When Is A Release Not Really A Release?

Litigants get together to buy a restaurant.  Problems arise, and a legal malpractice action is commenced. The proceeds over which the litigants argue arose from a legal malpractice case.  The attorney successfully sued had failed to tell his clients that the attorney's friend owned the property next door to a restaurant the clients were buying, and that the attorney's friend was encroaching on their soon-to-be-purchased restaurant.  Things went downhill between the litigants after succeeding on the legal malpractice case.

Buscaglia v Schreck  2014 NY Slip Op 31582(U)  June 10, 2014  Sup Ct, Suffolk County  Docket Number: 26922-11  Judge: Elizabeth H. Emerson should be read for the Court's interpretation of what seemed to be a complete and total general release.

"The complaint alleges in the first cause of action that the plaintiff paid approximately  $197,000 to Mr. Barr during the course of the litigation, while the defendant only paid Mr. Barr  $20,000. The complaint also alleges that the parties were unable to pay the mortgage on the  premises due to the necessity of paying attorney fees in the legal malpractice action, thereby causing the premises to go into foreclosure. The first cause of action seeks reimbursement of one-half of the expenses paid by the plaintiff. The complaint alleges in the second cause of action that, the during the pendency of the litigation, the plaintiff paid property insurance and  expert witness fees and seeks reimbursement of one-half of those expenses. The complaint alleges in the third cause of action that the defendant wrongfully took various assets of the partnership, including heating oil, from the premises and cashed insurance checks payable to both parties. The complaint further alleges that the plaintiff also paid an attorney to represent the parties to resolve the foreclosure action on the premises and seeks reimbursement of one-half the expenses and assets taken by the defendant. The defendant interposed an answer and asserted a general denial, several affirmative defenses and a counter claim seeking "in excess of $50,000," for the plaintiffs refusal to lease the premises during the litigation.

With regard to defendant's first contention that the complaint must be dismissed pursuant to CPLR 3 211 (a) ( 1 ), where a defendant moves to dismiss an action asserting the existence of a def ensc founded upon documentary evidence, the documentary evidence "must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiffs claim" (Trade Source, Inc. v Westchester Wood Works, Inc., 290 AD2d 437; Berger v Temple Beth-El of Great Neck, 303 AD2d 346). The defendant contends that the Settlement Agreement and General Release dated April 26, 2011, represents that the parties released all claims that they had against each other. The defendant relies upon Paragraph 4 of the Settlement Agreement and General Release, which states: the plaintiff, the defendant, and Mr. Barr "hereby mutually release each other * * * from any and all claims * * * and liabilities of any kind whatsoever * * *."

''In construing a general release it is appropriate to look to the controversy being settled and the purpose for which the release was executed[,] ... [and] a release may not be read to cover matter which the parties did not desire or intend to dispose of' (Bugel v WPS Niagara Properties, Inc., 19 AD3d 1081, 1082; see also Wechsler v Diamond Sugar Co., 29 AD3d 681, 682). It is also well settled that "releases are contracts that, unless their language is ambiguous, must be interpreted to give effect to the intent of the parties as indicated by the language employed" (Rubycz-Boyar v Mondragon, 15 AD3d 811, 812).

The court cannot determine from Paragraph 4 of the Settlement Agreement and General Release whether the parties intended to release each other from all disputes that were related to the partnership or whether the subject document relates only to the claims in the litigation against Mr. Nitka. Therefore, the branch of the motion seeking dismissal on the ground of documentary evidence is denied. "

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