Plaintiff’s Claim that Release Was Not “Fairly and Knowingly Made” Defeats Motion to Dismiss

As the Court of Appeals noted in the leading case of Centro Empresarial Cempresa S.A. v América Móvil, S.A.B. de C.V., 17 NY3d 269 (2011), there is no question that because a signed release is a contract, it can be challenged on any of the traditional grounds for avoiding an agreement, “‘namely, duress, illegality, fraud, or mutual mistake.’” (quoting Mangini v McClurg, 24 NY2d 556 (1969)).

But the Court in Mangini explained a broader basis to avoid a release even if actual fraud had not been employed, based on the premise that the release must have been “fairly and knowingly made”:

In Farrington v. Harlem Sav. Bank ( 280 N.Y. 1), it was established that a release could be made covering both known and unknown injuries, “provided the agreement was fairly and knowingly made” ( id., at p. 4). This limitation on releases for unknown injuries, first applied to a claim that the plaintiff thought he was signing a mere receipt for money to pay a doctor’s bill, was applied in other cases of fraud ( Wheeler v. State of New York, 286 App. Div. 310; Scheer v. Long Is. R.R. Co., 282 App. Div. 724). Fraud, however, had long been a ground for setting aside a release (see Fleming v. Brooklyn Hgts. R.R. Co., 95 App. Div. 110). The requirement of an “agreement fairly and knowingly made” has been extended, however, to cover other situations where because the releasor has had little time for investigation or deliberation, or because of the existence of overreaching or unfair circumstances, it was deemed inequitable to allow the release to serve as a bar to the claim of the injured party (see, e.g., Duch v. Giaquinto, 15 A.D.2d 20; Landau v. Hertz Drivurself Stas., 237 App. Div. 141; Castenada v. Ruderman, 48 Misc.2d 321).

Mangini v McClurg, 24 NY2d 556, 563 (1969)(emphasis added).