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Question of Fact Whether Plaintiff Was Fraudulently Induced to Sign a Release—Relevant Law Explained

The Second Department determined plaintiff raised a triable issue of fact concerning whether plaintiff was fraudulently induced to sign a release re: a potential personal-injury action. The release was signed three days after the accident when the plaintiff was still on pain medication and it was alleged the insurance adjuster told her the offered funds were for plaintiff’s “inconvenience” and not to compensate for her injuries.  The court explained relevant law:

” A release is a contract, and its construction is governed by contract law'” … . “Generally, a valid release that is clear and unambiguous on its face constitutes a complete bar to an action on a claim which is the subject of the release absent fraudulent inducement, fraudulent concealment, misrepresentation, mutual mistake or duress'” … .

“A signed release shifts the burden of going forward . . . to the [plaintiff] to show that there has been fraud, duress or some other fact which will be sufficient to void the release'” … . “A plaintiff seeking to invalidate a release due to fraudulent inducement must establish the basic elements of fraud, namely a representation of a material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by the plaintiff, and resulting injury'” … . Moreover, there is a requirement that a release covering both known and unknown injuries be ” fairly and knowingly made'” … . Powell v Adler, 2015 NY Slip Op 04466, 2nd Dept 5-27-15

 

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