Opinion
593/2010
06-23-2010
A.A. Truck Renting Corp., Plaintiff, v. Navistar, Inc. f/k/a International Truck and Engine Corp., Defendant.
Appearances of Counsel: For the plaintiff: Schwartzman Garelik Walker & Troy, P.C., by Donald A. Pitofsky, Esq. For the Defendant: Eckert Seamans Cherin & Mellott, LLC, by Steven R. Kramer, Esq.
Appearances of Counsel: For the plaintiff: Schwartzman Garelik Walker & Troy, P.C., by Donald A. Pitofsky, Esq. For the Defendant: Eckert Seamans Cherin & Mellott, LLC, by Steven R. Kramer, Esq.
The issue raised by the defendant's motion to dismiss, made at this pre-discovery stage of this state court litigation, is the effect to be given of a release that was part of a settlement of a prior federal action between the parties.
Upon the foregoing papers, it is ordered that the motion is determined as follows:
This is an action for breach of contract. On or about April 25, 2006, A.A. Truck Renting Corp. (A.A. Truck) and Navistar entered into a written Loyalty Rebate Program Agreement pursuant to which Navistar and A.A. Truck agreed, in pertinent part, that A.A. Truck would be entitled to a rebate from Navistar in the amount of $5,000 per vehicle upon A.A. Truck's payment of the invoices applicable to A.A. Truck's purchase from Navistar of any Series 7000, 8000 or 9000 Truck. On or about October 25, 2007, A.A. Truck and Navistar entered into an agreement whereby A.A. Truck agreed to purchase nine Series 8000 trucks from Navistar for a purchase price of $740,300.00.
From October 25, 2007, through October 31, 2007, Navistar delivered and A.A. Truck received the nine trucks. On or about June 6, 2008, A.A. Truck wrote to Navistar and put Navistar on notice that A.A. Truck had been experiencing chronic mechanical failures with numerous vehicles that A.A. Truck had purchased and demanded a credit from Navistar in the amount of $250,000 and proposing to pay the $490,300 balance to Navistar. On or about June 27, 2008, Navistar commenced an action in Federal Court in the Eastern District of New York against A.A. Truck seeking to recover the sum of $740,300 for non-payment for the purchase of the nine trucks, no portion of which had been paid by A.A. Truck as of June 27, 2008. A.A. Truck answered and asserted various affirmative defenses claiming that the purchase price should be offset by $250,000 attributable to mechanical failures.
On or about November 30, 2008, A.A. Truck and Navistar settled the action for the negotiated sum of $560,300 payable in twelve equal monthly installments with interest at the agreed rate of 6.75% per annum. The settlement agreement contained a release provision which stated:
With the exception of the rights, remedies and obligations set forth in this Agreement and within the documents delivered pursuant to this Agreement, each party releases and discharges the other and his or its respective partners, representatives, agents, employees, heirs, executors, administrators, successors and assigns from all actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands whatsoever, in law, admiralty or equity, which any party or its successors and assigns ever had, now have, or hereafter, can, shall, or may have against the other, for, upon, or by reason of any matter, cause of thing whatsoever from the beginning of the world to the day of the date of this Agreement, except, that (a) A.A. shall not be released from its payment obligations to Navistar under the Promissory Note and (b) Navistar shall not be released from its liability to A.A. for the warranties, as extended, applicable to each of the trucks identified in the Schedule annexed hereto as Exhibit "2."
During the period between November 30, 2008 and January 5, 2010, A.A. Truck paid Navistar the sum of $560,300 for the nine trucks. On January 5, 2010, upon its final payment for the nine trucks, A.A. Truck presented Navistar with a demand for payment of $45,000, representing the contractual rebate. No portion of the $45,000 has been paid. A.A. Truck then commenced this action to recover that sum.
Navistar moves to dismiss this action pursuant to CPLR 3211(a)(5) claiming that the release settling the action in the Eastern District bars this action. Navistar claims that the release was a general release, which settled all claims and released all obligations relating to A.A. Truck's purchase of the nine trucks, including the Loyalty Rebate Program and thus this action is barred. A.A. Truck claims that the settlement dealt with a reduction in the purchase price of the trucks as a result of mechanical failures, no offsets were related to the Loyalty Rebate Program, and, therefore, the release did not cover the Loyalty Rebate Program.
The meaning and scope of a release depends on the context of the controversy being settled and upon the purpose for which the release was actually given and a general release cannot be read to cover matters which the parties did not desire or intend to dispose of (see, Huma v Patel, 68 AD3d 821 [2nd Dept. 2009]; Matter of Brown, 65 AD3d 1140 [2nd Dept. 2009]; Zichron Acheinu Levy, Inc. v Ilowitz, 31 AD3d 756 [2nd Dept. 2006]). Here, contrary to the defendant's contention the plaintiff raised factual issues regarding whether the scope of the
subject release, based upon the context and circumstances of its execution, covers the Loyalty Rebate Program. Given the limited evidence in the record relating to this pre-answer and pre-discovery motion, "[t]he scope and validity of the general release... cannot be conclusively determined at this time and must await the determination of a proper record." (Rimberg & Assoc., P.C. v Jamaica Chamber of Commerce, Inc., 40 AD3d 1066 [2nd Dept. 2007]; accord, In re Brown, 65 AD3d 1140 [2nd Dept. 2009]). The motion to dismiss, therefore, must be denied.
Accordingly, it is ordered that the defendant's motion to dismiss, pursuant to CPLR 3211(a)(5), is denied in all respects.
Dated: June 23, 2010