INDIANA COURT OF APPEALS
Questions of fact existed as to whether first release, covenant not to execute, and second release executed by plaintiff and first defendant operated to dismiss claims against a remaining defendant
On May 9, 2017, then sixteen-year-old John Bird and another minor, D.G., were working at Valley Care and were cleaning out a chicken coop. Inside the chicken coop, D.G., discovered a loaded rifle with which he shot Bird in the abdomen. Bird was taken to a local hospital and airlifted to another hospital with life threatening injuries.
Bird filed his complaint against D.G., D.G.’s parents, Valley Acre, and Valley Acre’s shareholder David Bagshaw, and premises owner Geneva Bagshaw. After the filing of the complaint, three documents were executed having a connection to the shooting incident: (1) a May 19, 2020 document entitled “Release of All Claims against Dennis and Angelina Gresham and Indemnity Agreement”, (2) a May 19, 2020 “Covenant not to Execute on any Judgment in Excess of Available Insurance Proceeds (with Bird and an authorized representative of State Farm Insurance as signatories), and (3) a December 11, 2020 “Release of all Claims against Dennis and Angelina Gresham and Indemnity Agreement (the December release). The language of the May Release, in relevant part, addressed “full settlement of all claims resulting from said accident.” The Covenant contemplated ongoing litigation, but Bird agreed not to execute upon any judgment obtained against D.G. The December Release deleted the “all claims” language and included the term: “Nothing herein does or is intended to release any claims against Valley Acre Farms, Inc., David Bagshaw, or Geneva Bagshaw.” Each of the releases stated that a $5,000.00 payment was the consideration for the release.
On December 17, 2020, Valley Acre filed a motion for summary judgment, contending that all defendants had been released from liability upon execution of the May release. Bird responded, contending that the “defunct July release was never fully executed.” The trial court granted the summary judgment motion of Valley Acre and declared the order final and appealable pursuant to Indiana Trial Rule 54(B). Bird appealed.
On appeal, Valley Acre argued that the May Release was a clear and unambiguous statement of intention to release all claims against all defendants, in exchange for consideration of $5,000.00. On the other hand, Valley Acre described the December Release as a failed contract, due to lack of consideration. Valley Acre argued to the trial court that the May Release is the only one of the three documents executed in connection with the shooting incident that is germane to the summary judgment decision. Valley Acre prevailed on that argument and the grant of summary judgment was based solely upon the May Release with its broad release language.
Bird argued that the May Release was rescinded and was now moot. He pointed to the multiplicity of documents and argued that the trial court should have determined party intent through a broader examination. More particularly, he argued that the contemporaneous writing rule permits consideration of the covenant, executed the same day as the May Release. If the parties to the May Release actually intended a broad release, the agreement not to execute a judgment obtained against D.G. would have been superfluous, as D.G. would have been released in the first instrument.
Bird argued that the trial court should have concluded that the December Release, as opposed to the May Release, was the valid contract, as it is supported by consideration and expresses the intent of the parties.
The essence of Bird’s argument is that a novation occurred. A novation is an act of making something new. The trial court considered the May Release as a standalone contract, the terms of which could not be varied because of lack of ambiguity. To the extent that the trial court considered whether the December Release may have extinguished the May Release, the trial court focused only upon whether the latter was not a valid contract due to lack of consideration. A novation requires a valid new contract. The trial court could not conclude that the December Release lacked consideration by reference to undisputed facts. The trial court simply accepted Valley Acre’s claim that consideration supported the May Release but not the December Release. Valley Acre pointed out that Bird did not designate evidence regarding tender or acceptance of remittance. But since Bird was the non-movant, Indiana law required Valley Acre to eliminate any genuine factual issues. The Court of Appeals could not say as a matter of law, without factual development, that the May Release was a release executed in exchange for proper consideration and that the December Release was not. Accordingly, summary judgment was improvidently granted.
