Opinion ID: 2327093
Heading Depth: 1
Heading Rank: 1

Heading: Is this a General Release?

Text: A necessary underpinning to the majority's reasoning is its conclusion that the general release signed by DeMarco should not be considered to be a general release at all, but a document from which the understanding of further litigation flows. In my opinion, this holding turns our well-settled jurisprudence on the interpretation of contracts in general, and releases in particular, on its head. It is also my opinion that this decision subjects insurance carriers to ambush by subterfuge, invites collusion, and clouds the settlement of serious cases in the future. [58] It is striking to me that the majority apparently considers that there are only two parties whose interests were impacted here; DeMarco's and Doire's. This rather shortsighted view overlooks two important factors. First, the initial problem was caused by the fact that Doire had insufficient coverage to protect him from serious liability claims, and, second, Travelers paid approximately $550,000 and received a release of Doire's liability to DeMarco. DeMarco's assertion that this was a gratuitous payment, or that he would have signed the documents without being paid over one-half million dollars, rings hollow. The majority purports to read the release and the assignment documents together to discern the intent and reach the perceived overall objective of DeMarco and Doire. To reach its conclusion, however, the majority must read each document separately, overlook the fact that the release absolved Doire of all liability, and give the assignment full effect as if the release did not exist. Moreover, there is no evidence in the record that Travelers ever saw the assignment document. I also respectfully disagree with the majority's reliance on Campione v. Wilson, 422 Mass. 185, 661 N.E.2d 658 (1996), as authority for the proposition that even a general release, as opposed to an agreement not to execute on a judgment, can be combined effectively with an assignment of a bad-faith claim against an insurer. An examination of that case reveals stark factual differences from the case before us. In Campione, the plaintiff-decedent was killed by the defendant's truck after his own vehicle had broken down in the breakdown lane of a highway. Campione, 661 N.E.2d at 659-60. Campione's estate brought a wrongful death suit against O'Donnell Sand and Gravel, Inc., and a judgment, substantially in excess of O'Donnell's insurance coverage, was entered. Id. at 660. In a series of documents, including an agreement for judgment, conditional releases, assignments, and settlement agreements, O'Donnell assigned to Campione's estate all its rights to bring an action for negligence against two insurance agents because they had not obtained adequate insurance coverage for the trucking company. Id. at 660-61. A trial court dismissed the actions against the agents, but the Supreme Judicial Court reversed. [59] Campione, 661 N.E.2d at 659. In doing so, the court recognized that this was not a case in which an insurer was accused of bad faith after the settlement of a case, as is the case here. Id. at 660-61. In fact, the carrier, which had paid out its entire policy in the underlying wrongful death case, was not even a defendant in the action precipitated by the assignment to Campione. Id. at 661. Rather, it was the independent agents who were alleged to be negligent because they had secured a policy with inadequate coverage for O'Donnell. Id. at 660, 661-62. For these reasons, Campione is not particularly relevant to the case before us. The majority also relies heavily on Pinto v. Allstate Insurance Co., 221 F.3d 394 (2nd Cir.2000). In that case, an excess verdict was returned against an insured after the carrier stubbornly refused to settle a personal-injury claim brought by a single claimant within the insured's policy limit. Id. at 396-98. The injured party and the insured exchanged a general release and assignment of the insured's bad-faith claim against his carrier. Id. at 398. In deciding against the carrier, the Second Circuit noted that the normal way to preserve such a claim was by a covenant not to execute, and not by a general release. Pinto, 221 F.3d at 403. However, observing that New York's highest court had not addressed the issue, the Second Circuit then predicted that the Court of Appeals for the State of New York probably would hold that it was appropriate to give force and effect to the intent of the parties, even if their intentions were diametrically opposed to what they said in the settlement documents. [60] Id. at 403-04. The Pinto case is clearly in the minority, and I cannot accept its reasoning. Our well-settled rules of contractual interpretation require that the intent of the parties is best determined by the wording of the documents that they drafted, agreed upon, and executed. See Westinghouse Broadcasting Co. v. Dial Media, Inc., 122 R.I. 571, 581 n. 10, 410 A.2d 986, 991 n. 10 (1980) ([T]he intent [the Court] seek[s] is not some undisclosed intent that may have existed in the minds of the contracting parties but is instead the intent that is expressed in the language of the contract.) (citing Theroux v. Bay Associates, Inc., 114 R.I. 746, 339 A.2d 266 (1975); Flanagan v. Kelly's System of New England, Inc., 109 R.I. 388, 286 A.2d 249 (1972)). Only when the document is absurd on its face (and no one has raised that argument here) or ambiguous do we rely on extrinsic factors to give context to the parties' intent. [61] See Gorman v. Gorman, 883 A.2d 732, 739 n. 11 (R.I.2005) (Under established contract law principles, when there is an unambiguous contract   , the terms of the contract are to be applied as written.); Mallane v. Holyoke Mutual Insurance Co. in Salem, 658 A.2d 18, 20 (R.I.1995); Aetna Casualty & Surety Co. v. Sullivan, 633 A.2d 684, 686 (R.I.1993). Those rules apply in particular to releases; this Court consistently has applied the same rules of construction to release documents as it has to other forms of contractual agreements. See Young v. Warwick Rollermagic Skating Center, Inc., 973 A.2d 553, 558 (R.I.2009) (A release is a contractual agreement, and the various principles of the law of contracts govern the judicial approach to a controversy concerning the meaning of a particular release.). In attempting to divine the possible motives of DeMarco and Doire and further in construing the language of the DeMarco release and assignment together, the majority reaches a conclusion that is hostile to our well-settled precedent. I respectfully disagree with the majority's conclusion that this is a case of form over substance; the essence of the substance is the release, which in clear language absolved Doire from any and all liability. DeMarco does not dispute that he intended to completely release Doire from liability from the excess judgment, nor does either party disagree that Doire assigned any claims he might have against his insurer to DeMarco. Instead, the vexing problem that remains is that DeMarco, an assignee who merely stands in the shoes of Doire, has no remaining claim to pursue against Travelers because the general release vitiated that claim. Although I am sympathetic to DeMarco's plight, the future implications of construing a general release as something other than a general release are too significant to ignore.