California Court Holds Defendant was not an “Affiliate” Entitled to Summary Judgment on Negligence and Premises Liability Claims After Tragic Vehicular Accident

Following a tragic accident involving a vehicle undergoing repairs, a plaintiff in a personal injury lawsuit received a favorable judgment from the California Court of Appeal recently.  The appellate court reversed the lower court’s dismissal of his complaint based on a general release he had signed, immunizing the defendant from liability.  The court here concluded that the defendant was not in the protected group of persons, as the term was understood in the release.

The plaintiff in this case brought a lawsuit against an automobile repair shop and the owner for his injuries. He had been retained by the shop to assess why the vehicle would not start. After testing the electrical connection starter, the vehicle ran him over and dragged him through the parking lot of the automobile repair shop, crushing his spine. Earlier, the vehicle had been towed to the auto shop, and the transmission shift linkage had been disconnected in order to tow the vehicle.

After settling his lawsuit with the owner and shop for the $1,000,000 limit of the defendants’ insurance policy, the plaintiff signed a settlement that released the defendants, as well as the defendants’ “affiliates,” from liability.  Three months after settling the first action, the plaintiff brought this action against the defendant who owned the underlying property from which the owner of the auto repair shop leased the land. Significantly, the owner left vehicles on the property in order for the repair shop to sell them, and the vehicle that injured the plaintiff was one of his vehicles.  He sued the defendant for negligence and premises liability. The defendant moved for summary judgment, and it was granted on the basis that the defendant was an “affiliate” protected by the language in the release.

On appeal, the court stated that reviewing whether there is a triable issue of material fact requires considering all of the evidence that had been set forth by the parties.  Here, the issue was whether the plaintiff and the defendants in the earlier lawsuit intended the release to provide immunity to a third party regarding the accident as an affiliate of the auto shop. The court stated that since the defendant in this case had no ownership, agency, or other dependent relationship to the former defendants, he was not an affiliate, and the defendants in the earlier case did not intend for the release to protect him.

The court reviewed caselaw surrounding California law and the releases that are provided to tortfeasors concerning liability.  Determining intent within a release rests upon contract interpretation, and, the court stated, it is not enough that a literal interpretation provides a benefit to a third party for that party to demand enforcement.

Mutual intent controls contracts, and here, the court stated that extrinsic evidence could help to prove a meaning within a contract.  Whether to admit the evidence depends on whether the contract is reasonably susceptible to the interpretation. California law follows an objective theory of contracts, under which the parties’ intent is not relevant to contract interpretation.

The specific language in this release provided protection against liability only if the plaintiff and the former defendants intended him to be an affiliate.  The defendant contended that an affiliate is a person in “close association with another” and that the evidence showed he leased the property of the auto shop, and the auto shop agreed to sell his cars on consignment.

Here, the court stated the term “affiliate” was unambiguous and does refer to a relationship closer than a “mere” arm’s length relationship in a contract. Usually, the court stated, the word refers to others in dependent or subordinate positions.  The court also looked at other sources that indicated a closer relationship than one that is contractual, including the remainder of the contract and the fact that the settlement terms were kept confidential, thereby showing no intention of providing the defendant with its intended immunity (or knowing of the release at all).

The court concluded that since the defendant was not an affiliate, as the term was intended under the release, the trial court should not have granted summary judgment in his favor.   The appellate court reversed the judgment and remanded for further proceedings.

This case demonstrates the importance of understanding the potential interpretations of a release, which is often entered into by plaintiffs who are settling their personal injury claims.  At Sharifi Firm, our premises liability attorneys help injured individuals seek compensation from at-fault parties and protect their legal rights through all of the phases of settlement or trial.  Throughout Southern California, we assist people injured by negligent parties. Call our office today to set up a free consultation with a skilled personal injury lawyer.  We can be reached by calling 1-866-422-7222.

More Blog Posts:

Court Upholds Offer to Compromise Following Motor Vehicle Collision Lawsuit; Defendant’s Changed Terms Re-Opened a Completed Negotiation That was not Enforceable under California Law, Southern California Injury Lawyer Blog, March 20, 2017

California Court of Appeal Finds in Favor of Plaintiff in Car Accident Lawsuit When Evidence Fails to Show Plaintiff’s Consent to Settlement Agreement, Southern California Injury Lawyer Blog, June 9, 2016

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