More on Challenging Releases for Alleged Fraud

Two recent decisions address, once again, attempts to avoid fully-executed written releases by claiming fraudulent inducement. Both decisions reversed the court below, with different results. The Appellate Division, First Department’s decision in Columbia Consultants, LLC v Danucht Entertainment, LLC, 2023 NY Slip Op 06439 (1^st Dep’t Decided Dec. 14, 2023) rejected all efforts to rescind the release based upon the broad language of the release, including a disclaimer of reliance on alleged representations of the releasee. On the other hand, the Appellate Division, Second Department’s decision in Israel v Progressive Cas. Ins. Co., 2023 NY Slip Op 06357 (2d Dep’t Decided on Dec. 13, 2023) allowed a challenge to the release to go forward, rejecting a motion to dismiss.

For some background on these issues, I refer the reader to my post “Challenging Releases and Settlements Based on Fraudulent Inducement is a Challenge,” where I explain and update the basic principles. Also, the Topic Heading “Release” collects more of the relevant cases.

Danucht Decision

In Danucht, the First Department got right to the heart of the issue by reversing the Commercial Division’s decision to allow a fraud claim to proceed in the face of a release. The First Department found the more comprehensive standard language of the release to be sufficient to cover the claim of fraud, even though the release did not directly encompass claims of fraud as to the release itself:

Read the full blog here.