Opinion ID: 1383123
Heading Depth: 2
Heading Rank: 1

Heading: Scope of the Release

Text: KMC complains that the court of appeals erroneously implies unpaid fees as a limitation on its consideration under the release. KMC submits that its consideration for the agreement is set forth in paragraph 2 which, in plain language, releases any and all claims Granada may have against KMC directly or indirectly attributable to KMC legal services between June 1, 1988 and April 1, 1992. Unpaid legal fees are not mentioned. Unpaid fees are only mentioned in the recitals at the beginning of the agreement and again in the first numbered paragraph which sets out Granada's consideration for the release. The agreement begins: WHEREAS, KMC has performed legal services for Granada since June of 1988; WHEREAS, as of the date written above, Granada owes KMC a substantial sum for outstanding and unpaid invoices for professional legal services rendered to Granada up to April 1, 1992 (the Unpaid Fees); WHEREAS, KMC and Granada desire to resolve the issue of the Unpaid Fees to their mutual satisfaction; and WHEREAS, KMC has advised Granada in writing that independent representation is appropriate in connection with the execution of this Agreement. NOW, THEREFORE, in exchange for the mutual promises, agreements and releases herein contained, KMC and Granada do hereby agree as follows:    Paragraphs 1 and 2 immediately follow and set out the consideration to Granada and to KMC for the agreement. In paragraph 1, KMC forgives Granada for all unpaid legal fees for services rendered between June 1, 1988 and April 1, 1992: 1. KMC hereby releases, and by these presents does hereby release, acquit and forever discharge Granada, its agents, servants, employees, officers, directors, affiliates and all persons, natural or corporate, in privity with them or any of them from any demands, claims or causes of action of any kind which KMC had or might have, directly or indirectly attributable to the Unpaid Fees owed to KMC by Granada for professional legal services rendered between June 1, 1988 and April 1, 1992, it being intended to release Granada from any obligation to pay such Unpaid Fees. Then in paragraph 2, Granada releases all claims it has, or may have, against KMC in connection with KMC's legal services to Granada during the same time period: 2. Granada hereby releases and by these presents does hereby release, acquit and forever discharge KMC, its agents, servants, employees, partners, affiliates and all persons, natural or corporate, in privity with it, from any and all demands, claims or causes of action of any kind whatsoever, statutory, at common law or otherwise, now existing or that might arise hereafter, directly or indirectly attributable to the rendition or [sic] professional legal services by KMC to Granada between June 1, 1988 and April 1, 1992. The court of appeals thus reads the unpaid fees mentioned in the recitals and paragraph 1 as an implied limitation on the claims mentioned in paragraph 2. KMC sees no reason to imply this limitation. But the court of appeals relies on our holding in Victoria Bank and Trust Co. v. Brady, 811 S.W.2d 931 (Tex.1991), to read the release narrowly. In Brady, we said that a releasing instrument must mention the claim to be released to be effective. Id. at 938. Because the release agreement here did not mention the Wolf Point claim, the court concluded it should be applied only to those claims which were mentioned; i.e. those claims involving unpaid fees. 955 S.W.2d at 129. We conclude that our decision in Brady does not control the construction of this release. The agreement in Brady purported to release all claims attributable to a specific loan transaction between a bank and its customer. In subsequent litigation between these parties, the customer raised claims relating to another transaction with the bank, and the bank raised the release in defense. In rejecting the bank's defense, we noted that the parties' agreement plainly limited itself to the specific loan and thus did not cover this other transaction. Id. at 939. The present release is clearly broader than the one in Brady. It is not expressly limited to a specific claim or transaction but rather purports to cover all demands, claims or causes of action of any kind whatsoever. Nothing in Brady forbids such a broadform release. Brady simply holds that the release must mention the claim to be effective. Id. at 938. It does not require that the parties anticipate and identify each potential cause of action relating to the release's subject matter. See Memorial Med. Center v. Keszler, 943 S.W.2d 433, 435 (Tex.1997). Although releases often consider claims existing at the time of execution, a valid release may encompass unknown claims and damages that develop in the future. See Cannon v. Pearson, 383 S.W.2d 565, 570 (Tex.1964); Quebe v. Gulf, C. & S.F. Ry., 98 Tex. 6, 81 S.W. 20, 22 (1904). Thus, we conclude that this release was sufficient to forgive all claims against KMC for malpractice attributable to legal services rendered to Granada between June 1, 1988 and April 1, 1992. Although the release does not identify specific cases, it does expressly forgive Granada's existing debt to KMC for legal services rendered from June 1, 1988 to April 1, 1992 in return for Granada's release of all present and future claims attributable to KMC's legal work during this same period. The court of appeals' construction imposes a symmetry that is simply absent from the agreement's language. While the recitals in this release are concerned primarily with the issue of Granada's unpaid legal fees, they do not convey an intent to limit the consideration to KMC for the forgiveness of those fees. The recitals merely state the parties' general desire to resolve the issue of Unpaid Fees to their mutual satisfaction. Paragraphs 1 and 2 then explain the parties' mutual satisfactionKMC forgives all unpaid legal bills; Granada releases all claims relating to KMC's legal services rendered during a specific time period. Because the release forgives KMC for any legal malpractice it may have committed during this period, the court of appeals erred in holding to the contrary. Nevertheless, we do not agree with KMC that this release completely bars National's and INA's claims. [2] The release does not apply to claims of causes or action ... directly or indirectly attributable to the rendition [of] professional legal services by KMC to Granada after April 1, 1992. Because the Wolf Point trial did not begin until April 28, 1992, and KMC's representation continued through trial, the plain terms of the release do not bar National's or INA's malpractice claims based solely on services KMC rendered after April 1, 1992. Thus, while the release may bar proof of certain elements of National's malpractice claim, it may not bar other elements.