Opinion ID: 1057335
Heading Depth: 1
Heading Rank: 3

Heading: The General Release

Text: ¶ 19. Defendants contend that the 1989 release, executed by Myer Bentob on behalf of Mitec Systems, does not bar Mitec Telecom from obtaining coverage under the policy for liabilities arising from the Bates lawsuit. They advance two reasons for this: (1) the release does not bar future and unknown claims; and (2) the release does not bind any entity other than Mitec Systems. The superior court concluded, to the contrary, that “the Mitec defendants in existence in 1989 [i.e., Mitec Manufacturing and Mitec Electronics] were affiliates of Mitec Systems for the purposes of the release and are . . . precluded from raising any claims against [NSIC] based on the policy.” Mitec Electronics and Mitec Manufacturing merged in 1991, and in 1996 merged with another Canadian corporation to form Mitec Telecom. Accordingly, the court granted summary judgment to NSIC on this issue, declaring that NSIC was not obligated to defend or indemnify any defendants. ¶ 20. We review the grant of summary judgment de novo, applying the same standard as the trial court. Johnson v. Harwood , 2008 VT 4, ¶ 5, ___ Vt. ___, 945 A.2d 875. Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Bacon v. Lascelles , 165 Vt. 214, 218, 678 A.2d 902, 905 (1996). A release between an insurer and its insured is a contract, Leo v. Hillman , 164 Vt. 94, 104, 665 A.2d 572, 579 (1995), and its interpretation is a question of law. Morisseau v. Fayette , 164 Vt. 358, 366, 670 A.2d 820, 826 (1995). As with any contract, our task in interpreting it is to ascertain the intent of the parties at the time of execution. Releases must be specific in order to be valid and are interpreted narrowly, as a general matter. Inv. Props., Inc. v. Lyttle , 169 Vt. 487, 497, 739 A.2d 1222, 1229 (1999). ¶ 21. The release here provided as follows: Mitec Systems Corporation[,] for and in consideration of the sum of [$16,250] paid by [NSIC] . . . by these presents does for its successors, affiliates and assigns, remise, release and forever discharge [NSIC] . . . of and from all, and all manner of action and actions, cause and causes of action, suits, debts, dues, sums of money, accounts, reckoning, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever, in law or in equity, which against the said [NSIC,] its successors, affiliates or assigns ever had, now has or which hereafter can, shall or may have for, upon or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of these presents. Included herein, but not in limitation hereof, are all claims that were asserted or could have been asserted in Mitec Systems Corporation v. Northern Security Insurance Company , Chittenden Superior Court, Docket No. S515-88CnC.
¶ 22. Defendants would have us find error in the superior court’s conclusion that this language operates to bar coverage for future claims, including the Bates lawsuit, arising out of events that occurred before the release was executed. Defendants assert that the release bars coverage only for claims arising out of lawsuits filed against Mitec before the release was executed, but not for after-filed claims, like this one, that arise out of events that occurred before the release. We disagree. ¶ 23. None of our cases is directly on point, but the release we are called upon to interpret today is strikingly similar to one that was before the United States Court of Appeals for the Third Circuit in Fisher Development Co. v. Boise Cascade Corp. , 37 F.3d 104 (3d Cir. 1994). There, Fisher released Boise Cascade from all claims that it “ever had, now has, or hereafter can, shall, or may have, for, upon or by reason of any matter, cause or thing whatsoever, from the beginning of the world to the day and date of these Presents.” Id . at 106. Noting that this release was of a type “regularly utilized,” the Third Circuit concluded that “[ i ] ts language evidences an intent on the part of Fisher to release all claims based on events occurring from ‘the beginning of the world’ to the date of the execution of the release.” Id . at 108 (emphasis added). The court went on: “[W]e can only take the phrase ‘hereafter may have’ to mean that the parties wished to release not only those claims of which they were currently aware, but also those they might subsequently discover based on their relationship prior to the execution of the release.” Id . (emphasis added). The Third Circuit declined to consider extrinsic evidence purportedly bearing on the question of whether the release barred future claims arising from past events, instead concluding that the release unambiguously barred such claims. Id . at 109 (“While [the release] does not use the words ‘future unknown liability,’ future unknown liabilities based on events occurring before the release are clearly covered.”). ¶ 24. The language in the release before us is virtually indistinguishable from the language analyzed in Fisher , and we decline to give it the crabbed reading proposed by defendants. That reading would render portions of the release mere surplusage , a result we strive to avoid in interpreting contracts. See Isbrandtsen v. N. Branch Corp. , 150 Vt. 575, 580, 556 A.2d 81, 85 (1988) (noting that we strive to give effect to all material parts of contracts). Nor are we persuaded by defendants’ argument that the release “makes no reference to unknown or future claims” and that such claims are therefore not released. The release here explicitly covers claims that Mitec Systems or its successors, affiliates, and assigns “hereafter can, shall, or may have.” This language plainly refers to the future, and to claims that Mitec Systems or its successors “may have” but which were not known at the time of the release. We agree with the Fisher court that such language unambiguously includes future claims arising out of events—here, the pollution in the Alling Industrial Park—that occurred before the release. ¶ 25. Defendants also cite several cases construing language different from that in the instant release, in support of an inference that only language like that cited in those cases will operate to bar future claims. See, e.g., Boles v. Blackstock , 484 So.2d 1077, 1080-81 (Ala. 1986) (release barring recovery for “all injuries, known and unknown” and “precluding forever any further or additional claims arising out of [a particular] accident” was unambiguous); Bernstein v. Kapneck , 430 A.2d 602, 609 (Md. 1981) (release of claims “known and unknown, and which have resulted or may in the future develop” barred claim for damages for later-discovered personal injuries; “the release could not be more clear, more specific, more complete, more all-inclusive or more all-embracing”); Emery v. Mackiewicz , 240 A.2d 68, 70 (Pa. 1968) (release barring “claims that are known and unknown, suspected and unsuspected” would be given effect; “release . . . could not possibly be . . . more completely all-inclusive and all-embracing”). ¶ 26. It needs no prolonged discussion, however, to conclude that those cases do not, and as a matter of logic cannot, have the effect defendants urge. The cases simply hold that future claims based on past events are barred by particular releases, not that such claims are not barred by other releases. Several of the courts in the cases cited were at pains to state that the language they interpreted was so completely clear that it would “turn[] the English language on its head” to conclude that the releases did not bar future, unknown claims. Bernstein , 430 A.2d at 609; accord Emery , 240 A.2d at 70 (“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.”). While the release here may not rise to the same level of redundancy as those in Emery and Bernstein , it is nonetheless unambiguous. Accordingly, the trial court did not err in concluding that the release barred coverage for future unknown liabilities, including the Bates lawsuit, that arose from the Alling pollution.
¶ 27. It remains to determine, however, whether the release barred Mitec Telecom’s coverage claims. Mitec Telecom contends that it is not a successor, affiliate, or assign of Mitec Systems, and that its coverage rights—which it asserts derive from Mitec Manufacturing’s rights—are therefore unaffected even if the release does extend to future claims by Mitec Systems’ successors. We do not agree. ¶ 28. In interpreting the language of the release, as with any contract, our goal is to give effect to the intent of the parties. State v. Philip Morris USA, Inc. , 2008 VT 11, ¶ 13, ___ Vt. ___, 945 A.2d 877. We presume that the parties’ intent is reflected in the plain language of the release when that language is clear. In re Adelphia Bus. Solutions of Vt., Inc. , 2004 VT 82, ¶ 7, 177 Vt. 136, 861 A.2d 1078. ¶ 29. The release here binds “successors, affiliates, and assigns” of Mitec Systems. Defendants’ principal argument against the superior court’s conclusion in this regard is that the court erroneously concluded that Mitec Telecom is a “successor to two affiliates” of Mitec Systems. According to defendants, Telecom itself is neither a successor to, nor an affiliate of, Mitec Systems, and thus is not bound by the release. The argument very nearly defeats itself. A general release is meant to buy peace from a discrete set of claims. Here, NSIC paid consideration to Mitec Systems in exchange for a release from liability for coverage claims by Mitec Systems and its successors and affiliates. NSIC’s purchase would be hollow indeed if the releasor’s affiliates—i.e., Mitec Manufacturing or Mitec Electronics—could unilaterally reimpose liability on NSIC simply by changing their corporate form once, to become a “successor to two affiliates.” ¶ 30. The summary-judgment evidence amply supported this conclusion. The trial court’s summary-judgment order largely cited plaintiff’s pleadings and exhibits for factual support. The “once-removed” citations here erect no great obstacle to our review, and we decline to reverse on that basis, as defendants urge us to. We briefly recount the undisputed facts relied on by the superior court. ¶ 31. The court found that Mitec Electronics provided a letter of credit to the State on behalf of Mitec Systems as part of the 1986 settlement of the original pollution claims. Defendants do not dispute this fact. The court also found that Mitec Systems sold its assets to Mitec Manufacturing at an inflated price (many of these assets, it is worth noting, were purchased from Mitec Manufacturing just a few years before). Contrary to the claim that defendants continue to press—that there was a “complete lack of any corporate relationship among Systems, Electronics, and Telecom” — the trial court found that there was a “unity of control and ownership” of all the Mitec companies; that the companies all “worked hand in glove as if part of a larger company”; and that Mitec had shown no facts that would rebut that conclusion. There was no error in concluding that Mitec Telecom, as successor to one or more affiliates of Mitec Systems, was bound by the general release. ¶ 32. Finally, we note again that Mitec Telecom explicitly claimed coverage as a successor to Mitec Systems in the earlier federal action arising out of the Bates-lawsuit coverage dispute, see supra , ¶¶ 17-18, which is to say that Mitec Telecom’s own explicit understanding, at least in 1999, was that it was itself a successor to Mitec Systems. Mitec Telecom cannot avoid the release.