Summary
holding that release which discharged agents and employees sufficiently identified law firm and individual member thereof who had represented specifically named releasees
Summary of this case from Luther v. DannerOpinion
No. 82-1223
Decided August 24, 1983.
Contracts — Releases — R.C. 2307.32 — "All other persons," construed — Agency — Attorneys at law — Applicability of release to tortfeasor's agent.
APPEAL from the Court of Appeals for Lucas County.
Plaintiff-appellant, David R. Pheils, Jr., and fourteen other plaintiffs initiated suit against seven defendants-appellees, namely, Shumaker, Loop Kendrick, Ronald J. McCracken, Corey D. Garber, Kathryn Garber, Garber Publishing Company, Garber-Lawrence Publishing Group, Inc., and Robert J. Bagnell. Before final judgment, all but four of the plaintiffs were either dismissed without prejudice or withdrew from the case. Motions for summary judgment were filed by the appellees as to all issues against all remaining plaintiffs. The trial judge granted the motion for summary judgment against appellant Pheils in favor of the appellees Shumaker, Loop Kendrick and McCracken, but allowed the case to go to trial as to the remaining plaintiffs against all seven appellees and as to appellant against the five appellees not granted summary judgment.
The only issue tried to the jury was the question of the validity of certain releases signed by the plaintiffs. The jury found the releases valid and returned a verdict for the five appellees remaining after the grant of summary judgment against the appellant. The verdict was also returned in favor of all seven appellees including Shumaker, Loop Kendrick against the remaining plaintiffs other than appellant. Appellant and three of the original plaintiffs appealed the decision of the trial court. The court of appeals affirmed.
Appellant sought damages against appellees for losses he sustained in a business loan made to Garber-Lawrence Publishing Group, Inc. through Duane Pheils, his brother, who was one of the corporation's investors. Appellant charged fraud by the appellees Shumaker, Loop Kendrick through its associate Ronald J. McCracken. Summary judgment entered against appellant was based on a determination that the appellee law firm and its attorney, McCracken, who represented the corporation and the Garbers, owed no duty to the appellant.
Appellant was the attorney for Duane Pheils and his associate, Gilbert Lawrence, in connection with the formation of the appellee corporation, Garber-Lawrence Publishing Group, Inc., and arranging their investments in said corporation. McCracken, employed by Shumaker, Loop Kendrick, was the attorney for Garber Publishing Company and its investors, including Corey and Kathryn Garber. Appellant testified that during the course of the business negotiations McCracken made fraudulent representations which induced the investment by appellant's two clients and later induced appellant's own business loan to the corporation.
After Duane Pheils and Lawrence had invested in the newly formed corporation of Garber-Lawrence Publishing Group, Inc., Duane Pheils approached his brother, appellant, about the extension of a loan to the newly formed corporation. Following the loan by appellant to the corporation, based upon representations allegedly made by McCracken through Duane Pheils, appellant sought independent outside help in evaluating the financial condition of the corporation. He hired a certified public accountant to examine the corporation's books. The accountant reported that Garber-Lawrence Publishing Group, Inc. was in very bad financial condition. Appellant took this discovery to the appellees and told them be would bring suit against them for fraudulently representing their position to him. He showed them a complaint he had drafted outlining such allegations.
The appellees persuaded appellant not to file the complaint and reached an agreement with him to sign a release of the appellees from liability in return for a mortgage on the home of the Garbers for thirty thousand dollars along with personal property. The agreement was drafted by appellee McCracken of Shumaker, Loop Kendrick and was presented to appellant. Appellant took the agreement and later made changes. After appellant made revisions he and the other remaining plaintiffs to the original action signed individual agreements which included releases of each of the defendants from liability.
The purpose of the agreements was to provide consideration for the release of any legal claims the plaintiffs may have had against the appellees for any alleged misrepresentations which induced the investments on the part of the plaintiffs. Appellant signed the releases after he had the books of the corporation examined by an independent accountant and after he himself had made certain alterations in the actual agreement. Appellant contends that he signed the releases before he obtained full knowledge of the fraud perpetrated by McCracken and the other appellees in their representations concerning the corporation.
The releases signed by appellant contained express language disavowing any reliance on any representations made and acknowledging the expertise and knowledge of the appellant. The specific language set forth in the pertinent part of the agreement, Paragraph 8, reads as follows:
"b. * * * [The parties] are entering into this Agreement and the transactions herein contemplated based on and relying solely on their own familiarity with the relevant factors, and no person has made any express or implied representations, warranties or agreements to them * * *.
"* * *
"d. * * * [The parties] have knowledge and experience in financial, legal and business matters and are capable of evaluating the risks of participating in this Agreement."
The releases provided for discharges from liability of appellees Corey D. Garber, Kathryn Garber, Garber Publishing Company, and the Garber-Lawrence Publishing Group, Inc., "their successors, assigns, officers, directors, agents, employees, * * * of and from any and all claims, demands, actions, and causes of action of whatsoever kind or nature which the undersigned now has or claims to have or which the undersigned may hereafter have or claim to have, whether known to them or not," against Corey and Kathryn Garber and the two corporations, "their successors, assigns, officers, directors, agents, employees * * * arising out of or in any way connected with alleged representations, acts or omissions" of the Garbers and the two corporations "which occurred or may have occurred prior to and including the date hereof."
After testimony was presented on the issue of the validity of the releases, the jury determined that the releases were valid and as a result returned a verdict for the appellees. Appellant perfected his appeal to the Court of Appeals for Lucas County, which affirmed the judgment of the court of common pleas.
The cause is now before this court pursuant to the allowance of a motion to certify the record.
Mr. David R. Pheils, Jr., pro se. Messrs. Watkins, Bates, Handwork, Gross, Mills Guthrie and Mr. Frank D. Guthrie, for appellees Corey D. Garber et al.
Messrs. Eastman Smith and Mr. Jamille G. Jamra, for appellee Shumaker, Loop Kendrick.
Messrs. Robison, Curphey O'Connell and Mr. David W. Stuckey, for appellee Ronald J. McCracken.
The basis for appellant's claim is that he was induced by fraud to extend a loan to the Garber-Lawrence Publishing Group, Inc. and that such fraud was perpetrated by Ronald J. McCracken, a member of the law firm of Shumaker, Loop Kendrick. Appellant asserts that he should be able to recover damages which flow from this alleged fraud even though McCracken was never directly involved with Duane Pheil's proposal that prompted appellant's extension of credit. McCracken was involved in the negotiations which resulted in the drafting of the releases which the appellant signed, releasing certain persons involved in the Garber-Lawrence Publishing Group and the Garber Publishing Company from all claims which the appellant may have been able to pursue against them.
Appellant's claims against appellees McCracken and Shumaker, Loop Kendrick were determined by summary judgment for these two appellees based upon the ground that there is no existing duty owed by McCracken to a non-client such as appellant. However, the validity of the releases signed by appellant was still presented to the jury as against the five other appellees. The jury found the releases were validly executed agreements enforceable against the appellant and barred his action against the five remaining appellees.
The language of the releases creates the legal issue for review. The purpose of the agreement was to provide a settlement of possible legal claims which existed between parties. In return for monetary consideration the appellant agreed to surrender any claims he had against the appellees which arose prior to the date of the signing of the releases. The releases discharged liability against the appellees, Corey D. Garber, Kathryn Garber, Garber Publishing Co., and the Garber-Lawrence Publishing Group, Inc., and "their successors, assigns, officers, directors, agents, employees * * *."
Appellee McCracken, as legal representative of the Garbers in their publishing company, was their agent and employee. This relationship was within the language of the releases and contemplated by the parties. This court has decided that when a party enters into a written release the release is presumed to be a release for the benefit of all wrongdoers. See Whitt v. Hutchison (1975), 43 Ohio St.2d 53 [72 O.O.2d 30], paragraph one of the syllabus; Adams Express Co. v. Beckwith (1919), 100 Ohio St. 348, paragraph one of the syllabus.
Whitt v. Hutchison, supra, holds that "a written release in general and unqualified terms, on advice of counsel, made and executed upon legal consideration between a party wronged and one or more of the persons charged with the commission of the wrong, is presumed at law to be a release for the benefit of all the wrongdoers. (Paragraph one of the syllabus of Adams Express Co. v. Beckwith, 100 Ohio St. 348, followed.)"
This court in Beck v. Cianchetti (1982), 1 Ohio St.3d 231, held that a general, unqualified release with words such as "all other persons" was not sufficient to be enforcible against the signor by other unnamed tortfeasors. Beck is factually distinguishable. Beck concerned a plaintiff, a motorcycle passenger, in a motorcycle-automobile accident who was induced to sign a general, unqualified release from liability of her motorcycle driver, Michael Cotrufo. The release named only one person, Michael Cotrufo, while containing a general clause, much as the one noted above, releasing "her * * * agents, servants, * * * and all other persons, * * *." Cianchetti, the alleged tortfeasor driving the automobile which collided with Cotrufo, claimed he was released from liability as an unnamed person under the phrase "all other persons." Cianchetti was not and did not claim to be an agent or employee of the releasee, Cotrufo. Such is not the case here. Appellee Shumaker, Loop Kendrick and appellee McCracken were "agents" and "employees" of the named releasees to whom specific reference as "agents" and "employees" was made in the releases. Appellant, an attorney with knowledge of the legal implication of releases, reviewed and revised the releases before signing them. Such releases evince an intention of all parties to release McCracken and Shumaker, Loop Kendrick as well as the appellees specifically named in the releases. The release of McCracken and Shumaker, Loop Kendrick does not hinge on the phrase "all other persons" as it did in Beck, supra.
Beck v. Cianchetti (1982), 1 Ohio St.3d 231, provides in paragraph one of the syllabus
"R.C. 2307.32 requires that a release expressly designated by name or otherwise specifically identify or describe any tortfeasor to be discharged. The phrase `all other persons' is not sufficient to satisfy this statutory requirement."
In Beck, supra, the applicable portion of R.C. 2307.32 which is analyzed provides
"(F) When a release or covenant not to sue or not to enforce a judgment is given in good faith to one of two or more persons liable in tort for the same injury or the same wrongful death:
"(1) It does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms otherwise provide, but it reduces the claim against the other to the extent of any amount stipulated by the release or the covenant, or in the amount of the consideration paid for it, whichever is the greater."
Although the Ohio General Assembly in R.C. 2307.32 (F)(1) decided the release of one tortfeasor does not release other tortfeasors "unless its terms otherwise provide," the parties here, unlike those in Beck, supra, understood the terminology and did "otherwise provide" to express an intention to release the unnamed tortfeasors, appellees McCracken and Shumaker, Loop Kendrick.
Given the jury's factually supported finding that the releases were valid, such releases apply to all appellees.
For the foregoing reasons the judgment of the court of appeals is affirmed.
Judgment affirmed.
W. BROWN, SWEENEY, LOCHER, HOLMES and C. BROWN, JJ., concur.
CELEBREZZE, C.J., and J.P. CELEBREZEE, J., dissent.
Because I feel summary judgment was improperly granted in favor of appellees McCracken and Shumaker, Loop Kendrick, I dissent.
Civ. R. 56 (C) provides that summary judgment shall be rendered if there is no genuine issue as to any material fact; if the moving party is entitled to judgment as a matter of law; and if it appears from the evidence that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, such party being entitled to have the evidence construed most strongly in his favor.
In this case, summary judgment was granted on issues other than the validity of the releases. The Supplemental Findings of Fact and Conclusions of Law of the trial court concern whether misrepresentations, fraud or duress induced appellant to sign the releases.
However, the case presents other questions which also deserve a hearing. Three documents were involved: an agreement, a settlement agreement and the releases executed on the same date. In both agreements, the language specifically named appellees Corey and Kathryn Garber, Garber-Lawrence Publishing Group, Inc. and Garber Publishing Company, Inc. [The settlement agreement states, in Paragraph 1, that appellant Pheils agreed to execute a release for claims against any other party, if demanded. Thus, the release is based upon the agreement in which the parties were specifically named.] Releases were executed which discharged the individuals named in the agreements. However, they included a general clause discharging "successors, assigns, officers, directors, agents, employees, their ancestors, siblings, heirs, personal representatives, successors and assigns," which is at issue. Therefore, a question arises as to whether the agreement and releases should be read and construed together.
Furthermore, there is a question of whether the releases were intended to apply only to the parties named or whether appellees McCracken and Shumaker, Loop Kendrick were included within the general clause of the releases. As stated in the majority opinion, "[we] held that a general, unqualified release" is "not sufficient to be enforceable against the signor by other unnamed tortfeasors." Beck v. Cianchetti (1982), 1 Ohio St.3d 231. The majority concedes that the releases in this case contained a general clause similar to the unenforceable one in Beck. Although the facts differ, the validity of general terms in a release should be determined in light of the policy set forth in Beck, which was decided after both the lower courts considered the case.
Construing the evidence most strongly in favor of appellant, reasonable minds could come to different conclusions on these questions. For these reasons, summary judgment was improperly granted and I dissent.
J.P. CELEBREZZE, J., concurs in the foregoing dissenting opinion.