April 19, 2018

Be Careful with Those Releases; Dulworth v. Bermudez

Category: Indiana Law Review | Author: | Share:

While a release of one party does not necessarily release other parties, plaintiffs must carefully look at the language of those releases. If they do not, then they may release a tortfeasor accidentally.

Bermudez was driving in Fort Wayne, followed by Dulworth and Cherneski. Bermudez came to a sudden stop. And while Dulworth was able to stop in time, he was hit from behind by Cherneski’s vehicle.

Following the accident, Dulworth resolved his claims against Cherneski. As part of that settlement, Dulworth entered into a release with Cherneski and her insurer, Founders. The release applied to Cherneski, Founders, and “all other persons, firms, corporations, associations or partnerships.”

After settling his claim against Cherneski, Dulworth filed a complaint against Bermudez. He also sought underinsured motorist benefits from Progressive, his insurer.

Bermudez and Progressive each moved for summary judgment. Bermudez argued that Dulworth’s release with Cherneski released all claims against her. And Progressive argued that Dulworth both released it and had not reached the policy limits of the tortfeasor’s coverage, so he was not entitled to underinsured motorist benefits. The trial court entered summary judgment for each defendant, and Dulworth appealed.

On appeal, Dulworth argued that the release shouldn’t apply to Bermudez, and that it should be limited to entities related to Cherneski and Founders. The Court was not persuaded.

By executing the Release, Dulworth did not only release Cherneski and her insurer, but also “all other persons, firms, corporations, associations, or partnerships.” Even though the Release initially references the release of Cherneski, Founders, and their agents, servants, successors, heirs, executors, and administrators, the instrument then, without any limiting language, also releases “all other persons, . . . from any and all claims, actions, . . .” Unlike Bank One, the instrument here simply does not contain any recitation of ‘affected parties’ or any other constricting language. … Furthermore, the Release preserves the rights of Cherneski and Founders to pursue other claims related to the accident, but includes no such provisions that reserves Dulworth’s rights with respect to other claims related to the accident.

And Dulworth’s parol evidence—an affidavit stating that he did not intend to release Bermudez and Progressive—did not matter, as the defendants here were third-party beneficiaries of the unambiguous release.

This was fatal to Dulworth’s claim against both Bermudez and Progressive. Not only did he release these entities, but his failure to recover any money from Bermudez prevented him from obtaining any uninsured motorist benefits from Progressive.

The lesson here is clear—a plaintiff who does not want to release all potential defendants should not sign a release that contains the terms “all persons” or “all other persons.” Doing anything else is simply asking for trouble.

Lessons:

  1. A release that contains the terms “all persons” or “all other persons” will likely release every possible defendant, even those not parties to the release.
  2. Plaintiffs should ensure that a release contains language limiting its effect to the intended parties.