When the Four Corners are Not *Exactly* the Four Corners:
Indiana’s Contemporaneous Writing Exception
In the recent case of Bird v. Valley Acre Farms, Inc., the Indiana Court of Appeals explored the applicability of Indiana’s contemporaneous writing rule and the general disfavor of extrinsic and parol evidence in contract interpretation.
A minor working at a chicken coop in 2017 discovered a loaded rifle and negligently shot his coworker. The coworker (Bird) suffered abdominal injuries and filed suit against the minor, the minor’s parents, and the employer (Valley Acre). The parties ultimately executed three different documents relating to the shooting: (1) a May 19, 2020 “Release of All Claims against [Parents]” (the “May Release”); (2) a May 19, 2020 “Covenant Not to Execute” between Bird and the parents’ insurance company which prohibited Bird from executing on any money judgment obtained in ongoing litigation and released the minor (“Covenant”); and (3) a December 11, 2020 “Release of All Claims against [Parents]” (the “December Release”). Importantly, the May Release provided “full settlement of all claims” resulting from the shooting incident while the Covenant and December Release deleted the reference to “all claims” and specifically reserved claims against Valley Acre. Each of the releases provided for $5,000.00 as consideration.
In light of the May Release, Valley Acre filed a motion for summary judgment and asserted it had been released. Specifically, it argued the May Release was a valid release supported by $5,000.00 in consideration, that the December Release failed for lack of separate consideration, and the Covenant could not be considered in interpreting the May Release because it contained different signatories. In contrast, Bird argued a novation had occurred and the December Release extinguished the May Release while the Covenant must be considered in interpreting the May Release. The trial court agreed with Valley Acre and Bird appealed.
The Indiana Court of Appeals reversed the trial court’s grant of summary judgment to Valley Acre. Genuine issues of material fact existed regarding consideration, the claim of novation between the May and December Releases, and the intent of the May Release. Specifically, the court found the circumstances surrounding execution of the May Release warranted application of the contemporaneous writing rule and consideration of the Covenant to prove the true intent of the May Release. Although contracts are generally interpreted by the four corners, “the contemporaneous writing rule allows a court to determine the intent of the parties to an agreement by examining documents that were drafted contemporaneously . . . [and] relate to the same transaction[.]” The court noted that although the May Release and Covenant were signed by different parties, the Covenant specifically contemplated ongoing litigation among other parties and therefore contradicted the broad, “all claims” release contained in the May Release and executed the same day. The Court concluded by application of the contemporaneous writing rule that when construed with the Covenant, the May Release intended only a limited release of the minor’s parents and claims against other parties were preserved.
 2021 Ind. App. LEXIS 295 (Ind. Ct. App. 2021)