Patterson v. American Medical Systems, Inc.

• Decision Date: 15 May 1996
• Citation: 141 Or.App. 50,916 P.2d 881
• Parties: Lowell A. PATTERSON, Appellant, v. AMERICAN MEDICAL SYSTEMS, INC., Respondent. 9411-08042; CA A88910.
• Court: Oregon Court of Appeals

Page 881

916 P.2d 881

141 Or.App. 50

Lowell A. PATTERSON, Appellant, v. AMERICAN MEDICAL SYSTEMS, INC., Respondent.

9411-08042; CA A88910.

Court of Appeals of Oregon.

Argued and Submitted Dec. 14, 1995.

Decided May 15, 1996.

Christine Coers-Mitchell, Portland, argued the cause for appellant. With her on the briefs were Don G. Carter and McEwen, Gisvold, Rankin, Carter & Streinz.

Christopher W. Thompkins, Portland, argued the cause for respondent. With him on the brief were Paul R. Duden and Tooze, Shenker, Duden, Creamer, Frank & Hutchison.

Before WARREN, P.J., and EDMONDS and ARMSTRONG, JJ.

EDMONDS, Judge.

Plaintiff brought this products liability action to recover damages for alleged defects in a penile prosthesis manufactured by defendant. The trial court granted defendant's motion for summary judgment on the ground that plaintiff had released all claims against defendant as part of the settlement of a previous case. ORCP 47. Plaintiff appeals from the subsequent judgment, and we reverse.

In 1987, plaintiff sued defendant, alleging that the first two prostheses manufactured by defendant that had been implanted in him were defective. He sought damages in excess of $140,000. He settled the claims in 1988 for $12,000. At the time of the settlement, plaintiff was using a third prosthesis manufactured by defendant. As part of the settlement, he executed a release that includes the following provisions:

"There is now pending in the United States District Court for the District of Oregon a case entitled Lowell A. Patterson, Plaintiff, v. American Medical Systems, Inc., a Minnesota Corporation, Defendant, Civil No. CV88-77MA. The parties desire to compromise and settle their differences and any and all other claims that LOWELL A. PATTERSON has or might have asserted against AMS.

" * * * * *

"IN CONSIDERATION of [AMS' payment to him of $12,000], LOWELL A. PATTERSON hereby accepts the payment in full settlement and satisfaction of all claims, charges, actions and lawsuits of every nature and kind whatsoever, known or unknown, suspected or unsuspected, past, present or future, on account of or in any way related to LOWELL A. PATTERSON'S use of any penile prosthetic device manufactured or sold by AMS, which he has or might have asserted against AMS now or in the future.

"LOWELL A. PATTERSON releases, acquits and forever discharges AMS and each of its subsidiary or parent corporations, individual directors, officers, employees, agents and insurers, individually and collectively, and any and all other persons who might be claimed to be liable, of and from any and all claims, charges, actions and lawsuits described in the preceding paragraph."

This action was filed in 1995. It also alleges claims of strict liability, negligence and breach of warranty in relation to a prosthesis manufactured by defendant. The prosthesis in question was implanted in plaintiff in 1991. Before that implant, plaintiff had received another prosthesis in 1989 that replaced the one that he was using at the time of settlement.

Defendant argues that plaintiff unambiguously released all future claims against defendant related to any prosthesis that he might receive at any time. Plaintiff argues that the release is either unambiguously limited to the claims involved in the previous lawsuit or is ambiguous and requires the evaluation of extrinsic evidence to determine the intent of the parties. In either event, plaintiff argues that the trial court erred in granting defendant's motion for summary judgment. Under ORCP 47 C, our inquiry is whether there exists a genuine issue of material fact about what the parties intended by the 1988 release agreement. We draw all inferences of fact against defendant, the moving party, and in favor of plaintiff, the nonmoving party. Jones v. General Motors Corp., 139 Or.App. 244, 911 P.2d 1243 (1996).

A release is a contract and is subject to the ordinary rules of contract construction and interpretation. Ristau v. Wescold, Inc., 318 Or. 383, 387, 868 P.2d 1331 (1994). If the terms of the release unambiguously express the intent of the parties, it must be enforced accordingly. If they are ambiguous, then the trier of fact is to ascertain the intent of the parties and construe the contract consistently with their intent. OSEA v. Rainier School Dist. No. 13, 311 Or. 188, 808 P.2d 83 (1991). An ambiguity exists in a contract if the contract is capable of more than one sensible and reasonable interpretation. Deerfield Commodities v. Nerco, Inc., 72 Or.App. 305, 317, 696 P.2d 1096, rev. den. 299 Or. 314, 702 P.2d 1111 (1985). Inherent in the purpose of a release agreement is a promise to abandon a claim or right that is within the contemplation of the parties. Lindgren v. Berg, 307 Or. 659, 665, 772 P.2d 1336 (1989). Before a release is valid, there must be both the knowledge of the existence of the claim and an intention to relinquish it, in the absence of a specific promise to release liability for unanticipated claims. See Hansen v. Oregon Humane Soc., 142 Or. 104, 115, 18 P.2d 1036 (1933) (holding that to be valid and binding, a release must be executed with full knowledge of the import of what is being signed and with the intent to discharge from liability). Here, the issue is whether there exists an ambiguity in the 1988 release agreement about whether the parties intended that plaintiff release a claim for the prosthesis implanted in 1991.

The first paragraph describes the litigation that was pending at the time of the settlement and states that plaintiff and defendant had agreed to settle that litigation and "any and all other claims" that plaintiff "has or might have asserted against" defendant. In a subsequent paragraph, plaintiff states that he accepted the settlement amount in full satisfaction of all claims "of every nature and kind whatsoever, known or unknown, suspected or unsuspected, past, present or future " that were "in any way related" to his "use of any penile prosthetic device manufactured or sold by AMS, which he has or might have asserted against AMS now or in the future." (Emphasis supplied.)

When the paragraphs are read together, they are reasonably susceptible to more than one meaning. The first paragraph is a recital paragraph and refers to claims, asserted or unasserted, that exist at the time of the agreement. The other pertinent paragraph describes the scope of the consideration for the release agreement. In that paragraph, the phrases "past, present or future" and "any * * * device * * * manufactured * * * in the future" could refer to the existing claims mentioned in the recital clause or they could refer to any prosthesis purchased at any future time by plaintiff from defendant.

The extrinsic evidence of the circumstances surrounding the formation of the release agreement may also be considered to explain the terms of the agreement to determine whether they are ambiguous. Abercrombie v. Hayden Corp., 320 Or. 279, 292, 883 P.2d 845 (1994). The extrinsic evidence demonstrates that at the time of the settlement, plaintiff was using the third prosthesis that he had procured from defendant. The language in the release about future claims may refer only to...