Generally, under New York law, a release signed by one party releasing the other party from liability bars the first party (the releasor) from suing the second party (the releasee). However, how this rule plays out in court can be complicated as demonstrated in a recent decision of the New York Appellate Division, Second Department. In that case, the defendant sought to dismiss the plaintiff’s lawsuit on the ground that it previously signed a valid release. The lower court denied the motion to dismiss but the Appellate Division reversed and dismissed the action.
The plaintiff’s claim, in Prete vs. Tamaras Development 1, LLC, was for damage to its real property alleged to have been sustained as a result of a construction project which was being carried out by the defendant on an adjacent property. The defendant paid the plaintiff $15,000.00 at the time of the purported injury and received a signed release in exchange for such payment. Thereafter, the plaintiff sued the defendant for additional damages. The defendant asked the lower court to dismiss the plaintiff’s claim based on New York CPLR § 3211(a)(5), which allows for dismissal of a cause of action where the plaintiff already obtained a release from the defendant.
The lower court denied the defendant’s motion to dismiss presumably because the Court found that the plaintiff was not literate in the English language and therefore did not understand what he was doing at the time he signed the release, thus creating an issue of fact as to the validity of the release. The defendant appealed and the appellate court reversed agreeing with the defendant.
The Second Department found that even if it treated the allegations in the complaint to be true, the case should be dismissed because the plaintiff failed to introduce any evidence which created an issue of fact as to whether the release should be voided. The Court found that the release in question was executed by the plaintiff and, by its terms, released the defendant from the claims interposed by the plaintiff and barred the action. The defendant, by submitting a valid signed release to the Court shifted the burden of proof back to the plaintiff who was then required to show there had been fraud, duress or some other valid reason for voiding the release.
The plaintiff’s claim that he did not adequately understand the English language was insufficient to avoid the general rule that a party who signs a document without any valid excuse for failure to read it is nonetheless bound by the document’s terms. In addition, the Court noted that in opposing the defendant’s motion, the plaintiff failed to allege the defendant had misrepresented the content of the release. The plaintiff also did not assert that he made any effort to have the document either translated or explained to him. A person who does not understand English must make a reasonable effort to have the agreement made clear to him or her.
The lesson here is that you should never sign a document unless you are sure you understand what the document says and what legal rights you are foregoing or obtaining.
If you have any questions regarding an agreement which you are planning to sign, please contact one of our attorneys.