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WAITS v. UNITED FIRE & CAS. CO.12/24/1997
B. Scope of review. A motion to strike under rule 104(c), like a motion to dismiss, admits the truth of all matters pleaded. See Fidelity Sav. Bank v. Wormhoudt [572 NW2d Page 572]
Lumber Co., 251 Iowa 1121, 1126, 104 N.W.2d 462, 466 (1960); In re Carpenter's Estate, 210 Iowa 553, 561, 231 N.W. 376, 380 (1930). The party challenging the defense must establish the legal insufficiency of the defense from the face of the pleading attacked. See Jacobsen v. Moss, 221 Iowa 1342, 1346, 268 N.W. 162, 164 (1936). We will affirm the trial court's striking of a defense if we conclude the defense alleged is legally inadequate. Cf. Schmidt v. Wilkinson, 340 N.W.2d 282, 284 (Iowa 1983) (stating, in reference to a motion to dismiss under rule 104(b), that dismissal will be upheld where "no state of facts is conceivable under which plaintiff might show a right of recovery").
C. Complete satisfaction of claims. United Fire points out Waits gave the underinsured motorist a full and complete release and did not preserve any claim for UIM benefits. It suggests "Waits could have provided the Fays with a covenant not to sue if she desired to settle with them without acknowledging full satisfaction of her claim." (Emphasis added.) We find any distinction between a covenant not to sue and a release of no assistance in resolving the issue before us.
Documents known as covenants not to sue were devised to avoid the harshness of the common-law rule that a release of one tortfeasor or obligor automatically released all tortfeasors or obligors, regardless of the intent of the parties to the release. See Pedersen v. Bring, 254 Iowa 288, 291, 117 N.W.2d 509, 511 (1962) (stating "a covenant not to sue is an artificial means of evading the general rule that a full release of one . . . also releases others") (emphasis added); W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 49, at 334 (5th ed. 1984) (referring to a covenant not to sue as a "technical evasion, which is the most obvious of subterfuges for circumventing an inconvenient common law rule") (emphasis added) [hereinafter Prosser]; see generally Adams v. Dion, 19 Ariz. App. 69, 504 P.2d 1292, 1294 (1973) (referring to a covenant not to sue as "nothing short of legalistic `black magic'"), vacated, 109 Ariz. 308, 509 P.2d 201 (1973). Our court obviated the need for this subterfuge in Community School District v. Gordon N. Peterson, Inc., 176 N.W.2d 169 (Iowa 1970). In that case we rejected the common-law rule that a release of one obligor automatically released all others who are or may be liable. Community Sch. Dist., 176 N.W.2d at 175. We held settlement agreements were to be interpreted according to the intent of the parties as "determined by the terms of the contract aided by such extrinsic evidence as may be properly offered." Id. Under the modern rule, the effect of a settlement does not turn on the technical distinction between a release and a covenant not to sue. Rather, the effect of a settlement is determined by the intent of the parties to the settlement as shown by the terms of the settlement documents. We also note that a release and a satisfaction are not the same thing: "A satisfaction is an acceptance of full compensation for the injury ; a release is a surrender of the cause of action, which may be gratuitous, or given for inadequate consideration." Prosser § 49, at 332.
Turning to the terms of the release, we find no language indicating Waits intended to abandon her UIM claim against United Fire. United Fire was not included as one of the parties released from liability. To the contrary, the release contemplated a recovery of UIM benefits as shown by the following language: "It is the intent of the parties that thi
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