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.
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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."
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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.