Brief Fact Summary. The Court of Appeals (Colorado), in a personal injuries action, reversed a grant of summary judgment in favor of Defendants based on a release executed by the guardian of Plaintiff, who was struck on the head by a vending machine that fell from a truck when she was a minor. Defendants, truck driver and his employer, appealed.
Synopsis of Rule of Law. Rescission of a settlement of a personal injury claim is available for mistakes relating to the nature of known injuries but not for mistakes as to the future course and effects of those injuries.
We believe the better rule to be that where the parties contract for a release of all claims for known injuries, the release is a bar to recovery for unknown consequences of known injuries, but is not a bar to recovery for unknown injuries not within the contemplation of the parties at the time of contracting for such release; further, that even though a release expressly covers unknown injuries, it is not a bar to an action if it can be shown that such unknown injuries were in existence and were not within the contemplation of the parties when the settlement was agreed upon, but that, if the parties did in fact intentionally agree upon a settlement for unknown injuries, such release will be binding.View Full Point of Law
Issue. May a mistake on the part of a minor plaintiff’s guardian in connection with a settlement and an attendant release negate such settlement agreements and permit a successful on to set aside a judgment?
Held. Yes. The court affirmed the judgment of the appellate court, holding that summary judgment was precluded because there was a genuine factual issue as to whether plaintiff’s guardian was mistaken about the nature of her injuries when he executed a release.
Dissent. While the majority, in weighing policy considerations favoring finality of settlements agreements against the effects errors may have on the outcome of such settlements, chose to mitigate the effects of the latter scenario, the dissent sees a greater danger in permitting a plaintiff to relitigate what it views as settled issues: “If an injured party can set aside a release contract simply because he was not specifically aware of a consequence of his injury which subsequently developed, any incentive for a defendant to enter into such a release transaction would be nullified. The only safe release from a defendant’s viewpoint would be one listing every possible consequence of the known injury. As a practical matter, such an all-inclusive list is an impossibility.” The dissent points out, “Having chosen to settle the case for an agreed amount which in this case included a substantial percentage for possible future damages, the plaintiff must be held to that election.” Thus, in
the interests of closure and judicial efficiency, the dissent would have affirmed the lower court’s decision.
Discussion. The court in Gleason begins by addressing the preliminary issue of when summary judgment is proper, i.e, where there exists a material issue of fact that would be correctly submitted to a jury, cautioning, “Summary judgment is a drastic remedy and should be granted only where the evidential and legal prerequisites are clearly established.” More central, however, is the question of what effect, if any, a factual mistake on the part of a party should have on a settlement reached in a civil action. The court points out, “Rescission of a settlement of a personal injury claim is available for mistakes relating to the nature of known injuries but not for mistakes as to the future course and effects of those injuries.” Thus, it is necessary for the court to define mistake generally, stating: “Mistake involves an erroneous state of mind about an external fact. It may stem from a tacit presupposition of an untrue fact or from ignorance of an existing fact. An inquiry into its exis
tence is essentially factual in character.” With specific regard to cases like the one at bar, the court notes, “Mistake involves an erroneous state of mind about an external fact. It may stem from a tacit presupposition of an untrue fact or from ignorance of an existing fact. An inquiry into its existence is essentially factual in character.” The court then drew a distinction between diagnosis and prognosis with respect to an injured plaintiff’s medical condition, the central inquiry being whether the plaintiff could possibly know the extent of the injury sustained: “If unknown injuries were not within the contemplation of the parties, the release will be set aside.” Concluding that the nature of the injury sustained by the plaintiff was unknown to her guardian at the time of settlement, there existed a triable issue of fact and thus summary judgment was inappropriate.