Rodriguez v. Oto (212 Cal. App. 4th 1020, 2013)

Opinion

RUSHING, P. J.

We address in this case the question of how much evidence a defendant must present to establish a right to summary judgment under a global release by the plaintiff of “all persons” exposed to Lability for his personal injuries. Plaintiff contends that the trial court here erred by granting summary judgment because defendant relied solely upon the language of the release. According to plaintiff, a defendant in such a case must present additional evidence, extrinsic to the written agreement, of the parties’ “actual intent to benefit the third party.” We have concluded that insofar as some language in the cases might appear to support such a rule, it arises from, and should be confined to, the distinct issue whether a stranger to a contract, who stands to benefit from its performance, is an “incidental” beneficiary, rather than an “intended” one entitled to enforce its terms. In that context, extrinsic evidence is commonly necessary to ascertain the intended effect of the contract on the third party. It nonetheless remains the rule that where a clear intent can be ascertained from the parties’ written agreement, that agreement is at least prima facie evidence of their “actual intent.” Thus where its language unambiguously expresses a mutual intent to benefit a class of third persons, a member of that class makes a prima facie case of entitlement to its enforcement by proving the agreement—unless some cause to go outside the terms of the instrument, such as fraud, mistake, or latent ambiguity, appears. Here the only potentially sufficient cause suggested by the record is the mere possibility, raised belatedly by plaintiff, that a claims adjuster involved in negotiating the settlement might provide evidence that plaintiff did not expect the release to sweep as broadly as its language indicated. We find no abuse of discretion in the trial court’s denial of plaintiff’s tardy request for a continuance to explore that possibifity. Accordingly, we will affirm the judgment.

Background

On March 22, 2007, a vehicle operated by defendant Takeshi Oto collided with a vehicle operated by plaintiff Heriberto Ceja Rodriguez. Unbeknownst to plaintiff, Oto was driving from an event related to his employment with a subsidiary of Toshiba America, Inc. (Toshiba). While he himself had rented his vehicle from The Hertz Corporation (Hertz), Toshiba ultimately reimbursed him for the rental. Moreover, the rental was governed by an agreement between Hertz and Toshiba setting forth terms on which employees of the latter would rent vehicles on company business. That agreement included a “liability protection override” obligating Hertz to “provide primary protection ... for bodily injury or death up to a limit of $25,000 for each person” and to “indemnify, hold harmless, and defend [Toshiba] employee renters . . . and fellow employees who operate the car incidental to their business duties.”

Plaintiff engaged counsel the day after the accident. Some seven months later, he settled with Hertz for $25,000, the limit of its coverage for bodily injury or death. As part of the settlement he executed a written release in favor of “Takeshi Oto and The Hertz Corporation, its employees, agents, servants, successors, heirs, executors, administrators and all other persons, firms, corporations, associations or partnerships (hereafter Releasees).” (Italics added.) He testified that “some person from my lawyer’s” explained the release to him when he signed it. He answered “Yes” to the question whether he “underst[oo]d what [he] was signing at the time that [he] signed it.” However, he answered “No” when asked whether, in signing the release, he thought he was “releasing others besides Mr. Oto and Hertz from responsibility.” Nor did he believe he was “releasing Mr. Oto’s employer from responsibility” for the accident.

On February 18, 2009, plaintiff filed this action against Oto and “Toshiba America,” alleging that Oto injured plaintiff through negligent operation of a vehicle, and that defendants, “and each of them,” negligently “owned, operated, used, drove, maintained, loaned and/or entrusted their motor vehicle,” so as to cause his injuries. Defendants answered the complaint, asserting the release as an affirmative defense. On September 13, 2010, they moved for summary judgment on this basis. Plaintiff opposed the motion on the merits but also requested a continuance to conduct discovery. The trial court granted summary judgment, finding that the undisputed evidence established that the release explicitly exonerated Oto from further liability and that it also extended to Toshiba. The court found plaintiff’s undisclosed intentions insufficient to raise a triable issue of fact, and that the extrinsic evidence established no ambiguity. The court denied plaintiff’s request for a continuance, ruling that he had failed to show that such a continuance would enable him to discover facts essential to opposing the motion. The court duly entered judgment, and plaintiff brought this timely appeal.

I. Summary Judgment

A. Standard of Review

A summary judgment “shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c (section 437c), subd. (c).) A defendant seeking summary judgment meets his burden by showing that an element of the plaintiff’s cause of action cannot be established or that a complete defense to the cause of action exists and cannot be successfully contested by the plaintiff. “Once the defendant . . . has met that burden, the burden shifts to the plaintiff ... to show that a triable issue of one or more material facts exists as to that cause of action or . . . defense . . . .” (§ 437c, subd. (p)(2).) “In determining whether the papers show that there is no triable issue as to any material fact the court shall consider all of the evidence set forth in the papers, except that to which objections have been made and sustained by the court . . . .” (§ 437c, subd. (c).) Because the existence of a triable issue of fact is itself a question of law, we review without deference a ruling by the trial court that the evidence presented on summary judgment raised no such issue. (See Denevi v. LGCC, LLC (2004) 121 Cal.App.4th 1211, 1217 [18 Cal.Rptr.3d 276].)

Defendants’ showing in support of summary judgment consisted basically of the undisputed fact that plaintiff signed the release, coupled with the absence of any apparent ground to contest its general validity. In opposition, plaintiff asserted four principal facts: (1) That Toshiba and Hertz had entered into a corporate rental agreement under which Oto had rented the car he was driving when he collided with plaintiff; (2) that the release did not name Toshiba as a releasee; (3) that none of the participants made any “express reference” to Toshiba in connection with the settlement; and (4) that “[a]t the time of drafting the Release, it was not the intention of either HERTZ, OTO, or the Plaintiff to release TOSHIBA from liability” for the underlying accident.

In support of the third fact, plaintiff offered two letters from his counsel to Hertz Claims Management dated May 10, 2007, and October 15, 2007, and one letter from Don Beierschmitt of Hertz Claims Management to plaintiff’s counsel dated November 2, 2007, reflecting a policy limit demand of $25,000, and a settlement in that amount. To establish the fourth fact, plaintiff simply cited his own deposition statement that he did not believe he was releasing Oto’s employer from liability when he signed the release.

B. Claim Against Oto

A release is an instrument by which the signing party (releasor) relinquishes claims or potential claims against one or more persons (releasees) who might otherwise be subject to liability to him. The existence of a valid release is a complete defense to a tort action against the releasee. (E.g., Donnelly v. Ayer (1986) 183 Cal.App.3d 978, 983 [228 Cal.Rptr. 764] [legal malpractice].) In this case, the release specifically named defendant Oto as a releasee. The sole rationale plaintiff has offered for denying effect to the release, as it affects Oto, appears in a footnote in his opposition memorandum, where it is stated that Oto was joined “as a matter of caution since he may very well be a ‘necessary party[’]. . . .” Plaintiff does not pursue this rationale in this court, or offer any other basis for denying effect to the release as it affects Oto. Accordingly, the judgment in his favor must be affirmed.

C. Claim Against Toshiba

The real point of controversy below and here is the effect of the release on plaintiff’s claims against Toshiba, which for purposes of this appeal may be deemed Oto’s employer (see fn. 1, ante). In the context of summary judgment, this question raises two subsidiary inquiries: (1) Was the evidence in support of the motion sufficient to constitute a prima facie showing, without factual controversy, that the release was effective to preclude a judgment against Toshiba? (2) If so, did plaintiff present evidence raising a triable issue of fact on that point, or establish his entitlement to a continuance to secure such evidence?

The release signed by plaintiff extended not only to the named releasees Hertz and Oto, and their agents and successors, but to “all other persons, firms, corporations, associations or partnerships.” As a matter of plain logic, Toshiba—along with every other person or corporation in the universe— belongs to the class thus absolved of liability. The question is whether this logic alone is enough to establish, in the absence of countervailing evidence, that Toshiba is entitled to the protection of the release. We are confident that under the circumstances shown here, this question warrants an affirmative answer.

Plaintiff contends that a third party who is not named in a release, but who seeks to bring himself within its terms, bears the burden of showing that the lease applies to him—and, moreover, that “[t]his burden is ordinarily not met by simply relying on a literal interpretation of the contract.” (Italics omitted.) In addition, he asserts, a third party must present “evidence of the contracting parties’ actual intent to benefit the third party.” (Original italics.) Later he asserts that Toshiba failed to carry this burden because it presented no “testimony or other extrinsic evidence that would support the issue of the intention of the parties who actually made out the release.” We do not find this approach consistent with the governing principles of contract law; nor do we believe it is sustained by the authorities plaintiff cites.

A contract is “an agreement to do or not to do a certain thing.” (Civ. Code, § 1549.) As such it requires mutual assent. (Civ. Code, § 1565, subd. 2.) It is fundamental, however, that “there need not be a subjective meeting of the minds; in the absence of fraud, mistake, etc. . . . , the outward manifestation or expression of consent is controlling. In other words, mutual consent is gathered from the reasonable meaning of the words and acts of the parties, and not from their unexpressed intentions or understanding.” (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 116, p. 155, citation omitted, some italics added; see Civ. Code, § 1565, subd. 3 [contract requires consent “[c]ommunicated” by each party “to the other”].) In the absence of fraud, mistake, or another vitiating factor, a signature on a written contract is an objective manifestation of assent to the terms set forth there. (See Stewart v. Preston Pipeline Inc. (2005) 134 Cal.App.4th 1565, 1587 [36 Cal.Rptr.3d 901].) If the terms are unambiguous, there is ordinarily no occasion for additional evidence of the parties’ subjective intent. (Ibid.) Their “actual intent,” for purposes of contract law, is that to which they manifested assent by executing the agreement.

It is true that in determining the meaning of a contract, the dominant objective is to “give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” (Civ. Code, § 1636.) But in ascertaining the parties’ mutual intention, their agreed language “is to govern ... if the language is clear and explicit, and does not involve an absurdity.” (Id., § 1638.) When the contract has been “reduced to writing,” the parties’ intention “is to be ascertained from the writing alone, if possible,” subject to other rules of interpretation. (Id., § 1639.)

There are of course many exceptions and qualifications to these principles. But the principles do not become inoperative merely because the contract is invoked by someone who was not a party to it. The question in such a case is whether the parties intended to confer enforceable rights on the party now asserting them. The governing substantive principle is that a nonparty who claims benefits under the contract is entitled to do so as long as the claimed benefit does not flow to him as a mere incident of the agreement, but is one the contracting parties intended to confer. (Rest.2d Contracts, § 302; see Civ. Code, § 1559 [contract “made expressly for the benefit” of third person “may be enforced by him at any time before the parties thereto rescind it”]; Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1022 [90 Cal.Rptr.3d 453], quoting Gilbert Financial Corp. v. Steelform Contracting Co. (1978) 82 Cal.App.3d 65, 70 [145 Cal.Rptr. 448] [“ ‘As used in Civil Code section 1559, the ‘word “expressly has now come to mean merely the negative of “incidentally.” ’ ”].)

The rights of a third party beneficiary thus depend upon the intent of the contracting parties. (Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 524 [117 Cal.Rptr.2d 220, 41 P.3d 46] (Hess).) “Ascertaining this intent is a question of ordinary contract interpretation.” (Ibid.) It follows that if the requisite intent appears unambiguous from the face of the contract, the third party makes a prima facie showing of entitlement merely by proving the contract. This is what Toshiba did here. Under ordinary principles of contract law, this satisfied both its substantive burden as a third party beneficiary and its procedural burden as the moving party asserting an affirmative defense on summary judgment.

Plaintiff’s contention to the contrary is traceable to judicial pronouncements which we believe have little proper bearing on language like that here, which unambiguously grants legal rights to one or more third parties. In a case of this kind, the contract either grants an intentional benefit to the person asserting rights under it, or it affords him no benefit at all. The language on which plaintiff’s argument depends arose in, and should be largely confined to, cases where performance of the contract may benefit the third party but leaves open the question whether this is an intended object of the agreement, such that recognition of enforceable rights in the third party is necessary to carry out the contracting parties’ intentions—or is merely incidental thereto, i.e., a collateral and inessential consequence of the transaction contemplated by the parties. Plaintiff’s argument, and to some extent the authorities on which it rests, conflate these quite distinct situations.

Plaintiff’s chief authority is Neverkovec v. Fredericks (1999) 74 Cal.App.4th 337 [87 Cal.Rptr.2d 856] (Neverkovec). That case arose from a two-car accident in which the insurer for the first car’s owner agreed to pay its policy limits, apportioned in agreed amounts among four other persons involved in the accident. The appeal arose from a suit against the second driver by the most grievously injured of the passengers. He had signed a “particularly broad” release, extending to the first driver’s insurer, three named individuals, and “ ‘any other person, firm or corporation charged or chargeable with responsibility or liability.’ ” (Id. at p. 342.) The trial court entered summary judgment for the second driver on the ground that the release excused him from liability.

The Court of Appeal reversed. It acknowledged that “[r]elease agreements are governed by the generally applicable law of contracts.” (Neverkovec, supra, 74 Cal.App.4th at p. 348.) It noted, however, that third parties are not empowered to “ ‘enforce covenants made not for [their] benefit,’ ” and that a third party’s right to enforce performance “ ‘is predicated on the contracting parties’ intent to benefit him.’ ” (Ibid., quoting Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937, 944 [132 Cal.Rptr. 424, 553 P.2d 584].) It then made the pronouncements cited here by plaintiff: “The circumstance that a literal contract interpretation would result in a benefit to the third party is not enough to entitle that party to demand enforcement. The contracting parties must have intended to confer a benefit on the third party. [Citations.] [][] It is not necessary for the third party to be specifically named in the contract, but such a party bears the burden of proving that the promise he seeks to enforce was actually made to him personally or to a class of which he is a member.[] [Citations.] In making that determination, the court must read the contract as a whole in light of the circumstances under which it was entered. [Citations.] [][] Thus, to obtain summary judgment on the ground that a general release has discharged him from liability, a third party to the release agreement must affirmatively show that the parties intended to release him. The burden of proof is on the third party, under both contract law and the summary judgment statute. (§ 437c, subd. (