Gossinger v. Association of Apartment Owners of the Regency
1992 Haw. LEXIS 81, 835 P.2d 627, 73 Haw. 412 (1992)
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Rule of Law:
A release for personal injuries cannot be rescinded based on a mistake regarding the nature or extent of an injury when the injured party initiated and urged the settlement, signed the release knowing they were not fully cured, and were aware that the injury might require future treatment, absent unfair claim settlement practices.
Facts:
- On the morning of June 8, 1988, Phyllis Gossinger slipped and fell on soapy water that had flooded the bathroom floor of the apartment she had rented from Carol Sutherland, a member of the Association of Apartment Owners of The Regency of Ala Wai (the Association).
- Immediately after the accident, Mrs. Gossinger drove herself to the Queen’s Medical Center Emergency Room where she was diagnosed with a back strain and advised that it "would take a long time to heal" and that she should have a follow-up examination.
- The next day, June 9, 1988, the Gossingers wrote to the Association demanding compensation for personal injury and property damage, explicitly stating they would "take legal action immediately" if not compensated.
- Three days later, on June 12, 1988, the Gossingers settled their claims for $1,100 with State Farm Insurance Company, the Association’s insurer, and signed a release form that discharged the Association from "any and all claims...particularly on account of all injuries, known and unknown, both to person and property, which have resulted or may in the future develop."
- When the Gossingers executed the release, Mrs. Gossinger was still suffering from back pain and the Gossingers knew that she had not fully recovered from her back injury.
- Approximately one year after signing the release, Mrs. Gossinger’s back pain had not subsided, and she was diagnosed with a herniated disc requiring surgery, incurring over $20,000 in medical expenses.
Procedural Posture:
- On January 18, 1990, Phyllis and Herman Gossinger filed a complaint against the Association of Apartment Owners of The Regency of Ala Wai and Carol Sutherland (defendants) in circuit court, claiming damages based on negligence.
- Both defendants pleaded, among other defenses, the affirmative defense of discharge and release.
- On December 20, 1990, the Association filed a motion for summary judgment, and on December 27, 1990, Sutherland filed a joinder in the Association’s motion.
- The Gossingers opposed the motion on the grounds of unilateral or mutual mistake.
- On March 12, 1991, the circuit court entered an order granting summary judgment in favor of the Association and Sutherland, ruling that Mrs. Gossinger was aware of her lower back injury and the need for future treatment, and knowingly signed the Release, making mutual mistake unavailing.
- On March 20, 1991, the Gossingers filed a motion for reconsideration of the order granting summary judgment.
- On April 23, 1991, the circuit court denied the Gossingers' motion for reconsideration.
- The Gossingers filed a timely notice of appeal challenging both the order granting summary judgment and the order denying their motion for reconsideration.
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Issue:
Can a party rescind a personal injury release on the grounds of mutual or unilateral mistake as to the nature or extent of an injury, when that party initiated the settlement, knew they were not fully recovered, and were aware of potential future treatment at the time of signing the release?
Opinions:
Majority - Levinson, J.
No, a release cannot be rescinded based on a mistake as to the nature or extent of an injury under these circumstances. The court affirmed the circuit court's grant of summary judgment, emphasizing that the Gossingers initiated and urged the settlement, signed a broad release covering "known and unknown" injuries, and knew Mrs. Gossinger was not fully recovered and might need future treatment at the time of signing. The court distinguished Silva v. Robert Hind, Ltd., where rescission was allowed based on a mistake of a present fact (a physician's erroneous statement of complete cure). Here, the Gossingers were aware of an existing injury and its uncertain future course, not misled about a complete recovery. The court underscored that public policy favors the finality of negotiated settlements to avoid the costs and uncertainties of protracted litigation. To allow rescission in these circumstances would undermine the purpose of releases. The court also found no abuse of discretion in denying the Gossingers' motion for reconsideration, as the arguments and evidence presented could and should have been raised in opposition to the original motion for summary judgment.
Concurring - Burns, J.
Concurring with the result, Justice Burns, joined by Justice Heen, agreed that the release should not be rescinded but offered a refined rationale. The concurrence noted the tension between finality in settlements and alleviating human error. While Silva subscribed to a "midway" approach, allowing rescission for mistakes relating to the nature of known injuries (past or present fact) but not the future course of those injuries, the concurrence believed Silva's application was questionable. It suggested that a mistake about a back strain vs. a herniated disc could be viewed as a mistake relating to the nature of the injury (a diagnostic mistake). However, the concurrence proposed a modification to the "midway" approach: an injured party's mistake as to the nature of their injury is not a proper basis for rescission if the release was issued before a medical expert reasonably qualified to diagnose the injury had diagnosed its nature to a reasonable degree of medical probability. Under this refined view, the Gossingers settled based on an early, less definitive diagnosis, and therefore do not qualify for rescission. The concurrence also stated that, absent unfair claim practices, the question of who initiated settlement is immaterial, and the distinction between mutual and unilateral mistake is often unnecessary.
Analysis:
This case provides crucial guidance on the enforceability of personal injury releases in Hawaii, particularly when the injured party is aware of an existing injury at the time of settlement. It strongly reinforces the principle of finality in settlements, placing a significant burden on injured parties to fully understand and accept the potential for their injuries to worsen or be more extensive than initially known. The ruling suggests that merely being unaware of the 'extent' of a known injury, or its future development, is generally insufficient to rescind a release, especially if the injured party initiated the settlement. This decision effectively narrows the circumstances under which a mistake about an injury can invalidate a release, requiring clear evidence of a mistake as to a present fact (like a doctor's erroneous statement of full recovery) rather than an evolving condition.
