Ordinary Diligence Defeats Fraud-Based Attacks on Broad Employment Releases: Trepeta v. Mobiquity Technologies, Inc.

Introduction

This commentary analyzes the Appellate Division, Second Department’s decision in Trepeta v. Mobiquity Technologies, Inc., 2025 NY Slip Op 04806, decided on August 27, 2025. The case involves a former employee, Michael Trepeta, who sought to rescind a 2017 separation agreement containing a comprehensive general release and to recover damages for fraudulent inducement and other claims against his former employer, Mobiquity Technologies, Inc., and related defendants.

The key issues were whether the plaintiff adequately pleaded fraudulent inducement sufficient to invalidate the release and, if not, whether the release barred his claims at the pleading stage. Central to the dispute was the plaintiff’s allegation that he executed the separation agreement under fraudulent pressure—namely, threats of termination for cause and termination of health benefits purportedly under a 2005 employment agreement—and that material facts were concealed from him at the time of execution.

The Supreme Court, Nassau County, dismissed the complaint under CPLR 3211, and the Appellate Division affirmed. The decision consolidates and applies settled doctrines on pleading standards, justifiable reliance in fraud, duty to disclose, and the enforceability of general releases.

Summary of the Judgment

The Second Department affirmed the dismissal of the complaint, with costs, concluding:

The plaintiff failed to state a viable claim for fraudulent inducement because he did not adequately plead justifiable reliance. He had “the means available to him” to assess the truth of the employer’s statements by reviewing his own 2005 employment agreement, which defeated any claim of reasonable reliance.
Any fraudulent concealment theory failed because the plaintiff did not adequately allege that the defendants owed him a duty to disclose the supposedly concealed facts.
The defendants established, via submission of the separation agreement, that the comprehensive general release barred the action. The burden then shifted to the plaintiff to show grounds to set aside the release—fraud, duress, illegality, mutual mistake, or unfair circumstances showing the release was not fairly and knowingly made—which he failed to do.
Accordingly, dismissal under CPLR 3211 was proper.

Analysis

Precedents Cited and Their Influence

Leon v. Martinez, 84 NY2d 83: Reaffirmed the CPLR 3211(a)(7) standard—courts accept pleaded facts as true and ask whether those facts fit within any cognizable theory. This framed the analysis of the plaintiff’s fraud claim.
Reaves v. NYC Dept. of Educ., 218 AD3d 697; 1470 39th St., LLC v. Goldberg, 226 AD3d 853: Recent Second Department applications of the 3211(a)(7) pleading standard, confirming a liberal reading for plaintiffs at the motion to dismiss stage.
Cron v. Hargro Fabrics, 91 NY2d 362; Nilazra, Inc. v. Karakus, Inc., 136 AD3d 994; Asamblea De Iglesias Christianas, Inc. v. DeVito, 210 AD3d 843: These cases allow a plaintiff to use affidavits to cure pleading defects on a 3211(a)(7) motion. The Trepeta court considered the plaintiff’s affidavit but still found the claims deficient.
Israel v. Progressive Cas. Ins. Co., 222 AD3d 733; 651 Bay St., LLC v. Discenza, 189 AD3d 952: Defined the elements of fraudulent inducement, including a knowing misrepresentation of present material fact and reasonable reliance causing injury. The court applied these elements to conclude reliance was not justifiable.
Centro Empresarial Cempresa S.A. v. América Móvil, S.A.B. de C.V., 17 NY3d 269: A cornerstone release case. It underscores that a valid release is a complete bar to claims encompassed by it and describes the burden-shifting framework: once a release is shown, the releasor must demonstrate grounds to invalidate it (fraud, duress, mutual mistake, etc.). Trepeta follows Centro’s approach to both release enforceability and reliance considerations.
JM UC Group, LLC v. Precious Care Mgt., LLC, 221 AD3d 877; Feldman v. Byrne, 210 AD3d 646; Benjamin v. Yeroushalmi, 178 AD3d 650; ISS Action, Inc. v. Tutor Perini Corp., 170 AD3d 686: These decisions articulate the “ordinary intelligence” rule for justifiable reliance: a plaintiff cannot reasonably rely on a representation when he had the means to discover the truth by exercising ordinary diligence. Trepeta uses this doctrine to reject reliance where the plaintiff could consult his own employment agreement.
Sitar v. Sitar, 61 AD3d 739: For fraudulent concealment, a plaintiff must show the defendant had a duty to disclose; absent that duty, concealment does not sound in fraud. Trepeta applies Sitar to reject the plaintiff’s nondisclosure theory.
Wei Qiang Huang v. Llerena-Salazar, 222 AD3d 1033; Miller v. Brunner, 215 AD3d 952; Haynes v. Garez, 304 AD2d 714; Mangini v. McClurg, 24 NY2d 556: Together, these cases describe when a release may be set aside: traditional contract defenses (fraud, duress, illegality, mutual mistake) and the broader “not fairly and knowingly made” doctrine capturing overreaching or undue circumstances. Trepeta holds the plaintiff did not sufficiently plead any such grounds.
Sacchetti-Virga v. Bonilla, 158 AD3d 783: Clarifies that on a 3211(a)(5) motion (e.g., release), the plaintiff’s allegations and affidavit are construed favorably. Trepeta applies this standard yet still finds the release dispositive.
Lopez v. Muttana, 144 AD3d 871: Confirms that broad releases are enforceable and bar covered claims, aligning with the result in Trepeta.

Legal Reasoning

The court’s reasoning proceeds along two, related CPLR 3211 tracks: (1) failure to state a claim for fraudulent inducement under CPLR 3211(a)(7), and (2) dismissal based on a release under CPLR 3211(a)(5).

1) Fraudulent inducement and justifiable reliance (CPLR 3211(a)(7))

Elements applied: The court reiterated that fraudulent inducement requires a knowing misrepresentation of material present fact intended to deceive, reasonable reliance by the plaintiff, and resulting injury.
Ordinary diligence defeats reliance: The court held the plaintiff did not adequately plead justifiable reliance because he could have verified the employer’s position about termination “for cause” and health benefits by consulting his own 2005 employment agreement. Under the “ordinary intelligence” rule, a party cannot claim reasonable reliance on statements contradictable by documents in his possession or readily accessible to him.
No duty to disclose: To the extent the plaintiff alleged concealment of material facts, the court held he failed to allege a duty to disclose. Fraud by concealment requires a duty arising from, for example, a fiduciary relationship, special facts doctrine, or partial disclosures that are misleading absent further disclosure. The complaint and affidavit did not sufficiently allege such a duty.

2) The general release as a complete bar (CPLR 3211(a)(5))

Scope and burden shifting: The defendants submitted the 2017 separation agreement containing a broad release of “any and all claims … known and unknown … from any act or omission … on or before the date of execution.” This satisfied the defendants’ initial burden to show the action was barred by the release.
Plaintiff’s burden to avoid the release: The burden shifted to the plaintiff to allege facts that would invalidate the release—fraud, duress, illegality, mutual mistake, or that it was not “fairly and knowingly made” (overreaching, lack of deliberation, inequitable circumstances).
Insufficient allegations to set aside: The court concluded the plaintiff’s submissions did not adequately plead fraud (because reliance and duty to disclose were lacking), nor did they plead duress, overreaching, or other circumstances sufficient to avoid the release. Consequently, the release barred all claims encompassed by its terms, warranting dismissal.

Impact and Significance

This decision underscores several practical and doctrinal points likely to influence future litigation, particularly in employment and commercial release contexts:

Reliance in release challenges is constrained: When parties negotiate a separation agreement, a party cannot later claim reasonable reliance on the counterparty’s characterizations of contractual rights that the party could confirm by reading their own agreement. The court’s emphasis on “ordinary diligence” fortifies the finality of releases against fraud challenges premised on disputable interpretations of known documents.
Duties to disclose are narrow in arm’s‑length employment separations: Absent a fiduciary relationship or other legally recognized duty, employers generally have no obligation to volunteer information during separation negotiations. Plaintiffs attempting fraudulent concealment must plead specific facts establishing such a duty.
Burden-shifting with releases is outcome-determinative at the pleading stage: Defendants who produce a clear, comprehensive release can often obtain early dismissal. Plaintiffs must be prepared to plead—and ultimately prove—recognized grounds to invalidate the release, not merely dissatisfaction with how negotiations unfolded.
“Fairly and knowingly made” remains a viable but exacting path: The decision acknowledges the Mangini/Haynes line permitting courts to set aside releases in circumstances “falling far short of actual fraud” (e.g., extreme time pressure, overreaching). But Trepeta illustrates that bare assertions or generalized unfairness will not suffice without concrete, well-pleaded facts.
Practical drafting and litigation implications:
- Employers: Broadly worded releases that expressly cover known and unknown claims through the execution date remain a strong defense. Preserving documentation of negotiation context and providing reasonable time for review further insulates the release.
- Employees: To challenge a release, plead specific present-fact misrepresentations, why reliance was justified notwithstanding access to the underlying documents, and concrete circumstances showing duress or overreaching. Identify a duty to disclose for any concealment theory.

Complex Concepts Simplified

CPLR 3211(a)(7): A motion to dismiss for failure to state a claim. The court assumes the complaint’s facts are true and asks whether those facts, if proven, would support a legal claim.
CPLR 3211(a)(5): A motion to dismiss based on a defense like a release or statute of limitations. If the defense is established by documentary evidence, dismissal is appropriate unless the plaintiff shows a reason the defense is invalid.
Fraudulent inducement: Claim that a contract (here, a separation agreement) was entered into because of another party’s deliberate lie about a present fact, and the deceived party reasonably relied on that lie to their detriment.
Justifiable reliance: Even if a statement is false, the law asks whether the plaintiff reasonably relied on it. If the truth could be discovered by reviewing documents in the plaintiff’s possession, reliance typically is not justified.
Duty to disclose: For fraud based on concealment, the defendant must have had a legal duty to share the information (e.g., due to a fiduciary relationship, special facts, or partial statements that would be misleading without more).
General release: A contractual clause where a party relinquishes all claims against another, often including unknown claims, arising up to the date of execution. A valid release generally bars those claims.
“Fairly and knowingly made”: A judicial safety valve allowing a court to invalidate a release if, considering the circumstances (time pressure, overreaching), it would be inequitable to enforce it—even without full-fledged fraud.

Conclusion

Trepeta v. Mobiquity Technologies, Inc. cements a pragmatic rule in the release context: a party cannot sustain a fraud-based rescission challenge when the claimed misrepresentation is contradicted or verifiable by documents the party already possesses, such as their own employment agreement. The decision also reiterates that fraudulent concealment requires a duty to disclose, which was not adequately pleaded, and that a comprehensive release—properly documented—remains a formidable barrier at the pleading stage. The case thus reinforces the finality of well-crafted employment separation releases and the high bar plaintiffs must clear to invalidate them, sharpening the contours of justifiable reliance and the duty-to-disclose requirement in New York’s fraud jurisprudence.