Although this took place in a setting of a personal injury action, the court’s decision with these facts is broad enough to include other settings.
In this case, the plaintiff was injured in a car accident and accepted a settlement from the driver’s insurance company for a nominal sum. In connection with that payment, she executed a release of all claims against the driver. Three days later, she underwent further x-rays and learned that she had a fractured fibula. The plaintiff thereafter sued the driver prompting the insurance company to seek dismissal based on her release. The plaintiff opposed arguing that her release was the product of a mistake, and was unfair and fraudulently obtained. The lower court granted the insurance company’s motion and dismissed the case.
Upon appeal, however, the Third Department reversed. After recognizing the well-settled rules governing a release, including that it may be set aside if it was the product of fraud or mutual mistake, the court distinguished between unknown injuries and “‘mistakes as to the consequences of known injuries.” The first element can be the basis for a mistake which could invalidate a release, while the latter could not. In this case, where the plaintiff claimed to have not known of her broken leg, she should be permitted to pursue her case. The court noted that when the plaintiff presented at the hospital she was told that her leg was not broken despite the fact that plaintiff, while on pain medication, complained of leg pain, including to the insurance adjuster. The adjuster told her that it was probably a bruise and talked her into settling.