RELEASES: PULLING THE RIPCORD WITHOUT A PARACHUTE?

How does an association obtain protection against future claims and suits? How does an Association obtain protection for officers, directors, members, managers and other agents? Frequently associations recognize that an avenue of proposed conduct is somewhat risky, or seek to settle a dispute to avoid the risk of a lawsuit. As a practical matter, very few things occur without risk; however, many associations seek to avoid or limit risk through the use of a written release.

A release is in many ways a contract. First, there are multiple parties. Second, there must be consideration, something of value exchanged between the parties. Third, a release should be in writing. As the use of releases proliferates and there is a greater opportunity for disputes over releases, the courts are grappling with how to interpret releases.

Just as with other contracts, the meaning of the chosen words can lead to disputes. What may have been seen as specific and meaningful when written may not be after time. The recent decision of Amerada Hess Corp. v. Federated Department Stores, Inc., 24 Fla. L. Weekly D730 (Fla. 4^th DCA March 14, 2001) arose after a collision between a car driven by Carmen Bernard and Amerada Hess’ tractor trailer. Hess settled its claims against Bernard and entered into a release with her. Hess then sued Bernard’s employer, Federated Department Stores. The trial court held that the release barred a claim against Federated.

On appeal, the District Court of Appeal ruled that there was a question of whether the release intended to bar claims against only Bernard or barred claims against everyone including her employer, Federated. The appellate court focused on the fact that the release was "preprinted." The form contained "boilerplate" language with blanks for writing in the parties names.

The Court held that the use of a preprinted form creates a question of latent ambiguity. A latent ambiguity is confusion inherent in the form of the document. The confusion in this case was whether the release was intended to bar claims against companies not specifically named in the release or just Ms. Bernard.

It appears that the courts are struggling with a rule of reason as how to interpret releases. An example, is the decision in Vermut v. General Motors Corp., 733 So. 2d 126, 26 Fla. L. Weekly D12 (Fla. 4^th DCA December 20, 2000). In Vermut a release of claims following a contract dispute was enforceable. The release was customized, lengthy, clear and named all relevant parties.

The decisions only raise uncertainty as to the viability of releases. In reviewing the decision, it may appear that a release is safest if hand printed with every potential detail and party named. Of course that is somewhat unrealistic, especially in this day of word processing and interconnected relationships when not every potential employer or related party to an incident is known. While awaiting further court decisions, it certainly would be advisable to avoid utilizing preprinted forms with blanks, and to have releases initialed at strategic locations. If this option occurs, then please make certain that individuals initial all blanks that are necessary.

CONSTRUCTION: WHEN IS COMPLETION, COMPLETION?

Construction and repair contracts frequently distinguish between "substantial completion" and "completion". The significance of the two terms generally revolves around when payments must be made and when warranty periods begin. Because the terminology impacts money and work, there are frequently disputes regarding the terms.

The distinction between the terms was considered in CDI Contractors, LLC v. Albright Electrical Contractors, Inc., 26 Fla. L. Weekly D626 (Fla. 5^th DCA March 2, 2001). CDI contracted with Albright to perform electrical work within a shopping mall. CDI asserted that while the written contract did not have a completion date, the parties orally agreed upon a March 4, 1998 completion date. A temporary certificate of occupancy was issued on April 9, 1998; however, the work was not absolutely completed on that date.