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Hess v. Ford Motor Co.

Supreme Court of California

February 28, 2002, Decided

No. S092697.

Opinion

 [*520]  [**49]  [***223]    BROWN, J. 

This case presents two unrelated issues. First, the plaintiff enters into a release agreement with one tortfeasor and his insurance company. The agreement, however, contains broad language ostensibly releasing [****2]  all potential tortfeasors from liability. We now consider whether this language bars the plaintiff's claims against a tortfeasor who was not a party to the release. Based on the uncontroverted evidence at trial, we conclude it does not.

Second, the plaintiff obtains a judgment more favorable than his offer of compromise under Code of Civil Procedure section 998 (section 998 offer), and is entitled to interest on the judgment from the date of the offer to the date of satisfaction of judgment pursuant to Civil Code section 3291. We now consider whether the plaintiff is entitled to interest on the prejudgment portion of the interest accrued under Civil Code section 3291, i.e., compound interest or interest on interest. We conclude he is not.

BACKGROUND

John Hess was a passenger in a Ford pickup truck on Christmas morning. At  [***224]  an intersection, a car driven by Charles Phillips struck the Ford truck, and  [*521]  the truck rolled over at least one and a half times. Hess suffered severe injuries and is now a paraplegic.

Before filing a lawsuit, Hess made a claim against Phillips and his insurance [****3]  company, Continental Insurance Company (Continental). Hess's attorney at the time negotiated with Brad Sommers, the claims adjuster for Continental, and settled Hess's claim against Phillips for $ 15,000, the policy limit. As part of the settlement, Hess signed a one-page boilerplate release form provided by Continental (Release).

The Release stated that Hess "release[s], acquit[s] and forever discharge[s] Charles Phillip[s], Continental Insurance and any and all agents and employees, UAC [the underwriters adjusting company] and any and [all] agents and employees and his, her, their, or its agents, servants, successors, heirs, executors, administrators and all other persons, firms, corporations, associations or partnerships of and from any and all claims, actions, causes of action, demands, rights, damages, costs, loss of service, expenses and compensation whatsoever" that Hess had or might have due to the accident. (Italics added.) The Release further stated that Hess "declare(s) and represent(s) that . . . this Release contains the entire agreement between the parties hereto . . . ."

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27 Cal. 4th 516 *; 41 P.3d 46 **; 117 Cal. Rptr. 2d 220 ***; 2002 Cal. LEXIS 621 ****; 2002 Daily Journal DAR 2297; 2002 Cal. Daily Op. Service 1853

JOHN HESS, Plaintiff and Appellant, v. FORD MOTOR COMPANY, Defendant and Appellant.

Prior History:   [****1]  Superior Court of Los Angeles County. Super. Ct. No. NWC43057. William A. Drake, Judge. 1 

Court of Appeal, Second Dist., Div. Seven. No. B125395.

Disposition: Affirmed in part, reversed in part, and remanded.

CORE TERMS

mutual mistake, parties, contracting parties, settlement, reformation, intend, negotiated, extrinsic evidence, third party beneficiary, contracting, tortfeasors, intentions, prejudgment interest, accrued, firms, insurance company, associations, partnerships, adjuster, compound, contract language, burden of proof, trial court, releasing, third party beneficiary status, release agreement, accrued interest, date of judgment, summary judgment, damages

Contracts Law, Contract Interpretation, Good Faith & Fair Dealing, General Overview, Third Parties, Beneficiaries, Claims & Enforcement, Defenses, Ambiguities & Mistakes, Business & Corporate Compliance, Contract Formation, Mistake, Mutual Mistake, Remedies, Reformation, Evidence, Types of Evidence, Documentary Evidence, Parol Evidence, Parol Evidence, Defenses, Civil Procedure, Judgments, Summary Judgment, Evidentiary Considerations, Ambiguities & Contra Proferentem, Trials, Judgment as Matter of Law, Labor & Employment Law, Collective Bargaining & Labor Relations, Labor Arbitration, Enforcement, Equitable Relief, Enforcement, Duties & Liabilities of Parties, Forgery, Fraud & Mistake, Contracts Law, Types of Contracts, Releases, Appeals, Summary Judgment Review, Judgment Interest, Governments, Legislation, Interpretation, Prejudgment Interest