justice.

Soothsaying ten years ago about what this court would do when squarely faced with the question now presented by this case, Federal District (now Circuit) Judge Bruce M. Selya predicted that we would adopt the so-called intent rule in deciding whether a general release purporting on its face to run in favor of "all other persons, firms or corporations" (hereinafter referred to as "omnibus language") is effective to release an unnamed third party against whom the releasor still seeks to prosecute claims. McInnis v. Harley-Davidson Motor Co., 625 F.Supp. 943, 958 (D.R.I.1986). We now fulfill Judge Selya's prophecy by ruling that such a release will not bar claims against an unnamed third party who invokes its omnibus language when the participants in the original settlement did not, as a factual matter, intend to release this party from liability.

Facts

The plaintiff, Marr Scaffolding (Marr), was in the business of renting construction materials and equipment, including aluminum foundation forms, to construction contractors and builders. In August 1990, Marr rented some aluminum forms to defendant Cement Heads, Inc. (Cement Heads) for its use in pouring a foundation at a job site in Providence, Rhode Island. Unfortunately, some of this construction gear "disappeared" from the Providence site. With Marr's approval, Cement Heads then transferred the remaining leased materiel to another construction site in Westerly, Rhode Island, where defendant Fairground Forms, Inc. (Fairground) was working as a subcontractor on a public-works project. Professional Building Concepts, Inc. (Professional Building) was the general contractor on this Westerly project, which was bonded by Commercial Union Insurance Company (Commercial Union) and Hartford Insurance Company (Hartford Insurance). Cement Heads and Fairgrounds (which also rented other equipment from Marr for use at the Westerly site) swapped or borrowed Marr's leased materiel on several occasions without Marr's knowledge, and much of this equipment also "disappeared".

In due course, Marr sued Cement Heads, Fairground, Professional Building, and Commercial Union. Because the bonding companies were only liable for that portion of Marr's claims relating to its equipment rentals to Fairground at the Westerly site, Marr decided to settle this aspect of its lawsuit. Accordingly, its corporate attorney entered into negotiations with the attorney for Professional Building and the bonding entities. As a result, these settling parties caused $5,000 to be paid to Marr in exchange for Marr's signing a release (a complete copy of which is attached hereto as an appendix), which stated in pertinent part:

"Marr * * * (hereinafter referred to as 'Releasors') for and in consideration of Five Thousand ($5000.00) Dollar [sic ] * * * has remised, released and forever discharged and do for itself and its successors and assigns hereby remise, release and forever discharge Professional Building * * * and Commercial Union * * * and * * * Hartford Insurance * * * and their officers, employees, agents and attorneys, and any and all other persons, firms and corporations * * * (hereinafter referred to as 'Releasee' ), of and from any and all debts, demands, actions, causes of action, * * * controversies, * * * claims, rights, liabilities, suits * * * now existing, or which may result from the existing state of things, which Releasors now have or ever had against the Releasee from the beginning of the world to the day of the date of these presents * * *." (Emphases added.)

The release also provided:

"In particular and without limitation of the foregoing Releasee is specifically released from any and all claims for fair market value and fair rental of scaffolding, or any other claim made in the civil action entitled Marr Scaffolding Co., Inc. v. Fairground Forms, Inc., et al, * * * C.A. No. 91-4449, or any claims that Marr * * * may have now or in the future of any nature whatsoever."

Cement Heads eventually moved for partial summary judgment, asserting that as a matter of law the omnibus language in the release discharged its liability to Marr. Marr opposed the motion, arguing that the document applied only to the named releasees (Professional Building, Commercial Union, and Hartford Insurance) and thus did not inure to Cement Heads's benefit. To support its theory, Marr submitted affidavits from the attorneys for Marr and the contractor/bonding entities who negotiated and drafted this release, stating that they neither bargained for nor intended to discharge any liability that Cement Heads may have to Marr. Because the motion justice determined that the release was unambiguous, he refused to allow the settling parties' purported subjective intentions about the scope of the release to vary the stated terms of the instrument. Accordingly, he granted Cement Heads's summary-judgment motion and entered a judgment against Marr. Marr sought redress here via a petition for a writ of certiorari. We granted the writ and proceed to dispose of the issue presented.

Standard of Review

We review a Superior Court justice's decision to grant a summary-judgment motion on a de novo basis, applying the same criteria as the court below. See 6 James W. Moore, Moore's Federal Practice § 56.27(1), at 56-852 (2d ed. 1993); see also St. Hilaire v. City of Laconia, 71 F.3d 20, 24 (1st Cir.1995) (construing Fed.R.Civ.P. 56, which is "the same as" the Rhode Island rule, see Super. R. Civ. P. 56, Reporter's Notes), cert. denied, --- U.S. ----, 116 S.Ct. 2548, 135 L.Ed.2d 1068 (1996). As we have delineated what these criteria are in many cases, e.g., DiQuinzio v. Panciera Lease Co., 641 A.2d 50, 53-54 (R.I.1994), we emphasize here only the most salient of them, namely, that summary judgment is appropriate when the record, viewed in the light most favorable to the party opposing the motion, shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Id. at 54.

Analysis

In Pardey v. Boulevard Billiard Club, 518 A.2d 1349, 1355 (R.I.1986), we stated that "[t]he element of stability necessary to support the settlement of controversies requires that we give significant deference to the terms of a general release until we have been furnished with an adequate reason to do otherwise." "This adequate reason," we said,

"must be based upon factual evidence concerning the intention of the parties (and for this purpose a relaxation of the parol-evidence rule may well be required ), as well as the nature of the consideration paid, and the existence of material mistake, fraud, misrepresentation, or overreaching." (Emphasis added.) Id.

One purpose for our willingness to look behind the omnibus language in a release and ascertain the parties' true intentions--if an "adequate reason" exists to do so--is to prevent third-party defendants from taking "gratuitous advantage," see McInnis, 625 F.Supp. at 952, of releases in which they took no part:

" '[B]y [their] superficial appraisement of certain words in the agreement, by a failure to look beneath the moth-eaten phrases of that stereotyped form so as to ascertain the true intention of the parties, by a determination to take the advantage of the syllable and not the spirit, by letter and not by law, [they would be] * * * coming into a windfall * * *.' " Lennon v. MacGregor, 423 A.2d 820, 821 n. 1 (R.I.1980) (quoting Hasselrode v. Gnagey, 404 Pa. 549, 556, 172 A.2d 764, 767 (1961) (Musmanno, J., dissenting)).

Because the motion justice in Pardey never addressed this intention-of-the-parties issue, we remanded the case back to the Superior Court so a hearing could be held to determine whether the parties to a settlement involving a release like this one--one that contained boilerplate phrases purporting to release the entire world from any and all claims--was actually intended by those parties to discharge an unnamed third person from liability for the specific claims at issue. See Pardey, 518 A.2d at 1355. After conducting the hearing, the Superior Court ruled that the settling parties did not intend to release a particular unnamed third party "by signing what was purported to be a general release but which specifically released other parties." Pereira v. Tellier, 583 A.2d 523, 524 (R.I.1990) (although document contained boilerplate wording purporting to discharge named releasees and "any and all other persons, firms and corporations," the plaintiff's claim against an unnamed third party was not barred when there was no intent to release this particular third party). As in the instant case, there was no indication in Pereira that any party to the release or settlement intended that the instrument's omnibus language would extend to the particular unnamed third party who later sought to take "gratuitous advantage" of the release.

Here, the release identifies by name Professional Building, Commercial Union, and Hartford Insurance--but not Cement Heads--as releasees. The affidavits submitted to the Superior Court in opposition to Cement Heads's summary-judgment motion show that the parties to the settlement that produced this release never intended that the omnibus language would release Cement Heads's potential liability to Marr on Marr's other claims. Thus, we are not faced here with the more difficult question presented when the parties to the original settlement do not all agree (as they do here) that the scope of the omnibus-release language at issue was not intended to reach any possible claims that the settling plaintiff may have against a particular unnamed third-party defendant. Although we reserve judgment on this question, we may be more inclined to give "significant...