language of the Release could be construed as a general release,
he conducted company-wide due diligence to determine any amounts
owed by ATBN to any Kraft division. (Id. at 51; Def.
Rule 56.1 Stmt. ¶ 36.) Specifically, Gorman sent email to six Kraft
attorneys in the other Kraft divisions stating that ATBN "owe[s]
Kraft $400,000 for recent Crystal Light and Bacon Bits purchases
and [has] refused to pay us unless Kraft signs a general release
protecting them from any breach of our agreements. . . .
Obviously we can't sign for all of Kraft but I am interested to
know if any other division is doing business with them beside
Oscar Mayer and [the Beverage Division]." (Def. Rule 56.1 Stmt.,
Ex. K.) When questioned why he inquired about any debts owed to
other Kraft divisions, Gorman testified that he "was concerned
whether . . . there were other businesses that I would be
signing away or precluding Kraft from any rights it had
vis-a-vis [ATBN]." (Gorman Dep. at 50.)
Gorman received responses from all six Kraft attorneys. The
division of Kraft that markets and sells Bacon Bits responded
that ATBN owed money on an invoice for the purchase of Bacon
Bits. (Id. at 83.) The other Kraft attorneys, including the
Director of Legal Services for the Cheese Division, did not
indicate that any money was due to Kraft from ATBN. (Def.
Rule 56.1 Stmt. ¶ 40.)
After the Release was executed, the Cheese Division uncovered
an invoice dated November 11, 1999 in the amount of $585,500
that has not been paid by ATBN. (Pl. Rule 56.1 Stmt. ¶ 1.) This
action followed. In the face of ATBN's defense that the Release
discharged the debt, plaintiff argues that the Release was never
intended as a general release, but was limited to the Beverage
Division. In the alternative, plaintiff argues that the release
is invalid on the basis of the unilateral mistake doctrine.
I. Summary Judgment Standard
Defendant moves for summary judgment pursuant to FED. R. Civ.
P. 56. Summary judgment may be granted "if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law." FED. R. CIV. P.
56(c). The burden rests on the moving party to demonstrate the
absence of a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265
(1986); Ticali v. Roman Catholic Diocese of Brooklyn,
41 F. Supp.2d 249, 254 (E.D.N.Y. 1999). A genuine factual issue
exists if there is sufficient evidence favoring the nonmovant
for a reasonable jury to return a verdict in his favor.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250,
106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Ticali, 41 F. Supp.2d at 254. In
deciding whether summary judgment is appropriate, the court
resolves all ambiguities and draws all permissible factual
inferences against the movant. See Anderson, 477 U.S. at 255,
106 S.Ct. 2505. Summary judgment is warranted when the nonmovant
has no evidentiary support for an essential element on which it
bears the burden of proof. Celotex, 477 U.S. at 32223,
106 S.Ct. 2548; Silver v. City Univ. of N.Y., 947 F.2d 1021, 1022
(2d Cir. 1991).
ATBN contends that the Release is an unambiguous general
release that bars the instant claim and precludes the
introduction of parole evidence as to the parties' intent in
signing the Release. Kraft, on the other hand, argues that the
Release is ambiguous and that this Court should consider
extrinsic evidence indicating that the Release was intended to
be limited in scope to the Beverage Division.
In the context of contracts, if an ambiguity in the
contract exists, then summary judgment is generally
improper, because the principles governing summary
judgment "require that where contract language
susceptible of at least two fairly reasonable
meanings, the parties have a right to present
extrinsic evidence of their intent at the time of
Ginett v. Computer Task Group, Inc., 962 F.2d 1085, 1097 (2d
Cir. 1992) (quoting Schering Corp. v. Home Ins. Co.,
712 F.2d 4, 9 (2d Cir. 1983)). However, "when a release is clear and
unambiguous on its face and knowingly and voluntarily entered
into, it will be enforced as a private agreement between the
parties." L & K Holding Corp. v. Tropical Aquarium, 192 A.D.2d 643,
596 N.Y.S.2d 468, 469 (N.Y.App.Div. 1993). Moreover, when a
release is executed "in a commercial context by parties in a
roughly equivalent bargaining position and with ready access to
counsel, the general rule is that, if the language of the
release is clear . . . the intent of the parties [is] indicated
by the language employed" and parol evidence to the contrary is
inadmissible. See, e.g., Middle East Banking Co. v. State St.
Bank Intl, 821 F.2d 897, 907 (2d Cir. 1987); K & S Co. v.
Sexton Inv. Co., No. 96 Civ. 8741, 1999 WL 92284, at *5
(S.D.N.Y. Feb. 18, 1999). In addition, "[w]hen the words of a
release are of general effect the release is to be construed
most strongly against the releasor." Middle East Banking, 821
F.2d at 907.
Here, we conclude that the Release is a facially clear and
unambiguous general release. Contrary to Kraft's contention, the
document contains no language expressly or impliedly limiting
the scope of the Release to claims arising within the Beverage
Division. The Release unambiguously calls for "Kraft General
Foods to release ATBN" from all claims in consideration for
payment of a definite sum of money. (Def. Rule 56.1 Stmt., Ex.
I.) The language is as broad and general as it is clear, and
there is no genuine dispute that plaintiff's claim falls within
its confines. Furthermore, nothing within the four corners of
the Release suggests an ambiguity that would permit this Court
to look beyond the document to extrinsic evidence as to the
parties' intent. We therefore conclude that ATBN's motion for
summary judgment is granted with respect to this issue and,
absent some evidence that the Release was "procured by fraud,
duress, undue influence, or some other illegal means," K & S
Co., 1999 WL 92284, at *5, Kraft's claim for breach of contract
is barred by the Release.
III. Unilateral Mistake
Kraft seeks to avoid the Release under the doctrine of
unilateral mistake. Specifically, Kraft contends that they
executed the Release without understanding its significance and
unaware of the outstanding debt owed to the Cheese Division and
that ATBN either knew or should have known of their material
Under New York law, in order for a court to allow rescission
of a contract on the basis of a unilateral mistake, "a party
must establish that (i) he entered into a contract under a
mistake of material fact, and that (ii) the other contracting
party either knew or should have known that such mistake was
being made." Ludwig v. NYNEX Serv. Co., 838 F. Supp. 769, 795
(S.D.N.Y. 1993). If the party establishes a unilateral mistake
as to a basic assumption of the contract, a court may "void
releases even in the absence of fraud." Middle East Banking,
821 F.2d at
906; see also The Indep. Order of Foresters v. Donald, Lufkin &
Jenrette, Inc., 157 F.3d 933, 939 (2d Cir. 1998) ("as a basic
proposition, a contract is made voidable by either unilateral or
mutual mistake only where the asserted mistake concerns a `basic
assumption on which the contract was made.'") (citing
RESTATEMENT (SECOND) OF CONTRACTS, §§ 152-53).
We hold that Kraft has presented sufficient evidence to
demonstrate a genuine dispute of material fact as to whether the
Release should be rescinded on the basis of unilateral mistake.
Gorman stated that at the time he executed the contract, he
understood that the entire outstanding debt owed Kraft amounted
to $409,310.80. While Gorman was required to exercise ordinary
care to discover any additional amount owed, see, e.g., Banca
Commerciale Italiana v. Northern Trust Int'l, No. 95 Civ.
10700, 1997 WL 217591, at *7 (S.D.N.Y. April 30, 1997), we
cannot conclude as a matter of law that he failed to do so.
Recognizing the need to conduct a company-wide search, Gorman
contacted his colleagues within the other Kraft divisions. The
failure to uncover the outstanding debt was apparently due to
the fact that the disputed invoice was negotiated by a consumer
promotion group within the Cheese Division that was solely
responsible for its collection. (Gorman Dep. at 102-03.) Based
on the evidence before us, we cannot determine whether or not
this debt should have been uncovered through the exercise of
ordinary care. Furthermore, common sense dictates that, at
minimum, there exists an issue of fact as to whether ATBN knew
or should have known of Kraft's mistake. Assuming arguendo that
ATBN was aware of its total outstanding debt of $994,810.80,
there would be little reason for them to believe that Kraft
would knowingly release all claims for less than half their
value. This argument is buttressed by the fact that the amount
cited in the Release is the precise total of the four invoices
of which Gorman claims he was aware at the time the Release was
signed. Moreover, the evidence suggests that ATBN was aware that
the settlement amount was derived only from the four known
invoices. Accordingly, defendant's motion for summary judgment
is denied. However, in order for Kraft to ultimately prevail on
their claim, they must take the steps necessary to rescind the
Release. Furthermore, "to overcome the heavy presumption that a
deliberately prepared and executed written instrument manifested
the true intention of the parties, evidence of a very high order
is required." George Backer Mgmt. Corp. v. Acme Quilting Co.,
46 N.Y.2d 211, 413 N.Y.S.2d 135, 385 N.E.2d 1062 (1978); see
also John Hancock Mut. Life Ins. Co. v. Carolina Power & Light
Co., 717 F.2d 664, 671 (2d Cir. 1983).
For the reasons stated above, defendant's motion for summary
judgment is granted in part and denied in part.
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