Summary
holding that a general release executed by the parties barred the fraud claim after concluding that plaintiffs failed to allege the release was induced by a separate fraud
Summary of this case from Jordan v. Raymond A. Mirra, Jr., Ram Capital Grp., LLCOpinion
No. 92.
Argued April 27, 2011.
Decided June 7, 2011.
APPEAL, by permission of the Appellate Division of the Supreme Court in the First Judicial Department; from an order of that Court, entered July 13, 2010. The Appellate Division (1) reversed, on the law, so much of an order of the Supreme Court, New York County (Charles E. Ramos, J.; op 2008 NY Slip Op 33348 [U]), as had denied a motion by defendants Gadi Zamir and Zamir Properties, Inc. to dismiss the fifth cause of action of the verified second amended complaint seeking to recover for an alleged fraud, and (2) granted the motion. The following question was certified by the Appellate Division: "Was the order of this Court, which reversed the order of the Supreme Court, properly made?"
Arfa v Zamir, 76 AD3d 56, affirmed.
Schlam Stone Dolan LLP, New York City ( David J. Katz of counsel), for appellants.
Wolf Haldenstein Adler Freeman Herz LLP, New York City ( Eric B. Levine and Alan A.B. McDowell of counsel), for respondents.
Chief Judge LIPPMAN and Judges CIPARICK, GRAFFEO, READ, SMITH, PIGOTT and JONES concur in memorandum.
OPINION OF THE COURT
MEMORANDUM
The order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.
In June 2005, plaintiffs Rachel Arfa and Alexander Shpigel executed a general agreement with defendant Gadi Zamir regarding management of their real estate business. The agreement contained a provision in which each party released the others and their related entities from "any and all claims, demands, actions, rights, suits, liabilities, interests and causes of action, known or unknown, which they have ever had, have or may now have, which in any way pertain to or arise from any matters, facts, occurrences, actions or omissions which occurred prior to" the date of the contract. This general release, which plaintiffs allege was part of a negotiated agreement meant to ease an antagonistic relationship and keep Zamir "from destroying the value of the real estate portfolio," prevents plaintiffs from now bringing an action for fraud based on misrepresentations predating it.
Plaintiffs have failed to allege that the release was induced by a separate fraud ( see Centro Empresarial Cempresa S.A. v America Movil, S.A.B. de C.V., 17 NY3d 269 [2011.] [decided today]). Additionally, they have failed to allege that they justifiably relied on Zamir's fraudulent misstatements in executing the release. By their own admission, plaintiffs, who are sophisticated parties, had ample indication prior to June 2005 that defendant was not trustworthy, yet they elected to release him from the very claims they now bring without investigating the extent of his alleged misconduct ( see Centro, 17 NY3d at 278; DDJMgt, LLC v Rhone Group L.L.C., 15 NY3d 147, 153-154). Dismissal of plaintiffs' fraud cause of action is therefore appropriate.
Order affirmed, etc.