A new decision of the Appellate Division, Second Department, relies upon two established principles the courts apply when determining attempts to avoid signed releases: (1) Releases of claims are not lightly disregarded; and (2) Failing to understand a contract one signs is usually not a basis to avoid being bound.
The decision is Prete v Tamares Dev. 1, LLC, 2023 NY Slip Op 04783 (2d Dep’t Decided Sept. 27, 2023).
Strength of Releases
Courts do not take lightly efforts to avoid the binding effect of written, executed releases of claims. See my post, Challenging Releases Based on Fraudulent Inducement is a Challenge. The leading case in New York is Centro Empresarial Cempresa S.A. v América Móvil, S.A.B. de C.V., 17 NY3d 269 (2011). As the Court of Appeals explained there:
Generally, “a valid release constitutes a complete bar to an action on a claim [*5]which is the subject of the release” (Global Mins. & Metals Corp. v Holme, 35 AD3d 93, 98 [1st Dept 2006]). If “the language of a release is clear and unambiguous, the signing of a release is a ‘jural act’ binding on the parties” (Booth v 3669 Delaware, 92 NY2d 934, 935 , quoting Mangini v McClurg, 24 NY2d 556, 563 ). A release “should never be converted into a starting point for . . . litigation except under circumstances and under rules which would render any other result a grave injustice” (Mangini, 24 NY2d at 563). A release may be invalidated, however, for any of “the traditional bases for setting aside written agreements, namely, duress, illegality, fraud, or mutual mistake” (id.).
Although a defendant has the initial burden of establishing that it has been released from any claims, a signed release “shifts the burden of going forward . . . to the [plaintiff] to show that there has been fraud, duress or some other fact which will be sufficient to void the release” (Fleming v Ponziani, 24 NY2d 105, 111 ).
Read the full blog here.