Facts: During the discovery phase of their divorce, Husband’s counsel furnished an unsworn letter with a balance sheet purporting to summarize the parties’ assets.

In their subsequent divorce, the trial court incorporated their marital dissolution agreement (“MDA”). The MDA said each party had made a complete disclosure of assets, that the information was accurate, and that the MDA “shall not release any party from any claims the other party may have to assets or liabilities that have not been disclosed.”

Twelve years after their divorce, Wife petitioned for contempt, alleging that Husband failed to disclose specific securities he owned during the marriage and failed to pay some of her uncovered medical expenses as required by the MDA.

Wife’s petition was resolved in 2017 via an agreed order stating that, in exchange for Husband’s $100,000 payment to Wife, Wife’s petition was dismissed with prejudice “as to all claims [Wife] has or could assert against [Husband] pursuant to the [MDA], including but not limited to attorney fee claims and all past, present, and future claims with respect to … the payment of medical expenses.”

Two years later, the Social Security Administration informed Wife by letter that Husband had pension or other retirement benefits with Coca-Cola Company, Coca-Cola Enterprises, and the Krystal Company. Husband did not disclose these assets before the divorce or in the MDA even though they existed at the time.

Wife sued Husband for an accounting, a money judgment for damages, prejudgment interest, and attorney’s fees for fraudulent misrepresentation and breach of the disclosure warranty in the MDA.

Husband responded with a motion for summary judgment arguing that Wife’s complaint is barred by the doctrine of accord and satisfaction, specifically the $100,000 payment and Wife’s release of all claims she had or could assert against Husband under the MDA.

The trial court granted summary judgment to Husband, explaining that the release in the agreed order “forecloses any other claims Wife may have against Husband related to the MDA. She released those claims in exchange for $100,000. That is accord and satisfaction.”

Wife appealed.

Wife argued the agreed order should not be read to release unknown claims.

Husband responded that the agreed order explicitly covered “all claims [Wife] has or could assert against [Husband] pursuant to the [MDA], including but not limited to attorney’s fee claims and all past, present, and future claims with respect to … the payment of medical expenses.” He argued the language it shows Wife’s intent to release him from “all obligations” under the MDA.

On Appeal: The Court of Appeals affirmed the trial court.

Tennessee courts favor agreed orders because they indicate an amicable result to an issue in litigation. Agreed orders have been described as “about the most binding of agreements that can be made.”

Releases are valid in Tennessee and are not against the public policy of the state. A release is a contract; therefore, the rules of construction applicable to contracts apply in construing a release. Tennessee courts look to the parties’ intention as expressed in the terms of the contract considered in the light of all the facts and circumstances.

Contracts are to be judged by an objective standard, i.e., what a reasonable onlooker would conclude the parties intended from the words expressed in the instrument. Therefore, absent an ambiguously worded release, courts are not interested in what the parties subsequently say they meant; courts are only interested in what the words, given their natural and ordinary meaning, show the parties intended.

The Court found the clear language of the release showed Wife’s intent to release all claims against Husband:

Here, the release language contained in the agreed order is broad and encompasses “all claims” which Wife “could assert against [Husband] pursuant to the [MDA].” The words “could” and “including but not limited to” plainly refer to the possibility of future claims stemming from the MDA, not exclusively the claims Wife did assert in the [previous] petition for contempt. In consideration, Husband paid Wife $100,000. This unambiguous language reveals the parties’ intent that the release operate to broadly cover all claims, including future claims, related to the MDA. The language of the release supports Husband’s contention and the trial court’s conclusion that Wife’s claims against him in the instant action have been released.

Next, we turned to the facts and circumstances surrounding the execution of the release. In her affidavit filed over three years after signing the agreed order, Wife simply asserts that her “intent was to release all claims [she] could have had at the time of the release, or in the future, as to the stock issues and the … medical expenses.” Wife also points to the correspondence between the parties’ counsel during the negotiations preceding the agreed order to buttress her stated intent. … [T]he email states that the $100,000 payment will be in consideration of “all past and future obligations that [Husband] has to [Wife].” Besides the attorneys’ correspondence and her subjective impression of her own intent when signing the agreed order containing the release, Wife has not identified any independent facts or circumstances from which a trier of fact could conclude that the parties intended to release only claims existing at the time of the release, or future claims relating only to stock issues … and medical expenses.

[W]e conclude that the parties intended to release Husband from future claims pursuant to the MDA. This lawsuit falls within the scope of the release contained in the [] 2017 agreed order.

The Court affirmed the trial court’s judgment dismissing Wife’s complaint.

Sanford v. Sanford (Tennessee Court of Appeals, Eastern Section, May 24, 2022).

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