PETERSON, J. I respectfully dissent.
I do not find as does the majority that the form of the questioned release “on its face violates the public policy as set forth in Civil Code1 section 1668”; or that “[b]ecause two workers have refused to execute a written release of liability, the terms of which would necessarily include release of liability for fraud, wilful injury or violation of law (negligent or wilful), they have been denied an employment opportunity.” (Maj. opn., ante, p. 1154, italics added.)
The pertinent language of the release running to Metropolitan and its agents and officers consists of the releasing party “knowingly assuming] all risks in connection with potential exposure [to] asbestos,” releasing them “from and against any and all liability whatsoever,” and waiving “any and [1158]all claims of every nature . . . related to exposure to asbestos . . . (Italics added.) This language is said to be broad enough to encompass release of liability claims for fraud or willful injury or violation of law, thereby invalidating the release because of the proscription of sections 1668 and 3513.
This record does not reveal that the release presented to appellants was ever contended by respondent to include release of the acts proscribed by section 1668. Appellants themselves put this interpretation on the release through their counsel’s communication to their employer, by which they refused to execute it and, thus, unilaterally created a straw man; i.e., a release valid on its face which they allege violated public policy in that it would nonetheless discharge claims whose release is legally proscribed by section 1668. Respondent then sought a declaratory judgment that the release was not void as against public policy. The lower court’s declaratory judgment as here pertinent held “the Release is not void as against public policy or otherwise . . . .”
The majority has accepted appellants’ interpretation of the release, apparently rationalizing its decision in part on the fact that respondent did not specifically allay appellants’ ostensible fears over the alleged effect of the release, or deny or respond to appellants’ patently erroneous contentions regarding its effect.
It initially seems clear that the release did not, and could not, become invalid merely because respondent chose to ignore appellants’ contentions as to its effect. As will be later explained, those contentions regarding the interpretation of the release language were more than simply erroneous; they were proscribed as a matter of law.
I cannot, therefore, as the majority suggests, convert respondent’s failure to respond to such contentions of appellants to a “patent effort to justify the validity of this release in all respects (including exculpation for fraud, wilful injury, or violation of law) . . . .” (Maj. opn., ante, p. 1152, fn. 3.)
The unilateral contention of one contracting party to another that a contract valid on its face is nonetheless illegal does not establish such illegality; neither does the failure to respond to such contention.
The “all” and “any and all” language of this release is common to virtually every form release contemporarily and heretofore used by practi[1159]tioners.2 An analysis of the operative words of this release similar to that of the majority could arguably be made as to almost any current form of release.
The majority suggests that the settlement language of the release at bar and of those described in footnote 2 to this dissent, ante, are “designed to prevent relitigation or collateral attack upon a cause of action arising from a past event”; and hence, that “[t]he rationale behind this policy of repose is not germane to the situation before this court.” (Maj. opn., ante, p. 1157, italics in original.)
One needs to look no further than Palmquist v. Mercer (1954) 43 Cal.2d 92 [272 P.2d 26] to determine the Supreme Court has recognized that a release concerning, as here, liability of the releasee for a future event (a prospective ride to be undertaken on a horse at a riding academy) is subject to the same rules of construction in the application of section 1668 as is a release pertaining to a past event. In neither case can such language as a matter of law include release of liability for acts, release of which is proscribed by section 1668. Further, I see no distinction in the application of rules of precedent to the analysis of a contract’s meaning, as the majority suggests, because of the procedural vehicle utilized to obtain a judgment thereon, whether declaratory relief or otherwise. The applicability of section 1668 and its incorporation by law into all contracts of release remains constant, regardless of whether the cause of action concerning that applicability is one which exists and is sued upon before, or may arise and be sued upon after, the release is executed.
The majority’s arguments to the contrary simply postulate the future possibility of a party to a liability release, pertaining to either past or future events (or a combination of both), attempting to seek its application illegally; i.e., to utilize it to bar his liability for fraud, willful injury, or violation of law because of the release’s general language. That application is absolutely proscribed by section 1668, and any such future contention of the party released would predictably be rejected as a matter of law. “Ordinarily, all applicable laws in existence when an agreement is made, which laws the parties are presumed to know and to have had in mind, necessarily enter into the contract and form a part of it, without any stipulation to that effect, as if they were expressly referred to and incorporated. [Citation.]” (City of Torrance v. Workers’ Comp. Appeals Bd. (1982) 32 Cal.3d 371, 378 [185 [1160]Cal.Rptr. 645, 650 P.2d 1162], internal quotation marks omitted, italics added.)
Even if one assumes, arguendo, that respondent had affirmatively sought a construction of the release contrary to the proscription of section 1668 (an assumption the record belies), this long-standing rule applying to all contracts, including the release at bar, is not subject to variation simply because a party thereto urges it be given an erroneous construction. Many lawsuits involve, as does this one, simply a disputed question of the legal meaning of a contract’s literal terms without the necessity of considering any additional evidence on that question. An erroneous and rejected assertion of a litigating party as to what the language of a contract means does not, ipso facto, invalidate the contract.
In Werner v. Knoll (1948) 89 Cal.App.2d 474 [201 P.2d 45], a contention similar to that of appellants was made in a lease providing: “ ‘First party [defendant] shall not be liable for any damage arising from personal injuries sustained by any person or persons, in, on, or about said premises, from any cause whatsoever, and second party [plaintiff] agrees to save and keep first party free and harmless of and from any such liability, loss or damage.’ ” (P. 475, italics added, brackets in original.)
The Werner court said: “[S]ection 1668 does not declare unlawful all contracts, the object of which is to exempt individuals from the consequence of their own acts, but only those contracts which would exempt one from the consequences of his own fraud, willful injury or violation of law whether willful or negligent.” (89 Cal.App.2d at pp. 475-476, italics added.)
Appellant in Werner contended (as do appellants here), inter alia, “that inasmuch as the provision in question purports to relieve respondent from liability arising from any cause it therefore attempts to relieve respondent from the consequences of his own fraud and willful injury as well as negligence contrary to the provisions of Civil Code section 1668 thereby rendering the entire provision invalid with the result that respondent cannot rely upon the provision to relieve him from the consequences of his own negligence.” (89 Cal.App.2d at p. 476, italics added.)
Pointing out that the pleadings in Werner only raised the question of respondent’s negligence, Justice Peek concluded: “The asserted illegality of the provisions relating to fraud and willful injury would not deprive respondent of relying upon the provision relating to negligence since the rule is well established that a lawful promise based on a good consideration is not invalid because an unlawful promise is made for the same consideration [citation] and there is no reason to reach a different conclusion where the [1161]provisions relating to fraud, willful injury, and negligence are not separately stated but are included within the single phrase ‘any cause. ’ ” (89 Cal. App.2d at p. 477, italics added.)
The form of the release at bar, per se, is not void as violative of the public policy enunciated by section 1668 because it was valid for the purpose of relieving Metropolitan of liability for acts of ordinary negligence and strict liability; and it was required to be interpreted as incorporating section 1668 eliminating from its effect any discharge of liability of the released party for fraud, willful injury, or violation of law.
Palmquist v. Mercer, supra, was a case in which a general release, given a riding academy in advance of his ride by a plaintiff injured when riding a rented horse of known dangerous propensities, was urged by the academy to bar plaintiff’s claim grounded in actual fraud for failure to disclose material facts concerning those unsafe and dangerous propensities. Palmquist observed that Werner, supra, 89 Cal.App.2d 474, had recognized “ ‘contracts seeking to relieve individuals from the results of their own negligence are not invalid ....’” (43 Cal.2d at p. 100.) The Palmquist court held, however, that such a release was ineffective “to exempt one from liability ‘for his own fraud,’ ” and that the trial court erred in withdrawing that issue from the jury based on the release. (Ibid.)
Here, and in Werner, the release remains a valid bar to claims arising from negligence and strict liability of the parties released, even if an erroneous contention is made that it includes claims whose release is legally proscribed by section 1688. Palmquist, supra, simply reinforces Werner by affirming that, despite contrary contentions, the typical language of a general release of civil liability claims cannot be applied to bar claims for fraud because of the proscription of section 1668.
The release in this case, as it must be interpreted under the law of this state, excludes from its ambit any bar of claims arising from fraud, willful injury, or violation of law. Measured by such interpretation, the release was, as the trial court found, “not void as against public policy or otherwise
The majority’s conclusion as to the invalidity of the release also appears to run counter to that of two other decisions, which refused to hold section 1668 would invalidate similar releases of all claims in connection with other activities which, like asbestos removal, pose obvious hazards to participants. In Hulsey v. Elsinore Parachute Center (1985) 168 Cal.App.3d 333 [214 Cal.Rptr. 194], the court dealt with a release which purported to cover “ ‘all actions, claims or demands . . . .’” (P. 340.) The court affirmed summary [1162]judgment based upon the release of claims sounding in negligence and strict liability: “Whatever it proscribes, this section [1668] does not invalidate contracts which seek to except one from liability for simple negligence or strict liability.” (Id. at p. 342, italics in original.)
Similarly, in Madison v. Superior Court (1988) 203 Cal.App.3d 589 [250 Cal.Rptr. 299], the court dealt with a release which purported to cover “ ‘any and all actions or causes of action ....’” (P. 594.) The court rejected a claim that section 1668 invalidated the release: “Therefore, we conclude that the agreement is enforceable and, as against any action brought by [the injured party], would have served as ‘a complete defense. ’ It had the obviously intended legal effect of shifting the responsibility for any negligence by the defendants .... By this agreement, [the injured party] effectively assumed all of the risks of any injury he might suffer as a result of defendants’ negligence during the training course.” (Id. at p. 600, italics in original.)
The majority suggests I “acknowledge the language of the release [is] sufficiently broad so as to exclude liability for fraud, wilful injury, and wilful or negligent violation of law . . . .” (Maj. opn., ante, p. 1154.) To the contrary, I assert that, regardless of any such hypothetical construction which might arguably be placed on the literal language of the release, the mandatory and necessary inclusion of the proscriptive terms of section 1668 in the release by operation of law totally precludes that construction. Indeed, it is for this reason I find the trial court should be affirmed.
The majority’s result, having been reached, in my view, by an erroneous interpretation of the release, is further rationalized by the alleged denial of an “employment opportunity” to appellants (maj. opn., ante, p. 1154), who chose through counsel to place an interpretation on the release the law forbids and to refuse employment for that sole reason.
The record discloses these parties have a separate action, filed four months after this one and waiting in the wings in the Superior Court of the City and County of San Francisco,3 wherein appellants have sued respondent and Metropolitan for damages and injunctive relief in causes of action for wrongful termination, breach of the covenant of good faith and fair dealing, tortious interference with contract, and intentional and negligent infliction of emotional distress.
While applicable precedent requires us to find the release to be valid as one barring claims for negligence and strict liability, that finding will not [1163]preclude appellants from proceeding with their pending San Francisco action. There they may offer proof, if available, that respondent at the behest of Metropolitan in fact discharged them for refusing to release claims of liability for fraud, willful injury, or statutory violation, even though the release presented to them could not be legally interpreted to bar such claims.
I do not believe we can here vary the clear and ordinary rules of construction of contracts because, as the majority suggests, the declaratory judgment might be urged collaterally to estop this separate damage action of appellants, or potentially create additional “burden, expense and risk” for them in that action. (Maj. opn., ante, p. 1155.) I find no authorities approving such speculations as a rationale dictating or affecting the construction of the contract’s meaning in the case at bar.
The majority seems to implicitly conclude that, had the employer amended the release to except literally and specifically from its effect the terms of section 1668, such clarification and its express confirmation in the summary judgment would have compelled the result I reach. This conclusion is buttressed, it is contended, by comparison of the “relative sophistication and bargaining strength of the parties to the proposed release”; i.e., because the employer chose not “to meet the legitimate policy concerns” of the employees by so amending the release, reversal is compelled. (Maj. opn., ante, p. 1155.)
This reasoning, I respectfully submit, posits without precedent a strange and murky doctrine in contract analysis. It means this: A release, to avoid invalidation on the public policy grounds the majority asserts, must literally set forth and exclude from its effects acts already so excluded by operation of law because of the proscription of section 1668, if the releasor lacks the “sophistication” or “bargaining strength” of the releasee, and arguably cannot therefore be deemed to understand the principle of incorporation of section 1668 in, and its legal effect on, all releases in this state.
Carried to its logical extension, such reasoning would compel similar revision of all contracts to include literally all relevant portions of the Civil Code of this state, affecting that contract and now deemed incorporated therein. The test of the parties’ relative “sophistication” as a trigger of that result would remain a subject of repeated factual dispute in each case. Traditional rules of contract interpretation, incorporating applicable statutes therein as a matter of law, would be effectively abolished. The question of whether a relevant statute is incorporated by law in a contract of release would become uncertain at best, unknown at worst. If from case to case the relative “sophistication” and business acumen of releasors and releasees varies, literal inclusion of the relevant statute would be required at the peril [1164]and risk of the release being found invalid. No incorporation by law of the terms of a statute in a release could be safely assumed by any drafting lawyer under these circumstances; and the complexity of, and litigation concerning, legal draftsmanship and the legal effect of releases would thereby be sharply and unnecessarily heightened.
No authorities to date hold that the ancient principle of incorporation by law of a relevant and applicable statute in a contract in this state is invalidated unless that statute is expressly set forth therein, when some relative disparity of sophistication and bargaining strength of the contracting parties exists. The majority’s result does just that.
I would hold, in affirming the judgment, that the release was not void as violating public policy, because it legally barred claims of negligence and strict liability.
A petition for a rehearing was denied June 22, 1990, and respondent’s petition for review by the Supreme Court was denied August 30, 1990.
All subsequent statutory references are to the Civil Code.
See 1 West’s California Civil Code Forms (3d ed. 1989) Obligations, section 1541, form 3, page 573, where the recommended general release typically provides, inter alia, for release “of and from all claims ... of whatever kind or nature . . . relating to any matter whatsoever . . . .”
San Francisco Superior Court No. 892425, filed May 25, 1988.