Saulnier v. Sucharow

Background

The dispute arose from fee-sharing arrangements involving Labaton, Gérard Sillam, and French attorneys. In 2008, Aldric Saulnier acquired rights under an agreement providing for a share of certain fees earned by Labaton. In 2009, Labaton and Saulnier entered a settlement that gave Saulnier specified interests in fees involving listed potential clients and required Labaton to provide periodic declarations about whether those clients had retained the firm.

In 2015, after Saulnier and Sillam questioned whether Labaton was accurately reporting fees and whether declarations signed by Labaton partner Christopher J. Keller were truthful, they entered a new settlement with Labaton. In exchange for $99,999.99, Saulnier and Sillam relinquished their rights under the 2009 settlements and broadly released claims against Labaton and its partners, agents, and representatives.

In 2019, Saulnier learned that Labaton had represented two potential clients in filing proofs of claim in class actions. Saulnier contended that he was entitled to a share of the related fees and that Labaton had concealed those representations before the 2015 settlement. He sued Labaton and Keller for fraudulent inducement, alleging that he would not have agreed to the 2015 settlement if he had known about the representations. Other claims and a claim against another defendant had previously been dismissed. After Keller died, Garrett J. Bradley was substituted as the preliminary executor of Keller’s estate.

Motions and legal standard

Saulnier moved for summary judgment on his remaining fraudulent-inducement claim. Labaton and Bradley moved for summary judgment dismissing the action, arguing that the 2015 settlement released Saulnier’s claim. Summary judgment is granted when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law.

Because fraudulent inducement is a state common-law claim, the court applied New York law. Under that law, a clear and valid release generally bars claims covered by the release. A release may include unknown fraud claims if the parties intended that result and made the agreement fairly and knowingly. A party that released a fraud claim may challenge the release as fraudulently induced only by identifying a fraud separate from the subject of the release.

Court’s analysis

The court found the case similar to a New York Court of Appeals decision involving parties who suspected that information was being withheld but nevertheless signed a broad release. Saulnier and Sillam had questioned the accuracy of Keller’s declarations and suspected that Labaton was withholding fees before they signed the 2015 settlement.

The court held that the alleged concealment of fees was not separate from the fraud covered by the release. Instead, it was the precise subject of the released claim: whether Labaton had withheld information about fees that Saulnier believed were owed to him. The broad release therefore barred Saulnier’s fraudulent-inducement claim.

The court gave an additional reason for rejecting the claim. A fraudulent-inducement claim requires a material misrepresentation, falsity, knowledge of falsity, justifiable reliance, and injury. Saulnier could not establish justifiable reliance on the Keller declarations because, by his own admission, he believed Keller had lied before Saulnier signed the 2015 settlement.

Disposition

The court denied Saulnier’s motion for summary judgment and granted defendants’ cross-motion for summary judgment dismissing the complaint. The Clerk was directed to enter judgment dismissing the complaint against all defendants and to close the case. The court stated that the allegations about the earlier fee-sharing conduct had not been adjudicated on their merits; the ruling resolved Saulnier’s remaining fraudulent-inducement claim based on the release and lack of justifiable reliance.