Sumrall v. Bickham

887 So.2d 73

Zander SUMRALL, III v. Cole BICKHAM, Continental Casualty Company, Ralph "Doc" Smith, Janice Smith Moak, Benjamin "Hut" Moak, Joetta Smith Stevens, ABC Insurance Company, and DEF Insurance Company.

No. 2003 CW 1252R.

Court of Appeal of Louisiana, First Circuit.

September 8, 2004.

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Tom W. Thornhill, Chadwick W. Collings, Slidell, M. Reggie Simmons, Franklinton, for Plaintiff-Respondent, Zander Sumrall, III.

Andrew Blanchfield, Chad A. Sullivan, Baton Rouge, for Defendant-Relator, Continental Insurance Company.

Charles M. Hughes, Jr., Cheryl I. Magee, Mandeville, for Defendant, Ralph Smith.

William J. Knight, Franklinton, for Defendant, William Cole Bickham.

Before: CARTER, C.J., PARRO, and GUIDRY, JJ.

CARTER, C. J.

The sole issue for our consideration in this writ action is whether the plaintiff's pretrial settlement and dismissal of all claims against the alleged tortfeasor automatically resulted in a release of the tortfeasor's liability insurer from its contractual obligation.

FACTS AND PROCEDURAL HISTORY

This case arose out of a physical altercation shortly after midnight on December 5, 1999, between plaintiff-respondent, Zander Sumrall, III, and defendant, William Cole Bickham, who were both attending an outdoor party hosted by friends. It is alleged that alcoholic beverages were being consumed and illegal drugs were being used at the party. Sumrall was seriously injured when Bickham tackled him from behind as he attempted to leave the party after a fight broke out. At the time of the incident, Bickham, who was home on leave from the U.S. Army, believed that Sumrall was retrieving a gun from his vehicle. Bickham's impact caused an injury to Sumrall's left leg as well as a severe hip injury, resulting in a permanent limp and weakness.

Sumrall filed suit against Bickham and defendant-relator, Continental Insurance Company (Continental), the homeowner insurer for Bickham's father.¹ Bickham filed a motion requesting a stay of the proceedings against him pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940.² Sumrall later settled his claims against Bickham, releasing him from the suit.³ In the receipt and release agreement (the release agreement), Sumrall expressly agreed, in exchange for the compensation he received, to:

RELEASE, ACQUIT, AND FOREVER DISCHARGE William Cole Bickham from any and all actions, claims, demands, damages, costs, loss of services, expenses, and compensation on account of, or in any way growing out of, any and all known and unknown personal injuries and property damage resulting or to result from an incident that occurred on or about the 5th day of December, 1999, ... reserving to said Zander Sumrall, III all rights as to all other parties, named or unnamed, including specifically, but without limitation, all rights as to Continental Insurance Company, the insurer of William Cole Bickham, ....

* * *

It is further understood and agreed that this settlement is the compromise of a doubtful and disputed claim, and that the payment is not to be construed as an admission of liability on the part of the payor or of the persons, firms, and corporations released hereby, by all of whom liability is expressly denied. (Italics added.)

The trial court signed a judgment of dismissal in accordance with the terms of the settlement agreement, dismissing Sumrall's claim with prejudice as to Bickham "only," and expressly reserving all rights as to Continental. Shortly thereafter, Continental filed a motion for summary judgment, based in part on the language of the release agreement and the judgment of dismissal. The trial court denied the motion, and Continental applied to this court for supervisory review.⁴

In its writ application to this court, Continental raised two issues: (1) whether certain policy exclusions applied to deny coverage of the underlying claim, and (2) whether the dismissal of its insured, Bickham, resulted in the discharge of its obligation under the policy to provide coverage for Sumrall's damages. Following our review of the application, we denied the writ. Sumrall v. Bickham, 03-1252 (La.App. 1 Cir. 9/22/03) (unpublished writ action).⁵

Continental then applied to the Louisiana Supreme Court for supervisory and/or remedial review. The writ was granted and by per curiam order, the matter was remanded to this court for an "opinion solely on the issue of whether a plaintiff's settlement with an insured eliminates an insurer's obligation to pay the plaintiff according to the terms that the policy would otherwise require." Sumrall v. Bickham, 03-2965 (La.1/30/04), 865 So.2d 44 (emphasis added).⁶ It is in this procedural posture that the matter now comes before us.

LAW AND ANALYSIS

Continental asserts that its policy only obligates it to pay claims for which its insured is legally liable.⁷ Continental's argument is that because Sumrall settled with and fully released Bickham from the lawsuit, a "natural consequence" of the release is that Bickham can no longer be found legally liable for Sumrall's injuries, and therefore, Continental's policy obligation cannot be triggered. Sumrall counters this argument by noting that Bickham's release and concomitant dismissal from the action was unambiguous and it affected only Bickham. Sumrall points to the express and specific reservation of rights as to Continental in the release agreement, as well as the clear statement in the agreement that Sumrall's settlement with Bickham was not to be construed as an admission of liability by Bickham, which was expressly denied.

Louisiana law provides that the scope of a compromise agreement extends to the differences clearly comprehended by the parties, not to differences that the parties never intended to include. See LSA-C.C. art. 3073. In the release agreement, Sumrall unambiguously released Bickham from all "actions, claims, demands, damages, costs, loss of services, expenses, and compensation on account of, or in any way growing out of ... [the] incident ... reserving to ... Sumrall ... all rights as to all other parties, ... including specifically, but without limitation, all rights as to Continental... the insurer of ... Bickham." (Emphasis added.) The release language shows that the parties, Bickham and Sumrall, clearly comprehended and intended that Sumrall would maintain his rights to pursue Bickham's liability insurer, Continental. The release agreement expressly provides that Bickham's settlement with Sumrall "is not to be construed as an admission of liability" on the part of Bickham. The agreement goes on to clearly state that Bickham "expressly denie[s]" liability. Similarly, the judgment dismissing Bickham tracks the language of the release agreement, inserting the word "only" after Bickham, emphasizing the intent of the parties that only Bickham was released by the settlement.

There is no dispute concerning the facts. There is no evidence filed into the record substantiating any mistaken intent by either party to the release agreement. Therefore, the jurisprudence regarding cases where genuine issues of material fact were found to exist as to the intent of the parties in a release agreement are not helpful to our analysis in this case.⁸ Continental was not involved in the settlement between Sumrall and Bickham. Since Continental was not a party to the release agreement, it has no right to raise the issue of Sumrall and Bickham's intent upon entering into their settlement. See Duet v. Lucky, 621 So.2d 168, 172 (La.App. 4 Cir.1993). Furthermore, Continental has not produced any evidence to prove that the intent of the parties to the compromise was anything other than what is portrayed by the clear language in the release agreement. Thus, our interpretation of the release agreement does not require an inquiry outside the four corners of the agreement to ascertain intent. See Gaubert v. Toyota Motor Sales U.S.A Inc., 99-2569 (La.App. 1 Cir. 11/3/00), 770 So.2d 879, 882.

We are called upon to examine and interpret the language of the release agreement, as well as the pertinent policy provision regarding Continental's obligation to pay any claim for which Bickham becomes "legally liable." Our interpretation involves the single issue surrounding the legal effect of Bickham's release with respect to Sumrall's rights against Continental. The issue presents a question of law, which is appropriate for decision by summary judgment; our review must be de novo. Smith v. Williams, 03-0433 (La.App. 1 Cir. 5/14/04), 879 So.2d 233, 235-36; Gaubert, 770 So.2d at 882. Appellate review of legal questions simply involves a determination as to whether the trial court's decision was legally correct. Simmons v. Berry, 98-0660 (La.App. 1 Cir. 12/22/00), 779 So.2d 910, 913-914.

We disagree with Continental's assertion that a liability insurer has no independent liability simply because its insured has been released pursuant to a pretrial settlement agreement with the plaintiff. Because Continental was not involved in negotiating the settlement agreement between Bickham and Sumrall, and was not a party to the compromise, Continental should not now be able to claim the benefit of the agreement by declaring that it should automatically be dismissed from the lawsuit as a natural consequence of the release of its insured. This is especially compelling in light of the clear language in the release agreement stating that Bickham was expressly denying all liability and that Sumrall was specifically reserving all rights "without limitation" as to Continental. See In re Combustion, Inc., 960 F.Supp. 1051, 1054 (W.D.La.1997).

We have previously recognized in Rodriguez v. Louisiana Tank, Inc., 94-0200 (La.App. 1 Cir. 6/23/95), 657 So.2d 1363, 1367-1368, writ denied, 95-2268 (La.11/27/95), 663 So.2d 739, that the release of an insured does not release the liability insurer, particularly where the plaintiff clearly intends to reserve rights against the...