New Maryland Appellate Opinion on Releases

The Maryland Court of Special Appeals looked at the scope of settlement releases in Harvey v. City Homes, Inc last week.  The case has some important reminders for Maryland plaintiffs’ attorneys that the case is not over after a settlement or verdict because the language of the release may be critical if the victim has future potential claims. 

Facts of Harvey

Harvey filed a lead paint lawsuit against his former landlord,  City Homes. Harvey’s lawsuit against City Homes was based on lead paint exposure in his early teens when he lived at 2027 Christian St. After getting sued, City Homes filed a 3rd party complaint against one of Harvey’s previous landlords, Everton Realty (“Everton”).

In the 3rd party complaint, City Homes claimed that Harvey’s injuries occurred earlier when he was a tenant on Everton’s property. In fact, Harvey had previously sued Everton for lead paint injuries 15 years earlier. Harvey’s old lawsuit against Everton was settled, and Harvey signed a release of claims as part of the settlement.

In response to the 3rd party suit by City Homes, Everton dug out the 15-year-old release Harvey signed in the prior case. Both Everton and City Homes moved to dismiss, arguing that Harvey’s current claims were barred by the release he signed in the prior case. The Circuit Court for Baltimore City agreed with them and dismissed Harvey’s lead paint case based on the prior release. Harvey appealed and asked the Court of Special Appeals to answer a very straightforward question: were Harvey’s new claims involving a new landlord and a different property really barred by a 15-year-old release he gave his old landlord?

Argument on Appeal

Harvey’s argument on appeal was pretty simple. The release he executed in 1999 should only bar claims against the old landlord (Everton) related to lead paint at his old rental house (Catherine St). In response, City Homes asserted that the 1999 release effectively barred Harvey from ever bringing lead paint claims against anyone relating to any property. In effect, City Homes claimed that Harvey could sue no one for lead paint injuries ever again. The relevant language of the 1999 release read as follows:

[Plaintiffs] completely and forever release, acquit and discharge Everton . . . including their agents, servants and/or employees, past or present, principals, heirs, executors, administrators, predecessors, successors, privies, insurers, officers, directors, shareholders, partners, employees, and all other person, firms, partnerships, corporations and associations which are or might be claimed to be liable to them (hereinafter referred to as “the Released Parties”) from any and all claims and demands of whatever nature, actions and causes of action, damages, punitive damages, costs, loss of service, expenses, attorneys’ fees, costs of litigation, humiliation, embarrassment, mental anguish, injury to reputation, money benefits and compensation on account of or in any way growing out of personal injuries and other damages having already resulted or to result at any time in the future, whether or not they are in the contemplation of the parties at the present time and whether or not they arise following the execution of this Release, as the result of and by reason of the allegations contained in the Complaint filed by the Plaintiffs.

In deciding this question, the Court of Special Appeals relied entirely on its prior decision in Rakley v. Minnesota Mining & Mfg. Co., 63 Md. App. 515 (1985). In reliance on Ralkey, the Court explained that when claims against different parties all arise out of one injury, a broadly worded release will bar future claims against all joint tortfeasors based on that single injury.

What Does Rakley Tell Us?

Rakely is one of the most cited Maryland cases on settlement releases.  In Ralkey, the Maryland Court of Special Appeals held that a general release “to all mankind”  bars further suits against other entities involved in the occurrence, which produced the settlement with one participant that led to the release. The court noted that the release language used in that case did not distinguish between the suits against the doctor and the manufacturer, as only one incident took place and only one cause of action arose.

Holding in Harvey

The court held that Harvey’s claims against City Homes and Everton all arise from one single “indivisible injury.” Considering this, the court determined that the general language of the 1999 release barred all lead paint claims against other parties, such as City Homes. The Court affirmed the Circuit Court’s dismissal.

Essentially, the court applied ordinary contract law principles to interpret the release and relied on Ralkey to determine that a general release to all mankind bars further suits against other entities involved in the occurrence that produced the settlement with one participant that led to the release.

Take-Home Message

This is an unreported opinion, so you cannot cite it, not that any plaintiffs’ attorney would, given the result.  But there are some essential takeaways from this opinion. The critical lesson for the plaintiff’s attorneys from the Harvey v. City Homes decision is somewhat apparent. You must narrowly and thoughtfully construct the language when drafting settlement agreements or release forms.

If you just use an old boilerplate release form, you might inadvertently end up giving up your client’s right to bring any future claims against anyone for his injury. In fact, at the end of the opinion in Harvey, the Court noted that the claims against City Homes would not have been barred if the 1999 release had explicitly been limited to lead paint exposure “at 40 South Catherine St.” So just by including this specific reference to the rental property in the release language, the outcome of the case could have been entirely different. So next time your writing or reviewing a release, make sure the language is very specific and as limited in scope as possible.

You also want to remember that a release is just another contract under Maryland law is just another contract.  It is governed by ordinary contract principles. The construction of a release is based on the parties’ intent and the instrument’s object and purpose, and that intent controls and limits its operation.

More 2018 Maryland Appellate Opinions

• Lamalfa v. Hearn: getting in medical records at trial
• Duckett-Murray v. Encompass Ins. Co. of Am., Encompass: Allstate/Encompass’ effort to get over on its insured fails
• Davis v. Frostburg Facility Operations:  what is malpractice under Maryland law and why it matters so much when filing a claim