Opinion ID: 1133441
Heading Depth: 2
Heading Rank: 1

Heading: The December 7, 1993 Settlement Agreement Barred Marn's Property Damage Claim in the January 14, 1994 Complaint.

Text: A properly executed settlement agreement generally precludes future litigation for its parties. See AIG Hawaii Ins. Co. v. Bateman, 82 Hawai`i 453, 458-59, 923 P.2d 395, 400-01, amended in part, 83 Hawai`i 203, 925 P.2d 373 (1996). Indeed, a settlement agreement is an agreement to terminate, by means of mutual concessions, a claim which is disputed in good faith or unliquidated. It is an amicable method of settling or resolving bona fide differences or uncertainties and is designed to prevent or put an end to litigation. 15A Am.Jur.2d Compromise and Settlement § 1 (1976). We acknowledge the well-settled rule that the law favors the resolution of controversies through compromise or settlement rather than by litigation. Dowsett v. Cashman, 2 Haw.App. 77, 82-83, 625 P.2d 1064, 1068 (1981). Such alternative to court litigation not only brings finality to the uncertainties of the parties, but is consistent with this court's policy to foster amicable, efficient, and inexpensive resolutions of disputes. In turn, it is advantageous to judicial administration and thus to government and its citizens as a whole. We agree with the policy and law of settlements which the Supreme Court of Arkansas succinctly sets forth in Ragland v. Davis, 301 Ark. 102, 106-107, 782 S.W.2d 560, 562 (1990) (citation omitted, emphasis added): Courts should, and do, so far as they can do so legally and properly, support agreements which have for their object the amicable settlement of doubtful rights by parties; the consideration for such agreements is not only valuable, but highly meritorious. Because they promote peace, voluntary settlements. . . must stand and be enforced if intended by the parties to be final, notwithstanding the settlement made might not be that which the court would have decreed if the controversy had been brought before it for decision. Such agreements are binding without regard to which party gets the best of the bargain or whether all the gain is in fact on one side and all the sacrifice on the other. .... A compromise or settlement agreement disposes of all issues the parties intended to settle. In re Estate of Engels, 10 Kan. App.2d 103, 692 P.2d 400 (1984). . . . .... Having found the settlement to be valid and enforceable, the terms of the settlement would control . . . . Sylvester, 72 Haw. at 565-71, 825 P.2d at 1056-59 (emphases added); see also Gossinger, 73 Haw. at 423-24, 835 P.2d at 633-34; Han, 84 Hawai`i at 167-68, 931 P.2d at 609-10. The instant case appears to present a properly executed settlement agreement. Marn argues, however, that he did not intend to settle his property damage claim and that a genuine issue of fact precludes summary judgment, even though the Agreement repeatedly provides for the settlement of his property damage claim. It is well settled that courts should not draw inferences from a contract regarding the parties' intent when the contract is definite and unambiguous. See Hanagami v. China Airlines, Ltd., 67 Haw. 357, 364, 688 P.2d 1139, 1144 (1984) (citation omitted). In fact, contractual terms should be interpreted according to their plain, ordinary meaning and accepted use in common speech. See Amfac, Inc. v. Waikiki Beachcomber Inv. Corp., 74 Haw. 85, 108, 839 P.2d 10, 24, reconsideration denied, 74 Haw. 650, 843 P.2d 144 (1992). The court should look no further than the four corners of the document to determine whether an ambiguity exists. See KL Group v. Case, Kay & Lynch, 829 F.2d 909, 916 (9th Cir.1987) (applying Hawai`i law). Consequently, the parties' disagreement as to the meaning of a contract or its terms does not render clear language ambiguous. See State Farm Mut. Auto. Ins. Co. v. Fermahin, 73 Haw. 552, 556, 836 P.2d 1074, 1077 (1992); Hawaiian Ins. & Guar. Co. v. Chief Clerk of the First Circuit Court, 68 Haw. 336, 342, 713 P.2d 427, 431 (1986). It is equally well settled that [t]he parol evidence rule is invoked to bar the testimony of prior contemporaneous negotiations and agreements that vary or alter the terms of a written instrument. The rule is one of substantive law setting forth the well-settled principle that an agreement reduced to writing serves to integrate all prior agreements and negotiations concerning the transaction into the written instrument which then represents the final and complete agreement of the parties. The rule then bars evidence of collateral agreements that would vary or alter the written terms and is called into play where the issue involves the rights and duties created by the instrument. As a rule of substantive law, it determines the parties' legally enforceable contractual obligations and precludes consideration of extrinsic evidence to the contrary. Akamine & Sons v. American Security Bank, 50 Haw. 304, 440 P.2d 262 (1968); Midkiff v. Castle & Cooke, Inc., 45 Haw. 409, 368 P.2d 887 (1962). Historically, in an action to determine the parties' contractual rights under an agreement, the court's only inquiry would center around whether the written agreement was a total integration of the parties' intent. If so, absent evidence of mistake or fraud, the rule barred introduction of any extrinsic evidence that varied or altered the terms. See 4 Williston Contracts § 633 (1961). Cosmopolitan Fin. Corp. v. Runnels, 2 Haw. App. 33, 37-38, 625 P.2d 390, 395 (1981) (emphases added). Therefore, absent fraud, duress, mistake or ambiguity, extrinsic evidence is excluded once it is determined that a contract is fully integrated. See Industrial Indem. Co. v. Aetna Cas. & Sur. Co., 465 F.2d 934, 937 (9th Cir.1972); Akamine & Sons, Ltd. v. American Sec. Bank, 50 Haw. 304, 310, 440 P.2d 262, 266 (1968). The Agreement, in the instant case, also appears to be fully integrated. Paragraph 11 provides that [t]his Settlement Agreement contains the entire agreement between the parties[,] and, further, paragraph 8 provides that no representation of fact, opinion or promise has been made to induce the Settlement Agreement, apart from this writing and Settlement Agreement, and, MARN expressly acknowledges he has not relied upon any statement, representation, opinion or promise by anyone or any entity in executing this Settlement Agreement other than as is set forth in this Settlement. Turning to the contract terms, the plain and ordinary language contained within the Agreement repeatedly provides for the settlement of Marn's property damage claim. As the Agreement is an integrated document, the parol evidence rule bars consideration of Marn's belated assertions that he did not intend to settle his property damage claim. Without expressly stating so, Marn, however, implies that he was mistaken about the contents of the Agreement and/or that he was without knowledge of the Agreement's many references to settling his property damage claim arising from the January 19, 1992 accident. Marn states in his affidavit that he asked his attorney to preserve his property damage claim, basically because he was aware of State Farm Fire's subrogation rights through the renter's insurance policy. This court, in AIG Hawaii Ins. Co. v. Bateman, 82 Hawai`i 453, 457-58, 923 P.2d 395, 399-400, amended in part, 83 Hawai`i 203, 925 P.2d 373 (1996), addressed a request for rescission and cancellation of a settlement agreement on the basis of mistake. In Bateman, this court stated that a contract is voidable where one party is mistaken as to a basic assumption supporting the contract at the time of its makingif the mistake is material and has an adverse effect to the agreed exchange of performancesso long as (1) the mistaken party has not borne the risk of the mistake and (2) enforcement of the contract would not be unconscionable, or the other party had reason to know of the mistake or caused the mistake. Id. (citing Restatement (Second) of Contracts § 153, at 394, and § 154, at 402-03 (1979)). Furthermore, where the party seeking relief was not mistaken but consciously ignored the fact that he or she had limited knowledge of the facts, he or she effectively bears the risk of that mistake. Id. at 457-58, 923 P.2d at 399-400 (citing Restatement (Second) of Contracts § 154 cmt. c). Applying the above principles, we are led ineluctably to one conclusionthat the circuit court did not err in dismissing Marn's property damage claim. First, Marn has not requested the rescission or cancellation of the Agreement. Second, he has barely implied that he was mistaken about its contents. Third, a simple reading of the Agreement reveals the more than ten times that Marn's property damage claim was incorporated therein. Moreover, the Agreement also repeatedly incorporates, within the scope of settlement, future claims, known and unknown. Thus, Marn has effectively borne the risk of his mistake. Marn's belated attempt to sever his property damage claim from the Agreement on the basis of his ignorance of its contents is simply insufficient to establish a genuine issue of material fact regarding the viability of his property damage claim. Therefore, considering the policy recognizing the finality and enforceability of valid and binding settlement agreements, we hold that the circuit court correctly dismissed Marn's claims in Counts One, Three, and Four of the January 14, 1994 complaint.