Opinion
No. C0-03-48.
Filed: May 27, 2003.
Appeal from Stearns County District Court, File No. C4-02-3044.
James D. Jorgensen, Nelson Personal Injury Attorneys, (for appellant)
Frank J. Rajkowski, Rajkowski Hansmeier, Ltd., (for respondent Allied Property and Casualty Insurance Company)
Robert T. Stich, Leo I. Brisbois, Stich, Angell Kriedler, (for respondent DJB Inc.)
Considered and decided by Harten, Presiding Judge, Stoneburner, Judge, and Minge, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellant contends that the district court abused its discretion by not vacating the release she and respondents had executed before she began this action and by dismissing three of her claims as unfounded. Because we see no abuse of discretion in the refusal to vacate the release and no legal basis for the claims that the district court dismissed, we affirm.
FACTS
In January 1999, appellant Amy Mann, n/k/a Amy Berg, while driving an uninsured car owned by her father, James Mann, collided with another uninsured vehicle. She applied for coverage to respondent Allied Property and Casualty Insurance Corp. (Allied), which insured her father's other car. Allied denied coverage on the ground that the car appellant was driving was not insured. Appellant then demanded coverage from Allied under her father's uninsured coverage, and Allied again denied coverage because appellant was not covered under her father's policy.
In October 1999, appellant brought an action against Allied. She amended her complaint in November 2000 to add another defendant, respondent DJB Inc., the insurance agency with which she had discussed insuring the car. The DJB agent who spoke with appellant about coverage is appellant's former foster mother; she and appellant are close friends.
In December 2000, appellant discharged her attorney with a letter that read:
Please let this letter serve as notice that I am terminating my use of your professional services, effective immediately. I have been uncomfortable with how you have handled my case to date, and after reading the summons that was sent out, I can tell you that you acted totally against my wishes as to how you were pursuing the case. * * *
As to any costs you may have incurred to date, aside from the fact that I have no assets, I also feel that virtually all of these costs were a result of you pursuing and involving people that you were clearly instructed not to (namely [the insurance agent, DJB], and an implication of fraud).
Appellant's case against respondents was settled in January 2001 when she executed the following release:
In consideration of the sum of Four Thousand and no/100 ($4,00.00) Dollars, the receipt of which is hereby acknowledged, I, Amy Mann, for myself, my heirs and assigns, do hereby release and forever discharge Allied Property and Casualty Insurance Company and DJB, Inc., d/b/a Security Marketing Agency, together with their respective agents and employees, from any and all claims or causes of action that I may have arising out of the injuries I sustained in an accident which occurred on or about January 18, 1999.
This release by its terms includes all claims of whatever nature whether arising by virtue of tort principles, by contract or by operation of law. Included in this release are any claims that I may have based on the terms of any insurance policies issued by Allied and any claims that I may have against DJB or its agents for failing to procure or provide coverage for me for injuries sustained in automobile accidents.
This release also includes any claims from third persons who may have paid benefits to me or on my behalf because of injuries I did sustain. In regard to such claims, I agree to indemnify and hold harmless Allied and DJB, Inc., from those claims.
I understand and acknowledge that I to [sic] have the right to seek independent legal counsel concerning the terms and provisions of this release and further acknowledge that I have discussed my rights with previous counsel and notwithstanding that advice still desire to enter into this settlement on these terms. I understand that this release is binding and final and will preclude any further claims by me even if it turns out that the nature and extent of my injuries is substantially worse than I currently anticipate.
Finally, it is understood, acknowledged and agreed that any payments made to me represent simply the attempt to compromise a disputed claim and are not and shall not be construed as an admission of liability.
Appellant received and spent the $4,000.
About a year later, on the advice of her chiropractor, appellant talked to a lawyer who referred her back to the attorney she had terminated. On 21 March 2002, she filed a new complaint against respondents, restating the six counts of her earlier complaint and adding counts of tortious interference with contract and tortious interference with economic advantage, both relating to the contract between appellant and her attorney, and a count of fraud, relating to the release.
Appellant's chiropractor also referred her to a licensed psychologist, who first saw her on 26 March 2002. After administering several tests to appellant, the psychologist reported that her verbal memory and intellectual and academic skills were in the average range, that her symptoms were quite mild and not significant in nature and depended on the environment to be expressed, that appellant's test results were not consistent with a significant mood disorder, and that no further change is anticipated as a result of the accident. The psychologist concluded his report:
I suspect that [appellant] has sustained cognitive and attention problems, but will probably be able to use her other skills to adapt and compensate for these deficits. Nevertheless, I believe that she still experiences neuropsychological deficits that are subtle and not observed until placed under periods of stress.
In October 2002, respondents moved for summary judgment. The district court granted their motion and dismissed appellant's complaint with prejudice, determining that the release precluded the first six counts and the three additional counts lack a legal basis. Appellant challenges the summary judgment and the dismissal of her complaint.
DECISION
1. Settlement Agreement
Settlement agreements are contractual in nature and are as binding on the parties as any contract they could make. Vacating a stipulation of settlement rests largely within the discretion of the trial court, and the court's action in that regard will not be reversed unless it be shown that the court acted in such an arbitrary manner as to frustrate justice.
Chalmers v. Kanawyer, 544 N.W.2d 795, 797 (Minn.App. 1996) (quotation and citations omitted). Appellant gives five reasons why this release should be vacated, but none of them is persuasive.
First, appellant argues that she received insufficient consideration. For this argument, she relies on Schmitt-Norton Ford, Inc. v. Ford Motor Co., 524 F. Supp. 1099 (D.Minn. 1981), but her reliance is misplaced.
The key factor in determining the validity of the release is not the amount of consideration the person giving the release receives, * * * but rather whether the person received something [to] which he was not previously entitled.
Id. at 1103. Appellant received $4,000 to which she was not previously entitled, because the car she was driving was uninsured.
Appellant claims she had a binder, but the DJB agent from whom she allegedly received the binder testified inconsistently on the existence of a binder and appellant herself testified that she never paid anything for insurance. On appeal, she offers deposition testimony of the owner of DJB, but that testimony is not properly before this court because it was not before the district court. See Minn.R.Civ.App.P. 110.01 (record on appeal consists of papers filed in district court, exhibits, and transcript).
Second, appellant alleges fraud, claiming that DJB misrepresented to her that she was unlikely to prevail in her claims and that it would try to obtain coverage for her injuries through policies previously issued to her father by another insurance company. But these statements were not misrepresentations: DJB knew, and told appellant, that recovering from Allied when neither she nor the car she was driving was covered by its policy was unlikely, and DJB pursued appellant's claim against the other company until the commissioner of insurance determined that appellant was not entitled to recover. Moreover, intent is an essential element of a claim of misrepresentation . Flynn v. Amer. Home Prods. Corp., 627 N.W.2d 342, 349 (Minn.App. 2001). Appellant never alleges that respondents intended to deceive her. There was no fraudulent misrepresentation.
Third, appellant argues that the release was based on a mutual mistake, in that both she and respondent were mutually mistaken as to the extent of her injuries, because she did not discover her brain injury until at least May 2002, 16 months after executing the release. She relies on Couillard v. Charles T. Miller Hosp. Inc., 253 Minn. 418, 427, 92 N.W.2d 96, 102 (1958). But Couillard is distinguishable: it concerned the right of a plaintiff who had released all claims against the tortfeasor who caused the injury to bring malpractice claims against the physicians who treated the injury. Here, appellant seeks to bring the same claims she released against the same parties. In Couillard, the injuries resulting from the physicians' malpractice were not within the contemplation of the plaintiff and the tortfeasor when they settled. Here, appellant intentionally released respondents from any further claims "even if it turns out that the nature and extent of my injuries is substantially worse than I currently anticipate." A plaintiff who intentionally releases a tortfeasor surrenders his claim against that tortfeasor. See id. at 427, 92 N.W.2d at 102. Appellant cannot use mutual mistake as a reason for vacating the release.
Fourth, appellant argues that she was mistaken in signing the release, that respondents were guilty of inequitable conduct, and that these two circumstances together entitle her to vacate the release. She asserts in her brief that she was mistaken in that she did not realize the effect of signing the release, but her deposition unequivocally indicates otherwise.
Q. [B]ased on your review of [the release], you knew when you signed * * * that you were releasing and discharging all of the defendants— Allied, Security, all the people your lawyer had sued — from any further claims. You understood that, did you not?
A. Yes.
Q. Okay. And in return, you were getting the sum of $4,000?
A. Yes.
Q. And you got the $4,000, did you not?
A. Yes.
Q. Okay. And so the deal that you had understood was then completed with your signing of that Release?
A. Yes.
* * * *
Q. Okay. You understood when you signed that Release that the lawsuit was over and you had $4,000 in return, did you not?
A. Well, the lawsuit
Q. The lawsuit that you had against Allied, and then the amended complaint that your lawyer had prepared against Security, you knew that would now be over when you signed that Release, did you not?
A. Yes.
Appellant implies that her brain injury, diagnosed 16 months after she signed the release, may already have deprived her of the capacity to contract at the time she signed it. But the psychologist reported that appellant's verbal memory, intellectual capabilities and academic capabilities are all in the average range; appellant testified that she has signed other insurance contracts since obtaining the release, and nothing in her deposition transcript indicates that she lacked capacity when the release was signed. Appellant cannot vacate the release on the grounds of her unilateral mistake and respondents' inequitable conduct.
Again, appellant argues that, when she signed the release, she believed she would have coverage from her father's previous insurer. But even if this were true, in order to vacate the release on the grounds of unilateral mistake, appellant would need to show that respondents knew she was signing with a mistaken belief. See Schoenfeld v. Buker, 262 Minn. 122, 131, 114 N.W.2d 560, 566-67 (1962) ("there must be concealment or at least knowledge on the part of one party that the other party is laboring under a mistake in order to set aside a release for unilateral mistake," so neither party can take an unconscionable advantage of the other's mistake and be enriched at the other's expense). Appellant does not allege that respondents knew that she believed she could recover from another insurer.
Fifth, appellant argues that she is entitled to vacate the release because she was not represented by counsel when she signed it. This circumstance is reflected in the release itself.
I understand and acknowledge that I to [sic] have the right to seek independent legal counsel concerning the terms and provisions of this release and further acknowledge that I have discussed my right with previous counsel and notwithstanding that advice still desire to enter into this settlement on these terms.
During her deposition, appellant stated that she chose to rely on the advice of a friend and of her insurance agent, who was also a close friend, rather than the advice of her attorney. This was her own decision, and she was aware of it when she signed the release. She cannot vacate the release on the grounds of absence of counsel.
In support of this, appellant offers the transcript of the friend's deposition. But since he was deposed on 5 November 2002, after summary judgment had been issued, his deposition was not before the district court and is not before this court. See Minn.R.Civ.App.P. 110.01 (record on appeal consists of papers filed in district court, exhibits, and transcript).
The district court did not abuse its discretion in refusing to vacate the release.
2. Dismissal of Claims
The district court concluded that there was no basis for the claims appellant added to her complaint in the second action and dismissed them. When reviewing the dismissal of claims for failure to state a basis on which relief can be granted, this court asks only whether the claim sets forth a legally sufficient basis for relief. Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997). Other than appellant's own testimony, the only support offered for these claims is two depositions that were not before the district court because they were not taken until after the summary judgment had been issued. Therefore, the district court correctly found that appellant failed to provide a basis for the claims and did not err in dismissing them.