Court refuses to interpret Release to immunize third-parties: no free ride for State Farm

Regina Randolph was struck by a car, landing in the center of a Pontiac Street.  While bystanders activated flashers and attempted to assist her, she was struck again by a drunk driver and killed.  Titan, the cheap insurer for the first driver, paid its liability limits of $20,000.00 in settlement to her family and required that they execute a release.  The family then sued the drunk who last struck Randolph and the bar where the drunk had been drinking, along with Randolph's own Uninsured Motorist insurer, State Farm.

State Farm and the bar persuaded the trial court to dismiss the family's claims against them, arguing that they had been released by the boiler-plate language in the earlier Titan release.  The Court of Appeals reversed.  Two judges distinguished the language and facts of this case from the Romska v. Opper decision, where a similar argument was upheld.  These judges ruled that this incident involved two separate "accidents" and therefore the broad release language in the Titan release did not apply to State Farm. 

In a brief but well-reasoned concurrence, Judge Wilder pointed out that by prior Supreme Court precedent, State Farm and the bar were not direct "third-party beneficiaries" intended to benefit from the language of the Titan release.  In Koenig v. South Haven, the Engler majority had held that the family of a young man who drowned on an ill-protected breakwall could not sue the City for failing to maintain the breakwall in accordance with its contract with the State, as potential injury victims were not "intended third-party beneficiaries."  Judge Wilder logically pointed out that if this law applied to deny injury victims' rights, it should also apply to potential defendants who claimed to be third-party beneficiaries to a contractual arrangement.

The case is Brown v. State Farm Automobile Insurance, et al.