Menendez v. Perishable Distributors, Inc.
| Decision Date | 25 June 1985 |
| Docket Number | No. 83-8470,83-8470 |
| Parties | Ernest MENENDEZ and Theresa Menendez, Plaintiffs-Appellants, v. PERISHABLE DISTRIBUTORS, INC., and Edgar Newton Crowe, Jr., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Don C. Keenan, David S. Bills, Atlanta, Ga., for plaintiffs-appellants.
M. Scott Barksdale, Atlanta, Ga., for defendants-appellees.
Appeal from the United States District Court for the Northern District of Georgia.
Before GODBOLD, Chief Judge, JOHNSON and CLARK, Circuit Judges.
Plaintiff below, Ernest Menendez, appeals from an order of the district court directing a verdict in favor of the appellees, Perishable Distributors, Inc., and Edgar Newton Crowe, Jr. Menendez claims the district court erroneously allowed the appellees to amend their answer at trial to allege the affirmative defense of release without giving him a full and fair opportunity to obtain and present extrinsic evidence explaining the intent of the contracting parties not to release the appellees from liability. Because the applicable state law permits Menendez to present extrinsic evidence showing an intent contrary to the express terms of the release and because Menendez was deprived of a full and fair opportunity to do so, we reverse.
Menendez, a Florida citizen, was a passenger in an automobile owned and being operated by Ronald Gordon Pearson when Pearson lost control of the automobile and was struck head-on by a tractor-trailer owned by Perishable Distributors and being operated by Crowe. Menendez was injured in this collision, which occurred in Georgia. Invoking diversity jurisdiction and alleging that the combined negligence of Pearson and Crowe had caused the collision and his injuries, Menendez filed suit in the United States District Court for the Northern District of Georgia. 1 Pearson, also a Florida citizen, was dismissed as a defendant in this action due to the absence of diversity between him and Menendez. In response, Menendez filed a separate suit against Pearson in the Circuit Court of Dade County, Florida, alleging that Pearson's negligence had caused the accident.
Some months before trial began in the present case, Pearson and Menendez reached a settlement in the Florida state court action. In connection with this settlement, Menendez signed a release containing a boilerplate clause forever discharging Pearson "and all other persons, firms or corporations ... from any and all claims, demands, actions, causes of action or suits of any kind ..." arising as a result of the collision. Perishable Distributors and Crowe were unaware of this settlement agreement when their trial began in the Northern District of Georgia.
Menendez was the first witness called at trial. During Menendez's cross-examination, the appellees learned that he had settled with Pearson in the Florida state court action. Counsel for the appellees immediately raised the issue that, in connection with the settlement, Menendez might have signed documents constituting a release of joint tortfeasors which would bar the present action under Georgia law. Appellees' counsel requested the court to require Menendez to produce a copy of the settlement agreement. The attorney for Menendez, Mr. Robert Falanga, responded that, although he had attended the negotiations which led to settlement of the Florida case, he had returned to Georgia before the settlement documents were signed and thus did not know the terms of the agreement. Menendez testified that he, too, did not recall the contents of the documents he had signed. Menendez did not know if he had signed a release or a covenant not to sue, and he did not know the difference between the two. Falanga then stated that the Florida attorney who had represented Menendez in the state court action would have copies of the agreement. Further, Falanga argued that the burden of discovering the agreement should be on the appellees and not Menendez. After this exchange, the district court announced that if the settlement documents proved to comprise a release the present action would be dismissed. The court directed Menendez to ascertain the terms of the agreement and granted a brief recess to allow Falanga to telephone the Florida attorney for this purpose.
After the recess, Falanga informed the court that he had been unable to reach the Florida attorney personally but that he had spoken with someone in this attorney's office. That individual, however, had not been able to locate Menendez's file or provide the name of the Florida judge who had handled the case. Falanga then told the court that he recalled the defendants in the Florida case having stated on the record as part of the settlement agreement that "they would not hinder, delay, participate nor in any way interfere with any other litigation pending in any other states." The district court again stated that it intended to dismiss the present lawsuit if it turned out Menendez had signed a release. The court granted an extended lunch recess to allow Falanga to search for a copy of the settlement agreement in his own files and to allow the parties to formulate and research their positions on the effect of a release in this case.
When he returned from the lunch recess, Falanga produced a copy of the settlement agreement. The court then heard arguments from both parties on the effect of the release. Falanga contended that under Georgia law the release should be interpreted in light of the extrinsic evidence of the contracting parties' intent not to release the appellees from liability. The court agreed with Falanga's interpretation of Georgia law and directed that he produce any documents or other evidence from which the actual intent of the contracting parties could be ascertained. Falanga responded:
It is my understanding of the law that in order to plead a formal release, as a bar to recovery, it is an affirmative defense. There's nothing in the pleadings of this case to place me on notice that they were going to intend to plead the affirmative defense of a release. Based on that, I would have to claim surprise, which would prevent me from having taken the steps to have gotten the record up here as it existed down there in the Circuit Court of Dade County.
The district court rejected this argument, stating that it was the duty of the plaintiff's attorney to appear in court with the documents needed to put this issue in perspective. The court again directed Falanga to present whatever evidence he might have in his possession concerning the actual intent of the parties as to the effect of the release. Falanga then replied that he did not at the moment have any evidence. At this point, counsel for the appellees moved for summary judgment, dismissal, or a directed verdict on the ground that the release barred further prosecution of the lawsuit. The court allowed the appellees to amend their pleadings to allege the affirmative defense of release and then directed a verdict in their favor.
In actuality, Georgia law does not permit the introduction of extrinsic evidence to explain the intent of contracting parties where the terms of a release are not ambiguous. Henslee v. Houston, 566 F.2d 475, 478, 479-80 (5th Cir.1978); see also Crow v. Bowers, 204 Ga. 786, 51 S.E.2d 855, 857 (1949). More importantly, Georgia follows the common law rule that a general release executed in favor of one joint tortfeasor in total settlement of a claim releases all joint tortfeasors potentially liable on the claim, regardless of whether the settlement agreement contains a clause expressly releasing the other joint tortfeasors either by naming them specifically or by referring generally to all other persons or entities that might be liable. Henslee v. Houston, supra, 566 F.2d at 480; Zimmerman's, Inc. v. McDonough Construction Co., 240 Ga. 317, 319, 240 S.E.2d 864, 866 (1977). Here, the unambiguous terms of the settlement agreement released Pearson from liability and therefore, were Georgia law to apply, also released the appellees from liability as joint tortfeasors. Thus, if the district court had been correct in holding that Georgia law governed both the effect of the release and the admissibility of extrinsic evidence, entering the directed verdict would have been proper, even though the court would have erred slightly by giving Menendez an opportunity to introduce extrinsic evidence.
The release, however, was executed in Florida in settlement of litigation pending in a court of that state. By statute, Florida's legislature has abrogated the common law rule as to the effect of a partial release given to one of several joint tortfeasors. Fla.Stat. Sec. 768.041. The statute states that a release of one tortfeasor "shall not operate to release or discharge the liability of any other tortfeasor who may be liable for the same tort...." 2 Id. Without creating an inconsistency, the Florida Supreme Court has interpreted this statute to permit the release of all joint tortfeasors, but only if the terms of the agreement clearly express the releasing party's intent to do so, Hurt v. Leatherby Insurance Co., 380 So.2d 432, 433 (Fla.1980), and extrinsic evidence does not prove otherwise. Indeed, if the agreement contains "all-inclusive language discharging all joint tortfeasors" which appears within a "general printed release," the non-settling joint tortfeasors cannot rely solely on the terms of the release as a defense. Jowanowitch v. Florida Power & Light Co., 381 So.2d 750, 752 (Fla.Dist.Ct.App.1980), citing Hurt v. Leatherby Insurance Co., supra, 380 So.2d at 433. Extrinsic evidence of the contracting parties' intent must also support the defense, and thus extrinsic evidence is clearly admissible. Id.; see also Fidelity & Casualty Company of New York v. Cope, 444 So.2d 1041, 1046 (Fla.Dist.Ct.App.1984) (Lehan, J., concurring). Therefore, if Florida law were to govern the effect of the...
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