Michigan Court of AppealsMar 22, 1983
124 Mich. App. 432 (Mich. Ct. App. 1983)
124 Mich. App. 432335 N.W.2d 60

Docket No. 61621.

Decided March 22, 1983. Leave to appeal denied, 417 Mich ___.

Wish Sternberg, P.C. (by Phillip L. Sternberg), for plaintiff.

Klein Bloom, P.C. (by Gary M. Bloom), for defendant Trongo.

Before: BRONSON, P.J., and MacKENZIE and K.N. SANBORN, JJ.

Circuit judge, sitting on the Court of Appeals by assignment.


Plaintiff appeals as of right from an order granting defendant Daryl Trongo's motion for accelerated judgment based upon a release signed by plaintiff. GCR 1963, 116.1(5).

On June 9, 1979, Daryl Trongo, while driving his motorcycle, collided with a motor vehicle driven by defendant Patricia Straffon and owned by defendant Harry Straffon. Plaintiff was a passenger on Daryl Trongo's motorcycle. She sustained fractures of the knee and ankle and several lacerations. Her medical expenses following the accident were paid for by the Department of Social Services (DSS) through its Medicaid program. Plaintiff married Daryl Trongo on December 8, 1979.

Plaintiff was not personally covered by a vehicular insurance policy. Defendants Straffon, however, were insured under a no-fault policy and, under Michigan law, were primarily responsible for plaintiff's medical expenses. MCL 500.3115; MSA 24.13115. Defendant Daryl Trongo carried only general liability insurance on his motorcycle.

Plaintiff signed a release and discharge of all claims against Daryl Trongo on January 25, 1980, in a DSS office. Her DSS caseworker called her to the office and told plaintiff to sign the papers so that DSS could be reimbursed for plaintiff's medical expenses. Plaintiff stated that she neither read the release nor understood it to be a waiver of her claims against Daryl Trongo. By affidavit at the hearing on the motion, both plaintiff and Mr. Trongo's insurer, Emmco Excel Insurance Company, agreed that all settlement negotiations occurred between DSS and Emmco only and that there was never any contact between plaintiff and Emmco. The settlement draft was for the exact cost of medical expenses paid by Medicaid and was made payable to the DSS and plaintiff.

In its opinion granting the motion for accelerated judgment, the trial court said plaintiff failed to prove by a preponderance of evidence that the release should be set aside. Plaintiff failed to prove that either Emmco or the DSS coerced her into signing the release. The trial court stated that Emmco could not misrepresent the nature of the release as Emmco never dealt directly with plaintiff.

Plaintiff argues in this appeal that she raised questions of fact regarding the validity of the release which precluded the grant of accelerated judgment. We agree.

Where there is a material issue of fact as to the validity of a release, accelerated judgment is improper. Van Buren Twp v Ackron, 63 Mich. App. 600, 604; 234 N.W.2d 722 (1975); Baker v Detroit, 73 Mich. App. 67, 75; 250 N.W.2d 543 (1976). In determining whether a question of fact exists, the trial court must accept all of the nonmoving parties' well-pled allegations as true. Empire Shoe Service, Inc v Gershenson, 62 Mich. App. 221, 224; 233 N.W.2d 237 (1975). A plaintiff need not prove that a release is void by a preponderance of the evidence in a hearing on a motion for accelerated judgment. Such a stringent standard is only required when a plaintiff seeks affirmatively to void a release. See, e.g., Van Avery v Seiter, 383 Mich. 486, 488; 175 N.W.2d 744 (1970).

A release is valid if it is fairly and knowingly made. Denton v Utley, 350 Mich. 332, 342; 86 N.W.2d 537 (1957); Harris v Lapeer Public School System, 114 Mich. App. 107, 115; 318 N.W.2d 621 (1982). Generally, the intent of the parties expressed in the terms of a release governs its scope. Harris, supra, p 114. However, this Court will look beyond the language of the release to determine the fairness of the release and the intent of the parties on executing it. Id., p 115.

A release is not fairly made and invalid if:

"(1) the releasor was dazed, suffering from shock or under the influence of drugs; (2) there was misrepresentation as to the nature of the instrument; or (3) there was other fraudulent or overreaching conduct." Theisen v Kroger Co, 107 Mich. App. 580, 582-583; 309 N.W.2d 676 (1981). In resolving the factual question of the intent of the parties a court may consider all the circumstances surrounding the execution of the release, including the conduct and intelligence of the parties. Denton, supra, p 345.

Plaintiff in this case did raise material issues of fact regarding the validity of the release. She stated that she was signing papers at the insistence of her DSS caseworker so that the department could be reimbursed for plaintiff's medical expenses. Plaintiff was receiving Aid to Dependent Children (ADC) benefits and medical assistance at that time. She expressed fear that she would be cut off from assistance if she did not comply. These facts raise the material issue of misrepresentation about the nature of the instrument and other fraudulent or overreaching conduct by the DSS.

Once material issues of fact regarding fraud and misrepresentation as to the true nature of an executed instrument are raised, those facts must be resolved by a factfinder after a full hearing on the merits. Denton, supra, pp 343-345; Paul v Rotman, 50 Mich. App. 459; 213 N.W.2d 588 (1973). Furthermore, the question whether an implied principal-agency relationship exists is one of fact. Jackson v Goodman, 69 Mich. App. 225, 230; 244 N.W.2d 423 (1976). A principal is responsible for the misrepresentations made by its agent. Komraus Plumbing Heating, Inc v Cadillac Sands Motel, Inc, 31 Mich. App. 674, 679; 187 N.W.2d 920 (1971). Thus, the trial court in this case was not in a position to determine on a motion for accelerated judgment that Emmco made no misrepresentation to plaintiff. The question whether the DSS acted as an agent for Emmco is also a material issue raised by plaintiff to be resolved by a factfinder following a full hearing on the merits.

Defendant argues that this Court's opinion in Theisen, supra, is controlling here and warrants affirmance of the accelerated judgment. In Theisen, plaintiff moved to set aside a release and defendant moved for accelerated judgment based upon that release. The trial court granted defendant's motion for accelerated judgment. This Court affirmed. Theisen, supra, p 582, cited Van Avery, supra, for the rule that a plaintiff has the burden of proof by a preponderance of the evidence in order to set aside a release. This Court in Theisen said plaintiff had not met that burden.

Theisen is distinguishable from this case. First, the plaintiff in Theisen affirmatively moved to set aside the release. Second, the facts showed that plaintiff in Theisen dealt directly with the insurer to reach a settlement. Moreover, the plaintiff did not allege that the defendant's insurer or its agent misrepresented the nature of the release. Finally, in Theisen there was no showing of concealment or overreaching, unlike the circumstances shown in this case.

Thus, we reverse the trial court's grant of accelerated judgment and remand for a full separate hearing on the merits regarding the validity of the release. If that release is found void, this case should proceed to trial on the issue of liability.

Reversed and remanded.