Releases: Be Careful What You Sign

Victims of automobile accidents are frequently expected to sign numerous documents in the days and months following the accident. Insurance companies often refuse to negotiate the terms of the documents. Before signing anything, accident victims need to read and to completely understand what they sign.

Recently, a Pennsylvania mother lost all of her claims against Ford Motor Company related to the death of her daughter. The daughter died when she was a passenger in a Ford Explorer that rolled over in a fairly minor traffic incident. Following her daughter’s death, the mother sued the driver of the vehicle and promptly settled the case. The mother also promptly settled the daughter’s insurance claims with the insurance company that provided the daughter’s automobile insurance. In settling with the negligent driver and the daughter’s insurance company, the mother signed standard “release” documents that released all claims in exchange for a money damages award.

The mother next turned to the litigation of claims against Ford Motor Company, alleging that the Ford Explorer was defectively designed because it was prone to rollovers. Ford successfully moved for dismissal of the case, relying on the releases that the mother signed when she settled with the driver and the daughter’s insurance company.

The releases that the mother had signed released all claims against the driver and the insurance company as well as “all other persons, firms or corporations.” The mother insisted that she never intended to release Ford when she signed the releases. Ford maintained that the releases were enforceable according to their plain terms, and that a release of all other persons, firms, or corporations barred any other lawsuits arising out of the accident.

Ford won a dismissal on appeal. The Pennsylvania appeals court noted that, while the intent of the parties who sign a release is important, the “primary source” of the parties’ intent is the language of the release itself. “Embodied in the ordinary meaning of the words of the document itself,” the intent of the parties cannot separately be determined from what either party later claims to have expected from the release. The appeals court noted that Pennsylvania law has long supported comprehensive releases and has for many years recognized that releases can release all liability, even as to individuals and entities who are not named and who did not contribute any money toward the settlement.

Consumers dealing directly with insurance agents rarely are successful in negotiating changes to the “standard” documents and releases that insurance agents produce for signature. Before signing any insurance documents or even endorsing an insurance check, you should consult with an attorney. You should understand all of the claims you have arising out of an accident before signing final settlement documents on any payments.

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