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  • Posted on: May 18 2022

By Jonathan H. Freiberger

In this Blog’s August 23, 2021, article, entitled “Second Department Finds Release Binding Despite Plaintiff’s Claim About Not Understanding the English Language”(the “Prior Article”), we discussed, inter alia, the import of general releases and the difficulty that one may have invalidating same once executed.  

One of the leading cases on the law of releases, and as relied upon in the Prior Article, is Centro Emprésarial Cempresa S.A. v. America Móvil, S.A.B. DE C.V., 17 N.Y.3d 269 (2011).  The plaintiff in Centro sold its interest in a company to the defendant, a co-owner of the subject entity.  The Centro plaintiff sued for damages claiming they were fraudulently induced to agree to the sale of its co-ownership interest and to “release the defendant from claims arising from that ownership.”  The Court of Appeals affirmed the Appellate Division’s determination that the release barred the action.  

In discussing the law on releases, the Centro Court recognized that, in general, “a valid release constitutes a complete bar to an action on a claim which is the subject of the release.”  Centro, 17 N.Y.3d at 276 (citation and internal quotation marks omitted).  Further, if “the language of a release is clear and unambiguous, the signing of a release is a `jural act’ binding on the parties.”  Id.  (Citation and internal quotation marks omitted.)  “[A] release may encompass unknown claims, including unknown fraud claims, if the parties so intend and the agreement is fairly and knowingly made.”  However, “[a] release may be invalidated … for any of the traditional bases for setting aside written agreements, namely, duress, illegality, fraud, or mutual mistake.”  Id.  (Citation and internal quotation marks omitted.)  

In Ivaasyuk v. Raglan, 197 A.D.3d 635 (2nd Dep’t 2021), the case that was the focus of the Prior Article, plaintiff was injured when he fell off a ladder while working at a home being renovated.  Prior to the commencement of the action, plaintiff executed a general release pursuant to which all claims “arising out of the subject accident” were released.  Defendant moved for summary judgment dismissing the complaint based on the general release.  Supreme court denied the motion and the Appellate Division reversed.  Notwithstanding that the Ivasyuk plaintiff neither spoke nor read English, the Court explained that a “person who does not understand the English language is not automatically excused from complying with the terms of a signed agreement, since such person must make a reasonable effort to have the agreement made clear to him or her.”  Ivasyuk, 107 A.D.3d at 638 (citations omitted).  The Court found that “the deposition testimony of the injured plaintiff and [one of defendant’s principals] demonstrates that the terms of the release were explained to the injured plaintiff before he executed the document.”  Id.

The First Department was faced with a similar situation when, on May 17, 2022, it decided Rosa v. McAlpine Contracting Co.  The plaintiff in Rosa fell off a ladder at a construction site.  Plaintiff executed a release in exchange for a $30,000.00 payment.  Nonetheless, plaintiff commenced a personal injury action.  Supreme court granted defendants’ motion to dismiss the complaint based on the release and denied, as moot, plaintiff’s cross-motion to dismiss defendants’ release based affirmative defenses.  The First Department modified the order to deny both motions without prejudice.  In so doing, the Court stated:

The complaint and plaintiff’s affidavit raise issues of fact as to whether defendants engaged in fraud, duress, and/or overreaching to procure plaintiff’s signature on a general release of his claims against them related to his alleged fall from a 30-foot ladder while working at a construction site. There is little dispute that the release, written in English, unambiguously released all plaintiff’s claims against defendants in exchange for $30,000 in consideration, which plaintiff received. However, plaintiff avers that he does not read English, that he did not have counsel at the time he executed the document, that he did not know the nature or purpose of the document he signed, and that defendants represented to him that the execution of the document was a mere formality required for his receipt of compensation for work performed. Plaintiff averred that he was out of work at the time, facing eviction and medical bills, and in need of financial support, and that he was hoping to travel to Puerto Rico to see his brother, who was dying. He averred that he did not understand the nature of the release he signed until he retained counsel to aid him in prosecuting a workers’ compensation claim.  (Citations omitted.)

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

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