Comments on Recent Cases: May 2021

Image credit

Part of my work involves reading court decisions to keep abreast of how judges decide the types of cases I handle. Below, I share some thoughts on recent decisions.

Court Holds Release Barred Unknown Claim

Releases are often final, and signing them often means giving up claims you may not even know about. This principle was illustrated in a recent case, in which a Manhattan appellate court ordered the dismissal of a complaint.

In that litigation, an employee signed a separation agreement that released the employer “from any and all causes of action, claims or demands up to the date of this Agreement, known or unknown," Subsequently, she argued that the employer lied to get her to sign the agreement and sued for fraud. But the court held that the claim she subsequently discovered was one of the claims she waived in connection with the release.

Cases like this show why people who sign releases should do their own research to make sure they are not waiving important claims.

Court Refuses to Enforce Unsigned Term Sheet

Before engaging in a transaction, many parties draft term sheets to outline the general parameters of an eventual deal. But these term sheets may not be binding, especially when they are not signed. This often leads to litigation.

In a recent decision by the appeals court in Manhattan, argued in part by my friend Martin Roth, the court held that a plaintiff could not seek lost profits from a deal that did not consummate, just because they had an unsigned term sheet. Nor could they contend that the defendants negotiated in bad faith when the term sheet expressly said that it was not binding.

Cases like this should encourage parties to insist on binding agreements before thinking a proposed deal will really happen.

Court Credits Deposition Testimony over Sworn Statement When Deciding Summary Judgment

To survive a motion for summary judgment, a plaintiff usually needs to submit some evidence that could support an eventual win at trial. Though they can do this by submitting a sworn statement, a court often will disregard a witness statement if it contradicts his deposition testimony. This prevents lawyers from “fixing” a bad statement at deposition by writing up a better answer later.

A Manhattan appeals court recently upheld this principle when it affirmed the dismissal of a personal injury complaint. The plaintiff submitted an affidavit that said she lost her balance because the defendant did not provide adequate handrails. But because she testified differently at deposition, the affidavit was insufficient to support her case.

Cases like this illustrate why depositions (and preparing for them) can very important.