Question of Fact Whether General Releases Encompassed Environmental Damage from Leaking Fuel Tank

The Second Department determined that there was a question whether general releases contemplated damages related to environmental contamination and the action should not have been dismissed based on the releases. The action concerned gasoline which had leaked into the ground when defendant had leased the plaintiff’s property.  The court explained:

Generally, a valid release completely bars an action on a claim that is the subject of the release … . Principles of contract law govern the interpretation of a release; “a release that is complete, clear, and unambiguous on its face must be enforced according to the plain meaning of its terms'” … . Nonetheless, as the Court of Appeals has recognized with respect to a general release, “[t]here is little doubt . . . that its interpretation and limitation by the parol evidence rule are subject to special rules. These rules are based on a realistic recognition that releases contain standardized, even ritualistic, language and are given in circumstances where the parties are sometimes looking no further than the precise matter in dispute that is being settled. Thus, while it has been held that an unreformed general release will be given its full literal effect where it is directly or circumstantially evident that the purpose is to achieve a truly general settlement …, the cases are many in which the release has been avoided with respect to uncontemplated transactions despite the generality of the language in the release form” … .

Further, “[t]he meaning and extent of coverage of a release necessarily depend, as in the case of contracts generally, upon the controversy being settled and upon the purpose for which the release was actually given'” … . A general release may not be construed to cover matters that the parties “did not desire or intend to dispose of” … .

Here, the two releases at issue, whether construed together or separately, are ambiguous regarding whether the parties intended that they cover unknown claims for environmental contamination… .  Burnside 711 LLC v Amerada Hess Corp, 2013 NY Slip Op 05869, 2nd Dept 9-18-13