Raymond v. Feldmann

De MUNIZ, J.

Plaintiff brought this action after she was injured when her car was struck by a vehicle driven by defendant. The trial court granted a summary judgment for defendant on plaintiffs claim and also on defendant’s counterclaim. We affirm in part and reverse in part.

At the time of the accident, plaintiff was 21 years old and had never before been involved in an automobile accident. Four days after the accident, an agent of defendant’s insurance company called plaintiff on the telephone. The agent offered to settle plaintiffs personal injury claim for $100 plus payment of her emergency room bill, if plaintiff would promise to release defendant from any further liability for injury claims arising out of the accident. Plaintiff, who was unrepresented by counsel and thought that she had sustained only minor bruises, agreed. The conversation was tape-recorded with plaintiffs consent, but the terms were never put in writing.¹

Plaintiff later learned that her injuries were more serious than she had initially believed.² She returned the $100 check and filed this action, alleging that defendant had been negligent in the operation of his vehicle and that, as a result, she had suffered damages. Defendant asserted an affirmative defense of settlement and release. He also counterclaimed for breach of the release and settlement agreement, seeking attorney fees as damages. The trial court granted defendant’s motion for summary judgment on the ground that the release agreement barred plaintiffs action. It also granted summary judgment on the counterclaim and awarded defendant damages of $6,160, the amount of his attorney fees.

Summary judgment is appropriate only when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. ORCP 47; Edwards v. Times Mirror Co., 102 Or App 440, 442, 795 P2d 564 (1990). We review the record in the light most favorable to plaintiff and draw all reasonable inferences in her favor. Uihlein v. Albertson’s, Inc., 282 Or 631, 634, 580 P2d 1014 (1978).

Plaintiff argues that the court erred in failing to set aside the release agreement. Release agreements are favored by the law, Davis v. Bacon, 280 Or 561, 571 P2d 912 (1977); Walcutt v. Inform Graphics, Inc., 109 Or App 148, 817 P2d 1353 (1991), rev den 312 Or 589 (1992), but may be voided if the agreement has been obtained by misrepresentation or unconscionable conduct. Wheeler v. White Rock Bottling Co., 229 Or 360, 363, 366 P2d 527 (1961), Kim v. Allstate Ins. Co., 102 Or App 529, 795 P2d 582, rev den 310 Or 475 (1990). Plaintiff has not claimed either. She argues that the agreement should be set aside on the basis of mutual mistake, because, at the time of the agreement, she did not realize the nature and extent of her injuries.

In Oregon, mutual mistake is not a basis on which to void a release agreement. In Wheeler v. White Rock Bottling Co., supra, the plaintiff argued that she should be allowed to rescind the release agreement on the basis of mutual mistake, because she had incurred substantial medical expenses that were far beyond her contemplation when she signed the release. In rejecting the plaintiffs position, the Supreme Court examined the competing policy arguments and concluded:

“Heretofore this court has considered the settlement of claims prior to litigation to be in the public interest. * * * There is no reason in principle why an improvident settlement made before trial is any more to be set aside than a judgment rendered upon a verdict that hindsight later proves to have been obtained too soon and for too little. No one has suggested that judgments in personal injury cases should be kept open like claims under the Workmen’s Compensation Act for additional awards in the event of aggravation * * *.

“As noted, there are attractive policy reasons for adopting a rule that would permit perfectly honorable releases to be repudiated in the event of aggravation of an injury or the discovery of undiagnosed injuries. There are less compassionate but equally sound policy reasons for requiring persons of legal age and capacity to contract to stand by their covenants, including bargains containing an element of chance. We [have] reaffirmed the general rule with reference to the stability of untainted release agreements * * *. We are not now disposed to overrule those cases.” 229 Or at 366 (Citations omitted.).

The dissent attempts to paint a picture of youth, innocence and rightfulness taken advantage of by age, experience and venality to arrive at what it apparently considers a “compassionate” result. That position ignores the law and that the Supreme Court carefully considered the competing policies before determining that release agreements should be upheld. We do not condone the precipitous actions of the adjuster. We also might wish that plaintiff had been more cautious. However, the fact remains that plaintiff is an adult and that she voluntarily entered into an agreement.

The dissent holds that, “as a matter of law, the parties were not negotiating at arm’s length.” 120 Or App 459. It relies mainly on Kim v. Allstate Ins. Co., supra. However, except for the difference in experience between the plaintiff and the adjuster, the facts in Kim are not those here. In Kim, the adjuster made representations as to what the plaintiff could expect to receive if the matter went to court. We held that a jury could find that the statements made by the adjuster represented the absolute maximum value of the plaintiffs claim, rather than the maximum settlement offer. If so, the release would be tainted by a misrepresentation that would entitle the plaintiff to avoid the release. Plaintiff here does not claim that the agreement was made unconscionably or with misrepresentation. That the agreement was improvident is not a basis on which to void it.

Plaintiffs remaining assignments of error addressing the validity of the agreement do not require discussion, and we conclude that the court did not err in granting defendant summary judgment. However, plaintiff is correct that the court erred in awarding attorney fees to defendant as damages on its counterclaim for breach of contract. Attorney fees are not recoverable for breach of contract unless authorized by the contract or statute. Brookshire v. Johnson, 274 Or 19, 544 P2d 164 (1976). Defendant argues that the fees are “foreseeable” damages, because a “reasonable person” would foresee the necessity of an attorney if she “stopped to think about consequences of a breach. ’ ’ Defendant cites Huffstutter v. Lind, 250 Or 295, 301, 442 P2d 227 (1968), for the proposition that attorney fees are allowable as damages “in an action against a defendant where the defendant’s tortious or wrongful conduct involved the plaintiff in separate litigation.” It contends that that rule applies, because the separate litigation was defendant’s defense of plaintiff’s personal injury action brought in violation of the agreement.

That argument blatantly misapplies Huffstutter. The court’s statement there addressed attorney fees in the context of a defendant’s having involved a plaintiff in prior litigation with a third party. This is a direct action by plaintiff against defendant.

Furthermore, defendant’s counterclaim is based on contract, not tort. In the speed to obtain a release, the insurance adjuster failed to include an attorney fee provision in the oral contract. There is no basis for the award.

Judgment on plaintiffs claim affirmed; judgment on defendant’s counterclaim reversed.

1 The release discussion is as follows:

“Q: [by the agentl Okay. We’re having this recorded conversation in regards to full and final settlement of bodily injury claim from the accident on the 7th of December, 1987. Is that right?

“A: [by plaintiff] Yes.

“Q: Okay, and as full and final settlement of the injury portion of your claim, we have agreed to send you $100 as well as pay you for your emergency room bill. Is that right?

“A: Yes.

“Q: Okay, and you are in agreement that this is full and final settlement of the injury portion of your claim?

“A: Yes.

“Q: And you further release Allstate* * * and Thomas Feldmann from any further injury claims?

“A: Yes.”

2 Plaintiffs injuries were diagnosed as soft tissue strain in her back and neck.