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Roemmich v. Lutheran Hospitals & Homes Society of America12/27/1996
Plaintiffs, Bruce and Pamela Roemmich, appeal the judgment entered by the trial court dismissing their claims against defendant, Lutheran Hospitals & Homes Society of America, for breach of the parties' settlement agreement. We affirm.
In 1983, plaintiffs commenced a medical malpractice action against defendant for injuries suffered by their minor child while she was under defendant's care. In 1984, the parties reached a settlement. A settlement agreement and two accompanying releases were filed in the probate court. The settlement agreement required defendant to make an initial cash payment of $1,750,116 and to purchase an annuity which would pay $7,930 per month for the life of the child or 30 years certain. The releases executed by plaintiffs provided that, for consideration of the purchase by defendant of the annuity contract, plaintiffs agreed to release defendant from all claims.
In accordance with these documents, defendant made the initial cash payment and purchased three annuities (an annuity contract) from Executive Life Insurance Company (Executive). The annuity contract provided for income payments to plaintiffs of $7,930 per month for 360 months, beginning June 1, 1984.
In 1991, the payments, which had been regularly made, were substantially reduced because of Executive's financial difficulties and subsequent bankruptcy filing. Plaintiffs then filed a complaint against defendant to recover the unpaid amounts, arguing that defendant's failure to insure the full monthly payments constituted a breach of the settlement agreement. Defendant answered and counterclaimed for a declaratory judgment determining the rights and obligations of the parties under the settlement agreement.
In its motion for declaratory judgment, defendant contended that its obligation to plaintiffs under the settlement agreement was to make the initial cash payment and to purchase an annuity contract. Having done so, it contended its obligation to plaintiffs was discharged and that the claims against it should be dismissed.
The trial court agreed with defendant that, in addition to an initial cash payment, defendant was to purchase, but not guarantee the performance of, an annuity contract. Further concluding that defendant had performed both of these duties, the trial court declared defendant's obligation under the settlement agreement executed and dismissed plaintiffs' claims for breach.
I.
Plaintiffs contend that the trial court erred in dismissing their claims, arguing that the dismissal was based on an incorrect interpretation that defendant's obligation under the settlement agreement was executed rather than executory. We disagree.
The interpretation of a contract is a question of law for the court. Pepcol Manufacturing Co. v. Denver Union Corp., 687 P.2d 1310 (Colo. 1984).
A court's duty is to interpret a contract in a manner which effectuates the manifest intention of the parties at the time the contract was signed. Neves v. Potter, 769 P.2d 1047 (Colo. 1989). The touchstone in determining the intention of the parties is the language of the written agreement. Radiology Professional Corp. v. Trinidad Area Health Ass'n, 195 Colo. 253, 577 P.2d 748 (1978).
In addition, contract interpretation should rest on good sense and a plain understanding of the words used and the acts directed to be performed, Neves v. Potter, supra, and words and phrases in the contract should be interpreted, not in isolation, but by examination of the contract as a whole. Kuta v. Joint District No. 50(J), 799 P.2d 379
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