Neverkovec

In this case we examine a problem that has recurred not only in California but across the nation. An injured party settles with an alleged tortfeasor’s insurer, signing a general release agreement that appears to excuse everyone in the world from liability. Then the injured party proceeds against a different alleged tortfeasor, who raises the general release as a defense. We conclude that principles of contract law governing the rights of third party beneficiaries, and related rules of evidence, provide the best approach for resolving such cases.

Larry Neverkovec sued Joseph Gregory Fredericks for personal injuries suffered in an automobile accident. The trial court granted Fredericks’s motion for summary judgment, on the ground that Neverkovec had signed an unambiguous release of all claims he had against any party with potential liability. Neverkovec appeals from the ensuing judgment. We reverse. Fredericks was not a party to the release agreement, and in order to enforce it as a third party beneficiary he had to show the parties intended their agreement to benefit him. He did not meet this burden.

Background

In September 1994, Larry Neverkovec and Scott Moore were…

McNamara, Houston, Dodge, McClure & Ney, Guy D. Borges, Lisa M.

In this case we examine a problem that has recurred not only in California but across the nation. An injured party settles with an alleged tortfeasor's insurer, signing a general release agreement that appears to excuse everyone in the world from liability. Then the injured party proceeds against a different alleged tortfeasor, who raises the general release as a defense. We conclude that principles of contract law governing the rights of third party beneficiaries, and related rules of evidence, provide the best approach for resolving such cases.

Larry Neverkovec sued Joseph Gregory Fredericks for personal injuries suffered in an automobile accident. The trial court granted Fredericks' motion for summary judgment, on the ground that Neverkovec had signed an unambiguous release of all claims he had against any party with potential liability. Neverkovec appeals from the ensuing judgment. We reverse. Fredericks was not a party to the release agreement, and in order to enforce it as a third party beneficiary he had to show the parties intended their agreement to benefit him. He did not meet this…

I concur, but write separately to clarify a point addressed by the majority. While concluding, correctly, that a party’s subjective intent cannot create a triable issue of material fact regarding a contract’s objectively reasonable meaning, the majority suggests that such evidence is nonetheless admissible. (Maj. opn., ante, at pp. 350-351, 352.) I believe that such evidence is not only insufficient to create a triable issue, but is irrelevant as proof of the party’s contractual intent, and therefore inadmissible. (See Zurich General Acc. & Liability Assur. Co. v. Industrial Acc. Commission (1933) 132 Cal.App. 101, 104 [ 22 P.2d 572 ] [mutual assent understood from the reasonable meaning ascribed to the parties’ words and acts, and not from their unexpressed,, secret intentions or understandings].) Garcia v. Truck Ins. Exchange (1984) 36 Cal.3d 426 [ 204 Cal.Rptr. 435 , 682 P.2d 1100 ], cited by the majority for the contrary proposition, concerned the application of the parol evidence rule and did not consider the relevancy of evidence regarding the contracting parties’ subjective intent.