Present: All the Justices
RICHFOOD, INC., ET AL.
v. Record No. 971461 OPINION BY JUSTICE CYNTHIA D. KINSER
April 17, 1998
DENNIS JENNINGS, ET AL.
FROM THE CIRCUIT COURT OF HANOVER COUNTY
Richard H. C. Taylor, Judge
In this case, we address the scope of claims
encompassed in a release and whether a subsidiary
corporation that did not sign the release is nevertheless
bound by it. Because the release applies only to claims
that arose prior to its execution and because a subsidiary
is separate and distinct from its parent corporation, we
will reverse the judgment of the circuit court.
I.
The material facts relevant to this appeal are not
disputed. Richfood, Inc., is a wholesale food distributor
providing goods and services to retail grocery stores.
Market Insurance Agency, Inc., is a wholly-owned subsidiary
of Richfood and provides insurance to grocery stores.
Richfood, Dennis B. Jennings, and Paul H. Dembinski were
shareholders of Bold Horizons, Inc., which operated a
grocery store.
Market Insurance prepaid the annual premium on Bold
Horizons’ workers’ compensation insurance policy. Richfood
then billed Bold Horizons for the premium on a monthly
basis and credited Bold Horizons’ payment to Market
Insurance.
In August 1994, Richfood, Jennings, Dembinski, and
Bold Horizons entered into a stock purchase agreement with
Farm Fresh, Inc., for the sale of Bold Horizons. In order
to settle and compromise certain claims, Richfood,
Jennings, Dembinski, and Bold Horizons also executed a
Settlement Agreement and General Release dated September
23, 1994 (the Agreement). 1 The provision of the Agreement
at issue in this case, paragraph 3.a., states the
following:
Richfood hereby releases, acquits and forever
discharges The Jennings, Dembinski and their agents,
attorneys-at-law and attorneys-in-fact, from any and
all claims, debts, liabilities, demands, obligations,
costs, fees, expenses, damages, actions and causes of
action, of whatever kind or nature, whether known or
unknown, based upon, arising out of or connected with
anything whatsoever done, omitted or suffered to be
done by or for any of them, based on, arising out of
or in connection with any relationship or dealings
related in any way to Bold Horizons or the “Food 4
Less” store located at 4001 Virginia Beach Boulevard,
Virginia Beach, Virginia, whether such claims are
known or unknown, suspected or unsuspected or
otherwise whatsoever.
The sale of Bold Horizons effected a cancellation of
the workers’ compensation insurance policy as of August 30,
1
Several other individuals, not parties to this case,
also signed the Agreement.
2
1994. At that time, a portion of the prepaid premium had
not been used. Consequently, in May 1995, the insurance
carrier issued a refund check to Richfood in the amount of
$27,950, which represented the unused premium prepaid by
Market Insurance. A Richfood employee forwarded the refund
check to Farm Fresh, and Farm Fresh subsequently paid the
proceeds of the check to Jennings and Dembinski.
Upon discovering that Jennings and Dembinski had
received the proceeds from the refunded premium, Richfood
and Market Insurance demanded that Jennings and Dembinski
return the proceeds. Jennings and Dembinski, however,
refused. Richfood and Market Insurance commenced the
instant action, seeking reimbursement of the refund.
In response, Jennings and Dembinski filed grounds of
defense and a motion for summary judgment. In their
motion, they argued that the Agreement bars the claim of
Richfood and Market Insurance.
After considering the pleadings, the Agreement, the
written submissions of the parties, and the argument of
counsel, the circuit court determined that the Agreement
was unambiguous and discharged Jennings and Dembinski “from
liability to Richfood and Market Insurance for claims and
causes of action arising in the future and for wrongful
conduct occurring after the execution of the Release
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because the alleged wrongful conduct was connected with the
matters referred to in the Release . . . .” Accordingly,
in an order dated April 21, 1997, the court granted
Jennings’ and Dembinski’s motion for summary judgment.
Richfood and Market Insurance appeal.
II.
Jennings and Dembinski assert that the Agreement
discharges the claim of Richfood and Market Insurance even
though the parties executed the Agreement several months
before Jennings and Dembinski received the proceeds from
the insurance premium refund. Jennings and Dembinski claim
that paragraph 3.a. releases all claims based on both past
and future conduct between the parties relating to the
operation of Bold Horizons’ grocery store and that the
disputed insurance premium refund resulted from or was a
part of the operation of that business.
Alternatively, Jennings and Dembinski argue that even
if the Agreement does not apply to conduct occurring after
execution of the Agreement, the claim asserted by Richfood
and Market Insurance in this case existed prior to the date
of the Agreement. According to Jennings and Dembinski, the
insurance premium refund was a “known account receivable as
of August 30, 1994,” when the workers’ compensation
insurance policy was canceled, and that future wrongdoing
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is, therefore, not at issue. We disagree with both
arguments.
“The scope of a release agreement, like the terms of
any contract, is generally governed by the expressed
intention of the parties.” First Security Federal Savings
Bank, Inc. v. McQuilken, 253 Va. 110, 113, 480 S.E.2d 485,
487 (1997). “Where parties contract lawfully and their
contract is free from ambiguity or doubt, the agreement
between them furnishes the law which governs them.”
Russell Co., Inc. v. Carroll, 194 Va. 699, 703, 74 S.E.2d
685, 688 (1953).
Like the trial court, we find no ambiguity in
paragraph 3.a. of the Agreement. The operative words of
that provision are all in the past tense. Specifically,
paragraph 3.a. states that Richfood releases and forever
discharges Jennings and Dembinski “from any and all claims,
debts, . . . arising out of or connected with anything
whatsoever done, omitted or suffered to be done . . . .”
(emphasis added). Thus, paragraph 3.a. of the Agreement,
by its terms, covers only claims that already had accrued
prior to its execution. The additional language stating
“whether such claims are known or unknown, suspected or
unsuspected” speaks of anything “done, omitted or suffered
to be done” and discharges such claims regardless of
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whether they were known by the parties when executing the
Agreement. This language does not extend paragraph 3.a. to
claims not in existence on the date of the Agreement. In
sum, paragraph 3.a. of the Agreement does not discharge
claims arising out of conduct or events that had not
occurred on or before the date of the Agreement.
The alleged wrongful conduct giving rise to the claim
now asserted by Richfood and Market Insurance against
Jennings and Dembinski did not transpire before the
execution of the Agreement. It may well be that Richfood
and Market Insurance, as well as Dembinski and Jennings,
knew that there would be a premium refund from the workers’
compensation insurance carrier. However, in the present
action, Richfood and Market Insurance allege that Jennings
and Dembinski wrongfully retained that refund. This
alleged conduct by Jennings and Dembinski occurred after
Richfood initially received the refund check in May 1995,
long after the parties executed the Agreement. Thus, we
conclude that the provision of the Agreement at issue does
not bar the claim asserted by Richfood and Market Insurance
in this case.
We also hold that Market Insurance has a separate,
independent basis for asserting that the Agreement does not
preclude its claim against Jennings and Dembinski.
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Contrary to the position taken by Jennings and Dembinski,
Market Insurance’s status as a subsidiary of Richfood does
not make Market Insurance a party to the Agreement. As a
subsidiary, Market Insurance is a corporate entity separate
from Richfood. See Thompson v. Air Power, Inc., 248 Va.
364, 371, 448 S.E.2d 598, 603 (1994); Beale v. Kappa Alpha
Order and Kappa Alpha Alumni Found., 192 Va. 382, 395, 64
S.E.2d 789, 796 (1951). “The mere showing that one
corporation is owned by another or that they share common
officers is not a sufficient justification for a court to
disregard their separate corporate structure.” Southern
States Coop., Inc. v. Dailey, 280 S.E.2d 821, 827 (W. Va.
1981).
Furthermore, Market Insurance did not sign the
Agreement, and the terms of the pertinent provision do not
include or bind the subsidiaries of Richfood. In the
opening paragraph of the Agreement, Richfood is defined as
“Richfood, Inc., Richfood Holdings, Inc., Donald D.
Bennett, John E. Stokely, Edgar E. Poore, Daniel R. Schnur,
Esq. and David W. Hoover, (collectively, ‘Richfood’).”
Notably, this definition includes neither Market Insurance
nor any subsidiaries of Richfood. In every paragraph of
the Agreement in which Richfood is releasing other parties,
including paragraph 3.a., the term “Richfood” is never
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expanded to include other persons or entities. However,
the recipient of each release is broadened to include its
“officers, directors, employees, agents, attorneys-at-law,
attorneys-in-fact and all other parties or entities by or
through whom they may act.” Thus, the parties understood
how to include persons or entities in addition to those
specifically identified when it was their intent to do so.
“No word or clause will be treated as meaningless if a
reasonable meaning can be given to it, and there is a
presumption that the parties have not used words
aimlessly.” Winn v. Aleda Constr. Co., Inc., 227 Va. 304,
307, 315 S.E.2d 193, 195 (1984). Thus, we conclude that
Market Insurance is not a party to the Agreement and is,
therefore, not bound by paragraph 3.a.
For these reasons, we will reverse the judgment of the
circuit court and remand for further proceedings consistent
with this opinion.
Reversed and remanded.
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