Opinion ID: 1402413
Heading Depth: 3
Heading Rank: 2

Heading: The Parties' Intentions and Understanding of the Release Document

Text: Philbin first argues that the evidence demonstrated a factual dispute concerning the parties' intent when he signed the release. He also argues that there is a factual dispute as to whether factors exist sufficient to set aside the release, precluding summary judgment. [10] The borough argues that the release is clear and unambiguous, that Philbin has not established by clear and convincing evidence that the release should be set aside, and that Philbin's unilateral mistake in understanding the release cannot excuse its application to him. In our prior cases we have used two approaches to determine whether a release is enforceable. Though consistent, they vary in their emphasis. Under the first approach, a release is to be construed according to the parties' intent. This approach potentially raises questions of fact. [11] The parties' intent is determinative. [12] Accordingly, summary judgment is inappropriate if there is a genuine fact dispute as to the parties' intent. [13] The second approach focuses on the aggrieved party's understanding of the nature of the instrument he or she has signed. [14] Under this approach, releases are presumptively valid and the releasor must show by clear and convincing evidence that the release should be set aside. [15] In addition, we have stated that for a release to be effective it must be given with an understanding of what is being released. [16] But we have also stated that absent a showing of coercion or fraud, a mistaken understanding of the contents of a release is not sufficient to justify setting it aside. [17] Under either approach, the focus is on what a reasonable person would have understood the release language to have meant. [18] The evidence permits a reasonable inference that Philbin, based on his November 8 discussion with Kaucic, justifiably believed that the borough would purchase the remaining material, and that, notwithstanding the November 6 termination letter, the borough had not ruled out the possibility that Philbin could complete the contract in the spring of 1996. This evidence is found in part in two paragraphs of Philbin's affidavit opposing summary judgment: 6. I discussed with Borough personnel my intentions to complete the contract and produce all of the contract material prior to the time the Borough would need the material in the spring of 1996. It was my understanding from Project Manager Charles Kaucic that the Borough would purchase the remaining material from me in late spring 1996 after the sub-base had adequately thawed and could be properly prepared. At that time, no one told me that the material would not be purchased by the Borough from me in the spring. .... 9. At the time that I signed the document, the Borough had not refused to purchase the additional material that had been produced under the contract and that was presently stockpiled and ready for use. Rather, Borough personnel were discussing with me the options of either the Borough purchasing the stockpiled material on hand at that time, or me continuing with production to produce all needed material by spring. Based on this understanding, Philbin would have had no reason to expect that the release he signed on November 15 would preclude him from asserting a breach of contract claim against the borough in the event the borough declined to purchase the remaining gravel and permit him to complete the contract. Other evidence supports the reasonableness of this interpretation. Kaucic testified in deposition that as of November 2 or 3, a winter shutdown was necessary, and that he had informed Philbin that they could not continue because of the weather. His affidavit permits an inference that he talked with Philbin about completing the project in the spring if weather prevented further work in 1995. Although Kaucic characterized this as a hypothetical possibility, his testimony that freezing weather prevented continuation removes that factual contingency. There is also some evidence that the borough itself did not consider the release, when Philbin signed it, to foreclose a breach of contract claim. First, it appears the borough had decided as of November 3 to obtain its standard lien release even before it issued the termination letter. There is evidence to the contrary, but given Philbin's assertions about a November 8 conversation with Kaucic, a fact finder could find that the borough had decided to require him to sign the standard release even before it decided to terminate the contract. Second, the form of the release suggests it was primarily intended to protect the borough from lien claims. The borough's Acting Director of Public Works referred to it on November 3 as a lien release. And the claims Philbin excepted from the release were those of equipment suppliers, who might have asserted lien claims against the borough. Philbin's reading of the release form was therefore consistent with it being a lien release. Philbin's theory that the release covered only that part of the contract relating to Beverly Lakes Road is also supported by the language of the payment request submitted by the public works department to the borough receiving department. That request sought partial payment under the contract and indicated that the contract performance was incomplete. Further, the borough could not have insisted that Philbin execute a complete release as a condition to payment for the initial gravel deliveries because that would have been coercive and in bad faith. [19] In other words, it could not have expected Philbin to give up any possible contract breach claim in exchange for paying him what he had already earned for his partial performance of the contract to date. [20] And the release form permitted the contractor to except from the release particular specified claims. As the borough's counsel explained at oral argument, this would have permitted Philbin to except a breach of contract claim. Accepting this assertion at face value, it means that the borough, in demanding that Philbin sign the release, had no reasonable advance expectation that the release as finally executed would preclude a breach of contract claim. This implies that it did not intend the release to encompass a breach of contract claim. Finally, it is significant that Philbin affined that the borough did not raise the release as a defense when, in the spring of 1996, Philbin broached the issue of the completion of the contract with the borough. Philbin also affied that the borough never mentioned any `release' during the following year while Philbin attempted to negotiate with the borough to resolve this matter short of litigation. The borough first raised the release as a defense to contract claims in May 1997, a year later. This implies that the borough never intended the release to cut off any breach of contract claim. On the other hand, there is evidence to support the borough's interpretation of the release and its effect. And Philbin's testimony in his deposition and in another proceeding undercuts his affidavits. But this contrary evidence is not conclusive given the averments in Philbin's affidavit and the permissible inferences which we must draw in favor of the non-movant. [21] The standard of proof for setting aside a release is clear and convincing evidence. But that standard only comes into play when a fact finder is called upon to consider the parties' reasonable expectations. Despite the borough's implied argument that we should apply that standard here, we refuse to do so. It has no direct application at the summary judgment stage. [22] We conclude that summary judgment is improper, because there is a genuine fact dispute about what the parties intended when the borough paid Philbin for his partial performance of the contract and Philbin signed the release. We do not agree with the borough's assertion that Martech Construction Co. v. Ogden Environmental Services [23] requires affirmance. We there held that a release barred suit, where (1) the release covered claims of any nature whatsoever, (2) the settlement clearly sought to resolve the entire transaction, and (3) the later dispute was reasonably ascertainable when the release was signed. [24] Although the release Philbin executed covers any and all further claim[s] ... whatsoever, and the subsequent dispute might be described as reasonably ascertainable, it is not clear that the settlement sought to resolve the entire transaction, for the reasons we noted above.