David S. Sheehan and Barbara J. Sheehan v. Atlanta International Insurance Company and Integrity Insurance Company

This is a diversity case involving the validity of a release signed as part of a settlement agreement in a personal injury case. The release purported to exonerate appellees Atlanta International Insurance Company (Atlanta) and Integrity Insurance Company (Integrity) from any and all liability to appellants David and Barbara Sheehan. The Sheehans, contending that part of the release was invalid, brought suit against Atlanta and Integrity for bad faith under California Insurance Code section 790.03, breach of contract, and intentional infliction of emotional distress. The district court held that the release was binding and granted appellees’ motion for summary judgment on all claims. We affirm.

I.

FACTS AND PROCEEDINGS BELOW

On June 2, 1981, a truck in which David Sheehan was a passenger collided with a tractor-trailer rig owned by appellees’ insured, Southwest Truck Service. As a result of this accident-, Mr. Sheehan sustained serious injuries. Mrs. Sheehan later joined the suit against the appellees, claiming loss of consortium. The Sheehans retained Lewis Graham, a Los Angeles attorney, to represent them in the case. Much negotiation followed between the Sheehans and the…