Harris v. Lapeer Public School System

114 Mich. App. 107 (1982) 318 N.W.2d 621

HARRIS
v.
LAPEER PUBLIC SCHOOL SYSTEM

Docket No. 55497.

Michigan Court of Appeals.

Decided March 4, 1982.

John C. Foster, and Kitch, Suhrheinrich, Smith, Saurbier & Drutchas, P.C., for plaintiffs.

Davidson, Gotshall, Kohl, Secrest, Wardle, Lynch & Clark, for Lapeer Public School System and Rhonda Frederick.

Barbier, Goulet & Petersmarck, P.C., for Lapeer County Road Commission.

Thomas J. Doyle, for Crestview Manor, Patchak and Morgulec.

Before: BASHARA, P.J., and ALLEN and T.M. BURNS, JJ.

PER CURIAM.

Plaintiffs appeal from the trial court's orders granting accelerated judgment in favor of the defendants on the ground that a release executed by plaintiffs barred their cause of action.

On December 15, 1976, an automobile driven by Sherrie Lynn Lamphier collided with a school bus operated by Rhonda Laverne Frederick and owned by defendant Lapeer Public School System. Plaintiff Elizabeth Harris was a passenger in the Lamphier automobile.

The accident occurred at an intersection marked by a stop sign and an advertising sign erected by cross-defendant Chateau Construction Company for defendant Crestview Manor. Frederick alleges that these signs obstructed her view of the highway and forced her to pull out onto the highway to obtain an unobstructed view of the cross street. As Frederick drove the bus into the intersection, it was struck by the automobile operated by Mrs. Lamphier, who was allegedly unable to avoid the collision because of the icy condition of the road. As a result of the accident, plaintiff Elizabeth Harris was injured resulting in loss of her spleen and Mrs. Lamphier suffered brain damage.

On December 22, 1977, plaintiffs executed a release supplied by Larry Lamphier's insurers, State Farm Insurance Company and Farm Bureau Insurance Company. The release provided in pertinent part:

"For the Sole Consideration of Eight Thousand and no/100 ---- Dollars, the receipt and sufficiency whereof is hereby acknowledged, the undersigned hereby releases and forever discharges Larry M Lamphier his heirs, executors, administrators, agents and assigns, and all other persons, firms or corporations liable or who might be claimed to be liable, none of whom admit any liability to the undersigned but all expressly deny any liability from any and all claims, demands, damages, actions, causes of actions or suits of any kind or nature whatsoever, and particularly on account of all injuries, known and unknown, both to person and property, which have resulted or may in the future develop from an accident which occurred on or about the 15th day of Dec, 1976 at or near Lapeer Michigan.

"Undersigned hereby declares that the terms of this settlement have been completely read and are fully understood and voluntarily accepted for the purpose of making a full and final compromise adjustment and settlement of any and all claims, disputed or otherwise, on account of the injuries and damages above mentioned, and for the express purpose of precluding forever any further or additional claims arising out of the aforesaid accident.

"Undersigned hereby accepts draft or drafts as final payment of the consideration set forth above." (Underlined portions are handwritten.)

Plaintiffs commenced this action on December 14, 1978, against defendants Lapeer Public School System and Rhonda Laverne Frederick, Crestview Manor, co-owned by partners Alexander Patchak and Bernard Morgulec, and Lapeer County Road Commission. Plaintiffs added Chateau Construction Company as a party defendant on November 27, 1979. Thereafter, defendants Crestview Manor, Patchak and Morgulec filed a cross-claim against Chateau.

On January 28, 1980, defendant Lapeer Public School System added Larry Lamphier, individually and as special guardian of Sherrie Lynn Lamphier, as a third-party defendant. Larry Lamphier interposed plaintiffs' release as a defense to the suit and subsequently filed a motion for accelerated judgment. Following Lamphier's reponse, the other defendants (Crestview Manor, Patchak and Morgulec, Lapeer Road Commission, Lapeer Public School System and Chateau) moved to amend the pleadings to include the release as an affirmative defense. All defendants then filed motions for accelerated judgment pursuant to GCR 1963, 116.1(5) on the ground that the terms of the release discharged all defendants from liability.

The trial court granted defendants' motions to amend and, in orders of December 15, 1980, granted accelerated judgments in favor of defendants Lapeer Public School System and Rhonda Frederick, Lapeer County Road Commission, Crestview Manor, Patchak and Morgulec. Plaintiffs appeal from these orders.

No order of accelerated judgment was granted in favor of defendant Chateau Construction Company, although the trial court entered an order dismissing the "third-party action" against it on January 7, 1981. Chateau did not file a brief on appeal and it is unclear whether Chateau is a party to this appeal.

Plaintiffs' first contention that the trial judge erred in allowing defendants to amend their pleadings to include the release as an affirmative defense is without merit.

While a failure to include an affirmative defense in defendant's first responsive pleading generally waives that defense, Pryber v Marriott Corp, 98 Mich. App. 50; 296 NW2d 597 (1980), aff'd 411 Mich. 887 (1981), such a defense may be introduced through amendment under GCR 1963, 118.1. Ben P Fyke & Sons v Gunter Co, 390 Mich. 649; 213 NW2d 134 (1973). A motion to amend should ordinarily be granted and will be denied only for particular reasons:

"In the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. — the leave sought should, as the rules require, be `freely given'." Id., 656, citing Foman v Davis, 371 U.S. 178; 83 S. Ct. 227; 9 L. Ed. 2d 222 (1962).

The foregoing reasons are absent here. The record does not establish any bad faith or dilatory motive on the part of the defendants. They became aware of the existence of the release only when Larry Lamphier raised the defense in answer to the school system's third-party complaint. Defendants then moved without undue delay to raise the defense. Further, plaintiffs have not established undue prejudice arising from the amendments.

Plaintiffs also contend that defendants' motions were untimely under GCR 1963, 116.1, which provides in part:

"In a party's first responsive pleading, or by motion filed not later than his first responsive pleading, a party may demand that service of process be quashed or that judgment be entered dismissing 1 or more claims asserted against him * * *."

Plaintiffs' argument that defendants' failure to move for accelerated judgment prior to or concurrently with their first responsive pleading waived their right to bring the motion has been rejected by this Court in Manufacturers Construction Co v Covenant Investment Co, 43 Mich. App. 123, 127; 204 NW2d 54 (1972), lv den 388 Mich. 810 (1972), where this Court reasoned:

"[T]he acceptance of amendments raising affirmative defenses which will completely dispose of the case necessarily creates this problem each time the amendment is followed by a motion for accelerated judgment. Requiring a party in such case to await trial to preserve the purity of Rule 116 would yield counter-productive results."

We conclude that the trial court properly allowed defendants to amend their pleadings to raise the affirmative defense of release.

Plaintiffs next contend that the trial court erred in granting accelerated judgment in favor of defendants on the ground that the release clearly and unambiguously released all joint tortfeasors from liability. We agree.

In general, the intent of the parties expressed in the terms of the release governs its scope. Grzebik v Kerr, 91 Mich. App. 482; 283 NW2d 654 (1979), DAIIE v Joseph, 67 Mich. App. 393; 241 NW2d 221 (1976).

The broad language of the release in issue here, discharging "Larry M. Lamphier, his heirs, executors, administrators, agents and assigns, and all other persons, firms or corporations liable or who might be claimed to be liable," on its face indicates release of all the defendants herein. This Court has determined in Grzebik, supra, that a very similar release by its language indicated an intent to include two other defendants who were involved in the occurrence which gave rise to the suit. In Stitt v Mahaney, 403 Mich. 711; 272 NW2d 526 (1978), the Court interpreted similar "boiler plate" language to include release of all original tortfeasors. We note, however, that the Stitt Court also found the language of the release capable of being interpreted to include tortfeasors whose liability arose during medical treatment administered subsequent to the original occurrence. The Supreme Court held that it is the proper province of the jury to determine whether the intent of the parties to the release was to include the original tortfeasors as well as any subsequent tortfeasors. 403 Mich. 711, 718. The issue before the Court in Stitt, therefore, differed from that presented here. In Stitt, the question involved the release of all the original and subsequent tortfeasors; in the instant case, we are called upon to determine only whether the intent of the release was to include all of the original tortfeasors who may have been a party to the accident itself.

A release covers only the claims intended by the parties to be released. Auto-Owners Ins Co v Higby, 57 Mich. App. 604; 226 NW2d 580 (1975). In Denton v Utley, 350 Mich. 332; 86 NW2d 537 (1957), the Court stated that to be valid, a release must be fairly and knowingly made. Our courts will go beyond the broad language of a release to determine the fairness of the release and the intent of the parties in executing it. See Denton, supra, Theisen v Kroger, 107 Mich. App. 580; 309 NW2d 676 (1981).

With regard to the fairness requirement, the Court in Theisen observed that a release would be 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." 107 Mich. App. 580, 582-583.

The Court in Denton indicated that where fraud or mistake is alleged, the intent of the parties should be considered. This creates a question of fact.

"The intent involved being a question of fact, we will observe, in its determination, among other pertinent factors bearing upon the issue, the haste, or lack thereof, with which the release was obtained, the sum of money involved as consideration, and all the circumstances surrounding the release, including, of course, the conduct and intelligence of both the releasor and the releasee." 350 Mich. 332, 345.

See also Theisen, supra, 582-583.

In attacking the release in the instant case, plaintiffs made allegations, supported by affidavit, that, during the signing of the release, the agent of Lamphier's insurer, State Farm, represented to Elizabeth Harris that the release would bar claims only with respect to Lamphier's insurers, State Farm and Farm Bureau. Plaintiffs claim that their intent in executing the release was only to release Lamphier. Plaintiffs' claim of misrepresentation or mistake gives rise to a question of fact involving intent. Denton, supra, Theisen, supra. Such a question should properly be resolved by a jury. Cf. Stitt v Mahaney, supra, 718.

There having been an allegation of fraud or mistake which impinges upon the validity of the release as to all defendants except Lamphier, we conclude that the trial court erred in granting accelerated judgments in favor of those defendants based on that release while the question of fact remained.

We, therefore, set aside the trial court's orders of accelerated judgment in favor of defendants Lapeer County Road Commission, Lapeer Public School System and Rhonda Frederick, and Crestview Manor, Patchak and Morgulec, and remand for findings of fact as to the intent of the parties to the release executed between plaintiffs and Larry Lamphier. We also direct the trial court to determine the status relative to this matter of defendant Chateau Construction Company, which was not granted an order for accelerated judgment and has not filed a brief on appeal.

Remanded for further proceedings in accordance with this opinion. We do not retain jurisdiction.