Please Release Me Let Me Go

• Posted on: Nov 15 2024

By: Jonathan H. Freiberger

This BLOG has written frequently about the substance and scope of general releases.[1] As noted in prior BLOG articles, in New York, “a valid release constitutes a complete bar to an action on a claim which is the subject of the release.”Global Minerals & Metals Corp. v. Holme, 35 A.D.3d 93, 98 (1^st Dep’t 2006) (citation omitted). 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, Inc., 92 N.Y.2d 934, 935 (1998) (quoting Mangini v. McClurg, 24 N.Y.2d 556, 563 (1969)). See also Centro Empresarial Cempresa S.A. v AmÉrica MÓvil, S.A.B. de C.V., 17 N.Y.3d 269, 276 (2011). For this reason, “[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.” Centro, 17 N.Y.3d at 276 (quoting Mangini, 24 N.Y.2d at 563).

Today’s article is about Grove Realty Enterprises, Inc. v. Budde Agency, Inc., decided by the Appellate Division, Second Department on November 13, 2024. Grove is a case that the defendant apparently could not get dismissed even if Engelbert Humperdinck was present at the oral arguments in a tuxedo singing “Please Release Me Let Me Go”.

The Plaintiff in Grove owned a hotel (appropriately enough) on Fire Island that was destroyed by fire. The Defendant, Budde, is an insurance brokerage firm that procured for Grove a commercial property insurance policy issued by Arch Specialty Insurance Company, a non-party. Arch issued a “Partial Release” and then a “Final Policy Holder Release” after payments were made to Grove under the policy. Both releases contain similar language relevant to the issues raised by this article. Thus, the “Partial Release,” the exact language of which is extremely important here, provides (as quoted by the Court) that:

Grove “forever discharge[s] the said RELEASEE [Arch], their parent companies, affiliates, managers, principals, employees, third-party administrators, adjusters, agents, brokers, experts, servants, brokers and legal representatives, of and from all manner of actions …, whether sounding in contract, quasi-contract or tort, in law or in equity, which RELEASOR [Grove] now has against said RELEASEE [Arch] or which they ever had, or which their affiliates, predecessors, successors or assigns hereafter can, shall or may have, under policy or insurance number ESP0038969-04 (“the Policy”) issued by RELEASOR [Grove] to RELEASEE [Arch], by reason of any matter arising out of and/or related to any and all alleged loss or damage on or about March 27, 2015, to the Real Property and Business Personal Property owned by RELEASOR [Grove] located at Main Walk, Cherry Grove, New York 11782 (“the Loss” and “the Premises”). It is specifically understood and agreed that this Release applies to . . . any tort, bad faith, extra-contractual, breach of implied covenant of good faith and fair dealing and attorney fee claims, arising out and/or related to the Loss, and encompasses a full and final settlement of all claims and potential claims of any type against ARCH arising out of and/or related to the Loss, excluding GROVE’S Business Income with Extra Expense claim to ARCH, which is not released herein and is in the process of adjustment with all rights reserved by GROVE and ARCH” (emphasis omitted). [Brackets in original.]

After resolving matters with Arch, Grove sued Budde for breaching their contract by failing to procure adequate insurance coverage. Budde’s motion for summary judgment, predicated on its affirmative defense of release, was denied by the motion court. On Budde’s appeal, the Second Department affirmed.

First, the Court generally discussed the law on releases. In addition to the law discussed below, the Court noted that releases are contracts and their “construction is governed by contract law.” (Citations omitted.)[2] The Court also stated that a contract that “is clear, complete and subject to only one reasonable interpretation must be enforced according to the plain meaning of the language chosen by the contracting parties” and that an “agreement is ambiguous when the agreement on its face is reasonably susceptible of more than one interpretation.” (Citations and internal quotation marks omitted.)

The Court then held that the subject releases were ambiguous and required resolution by a trier of fact. In so doing, the Court stated:

Here, the Supreme Court properly determined that the releases were ambiguous and that therefore “the resolution of the ambiguity is for the trier of fact” (Arnell Constr. Corp. v New York City Sch. Constr. Auth., 144 AD3d at 716 [internal quotation marks omitted]; see Nappy v Nappy, 40 AD3d at 826). Both releases provided that Grove was discharging Arch and other entities, including brokers, but simultaneously provided that the release was only from actions “which RELEASOR [Grove] now has against said RELEASEE [Arch], or which they ever had, or which their affiliates, predecessors, successors or assigns hereafter can, shall or may have” against Arch. Furthermore, although the releases indicated that they applied to actions sounding in “contract, quasi-contract or tort,” they simultaneously limited their applicability to claims under the specific policy that Arch issued to Grove, which would preclude actions sounding in tort. [Hyperlinks added.]

Takeaway

Releases are important legal documents that are designed to insure future peace among adversarial parties. Accordingly, great care should be taken in the drafting of releases in order for the parties’ intent to be unambiguous and unassailable.

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.

[1] See, e.g., [here], [here], [here], [here], [here], [here], [here], [here] and [here].

[2]Eds. Note: this BLOG has written numerous articles addressing issues related to contract interpretation. To find BLOG articles related to this issue, visit the “BLOG” tile on our website and enter “contract interpretation” in the “search” box.