What's in a Release?
Most litigating attorneys will agree that obtaining fair settlements in injury cases can be challenging. For this reason, once settlement is reached, the temptation exists to simply execute the release the defendant's attorney encloses with the check. Unfortunately, many releases contain un-negotiated terms or language which leads to unintended results; therefore they must be carefully scrutinized prior to signing.
The first fundamental issue is to be sure the release only discharges intended defendants. Indiana law historically held that a release of one torfeasor released all tortfeasors. However, in Huffman v. Monroe County Community Sch. Corp., 588 N.E.2d 1264 (Ind. 1992), the Indiana Supreme Court abrogated the common law release rule and held that the release of one wrongdoer does not release all unless the agreement was to release all, as in any contract for the release of joint tortfeasors.
In Pelo v. Franklin College of Indiana, 715 N.E.2d 365 (Ind. 1999), the Indiana Supreme Court extended this holding to derivative actions, reversing the prior Indiana Court of Appeals opinion in United Farm Bureau Mut. Ins. Co. v. Blossom Chevrolet, 668 N.E.2d 1289 (Ind. Ct. App. 1996). The Indiana Supreme Court held that a settlement agreement only released those specifically identified and not other defendants, including those whose liability is derivative. Pelo, 715 N.E.2d at 366-67.
In a case in which several individuals have been named as parties to the case, there is little difficulty in identifying the individuals who are not released. However, in a case in which there is an early settlement and there is time to file subsequent claims, it is not always known who the later defendants will be. Pelo was significant in allowing plaintiffs to release one defendant while continuing on with investigation to determine if there were other tortfeasors.
While Pelo provides some protection to plaintiffs, it is still important to review the release document to ensure that it does not release other individuals the plaintiff may wish to remain as defendants in the case. In Esate of Spry v. Greg & Ken, Inc., 749 N.E.2d 1269 (Ind. Ct. App. 2001), the deceased's estate filed a claim against a drunk driver who negligently caused the deceased's death. The estate reached a settlement with the drunk driver and executed a release discharging the drunk driver "and any other party who is or may be liable" for the death.
Thereafter, the estate filed a dram shop claim against the bar that served the drunk driver. Upon reviewing the release document, the Indiana Court of Appeals held that the bar was released by the language discharging "any other party who is or may be liable." This case highlights the importance of reviewing the release language to ensure that only intended parties are released.
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