Appellate Court Saves Owner From Release He Signed

APPELLATE COURT SAVES OWNER FROM RELEASE HE SIGNED

By: Larry Leiby, Esq. and Robert S. Tanner, Esq.

About the Authors: Larry Leiby, Esq. was the founder and first chairman of the Florida Bar Construction Law Committee in 1976. He is the author of the Florida Construction Law Manual. He is Board Certified in Construction Law and was on the Construction Law Certification Committee that creates and grades the tests for construction law board certification. He was awarded the lifetime achievement award by the Florida Bar Construction Law Committee and teaches construction law at the Florida International University College of Law. He can be reached at leiby@mkpalaw.com.

Robert S. Tanner, Esq., a board certified construction law specialist, has worked with Mr. Leiby in construction matters since 2006, occasionally covers Mr. Leiby's classes at FIU law school, and has been litigating commercial cases for more than 10 years. He can be reached at rob@mkpalaw.com or, for more information, please visit www.mkpalaw.com.

In Alderman v. BCI Engineers & Scientists, Inc., 2011 WL 3862094 (Fla. 2d DCA Sept. 2, 2011), Sean Alderman ("Owner") owned a residence that was suffering damage that was caused at least in part by sinkhole activity. He made a claim with his insurer, State Farm Florida Insurance Company ("State Farm"). Afterwards, Owner entered into a contract with BCI which BCI performed in two distinct stages. First, BCI conducted a geotechnical subsidence investigation and prepared a report stating its findings and recommending remedies. Second, BCI was to evaluate bids from and to oversee the work of contractors who would perform the remedial work. State Farm signed BCI's request for budget for the second phase of services and returned it to BCI.

While a third party was performing the remedial work under the supervision of BCI, the septic tanks on Owner's property ruptured, causing damage. Furthermore, after the remedial work was performed, Owner continued to experience damage attributable to ongoing settlement. Owner eventually settled his insurance claim with State Farm and in so doing executed an instrument entitled General Release of All Claims ("Release").

The Release was for all claims "arising in relation to the filing of insurance claims by [Owner] relative to or associated with insurance coverage" and was given in favor of State Farm, its parent and subsidiary companies and "their officers, directors, shareholders, executors, administrators, insurers, insureds, . . . contractors . . . subcontractors . . . privies . . . ."

Owner sued BCI. Owner alleged that BCI negligent performing the second phase services. BCI moved for summary judgment based on the Release that Owner gave to State Farm. BCI argued that it was protected by the Release Owner gave to State Farm. Specifically, BCI argued that it had a contract with State Farm by virtue of State Farm's signature on BCI's budget request and, as a result, BCI claimed that it was a contractor or privy under the Release. Owner argued that BCI performed the remediation phase of the work pursuant to a contract with him, not State Farm. The trial court agreed with BCI and entered judgment in its favor. Owner appealed.

The appellate court found the situation similar to one where an insurer approves the costs of a repair shop to repair an insured's vehicle. The appellate court stated that in such situations, the contract for repairs is between the owner of the vehicle and the repair shop, not between the repair shop and the insurance company. However, facts existed to support both BCI's argument and Owner's argument. In light of that summary judgment was not proper and, the issue would have been remanded to the trial court except the appellate court went on to analyze the Release itself for further determinations.

The appellate court analyzed whether Owner's claim against BCI was for its negligence in supervising the remediation contractor's work, while the Release applied only to claims "arising in relation to the filing of insurance claims [ ] relative to or associated with insurance coverage . . . ." On that ground, the appellate court found that the Release did not apply to BCI.

It is not unusual for us to see releases signed by a person who unknowingly signed away claims he or she intended to keep. Sometimes it happens because the language of the document being signed is deceptively broad. Sometimes it happens because it is signed in a particular context, but the context is not reflected in the writing, and therefore the writing does not reflect limitations that the persons signing had in mind. Further, it sometimes happens because the person signs it without understanding the legal import of the document. A clear and unambiguous release generally will be enforced even if the person signing it makes a mistake, so long as he or she receives something of value for signing it and if fraud is not involved. Because a release can be the end of a claim, due attention should be given to it before signing.