Britt-Tech Corp. v. American Magnetics Corp.

463 N.W.2d 26, 1990 Iowa Sup. LEXIS 286, 1990 WL 181579
CourtSupreme Court of Iowa
DecidedNovember 21, 1990
Docket89-619
StatusPublished
Cited by6 cases

This text of 463 N.W.2d 26 (Britt-Tech Corp. v. American Magnetics Corp.) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Britt-Tech Corp. v. American Magnetics Corp., 463 N.W.2d 26, 1990 Iowa Sup. LEXIS 286, 1990 WL 181579 (iowa 1990).

Opinions

HARRIS, Justice.

Plaintiff manufacturer brought this action for both contribution and indemnity after settling a wrongful death action. Summary judgment was entered in favor of the defendants, one which supplied component parts to the manufacturer, and one a dealer which sold the item to the consumer. We vacate the decision of the court of appeals. We affirm the district court and remand.

The underlying wrongful death action was filed in August 1982 for the estate of Duane Hardy. Hardy was electrocuted June 7, 1982, while using a power washer manufactured by Britt-Tech. The electrocution resulted from an electrical short which existed within a transformer manufactured by American Magnetics. The transformer was purchased by Britt-Tech from American Magnetics and installed without alteration as a component part of the power washer. River City Development Company purchased the washer from Britt-Tech and sold it to Hardy.

A jury verdict was entered for Hardy’s estate but was vacated when the court sustained Britt-Tech’s motion for judgment notwithstanding the verdict. On appeal the case was reversed and remanded for a new trial on damages only. See Hardy v. Britt-Tech, 378 N.W.2d 307 (Iowa App.1985). Following remand the wrongful death case was settled, and Britt-Tech paid the estate a substantial amount, receiving a release from the estate.

On July 24, 1987, Britt-Tech filed this petition in equity claiming both contribution and indemnification against American Magnetics and River City Development Company.1

Defendants answered and later filed motions for summary judgment. Although the motions lack some specificity it is clear that they were limited to Britt-Tech’s claims for contribution. There was no challenge to Britt-Tech’s claims for indemnity. The district court so understood the motions and addressed only the claims for contribution.

The trial court granted summary judgment in favor of both American Magnetics and River City upon a finding that Britt-Tech did not comply with Iowa Code section 668.6 (1985). We transferred the case to the court of appeals which affirmed partial summary judgment in favor of defendant River City but reversed the partial summary judgment in favor of defendant American Magnetics. The case is before us on further review.

I. Although Britt-Tech contends otherwise it is clear that Iowa Code chapter 668 (1989) is applicable to its contribution claims. Britt-Tech argues that the chapter does not apply because the underlying suit was brought by Hardy’s estate August 2, 1982, prior to the chapter’s effective date.

In rejecting Britt-Tech’s position, the trial court correctly anticipated our holding in Iowa National Mutual Insurance Co. v. Granneman, 438 N.W.2d 840 (Iowa 1989). In Granneman, filed a month following the trial court ruling, we held that contribution claims filed after July 1, 1984, but arising from suits filed prior to July 1, 1984, fall within the ambit of chapter 668. Id. at 842.

II. Iowa Code section 668.6(3)2 both provides for and limits contribution [29]*29recoveries. There are only two alternative routes to recovery. In order to successfully travel the first one, Britt-Tech was required to discharge the liability of American Magnetics and River City prior to June 7, 1984 (when the estate’s two-year statute of limitations expired). But on that date Britt-Tech was still disputing the Hardy estate claim. Although an adverse verdict had been returned January 13, 1984, Britt-Tech sought and obtained a judgment notwithstanding the verdict. Thus Britt-Tech stood as the prevailing party until the court of appeals decision in 1985.

Taken alone, the constraints of section 668.6(3)(a) seem to leave tort defendants in the impossibly difficult dilemma of abandoning either their defense of the suit or their chance to seek contribution. The situation is not so desperate however when a second available alternative is considered. The legislature foresaw the possibility of unfair situations which might arise under the first alternative and therefore provided a second in section 668.6(3)(b).

The second alternative, under Iowa Code section 668.6(3)(b), allows those seeking contribution to agree to discharge liability of the person from whom contribution is sought while the action is pending and thereafter (within one year) seek contribution. To qualify under the second alternative, however, the one seeking contribution must take care to discharge the liability of the person from whom contribution is sought. To do so the release must be drawn with a view to Iowa Code section 668.7.3

The release obtained by Britt-Tech from the Hardy estate stated:

The Estate of Hardy does hereby remise, release and forever discharge Britt-Tech Corporation, its successors and assigns, and all other persons, firms or corporations, known or unknown....

The trial court held that the release executed between Britt-Tech and the Hardy estate did not satisfy the specificity requirements spelled out in Aid Insurance Co. v. Davis County, 426 N.W.2d 631 (Iowa 1988), a case decided long after Britt-Tech chose its method of seeking contribution. We held in Aid:

In our interpretation of section 668.7, we favor a rule which would require a written release to include some specific identification of the tortfeasors to be released in order for them to be discharged. While the easier course would require naming these parties, we would not require such a rigid rule if they are otherwise sufficiently identified in the manner that the parties to the release would know who was to be benefited. Such designations might include such classes as “employers,” “partners” or “officers.” While this rule may require evidentiary hearings to determine the members of the class, it provides needed flexibility. Under this rule, a general designation such as “any other person, firm or corporation” would not sufficiently identify the tortfeasors to be discharged.

Id. at 633-34.

Britt-Tech relies on Aid for the principle that extrinsic evidence is admissible to determine whether the parties intended to discharge River City and American Magnetics. Id. Britt-Tech claims the extrinsic evidence (the payment by Britt-[30]*30Tech for 100% of the claim — more than its share) satisfies Aid by identifying the released parties.

The release here was almost identical to the one we held to be insufficient in Aid. The trial court was correct in concluding it did not identify either American Magnetics or River City. For reasons it must have deemed sufficient, the legislature structured the sufficiency of a release on its wording, not on the subjective intent of the parties. We agree with the trial court that the release was not sufficient to qualify under section 668.7.

The insufficiency of the release is also answer to another of Britt-Tech’s contentions. It is argued that the running of the statute of limitations renders both American Magnetics and River City free of liability on the underlying claim. But again, the legislature has pinned the right to seek contribution on the sufficiency of the release, not some other theory of defense.

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463 N.W.2d 26, 1990 Iowa Sup. LEXIS 286, 1990 WL 181579, Counsel Stack Legal Research, https://law.counselstack.com/opinion/britt-tech-corp-v-american-magnetics-corp-iowa-1990.