Cline v. Homuth – Settlement With Teen Driver’s Parents Also Covered Grandmother

Many car accident lawsuits are resolved through an out-of-court settlement before the case reaches the trial phase. However, these agreements must be clear as to the exact terms, including who is released from liability, and who is not.
The recent case of Cline v. Homuth, before the California Court of Appeals for the Third Appellate District, is one such case where this became apparent.

Court records indicate the incident that started this case was one involving a teen driver and a motorcyclist. The teen had a provisional driver’s license, and was operating his parent’s vehicle. In the passenger seat was his grandmother, the only other person in the car.

As the teen turned left, the motorcycle approached from behind and struck the back of the vehicle. According to the accident report, as prepared by police, the teen driver had caused the crash. Motorcyclist was severely injured and suffered numerous broken bones. The teen’s parents – and their vehicle – were insured for up to $100,000 per person.

Motorcyclist’s total medical expenses actually exceeded this limit, and the insurance claims representative was aware of this. For this reason, when a demand was made for the policy limit to settle all pending claims, the insurance representative agreed. (This in itself is a somewhat rare scenario in that typically, insurance companies put up more of a fight, particularly when a demand for recovery reaches the policy limit.)

As part of the agreement, motorcyclist was asked to sign a form entitled, “Release of All Claims.” This document indicated acceptance of the payment would be considered to satisfy and any all claims or demands against the parents and the teen and “any other person, corporation, association or partnership responsible in any manner or degree for injuries to person or property as a result of the accident… for which the above-named parties are legally liable in damages…” The motorcyclist also waived provisions of civil law that pertain to unknown claims (or injuries that might be discovered later).

After that release was signed, motorcyclist filed a lawsuit against the teen’s grandmother, alleging negligent supervision. She moved for summary judgment in the case, asserting she was released from any claim of liability because of the term “any other person” as stated in the release.

The trial court denied her motion, indicating the question of whether she was covered in the release was an issue of fact to be decided by a jury. Further, the court ruled there was no indication plaintiff intended to release the grandmother, and plaintiff and his attorney stated he wouldn’t have signed the release if it had named the grandmother.

Defendant grandmother asked the court to decide the legal effect of the release and the court agreed.

At trial on that issue, the insurance agent indicated he had intentionally not listed the grandmother because she was not a named or covered insured, and he only had authority to settle on behalf of named and covered insureds. He testified there was never a negotiation or even a consideration noting an intention to release the grandmother.

The attorney for the motorcyclist indicated there was never a discussion or communication regarding an intent to exclude grandmother from release. He indicated that at the time the release was signed, he was aware of potential liability against both the grandmother and the state or county for negligent road construction, and he had conferred with his client about potentially pursuing both of those avenues.

Plaintiff said he was under heavy medication when he signed the release, but believed he still had the option to pursue civil action against others – including the grandmother – and that was his intent.

An insurance claims expert testified the industry standard was that only people specifically named in the release were actually released from liability, but the court then sustained a defense objection to this assertion.

Still, trial court ruled the release was unambiguous in expressing an intent to release all others – including grandmother – from liability. Essentially, she was a third party beneficiary to the release.

The appellate court affirmed. Although plaintiff argued the language in the release pertains to only the named parties, the appeals court disagreed, noting the additional language releasing “all others” is clear and unambiguous.

This is an example of why car accident attorneys must be meticulous in their analysis of car insurance policies and settlement agreements before pursuing a case or encouraging a client to sign a release of liability.

Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:
Cline v. Homuth, March 30, 2015, California Court of Appeal, Third Appellate District

More Blog Entries:
Bean v. Pacific Coast Elevator Corp. – Non-Economic Damage Award Valid, March 27, 2015, Spartanburg Car Accident Lawyer Blog

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