Crane v. WP Strategic Holdings, LLC

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 â​​ 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 (see Silver Point Capital Fund, L.P. v Riviera Resources, Inc., 198 AD3d 432, 432-433 [1st Dept 2021]; Avnet, Inc. v Deloitte Consulting LLP, 187 AD3d 430, 431 [1st Dept 2020]; see also Treistman v Ulster County Socy[*3]. for Prevention of Cruelty to Animals, 235 AD3d 1144, 1145 [3d Dept 2025], lv denied 44 NY3d 1020 [2025]). 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 (see Booth v 3669 Delaware, 92 NY2d 934, 935 [1998]; Global Mins. & Metals Corp. v Holme, 35 AD3d 93, 98 [1st Dept 2006], lv denied 8 NY3d 804 [2007]; see also Stevens v Town of Chenango [Forks], 167 AD3d 1105, 1106 [3d Dept 2018]).

"[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" (Centro Empresarial Cempresa S.A. v AmÃ​rica MÃ​vil, S.A.B. de C.V., 17 NY3d at 276; see Columbia Consultants, LLC v Danucht Entertainment, LLC, 222 AD3d 479, 480 [1st Dept 2023]; Avnet, Inc. v Deloitte Consulting LLP, 187 AD3d at 431). 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" (Centro Empresarial Cempresa S.A. v AmÃ​rica MÃ​vil, S.A.B. de C.V., 76 AD3d 310, 318 [1st Dept 2010] [internal quotation marks, brackets and citations omitted], affd 17 NY3d 269 [2011]). 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 allof 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."^FN2 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 (compare Darwish Auto Group, LLC v TD Bank, N.A., 246 AD3d 1332, 1341 [3d Dept 2026]; see generally Amici v Mazza, 234 AD3d 1170, 1173 [3d Dept 2025], lv denied 44 NY3d 902 [2025]). Plaintiffs' separate claim that they were fraudulently induced into entering the release also fails for lack of justifiable reliance (see generally Centro Empresarial Cempresa S.A. v AmÃ​rica [*4]MÃ​vil, S.A.B. de C.V., 17 NY3d at 276). 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" (LLM Capital Partners, LLC v Mill Point Capital, LLC, 224 AD3d 504, 507-508 [1st Dept 2024] [internal quotation marks and citation omitted]; see Silver Point Capital Fund, L.P. v Riviera Resources, Inc., 198 AD3d at 433).^FN3

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. Aarons, Ceresia and McShan, JJ., concur; Clark, J.P., not taking part.