Release of All Claims: (December Litigation Quarterly 2008)

December 1, 2008

Mutual Mistake

Once a settlement is reached, the tortfeasor who has settled with the victim will usually request that the victim sign a Release of All Claims. There are circumstances where there are multiple tortfeasors, and the victim may choose to seek compensation from all tortfeasors instead of holding the original tortfeasor responsible for all subsequent acts causing injury. This situation is prevalent when an already injured victim is injured further by a subsequent medical provider. However, an issue may arise if the original tortfeasor and the victim signed a Release of All Claims that releases all of the victim’s claims against additional tortfeasors. Can all additional tortfeasors prevail on summary judgment or can the original parties reform the Release of All Claims so that it states their true intentions?

The Fifth District Court of Appeal recently addressed this issue in Banks v. Orlando Regional Healthcare.1 In Banks, the Banks family was involved in a serious automobile accident with another vehicle driven by Guyette.2 Guyette and his insurer settled for his policy limits.3 The release stated that the Banks agreed to release all claims against Guyette and his insurer from liability of all known and unknown, foreseen and unforeseen injuries resulting from the automobile accident.4 The release was silent regarding any subsequent claims the Banks had against additional parties.5 After the settlement monies were deposited, the Banks filed suit against the health care providers who treated their daughter who had been injured in the accident. 6 The health care providers filed a motion for summary judgment claiming that the Banks released all subsequent tortfeasors in the original release.7 The Banks opposed the motion and filed an Amended Release of All Claims against Guyette and his insurer which preserved their claims against subsequent tortfeasors.8

Similar to Banks, in Rucks v. Pushman,9 Rucks was injured by Pushman outside of a bar owned by Gailey.10 After Rucks was taken to the hospital for her injuries, she was injured further by the hospital.11 Rucks filed suit against Pushman, Gailey and the health care providers.12 After Rucks settled with and released Pushman and Gailey, the health care providers filed motions for summary judgment claiming that they were released from all claims as a result of the releases between Rucks, Pushman and Gailey. 13

A victim may first settle with the initial tortfeasor solely for the injuries suffered from the initial tort and then sue the subsequent health care providers.14 A release of only the initial tortfeasor should be “carefully accomplished so that it is clear that the victim is not receiving compensation from the initial tortfeasor for injuries resulting from the subsequent negligence of the health care providers and that the victim is reserving the victim’s cause of action against the heath care providers.”15 If the release does not undoubtedly preserve the victim’s claims against health care providers, it is assumed that the victim recovered from the initial tortfeasor for all the injuries suffered by the health care providers, and thus, the victim will be banned from claiming a cause of action against the health care providers.16 The court in McCutcheon v. Hertz Corp. stated that if the settlement agreement between the victim and initial tortfeasor was intended to compensate the victim just for injuries caused by the initial tortfeasor, and not to compensate the victim for injuries from subsequent health care providers, the victim should be able to establish their intention.17 The cause of action, if any, that the victim may have against the initial tortfeasor to reform the victim’s release, should be asserted in a separate equitable reformation action.18

A court in equity has the power to reform a written instrument where, due to mutual mistake, the instrument as drawn does not accurately express the true intention or agreement of the parties to the instrument. Notably, in reforming a written instrument, an equity court in no way alters the agreement of the parties. Instead, the reformation only corrects the defective written instrument so that it accurately reflects the true terms of the agreement actually reached.19

In order to reform an agreement, evidence must be presented to make obvious, by clear and convincing evidence, that there was a mistake of fact between the parties. 20

In Banks, the court concluded that any “unintended assignment” of the Banks’ claims against the health care providers was “cured” by the reformation.21 In Rucks, the health care providers’ motions were granted.22 The court affirmed the summary judgments since Rucks did not bring a separate equitable reform action.23 Many plaintiff attorneys are not aware that a separate action in equity is required to reform a release and rather attempt to challenge the release in litigation. In this case, the court should follow Rucks and grant the subsequent tortfeasor’s motion for summary judgment. The court should find that the victim released the subsequent tortfeasors because equitable relief was not obtained.

Endnotes

1                      955 So. 2d 604 ( Fla. 5th DCA 2007).

2                      Id. at 605.

3                      Id.

4                      Id.

5                      Id.

6                      Id. at 606.

7                      Id.

8                      Id.

9                      541 So. 2d 673 (Fla. 5th DCA 1989).

10                   Id. at 674.

11                   Id.

12                   Id.

13                   Id.

14                   Id. at 675.

15                   McCutcheon v. Hertz Corp., 463 So. 2d 1226 (Fla. 4th DCA), rev. denied, 476                     So. 2d 674 (Fla. 1985).

16                   Id.at 676.

17                   Id.

18                   Banks, 955 So 2d at 608 (citing McCutcheon, 476 So. 2d at 676).

19                   Banks, 955 So 2d at 608.

20                   Newman v. Metropolitan Dade County, 576 So. 2d 1352 (Fla. 3rd DCA 1991).

21                   Banks, 955 So 2d at 609.

22                   Rucks, 541 So. 2d at 674-675.

23 Id. at 676.


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