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Michigan Supreme Court Lansing, Michigan

Opinion
SUPREME COURT NICOLE SHAY, Personal Representative of the ESTATE of THOMAS JOHN SHAY, Deceased, Plaintiff-Appellant, v JOHN ALDRICH, WILLIAM PLEMONS, and JOSEPH MILLER, Defendants-Appellees, and WAYNE ALLBRIGHT and KEVIN LOCKLEAR, Defendants.

Chief Justice:

Justices:

Marilyn Kelly

Michael F. Cavanagh Elizabeth A. Weaver Maura D. Corrigan Robert P. Young, Jr. Stephen J. Markman Diane M. Hathaway

FILED AUGUST 23, 2010 STATE OF MICHIGAN

No. 138908

BEFORE THE ENTIRE BENCH WEAVER, J. In this case, we decide whether the Michigan Court of Appeals case, Romska v Opper, 234 Mich App 512; 594 NW2d 853 (1999), was correctly decided. After

examination of the Romska decision regarding the scope of a release from liability, we

overrule Romska to the extent that its holding precludes the use of parol evidence when an unnamed party asserts third-party-beneficiary rights based on broad language included in a release from liability and an ambiguity exists with respect to the intended scope of that release. Accordingly, pursuant to MCR 7.302(H)(1), in lieu of granting leave to appeal, we reverse the judgment of the Court of Appeals, which heavily relied on Romska, and remand this case to the trial court for further proceedings. I. FACTS AND PROCEDURAL BACKROUND Plaintiff, Thomas Shay,1 alleged that he was assaulted by Melvindale and Allen Park police officers. On the day of the alleged assault, Officers John Aldrich and William Plemons of the Melvindale Police Department visited plaintiff at his home in response to a car alarm. After speaking with plaintiff, Officers Aldrich and Plemons left the home. They returned later that day, accompanied by Officer Joseph Miller of the Melvindale Police Department. In addition to the Melvindale police officers, two officers from the Allen Park Police Department, Wayne Allbright (or Albright) and Kevin Locklear, were present. Plaintiff alleged that Officer Aldrich struck him and he fell to the ground. Plaintiff further alleged that other officers present assaulted him after he fell. Plaintiff filed suit, naming five defendants: Officers Aldrich, Plemons, and Miller ("the Melvindale Officers"), as well as Officers Allbright and Locklear ("the Allen Park

Thomas Shay died approximately four months after oral argument on his application for leave to appeal in this Court, and Nicole Shay, the personal representative of his estate, was substituted as plaintiff. References to "plaintiff" in this opinion are to Thomas Shay.

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Officers"). With respect to the Melvindale Officers, plaintiff alleged that they committed an assault and battery. As for the Allen Park Officers, plaintiff alleged that their inaction during the alleged assault amounted to gross negligence. The Melvindale and Allen Park Officers, and their respective municipalities, were covered by different insurance companies and different insurance polices. Additionally, the Melvindale and Allen Park Officers, and their respective municipalities, were represented by separate defense counsel. Plaintiff, the Melvindale Officers, and the Allen Park Officers agreed to appear for a case-evaluation hearing. After the hearing, the following awards, based on each defendant's respective liability, were issued: $500,000 against Melvindale Officer Aldrich, $500,000 against Melvindale Officer Plemons, $450,000 against Melvindale Officer Miller, $12,500 against Allen Park Officer Allbright, and $12,500 against Allen Park Officer Locklear. Plaintiff accepted the case-evaluation awards against the Allen Park Officers, and both Allen Park Officers agreed to the awards. Plaintiff additionally accepted the caseevaluation award against Melvindale Officer Miller, but rejected the case-evaluation awards against Melvindale Officers Aldrich and Plemons. All three of the Melvindale Officers rejected the case-evaluation awards. Accordingly, the Allen Park Officers were dismissed from the case, while a trial date was set for the remaining defendants, the three Melvindale Officers. Plaintiff executed two releases, one naming Allen Park Officer Allbright and one naming Allen Park Officer Locklear. The two releases were identical in all respects

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except for the named Allen Park Officer indicated in the document. The release naming Officer Locklear read in part as follows: For the sole consideration of TWELVE THOUSAND FIVE HUNDRED AND NO/100 ($12,500.00) DOLLARS to me in hand paid by Michigan Municipal Liability and Property Pool do for ourselves, executors, administrators, successors and assigns, discharge, ALLEN PARK POLICE OFFICER KEVIN LOCKLEAR and Michigan Municipal Liability and Property Pool, insurer, together with all other persons, firms and corporations, from any and all claims, demands and actions which I have now or may have arising out of any and all damages, expenses, and any loss or damage resulting from an incident occurring on September 8, 2004.

Each release also stated that "the execution of this agreement shall operate as a satisfaction of my claims against such other parties to the extent that such other parties are or may be entitled to recover, by way of contribution, indemnity, lien or otherwise, from the parties herein released." Additionally, each release stated that plaintiff further agreed to "indemnify and hold harmless the above-named released and discharged parties . . . ." Plaintiff signed the releases, and the trial court entered a stipulated "Order for Dismissal with Prejudice as to Defendants, Allen Park Police Officer Albright and Allen Park Police Officer Locklear, Only." Approximately two months later, the Melvindale Officers moved for summary disposition under MCR 2.116(C)(7), relying on the Allen Park Officers' releases. The Melvindale Officers asserted that the language "all other persons" contained in the releases effectively released them as well. The trial court denied the Melvindale

Officers' motion for summary disposition, agreeing with plaintiff that dismissal based on (C)(7) would only be proper if the releases had been executed before the commencement 4

of plaintiff's suit. Furthermore, the trial court ruled that the Melvindale Officers could only have relied on the releases if they had raised the language as a defense in their first responsive pleading. The Melvindale Officers moved to amend their affirmative defenses in order to include the language of the releases as a defense. The Melvindale Officers relied heavily on Romska. In Romska, the Court of Appeals majority held that the language "all other parties" in a release was unambiguous and, therefore, there was "no need to look beyond the . . . language of the release" to determine its scope.2 The Melvindale Officers argued that the language "all other persons" contained within the releases was clear and unambiguous, just as the language in the release in Romska was. Thus, the Melvindale Officers asserted that they too were released by the language "all other persons" and that parol evidence should not be used to determine the scope of the Allen Park Officers' releases. The trial court denied the Melvindale Officers' motion to amend their affirmative defenses and rejected their argument that the language of the releases was broad enough to release them as well. The trial court instead found the releases to be ambiguous, noting that the names of the Allen Park Officers and their insurance carrier were in capital letters and bold type, which suggested the limiting nature of the language. This bold type was used in both the first and last paragraphs of the releases, which the trial court reasoned was further indication that the releases were intentionally limited to the
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Romska, 234 Mich App at 515-516.

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persons named in bold. The trial court additionally noted that the Melvindale Officers were not mentioned anywhere in the releases. After concluding that the releases were ambiguous and, therefore, that parol evidence was admissible, the trial court noted that the dismissal order entered as a result of the releases was entitled "Order for Dismissal with Prejudice as to Defendants, Allen Park Police Officer Albright and Allen Park Police Officer Locklear, Only." The order also indicated that the "entry of this Order does not resolve the last pending claim between the parties and does not close the case." Additionally, the trial court

acknowledged an affidavit from the attorney for the Allen Park Officers explaining that he had intended to negotiate the releases with plaintiff for the Allen Park Officers only. The trial court further indicated that the amount of consideration for the releases indicated that they were not meant to dispose of claims against the Melvindale Officers. The case-evaluation awards against the Melvindale Officers totaled $1,450,000, while the releases were executed in exchange for the $25,000 combined case-evaluation amount against the Allen Park Officers. The trial court reasoned that it was unlikely that plaintiff would forgo his claims against the Melvindale Officers for just $25,000. Plaintiff filed an emergency motion to reform the releases. However, before any decision on that motion, the Melvindale Officers filed an application for leave to appeal in the Court of Appeals. The Court of Appeals found Romska instructive and concluded

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that the Allen Park Officers' releases were unambiguous and must be applied as written.3 The Court of Appeals therefore concluded that plaintiff's claims against the Melvindale Officers were barred.4 The Court of Appeals reversed the trial court's order denying the Melvindale Officers' motion for summary disposition and remanded the case to the trial court for entry of judgment in favor of the Melvindale Officers.5 Plaintiff filed an application for leave to appeal in this Court. We ordered that oral argument be heard on the application, directing the parties to address "whether Romska v Opper, 234 Mich App 512 (1999), was correctly decided."6 II. STANDARD OF REVIEW This Court reviews de novo decisions on motions for summary disposition.7 When determining whether a motion for summary disposition brought pursuant to MCR 2.116(C)(7) was properly decided, we consider all documentary evidence and accept the complaint as factually accurate unless affidavits or other documents presented

Shay v Aldrich, unpublished opinion per curiam of the Court of Appeals, issued March 5, 2009 (Docket No. 282550), p 3-4.
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Id. at 4. Id. at 5. Shay v Aldrich, 485 Mich 911 (2009). Herald Co v Bay City, 463 Mich 111, 117; 614 NW2d 873 (2000).

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specifically contradict it.8

This issue also involves questions of law regarding the

construction of a contract, which we review de novo as well.9 III. ANALYSIS A. THE ROMSKA DECISION In Romska, the plaintiff was driving her car when she was struck by a car driven by Veliko Velikov.10 Velikov hit the plaintiff's car after swerving to avoid a vehicle driven by the defendant, David Opper.11 The plaintiff filed personal injury claims against both Velikov's and Opper's insurance carriers and was able to reach a settlement with Velikov's carrier, Farm Bureau Insurance Company, for $45,000.12 She executed a standard release form, releasing Farm Bureau, as well as "all other parties, firms, or corporations who are or might be liable."13 The plaintiff was unable to reach a settlement with Opper's carrier, American States Insurance Company.14 As a result, the plaintiff filed suit against Opper himself.15

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Kuznar v Raksha Corp, 481 Mich 169, 175-176; 750 NW2d 121 (2008). In re Eggbert R Smith Trust, 480 Mich 19, 23-24; 745 NW2d 754 (2008). Romska, 234 Mich App at 513. Id. Id. at 513-514. Id. at 514. Id. Id.

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Opper then moved for summary disposition, relying on the language "all other parties" in the Farm Bureau release.16 In a split decision, the Court of Appeals held that the language of the Farm Bureau release was unambiguous.17 Because Opper could be classified within the phrase "all other parties, firms or corporations who are or might be liable," the majority reasoned that there was "no need to look beyond the plain, explicit, and unambiguous language of the release in order to conclude that he has been released from liability."18 The majority noted that the plaintiff provided and received adequate consideration under the release and, thus, the release was valid.19 Additionally, the majority gave weight to the existence of a merger clause within the release, reasoning that the clause dictated that "disputes concerning the release are to be resolved exclusively by the resort to the language of the release itself."20 Therefore, the majority concluded that in order to give effect to the merger clause, it must not consider extrinsic evidence that might have been otherwise considered had the merger clause not been included.21

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Id.

Id. at 515. The Court of Appeals majority opinion was authored by then Judge MARKMAN and joined by Judge SAAD. Judge HOEKSTRA authored a partial concurrence and partial dissent.
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Id. Id. at 516. Id. at 516-517. Id.

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The majority went on to reason that the settling parties likely included broad language in the release for the purpose of avoiding future legal burdens that could potentially arise out of lawsuits brought by the plaintiff against third parties.22 The majority cautioned that finality might never be truly achieved through a release if even unambiguous release language, coupled with a merger clause, cannot effectively preclude such future lawsuits.23 In contrast, the partial dissent opined that when a "stranger" to a release seeks to apply broad language contained in a release to bar claims against the stranger, it is appropriate for a court to consider parol evidence of intent in order to determine the true scope of the release.24 The partial dissent noted that Michigan's Legislature abolished in MCL 600.2925d the common-law principle that the release of one joint tortfeasor is the release of all.25 The partial dissent opined that it would be fundamentally unfair to bar the plaintiff's claim against Opper on the basis of the broad release language because this would effectively deprive the plaintiff of a cause of action against a tortfeasor whom she did not intend to release.26

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Id. at 517-518. Id. Id. at 533 (HOEKSTRA, J., concurring in part and dissenting in part). Id. at 527. Id. at 528.

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The partial dissent acknowledged that an unambiguous document must generally be interpreted "solely on the basis of the information contained within its four corners," but it noted that this situation "is not always the case."27 The partial dissent concluded as follows: Indeed, this Court, too, has stated that it agrees with "the majority of courts which hold that the parol evidence rule cannot be invoked either by or against a stranger to the contract." Denha v Jacob, 179 Mich App 545, 550; 446 NW2d 303 (1989), citing 30 Am Jur 2d, Evidence,

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