White v. American Motors Sales Corp.

• Decision Date: 16 November 1982
• Docket Number: Civ. A. No. 81-0015-A,81-0098-A.
• Citation: 550 F. Supp. 1287
• Court: U.S. District Court — Western District of Virginia
• Parties: Carol WHITE, Plaintiff, v. AMERICAN MOTORS SALES CORP., Defendant. Carol WHITE, Plaintiff, v. AMERICAN MOTORS CORP., Defendant.

550 F. Supp. 1287

Carol WHITE, Plaintiff, v. AMERICAN MOTORS SALES CORP., Defendant.

Carol WHITE, Plaintiff, v. AMERICAN MOTORS CORP., Defendant.

Civ. A. Nos. 81-0015-A, 81-0098-A.

United States District Court, W.D. Virginia, Abingdon Division.

November 16, 1982.

J. Colin Campbell, Independence, Va., J. Clarke Fischer, Winston-Salem, N.C., for plaintiff.

William W. Eskridge, Abingdon, Va., for defendant.

MEMORANDUM OPINION

GLEN M. WILLIAMS, District Judge.

On April 12, 1979, the plaintiff, Carol White, was operating a 1974 American Motors Gremlin automobile in Yadkin County, North Carolina. Ms. White's automobile was struck from the rear by an automobile driven by Jeffery Freund and owned by Allen Martin Casstevens. The Gremlin burst into flames upon impact and White was severely burned.

On September 17, 1980, in her lawyer's office in Independence, Virginia, Ms. White executed an instrument releasing Freund and Casstevens from liability. The release also released:

all other persons, firms or corporations from all claims, demands, damages, actions, or causes of action on account of damage to property, bodily injuries or death, resulting, or to result, from an accident to my person which occurred on or about the 12th day of April, 1979, by reason of an auto accident on I-77 in Yadkin County, North Carolina and of all claims or demands whatsoever in law or equity, which I, my heirs, executors, administrators, or assigns can, shall or may have reason of any matter, cause or thing whatsoever prior to the date hereof. It is Understood and Agreed that this is a full and final release of all claims of every nature and kind whatsoever, and releases claims that are known and unknown, suspected and unsuspected. (See Defendant's Exhibit A).

On January 19, 1981, Ms. White, a Virginia resident filed identical complaints in two separate suits against American Motor Sales Corporation and American Motors Corporation. The two actions are joined for the purposes of this opinion. Defendant American Motors Corporation is a corporation incorporated under the laws of the state of Maryland and has its principal office in a state other than Virginia. Defendant American Motors Sales Corporation is a corporation incorporated under the laws of Delaware and has its principal office in a state other than Virginia.

The Gremlin was manufactured and sold by the defendants and eventually sold to the plaintiff by Bullins Used Cars in Galax, Virginia, which defendants assert is not an agent or dealer of their corporations. The plaintiff bases her claim in both tort and contract. First, Ms. White alleges that the defendants negligently breached a duty to design and manufacture a fuel system in the Gremlin which would not unreasonably enhance the danger to its occupants in the event of a rear-end collision. Ms. White also alleges that the sale of the automobile was in violation of the defendants' warranties of merchantability and fitness for a particular purpose and that the defects in the automobile directly and proximately caused injuries suffered by Ms. White in the accident and the destruction of the automobile.

This cause is before the court on the defendants' motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The defendants base their motions on three theories: first, that the release signed by Ms. White absolves the defendants from alleged liability; second, that the defendants cannot be held liable for a breach of warranty because of a lack of privity of contract between Ms. White and the defendants; and third, that North Carolina does not recognize liability based upon the "crashworthiness doctrine."¹

I. MOTION FOR SUMMARY JUDGMENT BASED UPON THE RELEASE

A. APPLICABLE LAW

Under the principles of the Erie doctrine, a federal court exercising diversity jurisdiction must apply the conflict of laws rules of the forum state. Erie Railroad Co. v. Thompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Kline v. Wheels by Kinney, Inc., 464 F.2d 184 (4th Cir.1972); Restatement (First) Conflict of Laws § 7 (1934).

It is generally held that the law of the place of the wrong determines the effect of a release. Annot., 66 Am.Jur.2d § 45 (1973); Annot., 69 A.L.R.2d 1034 (1960). The Virginia Supreme Court has not ruled on this question. Therefore, the Federal courts are under a duty to predict what the Virginia courts would do. McClung v. Ford Motor Co., 472 F.2d 240 (4th Cir.1973). The issue was addressed by the United States District Court for the Eastern District of Virginia. Preine v. Freeman, 112 F.Supp. 257 (1953). In Preine, a New York resident brought an action against residents of Virginia for injuries which resulted from an automobile accident in Virginia. A release was executed in Colorado. The court, after reviewing a number of cases from other jurisdictions, held that "the laws of that state which gave the plaintiff the cause of action also control in determining the effect of the releases. The fact that the release in Civil Action Number 1550 was actually executed in Colorado is immaterial since the law of the state giving the plaintiffs the right to sue determines the effect of the release." Id. at 260.

In addition to the Preine decision, the court is aware that Virginia relies on traditional conflict of laws rules and specifically rejects the Restatement (Second) of Conflicts of Laws "modern" approach to conflicts questions. McMillan v. McMillan, 219 Va. 1127, 253 S.E.2d 662 (1979). The "modern" approach, sometimes referred to as the "center of gravity" test, allows the court to apply the law of the state with the most significant relationship to the occurrence and parties. The Virginia Supreme Court rejected the modern approach and held that "in resolving conflicts of laws, the settled rule in Virginia is that the substantive rights of the parties in a multistate tort action are governed by the law of the place of the wrong." Id. 253 S.E.2d at 663.

Based upon the Preine decision and the Virginia Supreme Court's continued reliance on traditional rules on conflicts of laws question, this court finds that the law followed by Virginia at this time is that effect of a release will be determined by the place of the wrong, North Carolina.

B. THE EFFECT OF THE RELEASE IN FULL ON THE DEFENDANTS' LIABILITY UNDER NORTH CAROLINA LAW

At the time that White executed the release, applicable North Carolina law provided:

When a release or covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons liable in tort for the same injury or the same wrongful death:

(1) It does not discharge any of the other tort-feasors from liability for the injury or wrongful death unless its terms so provide; but it reduces the claim against the others to the extent of any amount stipulated by the release or the covenant, or the amount of the consideration paid for it, whichever is the greater; and,

(2) It discharges the tort-feasor to whom it is given from all liability for contribution to any other tort-feasor.

N.C.Gen.Stat. § 113-4 (1969) (Emphasis Added).

The language of the release that Ms. White signed released Freund and Casstevens "and all other persons, firms, or corporations from all claims ...." Ms. White argues that that statute operates to discharge from liability only those tort-feasors which are specifically named in the release. The North Carolina Court of Appeals has held to the contrary. Battle v. Clanton, 27 N.C.App. 616, 220 S.E.2d 97 (1975). The court applied the statute to a release which contained language very similar to the release executed by White.

The plaintiff in Battle was a passenger on a motorcycle which was involved in a collision with an automobile at an intersection. The insurer for the operator and the owner of the automobile settled with the plaintiff. The plaintiff executed a release which specifically named the insureds and

all other persons, firms, or corporations who are or might be liable, from all claims of any kind or character which I have or might have against it, him or them, and especially because of all damages, losses or injuries ... arising out of subject accident and I hereby acknowledge full settlement and satisfaction of all claims of whatever kind or character which I or my heirs, executors, administrators, successors or assigns may have against it, him or them by reason of the above-mentioned damages, losses or injuries.

Id. at 220 S.E.2d at 99.

The North Carolina statute is a part of the Uniform Contribution Among Tort-feasors Act. The court, noting that uniform acts should be given uniform interpretation, held, in accord with other courts interpreting the statute, that a general release to whomsoever bars further suits against other entities involved in the occurrence which produced the settlement that led to the release. Id. at 220 S.E.2d 99. Although this court recognizes that other courts have refused to give effect to general boiler plate release, this court is bound to follow the North Carolina rule. A general release of all persons releases all tortfeasors even though each tortfeasor is not specifically named in the release. Therefore, under North Carolina law, when Ms. White signed the September 17, 1980 release which contained general language releasing "all persons, firms, or corporations from all claims," she released the defendants from liability. Ms. White counters, however, that this court should not uphold the release because of a mutual mistake as to the scope of the release.

C. MUTUAL MISTAKE AS A DEFENSE

Ms. White, in affidavits she submitted in opposition to the defendants' motions, asserts that it was not her "intention" or the intention of her attorney or Freund's and Casstevens' insurance agent to release the defendants. Ms. White argues, therefore, that the release, because of the mutual mistake by the parties as to the scope of the release, is invalid. Again, this court must...