 From North Carolina Lawyers Weekly , September, 6,
1999
Most attorneys are familiar with general releases
that not only settle the parties' claims against each
other, but also cut off the right to sue anybody else.
In the typical auto accident, release language may
discharge not only the defendant, but also any other
person, firm or corporation, from liability of any
kind arising from the incident.
Over-familiarity with that standard boilerplate
could lull lawyers into overlooking an even broader
release buried in some forms, according to Tarboro
attorney Susan O'Malley.
In one of her recent cases, an Allstate form
purported to discharge not only all liability arising
from the accident but also anyone's liability
"from any act or occurrence up to the present
time."
"In essence, it was a release of any claim we
might have against any Allstate insured, no matter who
they were," said O'Malley.
That could have covered anything from a homeowner's
claim under a different policy to a bad faith lawsuit
over Allstate's handling of the case -- just to name
two possibilities.
The Allstate release stated in part:
"I do hereby release and forever discharge
[the other party] and any other person, firm or
corporation charged or chargeable with responsibility
or liability, their heirs, representatives and
assigns, from any and all claims, demands, damages,
costs, expenses, loss of services, actions and causes
of actions, arising from any act or occurrence up to
the present time and particularly on account of all
personal injury ... of any kind ... in consequence of
[the accident].
When O'Malley objected to the extra language, the
Allstate adjuster said she was the first lawyer who
had ever complained. He also said he didn't have the
authority to make any changes.
"The adjuster just said we should make sure we
didn't have any outstanding claims against
Allstate," O'Malley said.
O'Malley sent the adjuster back to the home office
for permission to revise the release. The carrier
eventually agreed to let O'Malley cross out the phrase
"arising from any act or occurrence up to the
present time."
"This wasn't mere surplusage," she said.
"Surplusage is language that has no effect one
way or another. This clearly could have had a negative
impact."
To be on the safe side, O'Malley also wrote
Allstate a letter confirming the changes.
"This was a release sent to someone who had an
attorney," said O'Malley. "You know what
would have happened if it had been sent to a lay
person who wasn't represented. I'm not saying it's the
worst thing that ever came down the block. But it is
an obvious attempt to abrogate other potential claims
that aren't being compensated."
Raleigh attorney Hoyt Tessener agreed. Tessener
said he had occasionally seen language similar to the
boilerplate in O'Malley's release.
"I'd be concerned too," he said. "In
motor vehicle cases, the release we usually agree to
states that it's limited to liability arising from the
accident. If it doesn't, the carrier will usually
agree to change it."
That's if the attorney spots the problem in the
first place.
According to Tessener, it's not worth risking a
lawsuit to find out whether all-inclusive language
like Allstate's is too broad to be enforceable.
"You don't want to be the first one to make
that challenge," he said. "The courts have
been very willing to allow parties to release
everything in a general release. I wouldn't take a
chance on it being unenforceable."
Case Law
In at least two rulings, North Carolina courts have
barred lawsuits after the plaintiffs signed general
releases similar to Allstate's.
However, in both cases, the plaintiffs were
attempting to pursue claims arising from the original
auto accident rather than unconnected claims against
the same or other parties.
Battle v. Clanton, 27 N.C. App. 616, 220
S.E.2d 97, disc. rev. denied, 289 N.C. 613,
223 S.E.2d 391 (1976).
In this case, the release discharged "all
other persons, firms, or corporations who are or
might be liable, from all claims of any kind or
character which I have or might have against it,
him, or them, and especially because of all
damages, losses or injuries [arising out of the
accident].
The Battle court said the release
"by its express terms provided for the
discharge and release of all other tortfeasors
from all other claims."
Goodwin
v. Schneider National, Inc. (North
Carolina Lawyers Weekly No. 9-16-0417, 8 pages).
In this unpublished case, the release was almost
identical to the one in Battle. The panel
said it barred all claims arising from the
collision.
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