Rebecca Woody v. A.W. Chesterton Company

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

December 11, 2007 Session

REBECCA WOODY v. A.W. CHESTERTON COMPANY ET AL.

Appeal from the Circuit Court for Hamilton County

No. 06CI520 Jackie Schulten, Judge

No. M2007-01210-COA-R9-CV - Filed March 13, 2008

An insulator and his wife sued multiple corporate defendants for damages related to his development

of mesothelioma from exposure to asbestos. Most of the defendants filed motions for summary

judgment based upon a release agreement signed by the plaintiffs in 1980 in settlement of another

lawsuit concerning asbestos exposure. The trial court denied the motions for summary judgment.

We have concluded that, except as to any claims arising from post-release asbestos exposure, the

trial court erred in denying the motions for summary judgment.

Tenn. R. App. P. 9 Interlocutory Appeal; Judgment of the Circuit Court Affirmed in Part,

Reversed in Part

ANDY D. BENNETT, J., delivered the opinion of the court, in which HERSCHEL P. FRANKS, P.J., and

JON KERRY BLACKWOOD , SP.J., joined.

Dwight E. Tarwater, Thomas A. Bickers, John W. Elder, and Joshua R. Walker, Knoxville,

Tennessee, for the appellants, Bayer CropScience, Inc., Certain Teed Corporation, General Electric

Company, Georgia-Pacific LLC, Industrial Holdings Corporation, and Union Carbide Corporation.

Michael J. King and M. Denise Moretz, Knoxville, Tennessee, for the appellants, National Service

Industries, Inc., Mobil Corporation, and CBS Corporation.

Jimmy F. Rodgers, Jr., Chattanooga, Tennessee; John E. “Rett” Guerry, III, and Robert J. Klug, Sr.,

Mt. Pleasant, South Carolina, for the appellee, Rebecca Woody.

OPINION

Wayne Woody, a member of the Asbestos and Insulators Workers Union, and his wife,

Rebecca Woody, filed suit in federal district court in June 1979 against 25 corporations that

allegedly “caused asbestos and asbestos insulation materials to be placed in the stream of interstate

commerce.”1 Mr. Woody had been diagnosed with asbestosis, a non-malignant, asbestos-related

lung disease. He and his wife sought damages for his asbestos-related illness, which they alleged

to be caused by occupational exposure to the defendants’ asbestos and insulation materials. They

were represented by counsel and settled the lawsuit in September 1980 for a lump sum payment of

$35,000.00. As part of the settlement, Mr. Woody and his wife signed a Complete Release of All

Claims (“release”), the effect of which is at issue in the present case.

In September 2006, Mr. Woody was diagnosed with pleural mesothelioma, a malignant,

asbestos-related lung disease. The present lawsuit was filed by Mr. Woody and his wife in

November 2006 shortly before his death as a result of mesothelioma.2 The complaint named 37

defendant corporations; only one of the corporations, CertainTeed Corporation, was a party to the

1979 lawsuit. According to the complaint, Mr. Woody was exposed, in both occupational and non-

occupational settings, to “asbestos related materials and other asbestos containing products mined,

or manufactured, processed, imported, converted, compounded, sold, distributed or installed” by the

defendants. As a result of these exposures, the complaint alleges, Mr. Woody developed

mesothelioma. Although the complaint does not specify exposure dates, Mr. Woody continued to

work as an insulator after signing the 1980 release, and the plaintiff’s claims are broad enough to

include post-release exposures. Causes of action for negligence, strict liability, breach of warranty,

civil conspiracy, and loss of consortium are asserted.

After filing answers pleading release as a defense, 27 of the defendants3 either filed or joined

in motions for summary judgment, asserting that the 1980 release barred all of the Woodys’ claims.

On April 12, 2007, the trial court entered an order ruling on 21 motions for summary judgment, one

of which was granted on the basis that the named company had “never been in the asbestos business,

has never employed [Mr. Woody], and in no respect has had any contact with any of the issues

involved in the case.” The court denied the other 20 motions for summary judgment based on its

conclusion that “the prior release does not bar the Plaintiff’s later claim based upon subsequently

diagnosed mesothelioma.” In agreed orders entered on May 7, 2007, the same ruling was applied

to the other summary judgment motions.

We granted the defendants’ application for interlocutory appeal pursuant to Tenn. R. App.

P. 9.

1

Wayne S. Woody v. Johns-Manville Sales Corp., No. CIV-1-79-158 (E.D. Tenn.), dismissed Sept. 30, 1980.

2

Ms. Woody filed an amended complaint after her husband’s death substituting herself as plaintiff, individually

and as the surviving spouse of Wayne Woody.

3

The defendants involved in this appeal are A.W. Chesterton Company; Advance Auto Parts, Inc.; Bayer

CropScience, Inc.; Borg Warner Morse TEC, Inc.; Breeding Insulation Company, Inc.; Breeding Insulation Company,

Chattanooga, Inc.; CBS Corporation; CertainTeed Corporation; Crane Company; Ford Motor Company; Foster Wheeler

Corporation; General Electric Company; General M otors Corporation; Georgia-Pacific, LLC; Goodyear Tire & Rubber

Company; Goulds Pumps; Industrial Holdings Corporation; Ingersoll-Rand Corporation; Maremont Exhaust Products,

Inc.; Mobil Corporation; National Service Industries, Inc.; Pharmacia Corporation f/k/a Monsanto Company; Pneumo

Abex LLC, as successor in interest to Alex Corporation; Riley Power, Inc.; and Union Carbide Corporation.

-2-

ANALYSIS

In this interlocutory appeal, we are asked to determine whether the trial court erred in

denying the defendants’ motions for summary judgment.

Summary judgments do not enjoy a presumption of correctness on appeal. BellSouth Adver.

& Pub. Co. v. Johnson, 100 S.W.3d 202, 205 (Tenn. 2003). This court must make a fresh

determination that the requirements of Tenn. R. Civ. P. 56 have been satisfied. Hunter v. Brown,

955 S.W.2d 49, 50 (Tenn. 1997). We consider the evidence in the light most favorable to the

non-moving party and resolve all inferences in that party's favor. Godfrey v. Ruiz, 90 S.W.3d 692,

695 (Tenn. 2002). Pursuant to Tenn. R. Civ. P. 56.04, summary judgment shall be granted “if the

pleadings, depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue of any material fact and that the moving party

is entitled to judgment as a matter of law.” In the present case, the relevant facts are not in dispute;

therefore, we must determine the legal effect of the 1980 release on the undisputed facts.

The following provisions of the 1980 release are essential to determining its effect on the

Woodys’ claims in this case:

For the sole and only consideration of Thirty-Five Thousand Dollars

($35,000.00), to the undersigned in hand paid, receipt of which is hereby

acknowledged, we hereby release and discharge [names of defendants in federal

district court case], their agents, servants, successors and predecessors and any

corporation acquired by, associated with or affiliated with each as parent or

subsidiary, and further release all of the respective officers, directors, agents, servants

and employees of said companies, and further release any other persons,

corporations, or entities, even though not named herein, involved in the distribution,

sale, production, manufacturing, mining, or processing of any insulation product,

from any and all claims, actions, causes of action, demands, rights, damages, costs,

loss of services or consortium, expenses and compensation whatsoever, which the

undersigned now have or which may hereafter accrue on account of or in any way

growing out of all known and unknown, foreseen and unforeseen,bodily and personal

injuries and property damage, and the consequences thereof, resulting or to result

from exposure to any insulation material, any asbestos-containing material or any

alleged dust-producing material on the part of the undersigned Wayne S. Woody,

including all claims for loss of consortium by the undersigned Rebecca Woody, or

any other claim she might have arising out of her husband’s alleged personal injuries.

....

The undersigned hereby declare and represent that the injuries sustained are

or may be permanent or progressive and that recovery therefrom is uncertain and

indefinite, and in making this Release it is understood and agreed that the

undersigned rely wholly upon their judgment, belief, and knowledge of the nature,

extent, effect, and duration of said injuries and liability therefor and is made without

-3-

reliance upon any statement or representation of the party or parties hereby released

or their representatives or by any physician or surgeon by them employed. This

Release is intended to cover any and all injuries of any nature, including the possible

sequelae thereof, including but not limited to asbestosis, cor pulmonale, lung cancer,

and other form[s] of cancer, or mesothelioma.

It is understood and agreed that this settlement is the compromise of a

doubtful and disputed claim and that liability on the part of the party or parties

hereby released, and that said releasees deny liability therefor.

(emphasis added).

(1)

Ms. Woody argues that the 1980 release cannot properly shield from liability defendants not

named in the release due to the absence of consideration from those defendants.

A release is a contract; therefore, the rules of construction applicable to contracts apply in

construing the terms of a release. Richland Country Club, Inc. v. CRC Equities, Inc., RCC, 832

S.W.2d 554, 557 (Tenn. Ct. App. 1991). By its terms, the release purports to release from liability

the named corporations and their agents as well as “any other persons, corporations, or entities, even

though not named herein, involved in the distribution, sale, production, manufacturing, mining, or

processing of any insulation product, asbestos-containing product, or alleged dust-producing

product.” There appears to be no dispute between the parties in the present case that the appellants

fit within this category of released entities. The question is whether these defendants can properly

benefit from the release when they were not named in or a party to the release and gave no

consideration to the Moodys for release from liability.

In interpreting this release provision, it is important to note that the release was executed

prior to the Tennessee Supreme Court’s decision in McIntyre v. Balentine, 833 S.W.2d 52 (Tenn.

1992), in which the court adopted modified comparative fault. Under the principles of contributory

negligence and joint and several liability, an injured party could seek full compensation from one

among multiple tortfeasors, and that tortfeasor could then seek contribution from other tortfeasors.4

The Uniform Contribution Among Tort-feasors Act, codified at Tenn. Code Ann. § 29-11-101 et

seq., provides that a release given to one of two or more tortfeasors “does not discharge any of the

other tort-feasors from liability for the injury or wrongful death unless its terms so provide.” Tenn.

Code Ann. § 29-11-105(a)(1) (emphasis added). Furthermore, “A tort-feasor who enters into a

settlement with a claimant is not entitled to recover contribution from another tort-feasor whose

liability for the injury or wrongful death is not extinguished by the settlement.” Tenn. Code Ann.

§ 29-11-102(d). Under this system, a settling defendant could, in essence, buy its right to seek

4

By contrast, under modified com parative negligence, a defendant is “liable only for the percentage of a

plaintiff’s damages occasioned by that defendant’s negligence.” McIntyre, 833 S.W.2d at 58.

-4-

contribution from other tortfeasors by including those other tortfeasors in the release. See Evans v.

Tillett Bros. Const. Co., Inc., 545 S.W.2d 8, 11-12 (Tenn. Ct. App. 1976); Ballinger v. Owens-

Illinois, Inc., 829 F.2d 38, No. 86-5755, 1987 WL 44451, at *1 (6th Cir. Sept. 14, 1987) (no petition

for cert. filed).

The 1980 release was supported by consideration in that the settling defendants paid

$35,000.00 to the plaintiffs and the defendants received a release of their liability as well as the

liability of other possible tortfeasors, against whom the defendants now had the right to seek

contribution. There is no requirement that each released tortfeasor provide its own consideration,

just that the promise is supported by consideration. Burchell Ins. Svcs., Inc. v. Western Sizzlin

Steakhouse of Dyersburg, No. E2003-01001-COA-R3-CV, 2004 WL 1459398, at *2 (Tenn. Ct. App.

June 29, 2004) (no Tenn. R. App. P. 11 application filed); see also Morison v. General Motors

Corp., 428 F.2d 952, 953-54 (5th Cir. 1970).

In Ballinger, a case interpreting Tennessee law, the releases from liability for asbestos

exposure contained language covering the named defendants as well as all other persons or

corporations who might be liable. Ballinger, 1987 WL at *1. The court upheld the application of

the releases to other alleged tortfeasors. Id.; see also Morison, 428 F.2d at 952; Peters v. Butler, 251

A.2d 600, 602 (Md. 1969); Hasselrode v. Gnagey, 172 A.2d 764, 765 (Pa. 1961).

We therefore find that, in accordance with its plain language, the release in this case properly

covers the appellants.

(2)

Ms. Woody further argues that Tennessee law does not allow the release of

“unaccrued/potential/future/prospective causes of action.”

As previously stated, a release is a contract and is subject to the rules of construction

applicable to contracts. Richland, 832 S.W.2d at 557. Any “[a]mbiguous language in a contract is

construed against the drafter.” Jackson v. Miller, 776 S.W.2d 115, 117 (Tenn. Ct. App. 1989). The

following principles apply when interpreting a release:

Generally speaking, the scope and extent of [a] release depends on the intent of the

parties as expressed in the instrument. A general release covers all claims between

the parties which are in existence and within their contemplation; a release confined

to particular matters or causes operates to release only such claims as fairly come

within the terms of the release.

Cross v. Earls, 517 S.W.2d 751, 752 (Tenn. 1974); see also Sherman v. Am. Water Heater Co., Inc.,

50 S.W.3d 455, 457 (Tenn. Ct. App. 2001). The following principles apply in determining the intent

of the parties:

“In interpreting a release to determine whether a particular claim has been

discharged, the primary rule of construction is that the intention of the parties shall

-5-

govern and this intention is to be determined with a consideration of what was within

the contemplation of the parties when the release was executed, which in turn is to

be resolved in light of all of the surrounding facts and circumstances under which the

parties acted.”

Evans, 545 S.W.2d at 11 (quoting 66 AM .JUR.2D Release § 30); see also Jackson, 776 S.W.2d at

118.

In support of her argument that Tennessee law does not allow the release of future claims,

Ms. Woody cites Poster v. Andrews, 189 S.W.2d 580 (Tenn. 1943), and Cocke v. Stuart, 7 Tenn.

(Peck) 137 (1823). Both cases involved causes of action that did not exist at the time when the

plaintiffs signed the releases, and the releases did not expressly cover such claims. While some

language used by the court in Cocke and quoted by the court in Poster suggests that a prospective

claim cannot be released, subsequent cases have clarified the issue by indicating that claims arising

after the signing of a release may be released if the language of the release so provides. In Sherman,

the issue was whether a release signed by an employee at the time of her termination covered an

indemnification claim. Sherman, 50 S.W.3d at 456. Under the terms of the release, the employee

agreed not to file suit against the company “based on any matter occurring from the beginning of

time to the date this Agreement is signed.” Id. at 458. Interpreting the wording of the release to

impose temporal restrictions, the court ruled that the indemnification claim was not barred by the

release. The court made the following statement while discussing a similar Colorado case:

Colorado law, like Tennessee law, provides that a release ordinarily operates on

matters expressed therein which are already in existence at the time of the giving of

the release, and demands subsequently maturing are not as a rule discharged by the

release unless expressly embraced therein or falling within the fair import of the

terms employed.

Id. at 460 (emphasis added); see also Tierney & Black, Inc. v. Siemens Power Corp., 79 Fed. Appx.

740, 742 (6th Cir. 2003).

We return again to the proposition that it is the language of the release that determines

whether it covers injuries that arise prospectively. This is true even with respect to injuries resulting

from acts or omissions that had not occurred at the time of the release, if the release itself expressly

so provides. It is well-settled that “public policy of Tennessee favors freedom to contract against

liability for negligence.” Dixon v. Manier, 545 S.W.2d 948, 950 (Tenn. Ct. App. 1976) (upholding

a release from liability for negligence signed by a customer prior to application of a hair straightener

at a cosmetology school); see also Empress Health and Beauty Spa, Inc. v. Turner, 503 S.W.2d 188,

190 (Tenn. 1973) (upholding exculpatory clause in release used by health club). The courts have

invalidated some exculpatory contracts based upon public policy considerations. See Maggart v.

Almany Realtors, Inc., No. M2005-02532-COA-R3-CV, 2007 WL 2198204 at * 6 (Tenn. Ct. App.

July 26, 2007) (perm. app. granted Nov. 13, 2007). Thus, in determining the prospective application

of a particular release, a court must distinguish between two types of “future” claims: (a) claims for

injuries discovered post-release that resulted from pre-release occurrences (in this case, exposure to

asbestos); and (b) claims based upon injuries that resulted from post-release occurrences. A release

-6-

covering the second category of claims is an exculpatory provision, contracting against liability for

future negligence. See Empress Health, 503 S.W.2d at 190-191.

Applying these principles to the case at bar, we have concluded that the 1980 release bars any

claims based upon injuries caused by Mr. Woody’s pre-release exposure to asbestos, including the

development of mesothelioma. The language of the release expressly states that it releases all claims

“which the undersigned now have or which may hereafter accrue on account of or in any way

growing out of all known and unknown, foreseen and unforeseen” injuries “resulting or to result

from” exposure to asbestos by Mr. Woody. The release further provides that it is intended to “cover

any and all injuries of any nature, including the possible sequelae thereof, including but not limited

to asbestosis, cor pulmonale, lung cancer, and other form[s] of cancer, or mesothelioma.” Thus, the

language of the release provides that it covers any injuries, including mesothelioma, that might later

develop as a result of Mr. Woody’s prior exposure to asbestos. This interpretation is consistent with

other cases interpreting similar asbestos releases. See Sheppard v. Acands, Inc., Nos.

CV950323560S, CV990368053S, 2005 WL 1433875 (Conn. Super. Ct. May 26, 2005); Spadaro

v. Abex Corp., 1993 WL 603378 (Del. Super. Ct. Sept. 9, 1993); Fisher v. Owens-Corning

Fiberglass Corp., 868 F.2d 1175 (10th Cir. 1989).

After careful review of the release language and the circumstances surrounding its signing,

as part of the settlement of a pending lawsuit, we have concluded that the release does not cover

claims as to injuries arising out of post-release asbestos exposure. The language of the release does

not expressly address liability for asbestos exposure occurring after the signing of the release, and

there is no indication that such injuries were within the contemplation of the parties at the time of

the release. We need not decide, therefore, whether an exculpatory provision in an asbestos release

such as that signed by Ms. Woody would violate public policy.

Ms. Woody argues that the Tennessee Supreme Court’s decision in Potts v. Celotex Corp.,

796 S.W.2d 678 (Tenn. 1990), necessitates a conclusion that mesothelioma is not covered by the

release. We must disagree. In Potts, the court concluded that asbestosis and mesothelioma are two

distinct diseases in the context of determining when a cause of action accrues for statute of

limitations purposes. Id. at 684-85. The two-disease analysis has no bearing on the scope of a

release, which is determined by the intent of the parties as expressed in the release. The following

analysis from a similar case, Sheppard v. Acands, Inc., likewise applies here:

The two disease rule, however, is a rule primarily related to the statute of limitations.

It does, in the context of asbestos litigation, recognize that the diagnosis of a non-

malignant asbestos related disease begins the running of the statute only for that

disease. The later diagnosis of a malignant related condition creates a new cause of

action with the commencement of the statute period being when the later diagnosis

was made. This rule does not affect the question of the validity of the release at

issue. The parties here, as they had a right to do, reached an agreement which

included a release of the defendant General Electric of any and all claims, present and

future, of and for all potential liabilities resulting or to result from exposure to an

asbestos-containing material. The plaintiffs’ exposure to asbestos had occurred and

was complete at the time the release is as [sic] executed and it was the manifestation

-7-

of the disease which postdated the releases. The language of the release foresaw the

possibility that other diseases might manifest themselves in the future and provided

for and included such an event, should it occur.

Sheppard, 2005 WL at *3.

In conclusion, the 1980 release covers all claims arising out of Mr. Woody’s exposure to

asbestos prior to the signing of the release; this includes conditions, including mesothelioma,

discovered after the signing of the release that resulted from pre-release asbestos exposure. The

1980 release does not, however, bar any claims related to asbestos exposure that occurred after the

signing of the release.

Costs of appeal are assessed against the appellants, for which execution may issue if

necessary.

___________________________________

ANDY D. BENNETT, JUDGE

-8-