On December 14, 2023, the First Department issued a decision in Columbia Consultants, LLC v. Danucht Entertainment, LLC, 2023 NY Slip Op. 06439, rejecting a claim that a plaintiff was fraudulently induced to enter into a settlement agreement, explaining:
Plaintiffs released their claim that they had been fraudulently induced to enter into the settlement agreement and release. The release covers all claims (with certain exceptions that are not relevant to this appeal), whether known or unknown, foreseen or unforeseen, matured or unmatured, suspected or unsuspected, arising out of or relating to the purchase agreements, the businesses covered by the purchase agreements, and the dispute between the parties concerning their obligations thereunder. This is broad enough to cover plaintiffs’ fraud claim.
The release was fairly and knowingly made. The settlement agreement and release was the subject of negotiations between counselled parties. Furthermore, section 1.3(b) provides that the release will remain in effect despite that each releasor may later discover claims or facts that may be different from those that it now knows or believes to exist regarding the subject matter of the release and which if known at the time of signing of the agreement, may have materially affected the agreement and such party’s decision to enter into it. Plaintiffs also failed to identify a separate fraud from the subject of the release.
Even if the fraud claim were not barred by the release, it would fail for lack of justifiable reliance. Plaintiffs allege that they entered into the settlement agreement (dated as of July 6, 2017) because defendant Richard Akiva falsely stated in late January or early February 2017 that the only person interested in buying the membership interests that plaintiffs had sold to defendant Danucht Entertainment, LLC in 2015 was nonparty Ron Burkle, for a price lower than what Danucht had paid. However, section 3 of the settlement agreement states, Each party acknowledges that in entering into the agreement, it has not relied upon any representation or warranty made by the other parties except as specifically provided in section 2, and section 2 has nothing to do with indication of interest in buying membership interests. In light of section 3, plaintiffs’ reliance on Akiva’s misrepresentation is unreasonable as a matter of law.
(Internal quotations and citations omitted).