Opinion
No. X08-CV03-4010104 S
June 7, 2007
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (No. 139)
Procedural and Factual Background
The following facts are summarized from the pleadings and from the affidavits and documents presented by the parties in connection with the motion for summary judgment now before the court.
In 1995, plaintiff James Hoydic purchased from Shawn Peters an exclusive route to sell Snapple and other soft drinks within a certain geographical area in Fairfield County, Connecticut. Shortly after purchasing the route, Mr. Hoydic entered into an agreement on April 6, 1995 with B E Juices to distribute Snapple products within the geographical area encompassed by the route he purchased. On October 9, 2000, Hoydic and seven other owners of routes within B E's territory commenced an action against B E Juices and Snapple Beverages, Inc., entitled Kevin Mcgovern, et al v. B E Juices, Inc., et al ("first action") (CV000180545S). The action alleged that B E Juices and Snapple had improperly allowed outside distributors to "transship" Snapple products into the exclusive territory of the plaintiffs. While the first action was pending, B E terminated its agreement with Hoydic on September 15, 2002. Consequently, Hoydic through his counsel Peter Shafran amended the claims in the first action and added a claim that B E Juices improperly terminated Hoydic's agreement. Hoydic filed a motion for Temporary Injunction and Rule to Show cause in the first action on September 19, 2002, asserting wrongful termination of the agreement and seeking reinstatement of his route. No hearing on the motion was ever held or requested.
On August 21, 2003, Hoydic commenced a second action, through his attorney Michael Beebe, against B E Juices entitled James Hoydic v. B E Juices, Inc. ("the second action") (X08CV034010104S) which is the case presently before the court. This second action seeks recovery for the wrongful termination of the agreement by B E Juices and claims among other things, breach of contract, breach of fiduciary duty, conversion, tortuous interference with business expectancy and a CUTPA claim against B E. The Defendants filed a motion to dismiss in the second action on October 13, 2003 claiming the first action was a prior pending action. Subsequent to the filing of the Defendant's motion to dismiss, Attorney Shafran filed a withdrawal on October 17, 2003 of the motion for Temporary Injunction and Rule to Show Cause in the first action. Ultimately, the Motion to Dismiss was denied by Judge Fischer on October 21, 2005.
During the pendency of both actions, settlement negotiations took place between the eight plaintiffs in the first action, represented by Attorney Shafran, and B E, Snapple and Mitchel Clyne (vice president of B E Juices and defendant in both actions). Mr. Hoydic did not attend the negotiations but several of the other plaintiffs did; all of the plaintiffs in the first action, including Mr. Hoydic, were represented by Attorney Shafran. Attorney Beebe who represents the plaintiff in this second action was neither present at those settlement negotiations nor was he made aware of them. The settlement negotiations took place on January 15, 2004 in the offices of Day, Berry Howard in Stamford. As a result of the meeting, Attorney Shafran and the plaintiffs who attended agreed in principle to settle the first action for a $20,000 payment to be equally divided by the eight plaintiffs. The agreement required the execution of a general release by all individual plaintiffs as to B E and Snapple. A settlement agreement and release discharging defendants from any further claims accrued prior to the date of the release was drafted and sent to all the plaintiffs. Mr. Hoydic signed the settlement agreement and release on March 8, 2004. A settlement payment was made to Mr. Hoydic, and each of the other plaintiffs in the first action, in the amount of $2,500 on March 26, 2004. The first action was then withdrawn on April 1, 2004. Over four months after the withdrawal of the first action the defendant, claiming the general release signed by Mr. Hoydic applied to the second action, demanded that Mr. Hoydic withdraw the second action. Mr. Hoydic refused, and the defendant has pleaded by special defense in this action, that all plaintiff's claims pleaded herein have been released and has filed the motion for summary judgment now before the court premised on that special defense of release.
The legal effect of the release, as to the second action, is in dispute among the parties. The defendants contend that Mr. Hoydic signed a general release that bars the continuation of his second action against B E. They claim that the language of the release clearly and definitively expressed the intention of Mr. Hoydic to release all possible claims against B E, including the claims in the second action. However, the plaintiff contends that the release was only intended to relate to the first action and is also unenforceable as to the second action based on a lack of consideration, mistake and misrepresentation. Additionally, Plaintiff's counsel argues that the Defendant's failure to include him in the settlement proceedings constituted fraudulent, inequitable and unconscionable conduct which requires the court to invoke its equitable powers of reformation. The parties presented oral argument before the court on the Defendant's Motion for Summary Judgment on April 2, 2007.
Discussion I. LEGAL STANDARD ON A MOTION FOR SUMMARY JUDGMENT
Summary Judgment "shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Practice Book § 17-49. "The Motion for Summary judgment is designed to eliminate the delay and expense of litigating an issue where there is no real issue to be tried." Wilson v. New Haven, 213 Conn. 277, 279 (1989). "In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist . . . If a genuine issue exists, it must be left to a later determination after a full hearing." (Citations omitted.) Siudyla v. ChemExec Relocation Systems, Inc., 23 Conn.App. 180, 184 (1990).
"A genuine issue has been variously described as a triable, substantial or real issue of fact; . . . and has been defined as one which can be maintained by substantial evidence." (Internal quotation marks omitted.) United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 378 (1969). "A `material' fact has been defined adequately and simply as a fact which will make a difference in the result of the case . . .'Issue of Fact' encompasses not only evidentiary facts in issue but also questions as to how the trial would characterize such evidentiary facts and what inferences and conclusions it would draw from them." (Internal quotation marks omitted.) Id. at 379.
In seeking summary judgment, the movant has the burden of showing the nonexistence of any issue of fact. Allstate Ins. Co. v. Barron, 269 Conn. 394, 405 (2004). Once that burden is met, however, "the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough . . . for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore cannot refute evidence properly presented to the court." Id. at 405. A motion for summary judgment "is properly granted if it raises at least one legally sufficient defense that would bar the plaintiff's claim and involves no triable issue of fact." Beebe v. East Haddam, 48 Conn.App. 60, 64 (1998).
II. RELEASES ARE SUBJECT TO THE RULES GOVERNING CONTRACT INTERPRETATION
It is well settled that a release, being a contract whereby a party abandons a claim to a person against whom that claim exists, is subject to rules governing the construction of contracts. (Internal quotation marks omitted) Muldoon v. Homestead Insulation Co., 231 Conn. 469, 482 (1994). "A contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . The intent of the parties is to be ascertained by a fair and reasonable construction of the written words and the language used must be accorded its common, natural and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms. A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity." Poole v. Waterbury, 266 Conn. 68, 87-88 (2003).
A contract is ambiguous if the intent of the parties is not clear and certain from the language of the contract itself . . . The contract must be viewed in its entirety, with each provision read in light of the other provisions . . . and every provision must be given effect if it is possible to do so . . . If the language of the contact is susceptible to more than one reasonable interpretation, the contract is ambiguous. Canterbury Heights Condominium Assn., Inc. v. Local Land Development, LLC, 273 Conn. 724, 735 (2005). The fact that the parties interpret the terms of a contract differently, however, does not render those terms ambiguous. Pacific Indemnity Ins. Co. v. Aetna Casualty Surety Co., 240 Conn. 26, 30 (1997). Rather, whether a contract is ambiguous is a question of law for the court. Id. Accordingly, the court must first turn to the language of the release.
The relevant clause of the release, whose legal effect is in dispute among the parties, reads as follows:
Plaintiffs . . . do hereby release and forever discharge B E from all actions or causes of action, suits, debts, accounts, covenants, controversies, damages, judgments, executions, claims and/or demands whatsoever, in law and/or in equity, known and/or unknown, which against the B E released parties the plaintiff settlers have brought, may bring, and/or could have brought from the beginning of time to the date of this settlement agreement, including but not limited to those arising out of and/or relating in any manner to the action.
The Defendants contend that they are entitled to summary judgment on the basis that the above clause contains broad and definitive language that clearly and unambiguously discharges any and all claims against B E that have been or could have been brought prior to the date of the settlement agreement. The second action they argue, having been filed prior to the settlement agreement, falls within the language of the release and should be barred from continuing forward. The plaintiffs, however, argue that the release does not apply to the second action because it was neither the intent of either party to settle this action nor does the release lack ambiguity.
III. WHERE THERE IS MORE THAN ONE OUSTANDTNG CASE OR CLAIM BETWEEN TWO PARTIES AND A RELEASE IS EXECUTED IN FAVOR OF ONE PARTY CONTAINING BROAD LANUAGE RELEASING "ANY AND ALL CLAIMS" ALONG WITH A SPECIFIC REFERENCE TO ONLY ONE OF THE CASES OR CLAIMS, COURTS WILL CONSTRUE THE RELEASE AS BEING AMBIGOUS OR AS DISCHARGING ONLY THE SPECIFICALLY REFERENCED CLAIM.The language in the release is broad and at first glance seems unambiguous and unequivocal in that it releases "any and all claims" as to B E. However, the plaintiff has argued that the release is ambiguous because the release specifically references the first action (reciting the case name, docket number and the date of commencement at the top of the agreement), refers to "the action" in several paragraphs and makes no specific reference to the second action. The defendants argue that a specific reference is unnecessary given the broad and definitive language of the release and there is no ambiguity created by the lack of a specific reference. However, contrary to the defendant's position, courts have found that releases with both broad release language and specific references to certain cases or claims are ambiguous in their application to other cases or claims pending between the parties at the time of the release. See Borque v. Trugreen, Inc. 389 F.3d 1354 (11th Cir. 2004); Allstate Insurance Co. v. CT Car Rental, Inc., Superior Court, Judicial District of Hartford, Docket No. CV97 057140 (June 16, 1999, Wagner, J.T.R.) ( 1999 Ct.Sup. 6620, 6622) (General release contains ambiguity because it specifically refers to personal injury case but makes no mention of pending and consolidated subrogation case claiming property damage.); and Investment Properties Inc. v. Lyttle, 169 Vt. 487 (1999) (Broad language of general release did not by its terms appear to cover particular liability asserted, creating conflict between two rules: first, that which interprets broad language of a general release broadly, but second, that which maintains that omitted terms were left out purposely; given this conflict, meaning of release could not be determined as a matter of law and summary judgment was improper.)
In Borgue, the 11th Circuit Court of Appeals found, under a fact pattern very similar to this case, that a general release negotiated between an employer and employee with regard to a workers' compensation claim was not sufficiently clear, despite broad release language, to encompass a separate claim for wrongful discharge. Borgue v. Trugreen, supra, 389 F.3d at 1356. The plaintiff had injured his shoulder while working as a courier and sought treatment at a workers' compensation clinic; after being ordered to restrict his lifting activity management questioned his injury, threatened to take away his route and then subsequently fired him. He filed an action for wrongful discharge and then pursued a workers' compensation claim utilizing a different attorney for each claim. The plaintiff eventually reached a settlement on his workers' compensation claim and signed a general release that was subsequently used by his employer to seek and obtain summary judgment in the wrongful discharge case. The court of appeals, in overturning the granting of summary judgment and remanding the case back to the district court found that the contract was ambiguous because it contained general clauses discharging all claims of liability and other more specific clauses discharging only benefits. Id. at 1358.
In other jurisdictions, courts have gone beyond finding releases with broad language coupled with a specific reference to a case or claim ambiguous and have found that such a release, as a matter of law, does not discharge cases or claims that are not specifically referenced and were pending between the parties at the time of the release. Warwick v. Gautier Utility District, 738 So.2d. 212 (Miss. 1999), Giers v. Atchison, T S.F. RY Co., 349 Ill.App. 169 (1953).
In Warwick v. Gautier Utility District, the plaintiff had filed two separate law suits against the Gautier utility district seeking the enforcement of his reversionary and contractual interests in a property taken through an eminent domain action by the utility district. The first action, seeking enforcement of his reversionary interest in the property, was filed in chancery court and the second action, claiming the district was bound by a contract signed by the previous owner of the property regarding utility rates to be charged for service to the property, was filed in circuit court. During the pendency of the two actions, the first action was settled and a release was executed by the plaintiff. Citing broad language in the settlement agreement releasing "any and all claims of any kind or nature growing out of or in any way connected with the taking of the undersigned property" the utility district moved to dismiss the second action. The circuit court dismissed the action but the Mississippi Supreme Court overturned the decision finding that, despite the broad language in the release, it was not the intention of the parties to extinguish the second claim. The court reasoned that both parties were aware of the separate law suits but only specifically referenced the first action and the lack of any specific reference to the second action was clear evidence that the parties did not intend to settle the second action. 738 So.2d at 216.
The Illinois Appellate court reached a similar conclusion in Giers v. Atchinson, T S.F. Co., supra, where a railway company sought to prevent an employee from recovering damages for serious injuries sustained in an accident after signing a general release in connection with a separate later accident in which he sustained minor injuries. Despite broad language releasing the railway company from "all claims," the court found that the release did not apply to the earlier accident. The court found that the release was only intended to apply to the later accident because it was the only accident specifically referenced; the court noted that if the parties intended to release both claims from the separate accidents they could have easily done so by specifically referencing both. Furthermore, the court was also persuaded by the fact that the release was obtained for a payment of $325 which was suitable to compensate the plaintiff for the minor injuries sustained in the second accident but fell far short of suitably compensating the plaintiff for the major injuries sustained in the first accident where he was claiming $75,000 in damages. The court reasoned that it would be fair to presume that the plaintiff would not be satisfied with $325 for such a serious injury and thus had not intended to discharge his right to recovery.
The facts of this case are very similar to the above cases. Most notably, the parties at the time of the settlement negotiations were certainly aware of the fact that there were two separate lawsuits pending but drafted a release that only specifically referenced the first action. When this is done, the courts have effectively taken the position that where parties, in spite of the broad clauses in a general release, choose to specifically reference a claim while omitting a reference to another pending claim this is strong evidence of intent to limit the scope of the release to only the referenced claim. 349 Ill.App. at 174.
IV. THE CIRCUMSTANCES OF THE SETTLEMENT NEGOTIATIONS AND CONDUCT OF THE PARTIES SUBSEQUENT TO THE EXECUTION OF THE RELEASE SHOW A CLEAR INTENT OF THE PARTIES NOT TO RELEASE THE SECOND ACTIONAs previously noted a "contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction." (emphasis added) Poole v. Waterbury, supra, at 88. The terms of the release when considered in light of the situation between the two parties and the circumstances surrounding the settlement negotiations strongly suggests an interpretation of the release consistent with the plaintiff's position. To begin with, similar to the situation in Giers, the plaintiff accepted much less money in the settlement than the amount of damages he was collectively seeking in the two actions. In fact, he accepted exactly the same amount as the other seven plaintiffs in the first action, none of whom had an individual wrongful termination claim pending, essentially giving up that claim for no additional consideration. Additionally, the plaintiff's attorney in the second action did not attend nor was he made aware of the settlement proceedings. While plaintiff's counsel contends that there was fraudulent intent on the part of the defendant's counsel to deprive the plaintiff of his services during settlement negotiations his lack of participation is more probative of the intent of the parties to only settle the first action. Furthermore, the conduct of the parties in the months following the execution of the settlement agreement strongly suggests intent to settle only the first action. The Connecticut Supreme Court has stated:
Plaintiff has argued that the release is unenforceable for lack of consideration; however, this issue need not be decided because a claim for lack of consideration necessarily requires a determination of the scope of the release first.
We have repeatedly held that in construing the meaning of terms in a contract, the conduct of the parties regarding their use is a proper consideration . . . Indeed, their conduct is given great weight in the interpretation of the agreement. 2 Restatement (Second) Contracts § 202(4) (1981) This is so because the parties to an agreement know best what they meant, and their action under it is often the strongest evidence of their meaning. (Emphasis in original; citation omitted.)
Levine v. Massey, 232 Conn. 272, 290 (1995).
In this case, the terms of the release required that the plaintiffs submit originals of all signed releases and withdrawals before receiving their settlement payments. On March 26, 2004, all of the plaintiffs to the first action were given their share of the settlement amount at which time the defendants made no claim that there were any deficiencies in the settlement documentation provided to them in the way of releases and withdrawals. Subsequently, a withdrawal was filed in the first action on April 1, 2004. No withdrawal was provided or filed in the second action and it was not until over four months later that a demand for the plaintiffs to file a withdrawal was made by the defendants. This conduct, it is submitted, clearly shows that the parties did not believe the second action had been settled and thus did not intend to settle the second action at the time of the agreement.
Overall, given the lack of a specific reference to the second action and the relevant circumstances surrounding the settlement agreement, the court finds that there is at least a genuine issue of material fact as to whether or not the parties intended the release signed by the plaintiff to apply to the second action, and that the defendant's motion for summary judgment must be denied. Having so found, it is not necessary or appropriate for the court to address the plaintiff's suggestion that the court exercise its equitable powers to reform the release to apply specifically to both the first action and the second action.
Reformation of the release is not among the plaintiff's claims for relief as pleaded in his amended complaint.
Order
The Defendant's Motion for Summary Judgment (No. 139) is denied.