Preston v. Creta
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Attorneys and Parties
Brief Summary
Personal injury and insurance settlement issue involving whether an early general release signed after a car accident barred the injured passenger's later injury claim.
The Supreme Court, Queens County, granted the defendant's motion under New York CPLR 3211(a) [rule permitting a pre-answer motion to dismiss] and dismissed the plaintiff Gary Preston's second cause of action based on the signed release.
The Appellate Division reversed the order dismissing the second cause of action and denied the defendant's motion to dismiss.
Accepting the plaintiff's allegations as true at the pleading stage, the court found questions of fact as to whether the release was obtained under unfair circumstances and whether it was fairly and knowingly made, particularly because the insurer allegedly told him he needed to sign paperwork so his hospital bill would be paid before he learned the full extent of his injuries.
Background
Gary Preston was a passenger in a vehicle involved in a collision with a vehicle driven by Rosette M. Creta. He was taken by ambulance to a hospital and released the same day. Three days later, he signed a general release in exchange for $2,500, releasing the defendant from claims arising from known and unknown personal injuries. Later that month, magnetic resonance imaging (MRI) allegedly revealed serious injuries that were not diagnosed at the hospital and allegedly required surgery. Preston asserted that Government Employees Insurance Company (GEICO), the defendant's insurer, contacted him multiple times beginning the day after the accident and told him he needed to sign emailed paperwork in order for his hospital bill to be paid. He claimed he electronically signed the release believing it related to hospital expenses and only later discovered the true scope of the settlement after consulting counsel.
Lower Court Decision
The Supreme Court, Queens County, held that the signed release barred Gary Preston's personal injury claim and granted the defendant's motion under New York CPLR 3211(a) [rule permitting a pre-answer motion to dismiss] to dismiss the second cause of action.
Appellate Division Reversal
The Appellate Division, Second Department, reversed on the law, with costs, and denied the defendant's motion to dismiss. The court held that although a release ordinarily bars claims within its scope, it may be set aside for traditional contract defenses or where it was not fairly and knowingly made. Based on the plaintiff's allegations, there were factual issues as to unfairness, overreaching, and whether he understood that he was settling all personal injury claims rather than merely arranging payment of hospital-related expenses.
Legal Significance
The decision reinforces that a broadly worded release will not automatically defeat a personal injury claim at the pleading stage where the injured party plausibly alleges that the release was procured quickly after an accident, before adequate medical investigation, and under misleading or inequitable circumstances. Even absent outright fraud, allegations showing lack of fair and knowing consent can preclude dismissal.
An insurer's early post-accident release may not be enforceable if the injured person plausibly alleges that it was signed before the injuries were understood and under circumstances suggesting misunderstanding, pressure, or unfairness.