Facts
- Dawn Kessler was at a friend’s home using a pressure cooker manufactured by National Presto Industries, Inc. (“Presto”) when the pressure cooker exploded and caused serious burn injuries.
- Kessler met with a representative of the friend’s homeowner’s insurance company after the accident to discuss her injury claim.
- In exchange for $750, Kessler signed a written “Release of All Claims.”
- The release named the friend as a released party and also released “all other persons, corporations, firms, associations, or partnerships” from any and all claims arising out of Kessler’s injuries from the incident.
- Despite signing the release, Kessler later filed a products-liability suit against Presto, asserting that a defect in the pressure cooker caused her injuries.
- Presto moved for summary judgment, arguing that the release barred the suit and that Presto, though not named, could enforce the release as a third-party beneficiary.
- Kessler opposed summary judgment, contending that the $750 payment was so low compared to her injuries that the release should not be enforced and that she did not intend to release the manufacturer.
Issues
- Whether Kessler’s “Release of All Claims,” which released the homeowner and “all other persons [and] corporations” from claims arising from the accident, barred Kessler’s later products-liability claims against Presto.
- Whether the $750 paid for the release was so grossly inadequate, given Kessler’s injuries, that the release was unenforceable under Michigan’s “shock the conscience” standard.
Decision
- The court granted Presto’s motion for summary judgment.
- The court held that the release’s language extended beyond the named homeowner to “all other persons [and] corporations,” and the claims against Presto arose from the same accident covered by the release.
- The court treated Presto as an intended third-party beneficiary of the release who could invoke it as a defense, even though Presto was not specifically listed by name.
- The court rejected Kessler’s argument that the $750 consideration invalidated the release, concluding that the payment was not so grossly inadequate as to “shock the conscience.”
- The court also declined to set the release aside absent proof of recognized grounds such as fraud, duress, or mutual mistake, and it enforced the signed writing according to its terms.
Legal Principles
- Under Michigan law, courts generally will not invalidate a contract or release solely because the consideration was low; relief is available only when the consideration is so grossly inadequate that it “shocks the conscience.”
- A broadly worded release discharging a named party and “all other persons, corporations, firms, associations, or partnerships” can bar later claims against an unnamed defendant when the later claims arise from the same injury-producing event addressed by the release.
- A nonparty to a release may enforce it as a third-party beneficiary when the release’s terms show the contracting parties intended the release to benefit a defined group that includes the nonparty.
- Absent fraud, duress, or mutual mistake, a person who signs a written release is bound by its plain terms, even if the signer later asserts a different understanding of the release’s scope.
Conclusion
The court entered summary judgment for National Presto because Kessler’s $750 “Release of All Claims” discharged not only the homeowner but also other potential defendants, including corporations such as the manufacturer, and the court found no basis to invalidate the release where the consideration did not “shock the conscience” and there was no showing of fraud, duress, or mutual mistake.