On July 7, 2008, the Pennsylvania Superior Court decided the case of Ford Motor Company v. Buseman, No. 807 EDA 2007, which followed previous holdings that broad language in a General Release, including a discharge of "all other persons, firms or corporations," will bar subsequent lawsuits. This is true even if it was not the intention of the plaintiff to release other entities and the other entities were not involved in the prior litigation and paid no consideration to settle it.
Although the primary application is in the Personal Injury arena when a plaintiff settles an accident case and then decides to pursue a Products Liability or Medical Malpractice case arising out of the same incident, there are potentially other types of cases where this line of rulings would apply.
The lesson to be learned is that what may appear to be a "boilerplate" or "standard" Release must be carefully analyzed and modified or else it may result in a release of other viable claims and lead to a painful call to your malpractice carrier.
The Facts
In Ford Motor Company v. Buseman, Maya Buseman-Williams died in an accident involving a rollover of her 2002 Ford Explorer. Her Estate alleged that the Explorer was defective and filed a Products Liability action against Ford.
However, the Estate had already settled a Wrongful Death lawsuit against the driver of the Explorer, Kevin Reeves, and had signed a Release with Reeves' carrier, State Farm, for $50,000 and Ms. Buseman-Williams' Underinsured carrier, GEICO, for $100,000. Both Releases included language releasing Reeves and "all other persons, firms or corporations."
The appeal revolved around Ford's claim that the broad release language included a release of any claims against Ford for Products Liability such that the case against Ford should have ended with Summary Judgment.
The Decision
The Superior Court held that, since the language of the Releases was unambiguous and there was no evidence of fraud, accident, or mutual mistake, Summary Judgment should have been entered for Ford since all claims against all entities had been released.
The Court reasoned that, when interpreting a contract, including a Release, the primary source of the intention of the parties is the language of the contract. What a party later contends not to have intended cannot be in direct conflict with the plain language of the document.
The Court cited the case of Hasselrode v. Gnagy, 172 A.2d 764 (Pa. 1961), which included the following passage:
If such a release
can be nullified or circumvented, then every written release and every written contract or agreement of any kind no matter how clear and pertinent and all-inclusive, can be set aside whenever one of the parties has a change of mind or whenever there subsequently occurs a change of circumstances which were unforeseen, or there were after-discovered injuries, or the magnitude of a releasor's injuries was unexpectedly increased,or plaintiff made an inadequate settlement. It would make a mockery of the English language and of the law to permit this release to be circumvented or held to be nugatory.
Parties with possible claims may settle their differences upon such terms as are suitable to them. They may include or exclude terms, conditions and parties as they can agree. In doing so, they may yield, insist or reserve such right as they choose. If one insists that to settle, the matter must end then and forever, as between them, they are at liberty to do so. They may agree for reasons of their own that they will not sue each other or any one for the event in question. However, improvident their agreement may be or subsequently prove for either party, their agreement, absent fraud, accident or mutual mistake, is the law of their case.
Thus, despite having not been a party to the prior Wrongful Death litigation and having paid no consideration towards its settlement, the Releases executed by the plaintiff exonerated Ford and barred the Products Liability claim.
The Lesson
The lesson to be learned is that language releasing "all other persons, firms or corporations" really means something. Specifically, it means that all claims against anyone in the world are being released, regardless of whether that is what either party really intends or whether anyone else paid any consideration to be released.
If such a Release is signed in an accident case, any Products Liability case will also be released, as will any claim for Medical Malpractice arising out of any treatment which occurred before the date of the Release.
My suggestion is that you review Releases carefully and remove the broad reference to "all persons, firms or corporations." If the insurance company will not agree to modify the Release you should advise the client to refuse to settle or insist that the client sign a written acknowledgement that he/she understands that the settlement will extinguish any and all claims arising out of the accident.
Author Resource:-
Tim Rayne is the author of numerous publications on Personal Injury Law and is a graduate of the Temple University Beasley School of Law's Master's in Trial Advocacy Program. Tim can be reached at http://www.macelree.com/traynelaw.
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