Neverkovec v. Fredericks

• Decision Date: 18 August 1999
• Docket Number: No. A081405,A081405
• Citation: 87 Cal.Rptr.2d 856,74 Cal.App.4th 337
• Court: California Court of Appeals Court of Appeals
• Parties: , 99 Cal. Daily Op. Serv. 6726, 1999 Daily Journal D.A.R. 8645 Larry NEVERKOVEC, Plaintiff and Appellant, v. Joseph Gregory FREDERICKS, Defendant and Respondent.

Page 856

87 Cal.Rptr.2d 856

74 Cal.App.4th 337, 99 Cal. Daily Op. Serv. 6726,

1999 Daily Journal D.A.R. 8645

Larry NEVERKOVEC, Plaintiff and Appellant, v. Joseph Gregory FREDERICKS, Defendant and Respondent.

No. A081405.

Court of Appeal, First District, Division 3, California.

Aug. 18, 1999.

Harry D. Roth, Davis, Karen L. Blank, Counsel for Appellant.

Guy D. Borges, Cynthia E. Miller, Lisa M. U-Ren, McNamara, Houston, Dodge, McClure & Ney, Fairfield, Counsel for Respondent.

PARILLI, J.

In this case we examine a problem that has recurred not only in California but across the nation. An injured party settles with an alleged tortfeasor's insurer, signing a general release agreement that appears to excuse everyone in the world from liability. Then the injured party proceeds against a different alleged tortfeasor, who raises the general release as a defense. We conclude that principles of contract law governing the rights of third party beneficiaries, and related rules of evidence, provide the best approach for resolving such cases.

Larry Neverkovec sued Joseph Gregory Fredericks for personal injuries suffered in an automobile accident. The trial court granted Fredericks' motion for summary judgment, on the ground that Neverkovec had signed an unambiguous release of all claims he had against any party with potential liability. Neverkovec appeals from the ensuing judgment. We reverse. Fredericks was not a party to the release agreement, and in order to enforce it as a third party beneficiary he had to show the parties intended their agreement to benefit him. He did not meet this burden.

BACKGROUND

In September 1994, Larry Neverkovec and Scott Moore were riding in a car driven by Larry's brother Jason Neverkovec. Fredericks was driving toward them, with his son Justin as a passenger. As Jason made a left turn, Fredericks' vehicle struck the right side of the car, seriously injuring Larry and Moore. According to the Highway Patrol collision report, Jason admitted he did not look for oncoming traffic when making the left turn, because he was talking to Larry. The officer who wrote the report testified at his deposition that he found no basis for holding Fredericks at fault.

Jason was driving a car owned by Robert Alexander, who employed the Neverkovecs' The agreement was forwarded to Philadelphia Insurance Company, which sent back general release forms to the attorneys to be signed by their clients. On April 18, 1996, Moore's counsel filed a complaint against Fredericks. Howard signed a general release on Larry's behalf on April 19, 1996. Fredericks signed a similar release on April 24th, 1996. In May 1996, the court appointed Howard guardian ad litem for Larry, and approved the settlement of his claim against Jason. Moore was on a military training mission when a general release on the same form as Fredericks' release was sent to his counsel. Moore signed the release in June 1996.

mother, Cindy Howard. Alexander allowed Howard to use the vehicle as she wished. The vehicle was insured by Philadelphia Insurance Company, which agreed to pay the policy limit of $30,000 but required all claimants to join in one settlement. In February 1996, the attorneys for Howard (acting as Larry's guardian), Fredericks, and Moore met to discuss the settlement. The attorneys for Howard and Moore did not discuss with Fredericks' attorney whether they were contemplating filing claims against Fredericks, nor was a release of any such claims discussed. In March 1996, the three attorneys signed an agreement apportioning the policy proceeds as follows: $15,000 to Howard as Larry's guardian; $10,000 to Moore; $4,500 to Fredericks; and $500 to Justin. The agreement stated: "Upon payment of these sums by Philadelphia Insurance Company, the parties release their claims against Jason Neverkovec."

The "Parents' Release and Indemnity Agreement" signed by Howard on Larry's behalf was particularly broad. Howard agreed to "forever release, discharge and covenant to hold harmless Alexander & Associates d/b/a Rent a Wreck, Jason Neverkovec, Cindy Howard and Philadelphia Indemnity Insurance Companies and any other person, firm or corporation charged or chargeable with responsibility or liability, their heirs, administrators, executors, successors and assigns, from any and all claims, demands, damages, costs, expenses, loss of services, actions and causes of action, belonging to the said minor or to the undersigned arising out of any act or occurrence up to the present time, and particularly on account" of Larry's injuries resulting from the accident. ¹ The releases On September 16, 1996, Howard filed a complaint on Larry's behalf against Fredericks. By stipulation, the action was consolidated with Moore's case against Fredericks. In April 1997, Howard (acting for Jason) and Alexander & Associates moved for a determination of good faith settlement under Code of Civil Procedure, section 877.6. ² The court granted the motion over Fredericks' objection, ruling that Fredericks could not contest the settlement because he was one of the settling parties. Fredericks moved for summary judgment in June 1997, contending the releases signed by Moore and Howard operated to relieve him of any liability. Howard responded that extrinsic evidence showed the parties never intended to release Fredericks. The trial court granted summary judgment to Fredericks in both cases, ruling that "the releases signed by or on behalf of the Plaintiffs were unambiguous, and each operated to release all claims arising against any party with potential liability."

signed by Moore and Fredericks included the same named parties "and his, her, their, or its agents, servants, successors, heirs, executors, administrators and all other persons, firms, corporations, associations or partnerships."

Only Larry Neverkovec has appealed. ³

DISCUSSION

A defendant moving for summary judgment may meet the burden of showing the action is meritless by establishing a complete defense. If the defendant makes a sufficient showing, the burden shifts to the plaintiff to present specific facts showing a triable issue of material fact. (§ 437c, subd. (o)(2).) Here, the trial court found that Fredericks established a complete defense based on the release of Larry's claims executed by Howard. We review the trial court's ruling de novo, assuming the role of the trial court and redetermining the merits of the motion. We construe the moving party's papers strictly and the opposing party's papers liberally, resolving any doubt as to whether there is a triable issue in favor of the opposing party. (Artiglio v. Corning Inc. (1998) Fredericks' summary judgment motion relied on two cases involving broad general releases signed in the aftermath of automobile accidents. In General Motors Corp. v. Superior Court (1993) 12 Cal.App.4th 435, 15 Cal.Rptr.2d 622 (General Motors ), the plaintiff's counsel advised the manufacturer of the plaintiff's vehicle that there was a possible products liability claim. The plaintiff then settled with the other driver involved in the accident, signing a release exonerating her "and any and all other persons, firms and corporations, whether herein named or referred to or not," from any claims arising from the accident. The plaintiff subsequently obtained new counsel and filed suit against the manufacturer, which unsuccessfully moved for summary judgment based on the release. (Id. at pp. 437-439, 15 Cal.Rptr.2d 622.)

                18 Cal.4th 604, 612, 76 Cal.Rptr.2d 479, 957 P.2d 1313;  Montgomery v. Cal Accountants Mutual Ins. Co.  (1998) 61 Cal.App.4th 854, 858-859, 72 Cal.Rptr.2d 39;  Pensinger v. Bowsmith, Inc.  (1998) 60 Cal.App.4th 709, 717-718, 70 Cal.Rptr.2d 531.)   We conclude that even if the general release was sufficient to shift the burden of proof to Howard, the extrinsic evidence before the court raised a triable issue regarding the parties' intent to release Fredericks
                

The Court of Appeal in General Motors granted the manufacturer's petition for a writ of mandate directing entry of summary judgment. The court held that while a release of one tortfeasor does not discharge other tortfeasors from liability "unless its terms so provide" (§ 877, subd. (a)), a release agreement need not specifically identify the tortfeasors who are released. ⁴ Under the usual rules of contract interpretation, the release agreement before the court unambiguously discharged the manufacturer and the rest of the world from liability arising from the automobile accident. The plaintiff presented no competent extrinsic evidence to suggest the parties intended another possible meaning of the language they employed, and the plaintiff had been aware of his potential claim against the manufacturer. Furthermore, the other driver had an incentive to include all other potential tortfeasors in the release to avoid entanglement in litigation, noted the court, citing Singer Co. v. Superior Court (1986) 179 Cal.App.3d 875, 883-884, 225 Cal.Rptr. 159 [although tortfeasor settling in good faith is discharged from liability for contribution to other tortfeasors under § 877, subd. (b), settling tortfeasor must respond if made a cross-defendant by joint tortfeasor]. (General Motors, supra, 12 Cal.App.4th at pp. 439-443, 15 Cal.Rptr.2d 622.)

The General Motors court rejected claims that a broad interpretation of the release was unconscionable or contrary to public policy. The court also dismissed the argument that the manufacturer lacked standing to enforce the release agreement as a third party beneficiary. It was only necessary for the manufacturer to show that it was one of a class of Fredericks also relied on Lama v. Comcast Cablevision (1993) 14 Cal.App.4th 59, 17 Cal.Rptr.2d 224 (Lama ), in which the plaintiff settled with the other driver and signed a release of all claims against "any other person, corporation, association or partnership charged with responsibility for injuries to the person and property of...