Opinion
Jan. 28, 1975.
Editorial Note:
This case has been marked 'not for publication' by the court.
Robert W. Hansen, Warren B. Bosch, Denver, for plaintiffs-appellants.
Montgomery, Little, Young, Ogilvie, Campbell & McGrew, P.C., David C. Little, Denver, for defendants-appellees.
COYTE, Judge.
Denny's Restaurant, Inc., a California corporation (Denny's), carried fire and business interruption insurance with Employers Mutual Liability Insurance Company of Wisconsin (Employer). Denny's hired American Protection Industries, another California corporation, doing business as Firemaster, Inc., which merged into General Systems Industries, Inc., a Delaware corporation, Chemco, Inc., and Fred Forrester, to clean and maintain the cooking ventilating apparatus and inspect the fire protection systems located in Deny's premises on South Colorado Boulevard in Denver, Colorado. Shortly after defendants performed maintenance work on the apparatus, a fire occurred. Employers paid $30,036.53 to Denny's because of the fire loss under Employers' insurance policy which contained a $1,000 deductible provision. Denny's then filed suit against defendants alleging breach of contract and negligence and damages in the amount of $100,000. A default judgment was obtained against Chemco, Inc., and Fred Forrester who do not appeal from that judgment. The other defendants are referred to herein as defendants.
Defendants filed an amended answer which contained an affirmative defense of release. They alleged that they had filed a separate suit against Denny's in California to recover the value of goods sold and delivered and that subsequently all claims between the parties had been compromised, settled, and released. They attached a copy of the release and the amended answer.
Defendants moved for summary judgment. Affidavits were filed by both parties and after argument, the motion was granted. However, upon motion of Deny's for a new trial, the judgment was set aside and plaintiff was allowed to join Employers as an additional party plaintiff and to file an amended complaint. In the amended complaint, plaintiffs set forth the facts of the contract of insurance between Denny's and Employers, the subrogation assignment to Employers, and sought damages for $31,036.53. The court then reheard the motion for summary judgment and again granted defendants' motion for the reason that the release executed by Denny's released both its and Employers claim against defendants.
Plaintiffs appeal contending that the release did not apply to this civil action against defendant, was executed because of a mutual mistake, and that, in any event, since Denny's claim in the instant case had been subrogated to Employers prior to execution of the release, the release was ineffective. We disagree and affirm.
The release is entitled, 'GENERAL AND SPECIAL RELEASE'; it specifically released defendants from all claims arising out of facts alleged in the California case, and further states that: 'This release extends to all claims of every nature and kind whatsoever, known or unknown, suspected or unsuspected . . .' It was signed for 'Denny's Restaurants, Inc. By Robert L. Mercer, Vice President & General Counsel' subsequent to the fire and after this suit had been filed.
The effect of the execution of a general release is thoroughly discussed in Goff v. Boma Investment Co., 116 Colo. 359, 181 P.2d 459, wherein the court stated:
"The terms of the settlement with the defendants were understood by the plaintiffs and they had the advice of counsel. Even if the plaintiffs did not have in mind when the document was signed the wrongs of which they now complain, as the release was a general one the present action was included in it. . . . The settlement, therefore, was a final arrangement between the parties, and, if free from fraud, it was a bar to the plaintiffs' action.' We are of the opinion that the release barred plaintiff's action.'
There is no factual issue presented as to the existence of a mutual mistake. Denny's contends that the release was to cover only the California litigation, but this raises only the issue of a unilateral mistake and not a mutual mistake. Denny's cannot deny the effect of the release, particularly when it was signed by its vice president and general counsel.
Plaintiffs also contend that the release was of no effect since the claim of Denny's had been assigned by operation of law to Employers prior to the date of the release. The applicable rule is stated in 16 G. Couch, Cyclopedia of Insurance Law s 61:199 (2d ed. R. Anderson), as follows:
'Where the tortfeasor, acting in good faith and without knowledge or notice of the insurer's payment and subrogation rights, settled with and obtained a full or general release from the insured, such settlement and release constituted a defense to the insurer's action against the tortfeasor for reimbursement.' The record is clear that defendant had no notice of the subrogation rights of Employers prior to the execution of the release. Hence, the release executed by Denny's effectively barred Employers right to recover against defendants as well as its own. See American Automobile Insurance Co. v. Clark, 122 Kan. 445, 252 P. 215.
Judgment affirmed.
SMITH and RULAND, JJ., concur.