Court Opinion

ID: 9789185
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:30:09.483593+00
Date Added: 2024-06-11T07:37:20.404345
License: Public Domain

KENNARD, J .
I concur in the majority’s opinion. I write separately to express a different view as to the analysis of the issue pertaining to the release. Unlike the majority, which applies the defense of mutual mistake, I would analyze this issue under the third party beneficiary theory. Although here the majority and I reach the same result on this issue, in a future case the mode of analysis could make a difference because it affects the allocation of the burden of proof.
*534I.
Plaintiff John Hess was a passenger in a Ford pickup truck that was hit by a car driven by Charles Phillips. Plaintiff’s injuries rendered him a paraplegic. Plaintiff settled his claim against Phillips and the latter’s insurance company, Continental Insurance Company (Continental), for the policy limit of $15,000. Plaintiff signed Continental’s one-page release form, agreeing to “forever discharge” his claims against Phillips, Continental, and “all other persons, firms, corporations, associations or partnerships,” the phrase at issue here. The Ford Motor Company (Ford) was not a party to the release.
At trial, plaintiff and the attorney who had represented him in the settlement with Phillips and Continental testified they did not intend to release Ford from liability. Continental’s claims adjuster, Brad Sommers, corroborated that testimony. Sommers testified that in the settlement discussions he had with plaintiff’s former attorney, the latter made clear that the purpose of plaintiff’s signing Continental’s release form was to “protect Phillips and Continental from future exposure,” not to release Ford.
The jury returned a verdict in favor of plaintiff, finding Ford liable for 55 percent of plaintiff’s injuries. It awarded plaintiff $2,701,813 in economic damages and $8.4 million in noneconomic damages. After deducting the amount plaintiff had received in settlement from other defendants, the trial court entered judgment against Ford in the amount of $6,644,155 plus interest. The Court of Appeal upheld the jury’s award of damages because Ford had failed to establish that it was an intended beneficiary of the release. We granted review.
II.
Ford contends that the generic language of the standard release form discharging plaintiff’s claims against “all other persons, firms, corporations, associations or partnerships” made Ford a third party beneficiary of the release. According to the majority, plaintiff had the burden of establishing “mutual mistake as his only defense to Ford’s claim of third party beneficiary status.” (Maj. opn., ante, at p. 525.) Implicit in that statement is the assumption that Ford did show it was a third party beneficiary of the release form that Phillip’s insurer, Continental, had plaintiff sign. But Ford never made that showing.
When a party not specifically identified in an agreement claims third party beneficiary status, it has the burden of proving that the contracting parties intended to benefit it. (E.g., Garcia v. Truck Ins. Exchange (1984) 36 Cal.3d *535426, 436 [204 Cal.Rptr. 435, 682 P.2d 1100]; see Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937, 944 [132 Cal.Rptr. 424, 553 P.2d 584].) That burden cannot be discharged by sole reliance on the literal reading of the language in the contract. “The circumstance that a literal contract interpretation would result in a benefit to the third party is not enough to entitle that party to demand enforcement. The contracting parties must have intended to confer a benefit on the third party. (Walters v. Calderon (1972) 25 Cal.App.3d 863, 871 [102 Cal.Rptr. 89]; Bancomer, S.A. v. Superior Court [(1996)] 44 Cal.App.4th [1450,] 1458 [52 Cal.Rptr.2d 435]; Kalmanovitz v. Bitting [(1996)] 43 Cal.App.4th [311,] 314 [50 Cal.Rptr.2d 332]; Jones v. Aetna Casualty & Surety Co. [(1994)] 26 Cal.App.4th [1717,] 1724-1725 [33 Cal.Rptr.2d 291].)” (Neverkovec v. Fredericks (1999) 74 Cal.App.4th 337, 348 [87 Cal.Rptr.2d 856].)
Here, Ford was not a party to the release. In claiming it was a third party beneficiary, Ford relied solely on the standard release form’s language that the release agreement between plaintiff and Continental also applied to “all other persons, firms, corporations . . . .” Ford presented no evidence that the parties to the release agreement intended its provisions to apply to Ford. Thus, Ford has not met its burden of establishing it was a third party beneficiary.
Moreover, even if we were to consider the release as evidence supporting Ford’s claim to be a third party beneficiary, the properly admitted evidence overwhelmingly refutes its claim. “In determining the meaning of a written contract allegedly made, in part, for the benefit of a third party, evidence of the circumstances and negotiations of the parties in making the contract is both relevant and admissible. And, ‘[i]n the absence of grounds for estoppel, the contracting parties should be allowed to testify as to their actual intention. . . .’ [Citations.]” (Garcia v. Truck Ins. Exchange, supra, 36 Cal.3d at p. 437.) Here, plaintiff presented compelling evidence that he did not intend to have Ford benefit from the release agreement.
Because Ford is not a third party beneficiary here, there is no need to get into any discussion of mutual mistake by plaintiff, Phillips, and the latter’s insurer, Continental.
Although the majority’s analysis and mine reach the same conclusion in favor of plaintiff, that may not be the situation in another case. Anyone claiming to be a third party beneficiary, as Ford does here, has the burden of showing the contracting parties’ intent to confer such a benefit. In contrast, anyone claiming mutual mistake, as plaintiff does here, has the burden of *536proving that the contractual language is wrong. (See maj. opn., ante, at p. 525.) This difference in the burden of proof could be decisive in another case.
George, C. J., and Werdegar, J., concurred.