| Johnson v Lebanese Am. Univ. |
| 2011 NY Slip Op 03658 [84 AD3d 427] |
| May 3, 2011 |
| Appellate Division, First Department |
| Bob Johnson, Appellant, v Lebanese American Universityet al., Respondents. |
—[*1] Wilmer Cutler Pickering Hale and Dorr LLP, Boston, Massachusetts (Ariella Feingold ofcounsel), for respondents.
Judgment, Supreme Court, New York County (Marylin G. Diamond, J.), entered January 12,2010, dismissing the complaint, and bringing up for review an order, same court and Justice,entered December 30, 2009, which granted defendants' motion for summary judgment dismissingthe complaint, reversed, on the law, without costs, the judgment vacated, and the complaintreinstated.
Plaintiff worked in marketing for defendant university until defendant terminated hisemployment. At the time of his termination, plaintiff was told that he was being let go due topoor performance. He was further informed that if he signed an agreement entitled "Release &Discharge" (the release) that defendant forwarded to him he would be paid the sum of $4,651.94.The agreement read as follows:
"I, the undersigned Robert Johnson do hereby declare that I have received from the LebaneseAmerican University the sum of $4,651.94 as an ex-gratia payment in full settlement of any andall claims and entitlements related to my services of whatsoever nature with the above mentionedUniversity up to June 10, 2008.
"I therefore hereby remise, release and completely discharge the Lebanese AmericanUniversity and all its responsible officers of and from all actions or rights that I may ever haveagainst the University in respect of my above mentioned service.
"In witness whereof I have signed this full, final and irrevocable Release and Discharge thisday of 6/30/08."
Plaintiff executed the document and collected the stipulated amount. However, he claims thatfive months later a former coworker at the university told him that she had been informed thatdefendant Joseph G. Jabbra, the university's president, was uncomfortable with plaintiff's"lifestyle choices." Plaintiff interpreted this alleged statement as a reference to his being gay. Hethen commenced this action alleging that in terminating him defendants had discriminated [*2]against him based on his sexual orientation, in violation of the NewYork State and New York City Human Rights Laws.
Defendants answered and, apparently before any discovery had been conducted, moved forsummary judgment. The sole basis for the motion was the release by which defendants contendedplaintiff had waived the discrimination claim. In opposition, plaintiff submitted an affidavit inwhich he stated that he was unaware of any basis for a discrimination claim against defendantswhen he signed the release and that he did not understand the document to relinquish any suchclaims. To the contrary, he stated: "My understanding was that [the $4,651.94 payment]represented back payment that was owed to me by Defendants, including payment for unusedvacation and sick time. Therefore, when I signed the release, I thought that by accepting thispayment, I was simply giving up my rights to later claim that the Defendants owed me any moreunpaid wages. I also did not understand the meaning of the term 'ex-gratia.' " Plaintiff argued thatbecause it referred only to "services," the release should be read narrowly to relinquish onlyclaims for monies owed in exchange for services. At the very least, he asserted, the documentwas ambiguous as to whether it broadly applied to other rights of employment, such as the rightto enforce antidiscrimination laws. Plaintiff also noted in his affidavit that he had not beenadvised to consult an attorney before executing the release. Finally, plaintiff contended that, byfalsely representing to him that he was being discharged for poor performance, defendantsfraudulently induced him into signing the release and that the document should be invalidated forthat reason.
Supreme Court granted the motion and dismissed the complaint. The court stated: "Inreleasing the University from all actions or rights he may have against the school with respect tohis 'service' thereto, the release was clearly referring to his employment by the University.Indeed, the release is a straightforward, uncomplicated document which apprises a reasonablesignatory that all claims arising out of such service are being released and discharged, includingemployment discrimination claims." The court rejected plaintiff's claim that he had not beenadvised to consult counsel, finding that no court of this State had held that to be a bar toenforcement of an employment-related release. It further held that plaintiff's fraudulentinducement claim was unavailing because he had not established an issue of fact as to whether heexecuted the release in specific reliance on the representation that his termination wasperformance-based.
Under New York State law, the enforceability of releases of employment discriminationclaims is generally analyzed the same way any release of claims would be analyzed, that is, as "acontract whose interpretation is governed by principles of contract law" (Goode v Drew Bldg.Supply, 266 AD2d 925, 925 [1999] [internal quotation marks and citations omitted]).Pursuant to those principles, language in a contract will be deemed unambiguous only if it has "'a definite and precise meaning, unattended by danger of misconception in the purport of the[agreement] itself, and concerning which there is no reasonable basis for a difference of opinion'" (Greenfield [*3]v Philles Records, 98 NY2d 562, 569[2002], quoting Breed v Insurance Co. of N. Am., 46 NY2d 351, 355 [1978]). However,as the Court of Appeals has explained: "There is little doubt . . . that [a release's]interpretation and limitation by the parol evidence rule are subject to special rules. These rulesare based on a realistic recognition that releases contain standardized, even ritualistic, languageand are given in circumstances where the parties are sometimes looking no further than theprecise matter in dispute that is being settled. Thus, while it has been held that an unreformedgeneral release will be given its full literal effect where it is directly or circumstantially evidentthat the purpose is to achieve a truly general settlement, the cases are many in which the releasehas been avoided with respect to uncontemplated transactions despite the generality of thelanguage in the release form" (Mangini v McClurg, 24 NY2d 556, 562 [1969] [citationsomitted]). Indeed, for a release to extend to claims both known and unknown, it must have beenboth " 'fairly and knowingly made' " (id. at 566, quoting Farrington v Harlem Sav.Bank, 280 NY 1, 4 [1939]). This does not necessarily mean that the releasor must show thathe or she was induced to execute the release by fraudulent means. Rather, "[t]he requirement ofan 'agreement fairly and knowingly made' has been extended . . . to cover othersituations where because the releasor has had little time for investigation or deliberation, orbecause of the existence of overreaching or unfair circumstances, it was deemed inequitable toallow the release to serve as a bar to the claim of the injured party" (id. at 567; seee.g. Haynes v Garez, 304 AD2d 714 [2003]; Starr v Johnsen, 143 AD2d 130 [1988]).
On their motion for summary judgment, defendants bore the burden of establishing that therelease was unambiguous as a matter of law and that there were no material issues of factregarding whether it precluded the claims asserted by plaintiff in his complaint. Defendantssatisfied their initial requirement by submitting the release. However, plaintiff raised a triableissue of fact as to whether a release of discrimination claims was "fairly and knowingly made."He did this by stating that it was his "understanding" that the release was simply anacknowledgment that the $4,651.94 payment that defendants would make upon receipt of theexecuted document represented everything he was already owed at the time of his termination,and that he had no right to challenge the amount at a later date. Whether plaintiff had a validbasis for such an "understanding" cannot be determined on this record. Indeed, plaintiff does notreveal who or what led him to form this belief. Further, if plaintiff had inquired into the meaningof the term "ex-gratia," he might have realized that, contrary to his "understanding," defendantsconsidered the payment gratuitous. However, it is significant that defendants did not challengethe legitimacy of plaintiff's "understanding" or offer an affidavit by anybody at the universitywho was involved in the preparation of the release. Accordingly, we adhere to thewell-established principle that evidence submitted in opposition to a motion for summaryjudgment should be accepted as true (seePellegrini v Brock, 65 AD3d 971 [2009]).[*4]
Plaintiff further created an issue of fact as to the fairnessof the release by alleging that he was told that the reason for his termination was poorperformance. Plaintiff did not make out a claim for fraud because he did not allege that he wasinduced by defendants' representation to sign the release. We find, however, that the allegationsuggests the existence of "overreaching or unfair circumstances," which, if proved, would renderenforcement of the release inequitable (see Mangini, 24 NY2d at 567). Additionally, aquestion of fact exists whether it would be fair to enforce the release against plaintiff'sdiscrimination claims when plaintiff was given the take-it-or-leave-it proposition of signing thedocument or not receiving the payment. Again, we must assume, for purposes of this motion forsummary judgment, where we are required to give plaintiff the benefit of all favorable inferencesthat can be drawn from the evidence, that the amount offered to plaintiff constituted wages andbenefits he had already earned. If that is the case, it would certainly constitute "overreaching" fordefendants to tie the payment of those wages to plaintiff's executing a release. We note that,because of the constraints placed on plaintiff's ability to collect those alleged wages, it was notunreasonable for him not to look up the definition of the term "ex-gratia."
If plaintiff's version of events is correct, then the scope of the release is not necessarily asbroad as defendants contend. Plaintiff maintains that he was paid only what he was already owed,and that he was given no additional benefits that would have constituted consideration for arelease of discrimination claims. If that is true, then he could not have been expected tounderstand that he was relinquishing his right to sue for claims unrelated to pay and benefits.Moreover, the release does not on its face preclude the narrow scope urged by plaintiff. If theparties indeed intended the release to settle payment and benefits issues only, then it makes sensethat they used language releasing claims related to the "services" plaintiff provided in exchangefor those payments and benefits.
The small amount of consideration paid to plaintiff is also significant and further informs ourview that summary judgment was improperly granted. While courts do not ordinarily questionthe amount of consideration supporting an agreement, it is appropriate to consider whether arelatively small amount of consideration paid to a releasor in exchange for signing a releasesuggests that the scope of the release is narrower than is urged by the releasee (see Best vYutaka, 90 NY2d 833 [1997]; Haynes v Garez, 304 AD2d at 716). We also take noteof the precise amount of the payment in this case, which indicates that it may have been chosento resolve only known, quantifiable claims.
This case differs substantially from Skluth v United Merchants & Mfrs. (163 AD2d104 [1990]), which defendants rely on and which appears to be the most relevant New York Statecase addressing the enforceability of releases that purport to waive employment discriminationclaims. In Skluth, the plaintiff had a contract with his employer, the defendant, whichprovided that the employer could terminate him upon 90 days' notice. The contract stated thatduring the 90-day notice period plaintiff would continue to be paid his usual salary and benefits,and for a period of 90 days thereafter he would receive additional severance pay. After theemployer terminated the plaintiff, the two parties negotiated additional severance pay notprovided for in the contract. According to this Court's recitation of the facts, "[t]his extension ofbenefits formed the consideration for plaintiff's execution of the release pursuant to which heagreed to 'release and forever discharge [defendant] from all liability of every kind, nature anddescription' arising out of his employment" (163 AD2d at 105). This Court found that the releaseunambiguously barred the plaintiff's discrimination claim, and that "no legal authority exists for[*5]the proposition that a release must expressly mention adiscrimination claim in order to be valid and binding with respect thereto" (id. at 107).
Unlike the situation here, the plaintiff in Skluth could not credibly argue that therelease he executed did not cover discrimination claims. The parties in Skluth negotiateda severance package that was more generous than the plaintiff was already entitled to, and it wasobvious that the employer's incentive for paying the plaintiff more money was a release of claimsof discrimination. Here, by contrast, plaintiff maintains that he tendered the release in exchangefor a payment of monies already due and owing, and that it would have been unreasonable forhim to relinquish additional rights without additional consideration.
The dissent dismisses plaintiff's "understanding" that the release only barred claims forbenefits due and owing to him at the time of his termination by citing cases that hold that areleasor's subjective belief as to what he is releasing is irrelevant. However, the dissent ignoresthe principle that where there is objective evidence that the release was not intended tocover certain claims, the releasor will not be barred from asserting those claims (see Cahill vRegan, 5 NY2d 292, 299 [1959]). As discussed above, on this record we cannot resolve theprecise scope of the release. Moreover, the dissent disregards well-settled rules of constructionby reading the operative words of the document in a vacuum. In interpreting contractuallanguage, a court must " 'consider the relation of the parties and the circumstances under which itwas executed. Particular words should be considered, not as if isolated from the context, but inthe light of the obligation as a whole and the intention of the parties as manifested thereby' "(Kass v Kass, 91 NY2d 554, 566 [1998], quoting Atwater & Co. v Panama R.R.Co., 246 NY 519, 524 [1927]). Here, accepting as true plaintiff's statement that the releasewas prepared specifically in connection with wages and benefits owed to him at the time of histermination, one can reasonably construe the document as waiving claims related to his earnings,and nothing else.
While the fact that plaintiff was not advised to consult with counsel is not dispositive of theenforceability of the release (Skluth, 163 AD2d at 107), defendants' tying of the paymentto plaintiff's return of the release certainly had a bearing on plaintiff's opportunity to consultcounsel. As Supreme Court recognized, the opportunity to consult counsel is at least a factor tobe considered when analyzing the volition with which a party entered into a contract (seeid.). However, with the payment depending on plaintiff's return of the signed release it canhardly be said, as the court did, that plaintiff had "ample" opportunity to consult an attorneybefore signing the document.
For the foregoing reasons, we find that issues of fact exist as to whether plaintiff intended torelinquish employment discrimination claims when he executed the release. Accordingly,Supreme Court erred in dismissing the complaint. Concur—Mazzarelli, J.P., Moskowitz,Richter and Manzanet-Daniels, JJ.
Andrias, J., dissents in a memorandum as follows: The issue before us is whether plaintiff'saction alleging discriminatory discharge in violation of the City and State Human Rights Laws isbarred by the "Release & Discharge" (the release) he executed after his employment withdefendant Lebanese American University (LAU) was terminated. While we all agree thatdefendants satisfied their prima facie burden on the summary judgment motion, the majorityfinds that plaintiff raised a triable issue of fact as to the scope of the release based on his allegedunderstanding that he was signing a limited release intended to cover only the issues directlyrelated to his services, such as wage and benefit claims. Because I believe that plaintiff'ssubjective belief is insufficient to render the terms of the release unambiguous, and that there isno evidence that would establish that plaintiff was deprived of the opportunity to consult withcounsel before signing the release, I respectfully dissent.
On June 9, 2008, plaintiff was told that he was being terminated from his position asmarketing communication project manager at LAU due to poor job performance. Thereafter, hewas told that if he wished to receive severance pay of $4,651.94, he would have to sign a release.On or about June 27, 2008, LAU's director of operations e-mailed the release to plaintiff for hisreview and signature. On or about June 30, 2008, plaintiff signed and returned the release, whichreads:
"I . . . declare that I have received from [the] University the sum of $4,651.94 asan ex-gratia payment in full settlement of any and all claims and entitlements related to myservices of whatsoever nature with the above mentioned University up to June 10, 2008.
"I therefore hereby remise, release and completely discharge [defendant] and all itsresponsible officers of and from all actions or rights that I may ever have against the Universityin respect of my above mentioned service."
In November 2008, plaintiff, who is gay, was allegedly told by a former coworker that sheheard that he had been fired because defendant Jabbra was unhappy with his "lifestyle choice."Plaintiff commenced this action and defendants moved for summary judgment based on therelease.
" '[A] valid release which is clear and unambiguous on its face and which is knowingly andvoluntarily entered into will be enforced as a private agreement between parties' " (Skluth vUnited Merchants & Mfrs., 163 AD2d 104, 106 [1990], quoting Appel v Ford MotorCo., 111 AD2d 731, 732 [1985]) and will constitute a complete bar to an action on a claimthat falls within its scope (see Hack v United Capital Corp., 247 AD2d 300, 301, 302[1998]). Like any contract, a release must be "read as a whole to determine its purpose andintent," and extrinsic evidence of the parties' intent may be considered only if the agreement isambiguous (W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990] ["before lookingto evidence of what was in the parties' minds, a court must give due weight to what was in theircontract"]; see also Kass v Kass, 91 NY2d 554, 566 [1998]). "A contract is unambiguousif the language it uses has 'a definite and precise meaning, unattended by danger ofmisconception in the purport of the [agreement] itself, and concerning which there is noreasonable basis for a difference of opinion' " (Greenfield v Philles Records, 98 NY2d562, 569 [2002], quoting Breed v Insurance Co. of N. Am., 46 NY2d 351, 355 [1978]).
Plaintiff asserts that it was his understanding that the release would cover only claims for[*6]additional payment or benefits owed for his services and thathe did not intend it to apply to any wrongful termination claims. However, "it is not aprerequisite to the enforceability of a release that the releasor be subjectively aware of the preciseclaim he or she is releasing" (Mergler v Crystal Props. Assoc., 179 AD2d 177, 180[1992]). If the language of a contract, including a release, is clear and unambiguous, "effect willbe given to the intention of the parties as indicated by the language employed and the fact thatone of the parties may have intended something else is irrelevant" (LeMay v H.W. Keeney,Inc., 124 AD2d 1026, 1027 [1986], lv denied 69 NY2d 607 [1987]; see Moore vKopel, 237 AD2d 124, 125 [1997] [that one party to an agreement may attach a particular,subjective meaning to a term that differs from the term's plain meaning does not render theagreement ambiguous]).
In Skluth v United Merchants & Mfrs. (163 AD2d 104, 105 [1990], supra),the plaintiff agreed to " 'release and forever discharge [defendant] from all liability of every kind,nature and description' arising out of his employment subject, in part, to the collection of statedsalary payments, his pension rights, and his right to participate in defendant's comprehensivemedical plan at his own expense so long as he was not enrolled in any other group medicalprogram."
This Court ruled that the quoted language could not be "reasonably construed as restrictingthe release to claims concerning salary, medical benefits or other forms of financialcompensation, and no legal authority exists for the proposition that a release must expresslymention a discrimination claim in order to be valid and binding with respect thereto" (id.at 107). Thus, we held that "[s]ince the agreement herein clearly and unambiguously releasesdefendant from 'all liability of every kind, nature and description', the instrument operates as amatter of law to release defendant from any and all claims, whether already accrued or whichmight arise subsequent to the date of execution, including plaintiff's assertion of agediscrimination" (id.).
The language of the release in this case is comparable to the language used in Skluth.By its express terms, the release applies to claims "related to my services of whatsoevernature" and to "all actions or rights that I may ever have against theUniversity in respect of my above mentioned service" (emphasis added). There is nolanguage limiting the scope of the release to wage and benefit claims. By executing a release withthis broad language, plaintiff released not only the claims that were specifically in dispute at thetime the release was executed but also any claims that he may ever have againstdefendants related to his service for LAU. The term "services of whatsoever nature" is broadenough to encompass any aspect of the employer-employee relationship between the parties.
Given the unambiguous language of the release, there is no need to look for extrinsicevidence of the parties' intent (see Greenfield v Philles Records, 98 NY2d at 569). In anyevent, plaintiff's subjective understanding as to the scope of the release does not constituteobjective evidence that the release was not intended to cover all claims arising out of hisemployment and, contrary to the majority's view, no objective evidence was submitted thatwould suffice to raise an issue of fact as to whether all the parties intended the release to be oflimited scope.
The majority also believes that plaintiff's failure to consult with counsel is a relevant factorand that "it can hardly be said, as the court did, that plaintiff had 'ample' opportunity to consult anattorney before signing the document." However, in Skluth, we explained: "The otherfactor deemed crucial by the Supreme Court, plaintiff's failure to consult with an attorney, alsodoes not preclude enforcement of the release. The court properly found that plaintiff is aneducated, experienced businessman with knowledge of release letters such as the one that he wasasked to execute. He had ample time to seek legal advice prior to signing the instrument and was,even accepting plaintiff's own version of the facts, not prevented or discouraged from doing so bydefendant. There is, certainly, no requirement in the law that consultation with a lawyer mustoccur in order to render a contractual obligation enforceable, even one relinquishing adiscrimination claim, so long as the agreement has been knowingly and voluntarily entered into.Although a party's representation by an attorney is some evidence of the knowledge and volitionwith which a particular contract was made, the absence of counsel is far less critical than theopportunity to consult counsel" (163 AD2d at 107 [citations omitted]).
Plaintiff, a marketing communication project manager at LAU, was not forced to sign therelease on the spot, and he does not aver that he was given an ultimatum by defendants that theywould withdraw the compensation offer if he did not sign and return the release by a date certain.Indeed, plaintiff acknowledges that he "had the release for approximately two days before [he]signed it." Thus, there is nothing to show that plaintiff was in any way deprived of theopportunity to consult with counsel or pressured to forgo that right.
Accordingly, I would affirm the judgment dismissing the complaint.