Fraud-Based Rescission of Release Agreements under the Child Victims Act: Gormley v. Marist Brothers (2025 NYSlipOp 01612)

1. Introduction

In Gormley v. Marist Brothers of the Schools, Province of the United States of America (2025 NYSlipOp 01612), the Appellate Division, Second Department, addressed the enforceability of two release agreements executed by the plaintiff, Steven Gormley, in connection with sexual abuse he suffered as a minor. The plaintiff alleged that, during the 1980s, a guidance counselor—an ordained “Brother” employed by the predecessor organization of the defendant—sexually abused him while he attended St. Mary’s High School. In 1993 and again in 2006, Gormley signed releases in favor of the defendant (and its predecessor) purporting to bar any further claims. In 2021, invoking the tolling and revival provisions of the Child Victims Act (CPLR 214-g), Gormley sued to recover damages and to set aside the releases on the grounds of fraudulent inducement and fraudulent concealment. The Supreme Court, Nassau County, granted the Marist Brothers’ pre-answer motion to dismiss under CPLR 3211(a). On appeal, the Second Department reversed and denied the motion, holding that the releases could be challenged on fraud grounds and that questions of discovery, diligence, and duty to disclose were factual and could not be resolved on a CPLR 3211(a) motion.

2. Summary of the Judgment

The Appellate Division reversed the trial court’s order dismissing the amended complaint. It held that:

The defendant did not establish, as a matter of law, that Gormley’s fraud-based claims to rescind the releases were time-barred under CPLR 3211(a)(5).
Issues of when the plaintiff discovered—or should have discovered—the alleged fraud present mixed questions of law and fact inappropriate for resolution on a motion to dismiss.
The allegations of fraudulent inducement (a promise that the abuser would have no further contact with minors) and fraudulent concealment (failure to disclose prior allegations of abuse against the counselor) were sufficient, at the pleading stage, to state causes of action under CPLR 3211(a)(7).
The defendant’s additional arguments, raised in reply, were properly considered because the plaintiff was afforded an opportunity to respond in sur-reply.

Consequently, the court denied the Marist Brothers’ motion to dismiss and reinstated the plaintiff’s claims.

3. Analysis

3.1. Precedents Cited

Cruz v. Guaba, 226 AD3d 964: Established that a defendant moving under CPLR 3211(a)(5) bears the initial burden of showing that the limitations period has expired.
Islandcap, LLC v. Cohen, 230 AD3d 660: Clarified that once a defendant meets that burden, the plaintiff must raise a question of fact regarding tolling or discovery.
Centro Empresarial Cempresa S.A. v. América Móvil, S.A.B. de C.V., 17 NY3d 269: Held that a valid release ordinarily bars claims covered by it, but can be invalidated for fraud.
Sargiss v. Magarelli, 12 NY3d 527: Ruled that dismissal of a fraud claim on a motion is improper unless it conclusively appears the plaintiff knew facts from which fraud could be inferred.
Applewhite v. 112 Liberty Assoc., LLC, 233 AD3d 834: Reiterated that fraud in the inducement is a traditional basis to set aside releases.
Barrett v. Freifeld, 64 AD3d 736: Recognized that a duty to disclose may arise under the special facts doctrine even absent a fiduciary relationship.

3.2. Legal Reasoning

The court’s reasoning unfolds in two principal strands:

Statute of Limitations (CPLR 3211(a)(5))
The defendant did not establish prima facie that the fraud-based claims were time-barred, because:
- The complaint and the defendant’s papers failed to show when Gormley discovered the fraud.
- Affidavit evidence indicated he only learned key facts in early 2021, well within two years of commencing suit under CPLR 203(g) and 213(8).
The court held that reasonable diligence questions must be resolved at trial rather than on a motion to dismiss.
Failure to State a Cause of Action (CPLR 3211(a)(7))
Taking all allegations as true, the plaintiff pleaded both:
- Fraudulent inducement—the defendant’s express promise (in the 1993 releases) that the counselor would “never again” work with minors, which was knowingly false and induced Gormley’s reliance.
- Fraudulent concealment—the defendant’s superior knowledge of prior abuse allegations and failure to disclose, giving rise to a duty under the special facts doctrine.
Those theories satisfy the elements of misrepresentation, scienter, reliance, and injury at the pleading stage. Nor did the defendant’s belated reply arguments warrant dismissal; the plaintiff was allowed to submit a sur-reply.

3.3. Impact

This decision reinforces two critical points in New York law:

Child Victims Act Claims vs. Prior Releases: Even longstanding releases executed by adult survivors of childhood abuse may be rescinded if the survivor can plead and prove fraud in the inducement or concealment.
Pleading Standard for Fraud on a Motion to Dismiss: Courts should hesitate to resolve discovery or diligence disputes at the CPLR 3211(a) stage when mixed questions of fact and law exist. The decision clarifies the refusal to entertain merits-based challenges to a fraud claim where the plaintiff has alleged facts entitling him to plead under any cognizable legal theory.

Going forward, entities seeking to enforce releases against survivors of abuse must ensure full and accurate disclosure of all material facts, or risk invalidation under the special facts doctrine. Claimants, in turn, are encouraged to invoke the CVA and to frame fraud-based challenges where release terms are predicated on false assurances.

4. Complex Concepts Simplified

CPLR 3211(a)(5) Motion: A pre-answer motion to dismiss a case because it’s too late to sue (statute of limitations). The defendant must show the deadline expired; the plaintiff must then show a reason the deadline doesn’t apply (e.g., tolling or late discovery of fraud).
CPLR 3211(a)(7) Motion: A pre-answer motion to dismiss for “failure to state a cause of action.” Courts accept all the plaintiff’s allegations as true and ask: “Could the plaintiff, on any plausible view, win?” If yes, the case proceeds.
Fraudulent Inducement vs. Fraudulent Concealment:
• Inducement: A false promise or statement that leads you to sign.
• Concealment: Hiding or failing to reveal a material fact when you have a duty to share it.
Special Facts Doctrine: Even without a fiduciary relationship, if one side has unique or superior knowledge of critical information, it may owe a duty to disclose that information, or nondisclosure becomes fraudulent.

5. Conclusion

Gormley v. Marist Brothers represents a significant reaffirmation of New York’s reluctance to enforce release agreements against survivors of childhood sexual abuse when those releases are tainted by fraud. By clarifying the standard for pre-answer motions under CPLR 3211, the Appellate Division underscores that release validity and discovery issues are factual matters for trial, particularly when a defendant’s promises or omissions lured a plaintiff into relinquishing rights. This decision will guide practitioners in framing fraud-based challenges to releases and in navigating the interplay between the Child Victims Act and traditional contract defenses.