Kupa, Deborah M.

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1996 Survey of Rhode Island Law: Cases: Contract Law

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Roger Williams University Law ReviewVolume 2 | Issue 2 Article 11Spring 19971996 Survey of Rhode Island Law: Cases: ContractLawDeborah M. KupaRoger Williams University School of LawFollow this and additional works at: http://docs.rwu.edu/rwu_LRThis Survey of Rhode Island Law is brought to you for free and open access by the Journals at DOCS@RWU. It has been accepted for inclusion inRoger Williams University Law Review by an authorized administrator of DOCS@RWU. For more information, please contact mwu@rwu.edu.Recommended CitationKupa, Deborah M. (1997) "1996 Survey of Rhode Island Law: Cases: Contract Law," Roger Williams University Law Review: Vol. 2: Iss.2, Article 11.Available at: http://docs.rwu.edu/rwu_LR/vol2/iss2/11430 ROGER WILLLAMS UN1VERSITY LAW REVIEW [Vol. 2:430Contract Law. Marr Scaffolding Co. v. Fairground Forms, Inc.,682 A.2d 455 (R.I. 1996). Where parties to a settlement agree asto the breadth of a general release, the court will apply an "intentrule" to determine the applicability of the release to unnamed thirdparties.In Marr Scaffolding Co. v. Fairground Forms, Inc.," the RhodeIsland Supreme Court adopted the "intent rule"2 for application ininterpreting the scope of general releases. General releases areoften used to release the parties to a settlement agreement fromfuture claims, and often include boilerplate language, or arecrafted by "erring artisans" as was the subject release in this case.3In Marr Scaffolding, the supreme court refused to permit a defend-ant, who was not a party to the settlement agreement, to rely onthe omnibus language of the release to escape future claims. 4FACTS AND TRAVELThe plaintiff, Marr Scaffolding Co., Inc. (Marr), rented con-struction material and equipment to contractors and builders.5 InAugust 1990, defendant Cement Heads, Inc. (Cement Heads),rented aluminum forms from Marr for a job in Providence, RhodeIsland, a number of which "disappeared" from the job site.6 WithMarr's permission, Cement Heads then moved some of the mate-rial to a Westerly, Rhode Island job site, where defendant subcon-tractor Fairground Forms, Inc. (Fairground), was also working.7The Westerly job was supervised by general contractor Profes-sional Building Concepts, Inc. (Professional Building), which wasbonded by Commercial Union Insurance Company (CommercialUnion), and Hartford Insurance Company (Hartford Insurance).8While working at the Westerly site, Cement Heads and Fairground1. 682 A.2d 455 (LI. 1996).2. McInnis v. Harley-Davidson Motor Co., 625 F. Supp. 943,958 (D.II. 1986)(predicting that Rhode Island courts would adopt the "intent rule" for interpreta-tion of general releases).3. Man- Scaffolding, 682 A.2d at 459.4. Id.5. Id. at 456.6. Id.7. Id.8. Id.1997] SURVEY SECTION"swapped or borrowed Marr's leased material," without Marr's per-mission.9 Much of this material and equipment was also lost.1oMarr subsequently sued Cement Heads, Fairground, Profes-sional Building, and Commercial Union, eventually settling thesuit with the latter three defendants, since the bonding companieswere only liable for the losses Marr incurred at the Westerly site.."Professional Building, Commercial Union and Hartford Insuranceagreed to pay Marr five thousand dollars in exchange for Marr'ssigning a release.-2 Moving for summary judgment, CementHeads claimed that the omnibus language of the release "dis-charged its liability to Marr."*3 Cement Heads argued that the re-lease was an "integrated and unambiguous written-agreement"and as such, extrinsic evidence should not be admitted to vary orcontradict its terms. 14 Marr argued that the release only appliedto the named releasees, not to Cement Heads, and submitted sup-porting affidavits from attorneys for each of the parties to the re-lease showing "that they neither bargained for nor intended todischarge any liability that Cements Heads may have to Marr."15Finding that the language of the release was unambiguous, andrefusing to consider the settling parties' "purported subjective in-9. Id.10. Id.11. Id.12. Id. The applicable part of the release stated:Marr. .. (hereinafter referred to as 'Releasors') for and in consideration ofFive Thousand ($5,000.00) Dollar [sic) ... has remised, released and for-ever discharged and do for itself and its successors and assigns herebyremise, release and forever discharge... Professional Building... andCommercial Union... and... Hartford Insurance... and any and allother persons, firms and corporations . . . (hereinafter referred to asReleasee'), of and from any and all debts, demands, actions, causes of ac-tion, .. . controversies.... claims, rights, liabilities, suits... now existing,or which may result from the existing state of things, which Releasorsnow have or ever had against the Releasee from the beginning of theworld to the day of the date of these presents ....in particular and without limitation of the foregoing Releasee is specifi-cally released from any and all claims for fair market value and fair rentalof scaffolding, or any other claim made in the civil action entitled MarrScaffolding Co.... v. Fairground Forms... or any claims that Mart...may have now or in the future of any nature whatsoever.Id. at 456-57 (emphasis added).13. Id. at 457.14. Id. at 458.15. Id. at 457.432 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol. 2:430tentions about the scope of the release," the motion judge grantedsummary judgment to Cement Heads, and Marr petitioned for awrit of certiorari. 16BACKGROUNDIn Pardey v. Boulevard Billiard Club,17 the Rhode IslandSupreme Court stated that unless it had an "adequate reason to dootherwise," it would give "significant deference" to general releaseterms.' 8 The adequate reason, they suggested, had to be groundedin factual evidence regarding parties' intent, among other fac-tors.19 Underlying its willingness to consider the parties' intent isthe court's policy of preventing "third-party defendants from tak-ing 'gratuitous advantage' of releases in which they took nopart,"20 particularly where the release included boilerplate lan-guage which seemingly released "the entire world from any and allclaims."21 In Pereira v. Tellier,22 the supreme court ruled thatwhere settling parties signed a supposed general release, the doc-ument only released specific parties, if the intent was not to re-lease unnamed third parties.23ANALysiS AND HOLDINGThe supreme court reviewed the lower court's order under a denovo standard of review, applying the same criteria as the courtbelow,24 stating that "summary judgment is appropriate when therecord, viewed in the light most favorable to the [opposing party]shows... no genuine issue of material fact and... the [movant] isentitled to judgment as a matter of law.25The Marr Scaffolding court followed the line of analysisthrough Pardey and Pereira, finding that the superior court motion16. Id.17. 518 A.2d 1349, 1355 (R.I. 1986).18. Marr Scaffolding, 682 A-2d at 457 (quoting Pardey, 518 A.2d at 1355).19. Id.20. Id. (quoting McInnis v. Harley-Davidson Motor Co., 625 F. Supp. 943, 952(D.R.I. 1986)).21. Id. at 457-58 (citing Pardey, 518 A.2d at 1355).22. 583 A-2d 523 (R.I. 1990).23. Marr Scaffolding, 682 A-2d at 458 (citing Pereira, 583 A.2d at 524).24. Id. at 457 (citing 6 James Wm. Moore et al., Moore's Federal PracticeU 56.27(1), at 56-852 (2d ed. 1993)) (citations omitted).25. Id. (citing DiQuinzio v. Panciera Lease Co., 641 A-2d 50, 53-54 (R.I. 1994)).SURVEY SECTIONjudge should have examined the parties' affidavits, and possiblyheld an evidentiary hearing to determine the "true intentions ofthe parties to the original settlement."26 The court noted that therelease identified the releasees by name, excluding CementHeads.27 The parties' affidavits showed that the omnibus lan-guage of the release was not intended to release Cement Heads'spotential liability to Marr. 28The court further rejected Cement Heads's argument that"parties to an unambiguous written agreement" such as this re-lease cannot vary its terms through extrinsic evidence. 29 First, thecourt found parol evidence admissible in situations where partieson both sides of the contract are mistaken about a material aspectof the contract, which therefore does not represent "their priorcompleted understanding."30 Second, since Cement Heads was astranger to the settlement agreement, it could not prevent the ad-mission of parol evidence in the court's effort to interpret the con-tract.3 ' Third, while Cement Heads contended that the releasewas unambiguous on its face, the court found several ambiguitiesin the instrument.32 Rather than a global application, as CementHeads argued, the court found that the language defining the"releasee" might simply refer back to the named releasees identi-fied earlier in the same sentence. 33 The court also found that thedefendants' denial of liability in the release "creates an ambiguityin regard to exactly who is being released," and if Marr was refer-ring to other than the named releasees, the document "purports tospeak for the world."34 Furthermore, the release was executed inexchange for consideration by the identified parties only, sug-gesting that Marr did not intend to release parties who "providedno consideration for the release."35 Finally, the court noted that ifevery person in the world was to be released, Marr would have re-leased not only all current, but also all future claims against any-26. Id. at 458.27. Id.28. Id. at 458-59.29. Id. at 458.30. Id. at 458-59.31. Id. at 459 (citing Inman v. Marcus, 43 A-2d 320, 322 (&I. 1945)).32. I&33. Id.34. Id.35. Id. at 460.1997] 433434 ROGER WILLIAMS UNIVERSITY LAW REVIEW [Vol. 2:430one for anything.36 The court granted Marr's petition forcertiorari, quashed the order granting summary judgment in favorof Cement Heads, and remanded the case to the superior court fordecision in accord with the "intent rule."37In dictum, the supreme court suggested that it might take adifferent tack if faced with the situation where parties to a settle-ment did not agree that the omnibus release language was notaimed at reaching an unnamed third party defendant.38 Reservingjudgment on that issue, the court hinted that in such a situation"we may be more inclined to give 'significant deference to the[broad] terms of a general release.' 3 9 Unlike this case, a thirdparty defendant in that situation is likely to be construed as beingincluded in the omnibus language. 40 In addition, the court indi-cated that it would defer to the general language of the releasewhere a party to the settlement: 1) "paid consideration for the re-lease" and claimed that the omnibus language was intentional andbargained for, in order to avert future claims from unnamed thirdparties, or 2) argued that the language was "otherwise of specificbenefit to one of the settling parties."41CONCLUSIONWith its decision in Marr Scaffolding, the Rhode IslandSupreme Court has cleared the path for future interpretation ofgeneral release language which purportedly releases not only theparties to the settlement, but also unnamed third parties. The "in-tent rule" requires that extrinsic evidence be admitted to show thatthe parties to the original settlement did not intend to release un-named third parties. Furthermore, a general release which pur-ports to release the world from claims by the releasee will not bar36. Id. The court noted that if taken literally, Marr would be committing'business suicide," since even Marr's customers could claim immunity from meet-ing their obligations to Marr. Id37. Id.38. Id. at 458.39. Id. (citing Pardey v. Boulevard Billiard Club, 518 A.2d 1349, 1355 (R.I.1986)).40. Id41. Id.1997] SURVEY SECTION 435claims against an unnamed third party where parties to the origi-nal agreement did not so intend.Deborah M. Kupa

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1996 Survey of Rhode Island Law: Cases: Contract Law

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