Russell v. Russell
| Citation | 1990 NMCA 80,801 P.2d 93,111 N.M. 23 |
| Decision Date | 05 July 1990 |
| Docket Number | No. 10545,10545 |
| Parties | Robert Donald RUSSELL, Petitioner-Appellant, v. Joan Theresa RUSSELL, Respondent-Appellee. |
| Court | Court of Appeals of New Mexico |
Husband appeals the trial court's findings entered pursuant to a remand by this court in Russell v. Russell, 106 N.M. 133, 740 P.2d 127 (Ct.App.1987) (Russell II ). He raises two issues: (1) whether the trial court erred in finding that none of wife's products liability settlement was directly attributable to medical expenses, and hence community property; and (2) whether the trial court abused its discretion in finding no substantial change in circumstances since the divorce to justify a modification of alimony. We reverse on the first issue and affirm on the second.
The parties were divorced in 1983. See Russell v. Russell, 101 N.M. 648, 687 P.2d 83 (1984) (Russell I ). At that time, wife had a potential personal injury claim against Procter & Gamble. The divorce decree provided that in the event wife brought an action and was successful, that portion of the claim which is "directly attributable to past medical expenses, loss of service to the community, and loss of earnings, if any, to the community, up to the time of the dissolution of the parties' marriage, is the community property of the parties and should be divided equally." Id. 106 N.M. at 135, 740 P.2d at 129.
Wife filed a personal injury suit requesting $1,000,000 in damages in July, 1983, shortly before the statute of limitations was to run. The suit was settled in 1985 for $200,000, releasing Procter & Gamble from all claims whatsoever arising out of the injury. The lump sum settlement did not allocate a specific amount to any type of damages. The parties agree that the actual amount of medical expenses was approximately $80,000. All but $1,476 was covered by insurance. Wife asserts that husband was not entitled to recover any portion of her settlement proceeds, because neither she nor Procter & Gamble intended any part of the settlement to cover wife's medical expenses.
In Russell II, we held that since all the medical expenses incurred were community debts, any recovery for those expenses was a community asset. Whether the expenses were paid by insurance is irrelevant. Since the insurance policies were paid with community funds, the insurance proceeds are also community property. See Roselli v. Rio Communities Serv. Station, Inc., 109 N.M. 509, 787 P.2d 428 (1990). Thus, we held that the community has an interest in the proceeds of the policy as well as in any recovery from the tortfeasor. We noted that if there was double recovery for medicals, the community should share in it equally. Russell II, 106 N.M. at 136-137, 740 P.2d at 130-131. In Russell II, the record did not include a copy of the settlement agreement. We therefore remanded for a determination of the amount of the settlement that was directly attributable to the medical expenses incurred during the marriage. We noted that "[s]ince the medical expenses were community debts and the insurance proceeds were community assets, any part of wife's settlement intended to reimburse the community for medical expenses is also community property." Id. at 137, 740 P.2d at 131.
Pursuant to our remand, a hearing was conducted to determine the amount of the settlement that was directly attributable to medical expenses and to determine whether the insurance companies had sought recovery for the benefits they had paid. At this hearing, the parties, the attorney for Procter & Gamble, a personal injury expert, and a subrogation expert testified. The trial court found that neither insurance company pursued its subrogation rights nor filed an independent suit, and thus they are now time-barred from seeking recovery for the benefits paid. This finding is not challenged. The trial court also found that neither wife nor Procter & Gamble intended any part of the settlement as a reimbursement of past medical expenses; that wife would not have agreed to the settlement amount if she had believed any part of it was to reimburse others for past medicals; and that the settlement did not directly attribute any monies to medical expenses. Husband challenges these three findings.
Husband contends the trial court erred in looking at the parties' intention to determine husband's rights to one-half of the community interest in wife's medical expenses. He argues the parties should not be allowed to alter the character of the property simply by declaring a different intention. Therefore, he claims, the trial court erred in finding that no portion of the settlement was directly attributable to past medical expenses. In order to resolve this issue, we must determine whether the trial court was correct in relying on the testimony of the parties to the settlement agreement that neither of them intended any part of the settlement as reimbursement for past medical expenses.
The court's finding reflects its interpretation of our mandate. The court apparently understood the mandate as limiting the husband's recovery to that portion of the settlement specifically allocated to the community or designated as reimbursement for medical expenses. While that is not an unreasonable interpretation of some of the language in Russell II, it was not our intention to deny husband any recovery if the evidence showed wife released Procter & Gamble from all claims arising out of her injuries, including the reimbursement for medical expenses, without taking into account the terms of the divorce decree. Such a result would be inconsistent with the fiduciary duty imposed on each spouse in connection with the power to manage and dispose of the community's personal property. See Roselli v. Rio Communities Serv. Station, Inc., 109 N.M. at 514, 787 P.2d at 433.
The primary objective in construing a contract is to ascertain and give effect to the intent of the parties. Manuel Lujan Ins., Inc. v. Jordan, 100 N.M. 573, 673 P.2d 1306 (1983); Shaeffer v. Kelton, 95 N.M. 182, 619 P.2d 1226 (1980). A court is bound by the unambiguous language of a settlement agreement. Burden v. Colonial Homes, Inc., 79 N.M. 170, 441 P.2d 210 (1968). Extrinsic evidence is not admissible to determine the intent of the parties unless there is uncertainty and ambiguity in the contract. United Nuclear Corp. v. Mission Ins. Co., 97 N.M. 647, 642 P.2d 1106 (Ct.App.1982). Whether an ambiguity exists is a question of law to be decided by the court. Id. A contract is ambiguous if it is reasonably and fairly susceptible of different constructions. Levenson v. Mobley, 106 N.M. 399, 744 P.2d 174 (1987).
We find no ambiguity in the settlement agreement executed in this case. Wife released Procter & Gamble of all claims whatsoever arising out of her injuries. The settlement agreement stated that Joan T. Russell releases and discharges Procter & Gamble Company,
from all claims and demands arising out of any and all personal injuries, damages, expenses, loss or damage, known or unknown, apparent and not apparent, present and future, alleged to have been sustained as a result of an occurrence or occurrences which happened on or after the 13th day of July, 1980. [Emphasis added.]
The agreement releases Procter & Gamble of all damages and expenses incurred as a result of wife's injuries. This release clearly includes past medical expenses and we find no ambiguity regarding the parties' intention to settle all possible claims. Yet the testimony of the parties to the settlement agreement was to the contrary. Since the written provisions of the release are not ambiguous, the trial court erred in relying upon testimony that contradicted the terms of the settlement agreement. See Acquisto v. Joe R. Hahn Enters., Inc., 95 N.M. 193, 619 P.2d 1237 (1980) (). Because we hold that the testimony of wife and the attorney for Procter & Gamble was not admissible to vary the settlement agreement, there was no evidence to support a finding that none of the settlement proceeds was community property.
Wife argues that other findings, unchallenged by husband, were sufficient to support the conclusion that no portion of the product liability settlement was attributable to medical expenses. These findings consist of the loss of the insurance companies' claims and husband's failure to intervene in the product liability suit. We do not see how these findings would support the trial court's conclusion. To so hold would mean that failure to intervene by a real party in interest is conclusive evidence that the party had no viable claim in the action.
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