On July 30, 2026, the Third Department issued a decision in Crane v. WP Strategic Holdings, LLC, 2026 NY Slip Op. 04806, holding that parties who voluntarily sold their rights in a company could not later void the sale, explaining:
As background, on May 28, 2024, defendants advised plaintiffs that they did not wish to move forward in this joint venture and offered to return plaintiffs’ capital investment with an additional $60,000 to account for any personal costs incurred. This arrangement was conditioned on the execution of an agreement and release that relinquished plaintiffs from all ownership of CSPNA and released all parties from any claims, both known and unknown. After negotiations regarding the terms of the release, during which versions thereof were exchanged between counsel for each party, the release was executed, and plaintiffs were paid $660,000. In relevant part, the executed release provided that each party released the other from “all claims, rights, causes of action, suits, debts, dues, units, shares, stock, interests, sums of money . . . and all liability . . . known or unknown.” All affirmed that they “entered into th[e] [a]greement of their own free will and accord, have received independent legal counsel and review of th[e] [a]greement, and they have not been promised any additional future consideration with respect to the transactions contemplated by th[e] [a]greement.” Plaintiffs also specifically acceded that “WP Strategic could sell the CSPNA [s]hares at any time in the future” and, nevertheless, “[d]espite this possibility, [plaintiffs] knowingly and voluntarily provide th[e] [r]elease . . . and voluntarily enter into th[e] [a]greement.”
Initially, we find the release to be clear and unambiguous, and that, by its terms, plaintiffs knowingly and voluntarily released defendants of the instant claims — specifically, the claim that defendants fraudulently induced them into accepting payment and executing the release by the failure to disclose the existence of the impending third-party sale of CSPNA. As each plaintiff’s signature on the clear and unambiguous release is a binding and jural act, defendants satisfied their prima facie burden of establishing that this release bars the claims and the burden shifted to plaintiffs to establish valid grounds for recission.
A party that releases a fraud claim may later challenge that release as fraudulently induced only if it can identify a separate fraud from the subject of the release. Thus, contrary to plaintiffs’ argument, a general release executed even without knowledge of a specific fraud effectively bars a claim or defense based on that fraud. Here, plaintiffs do not raise a separate issue of fraud and, because of their failure to do so, have failed to set forth cognizable grounds to set aside the release.
As to their specific fraud claims, plaintiffs maintain that defendants owed them a duty of disclosure as a fiduciary by virtue of their status as shareholders. This claim is refuted by the language of the release itself. Therein, plaintiffs acknowledged that “WP Strategic purchased all of the Capital Stock of CSPNA,” that their capital contribution would eventually entitle them to shares of CSPNA “on terms to be agreed upon” and that, at execution of the release, the parties had been “unable to reach agreement on the terms on which [plaintiffs] would hold a percentage of CSPNA Shares.” Similarly, the communications after WP had purchased CSPNA demonstrate that the parties were still negotiating the exact percentage of the company that plaintiffs would hold, along with several other key details of the business relationship. Thus, plaintiffs’ capital contributions merely conferred upon them the eventual right to shares, not the shares themselves. As plaintiffs were not shareholders at the time of the execution of the release, defendants did not owe plaintiffs a fiduciary duty.
Plaintiffs’ separate claim that they were fraudulently induced into entering the release also fails for lack of justifiable reliance. The record demonstrates that plaintiffs executed the release on the advice of counsel, despite that counsel’s stated belief that defendants were being untruthful and unresponsive. Additionally, in an email sent to plaintiffs and their counsel, defendant Todd Kletter expressed that he believed that CSPNA could trade at a substantially higher value than they had negotiated. The foregoing, as well as defendants’ reluctance to issue plaintiffs their negotiated-for shares, the sudden change in defendants’ willingness to do business with plaintiffs and the release specifically permitting defendants to sell CSPNA at any time were all indications that something was amiss. Yet, despite these indicators, plaintiffs failed to make further inquiry or insert appropriate language in the agreement for their protection and, as such, they “willingly assumed the business risk that the facts may not be as represented.
As the release executed by plaintiffs bars the instant action and plaintiffs have set forth no meritorious grounds to set aside that release, Supreme Court properly granted defendants’ motion to dismiss the complaint.
(Internal quotations and citations omitted).