Peter A. Lauricella

Peter A. Lauricella (Partner-Albany, NY) and Kadeem O. Wolliaston (Associate-Albany, NY) obtained an affirmance from the New York Supreme Court, Appellate Division, Third Department, upholding the dismissal of a complaint alleging fraud and breach of fiduciary duty arising from the sale of a closely held business. The plaintiffs sought over $2 million in damages. 

In the underlying matter, Crane et al.v. WP Strategic Holdings, LLC, the plaintiffs sought to rescind a negotiated agreement and release after learning that the acquired company was later sold to a third party for substantially more than its purchase price. The plaintiffs alleged that Wilson Elser’s clients fraudulently concealed ongoing sale negotiations, arguing that the release should be set aside based on fraud, breach of fiduciary duty, and the special facts doctrine.

The Third Department unanimously affirmed the Albany County Supreme Court's dismissal of the complaint, holding that the attorney-negotiated release was clear, unambiguous, and enforceable. Relying on the New York Court of Appeal’s decision in Centro Empresarial Cempresa S.A. v. América Móvil, S.A.B. de C.V., the court reiterated that a party seeking to avoid a release must identify a fraud that is separate and distinct from the subject matter of the release itself. Because the plaintiffs’ allegations concerned the value of the ownership interest they had agreed to relinquish, rather than a separate fraud inducing execution of the release, their claims were barred as a matter of law.

The court also rejected the plaintiffs’ contention that they were owed fiduciary duties as shareholders, holding that the language of the parties' Agreement and Mutual Release expressly acknowledged that no agreement had been reached regarding the terms under which the plaintiffs would hold ownership interest in the company. As a result, the plaintiffs were not shareholders when they executed the release, and no fiduciary duty arose. In so holding, the court confirmed that recital provisions in an agreement may properly be considered to determine the parties’ intent and the contract’s purpose when evaluating documentary evidence under CPLR 3211.

Finally, the Third Department held that the plaintiffs failed to establish justifiable reliance, noting that they were sophisticated businesspersons represented by independent counsel, were aware that the company could be sold at any point in the future before signing the release, and nevertheless chose to proceed without seeking additional protections or conducting further inquiry. Under those circumstances, the plaintiffs assumed the business risk of entering into the settlement and could not later invalidate the release on the basis of alleged nondisclosure. The court likewise rejected the plaintiffs’ reliance on the “special facts” doctrine, concluding that the alleged information could not support rescission where the plaintiffs failed to exercise ordinary intelligence in protecting their interests.

The decision reinforces New York’s strong public policy favoring the enforcement of negotiated releases and provides important guidance for businesses resolving ownership and investment disputes. It also underscores that sophisticated parties represented by counsel cannot later avoid broad settlement agreements absent allegations of a separate, independent fraud or reasonable reliance sufficient to invalidate the release.

Albany partners Christopher Priore and Peter Lauricella successfully represented a research company and its owner/president in a CPLR Article 78 proceeding in the New York Supreme Court, Appellate Division, Third Judicial Department, challenging the New York State Department of Labor’s (DOL) denial of the clients’ application for a license to purchase, own, possess, and transport explosives (O&P license). The company, which conducts limited fireworks displays as part of its business, must maintain an O&P license issued under Labor Law Article 16, which must be renewed annually.

In July 2021, our owner client applied to renew the company’s O&P license. The DOL denied the application on the sole ground that neither the owner nor any employee held a current Pyrotechnician Certificate of Competence (PCC), despite the owner having held a PCC for many years and the company having previously obtained O&P license renewals without one. The denial was upheld after an administrative hearing and adopted by the Commissioner of Labor.

Chris and Peter challenged the Commissioner's authority to impose a blanket PCC requirement as a prerequisite for O&P licensure. The central legal issue was whether the Department of Labor's internal policy – mandating that all O&P license applicants hold or employ someone with a PCC credential – constituted a "rule" subject to the formal rulemaking procedures of the State Administrative Procedure Act (SAPA). They presented evidence that the DOL had historically approved O&P license applications without a PCC, and only later, after internal discussions and consultation with counsel, adopted this requirement and added a question about PCCs to the application form – all without undertaking the required rulemaking process.

The Appellate Division unanimously agreed and annulled the Commissioner's determination. The court held that the mandatory PCC requirement was a generally applicable rule that should have been promulgated in accordance with SAPA's formal rulemaking procedures. Because the DOL failed to do so, the requirement was unenforceable. The matter was remitted to the DOL to evaluate the O&P license application at issue in accordance with properly promulgated rules and our clients’ particular facts and circumstances.
 

Peter Lauricella (Partner-Albany, NY) and Kadeem Wolliaston (Associate-Albany, NY) defended a complex commercial matter involving allegations of fraud, disputed ownership interests, and an attempted clawback of nearly $1 million in sale proceeds from a merger agreement. Our client, a private consulting and investment firm, was sued by two individuals who claimed they were each entitled to a 10% ownership interest in the subject company, which was later sold for $9.75 million. The parties had drafted and signed an “Agreement and Mutual Release,” which clearly and unambiguously released our client and its members from any and all claims, rights, causes of action, debts, shares, stock, interests, sums of money, and liabilities, whether known or unknown. Plaintiffs acknowledged they were represented by independent counsel and had entered into the agreement of their own free will. Six weeks after the release was executed and funds returned, our client sold the company to a third party for $9.75 million. The plaintiffs later obtained documentation indicating that negotiations for the sale may have begun prior to the execution of the release, and they filed suit against our client and its principals, seeking to set aside the release on the grounds of fraudulent inducement. In response, Peter and Kadeem moved to dismiss the complaint, arguing that the plaintiffs’ claims were barred by the plain language of the release and emphasized that the release explicitly covered all potential claims relating to stock, interests, and sums of money, including those that were unknown at the time. Importantly, under established law, a claim for fraudulent inducement cannot survive a broad release unless the plaintiff can allege that the release itself was induced by a separate fraud – something the plaintiffs failed to do. The court agreed and granted our motion to dismiss in full. The ruling reinforces the critical importance of well-drafted releases in commercial transactions and the strong protections they can offer against post-closing disputes. 

Following a nearly three-week trial, an Albany-based team comprising partners Peter Lauricella and Chris Priore and associates Daniel Lange and Kadeem Wolliaston obtained a favorable decision in New York State Supreme Court, Albany County for our client, an aggregate materials company that owns multiple quarry sites and asphalt plants, which also engages in road construction. 

As background, two first cousins owned a minority shareholder position in each other's companies, but in the mid-1990s, they held different visions for their respective businesses, and tensions arose. In or around 2007, our client’s majority shareholder requested that his shares in his cousin’s business be purchased, and his cousin agreed to do so. In 2014, the cousin died and his son became executor, and demanded an inspection of our client’s records. In late 2015, the son filed a Shareholder's Derivative lawsuit against our client, our client’s majority shareholder and our client’s other directors and related companies alleging that our client was being "looted" in a "grand scheme of fraud" in excess of $3 million a year. In 2019, our client and the other defendants filed motions for summary judgment, and the court granted the motion in large part, dismissing every claim in the Complaint, except for one alleging that two employees had been overcompensated. 

In January 2019, the cousin’s son filed another proceeding - a judicial dissolution proceeding pursuant to NY Business Corporation Law (BCL) section 1104-a, claiming that our client’s alleged "oppressive actions" against him warranted the dissolving of the entire company, in which the assets would be liquidated and the proceeds paid out to the shareholders. Under NY's BCL, our client opted to purchase the plaintiff’s shares, triggering a Valuation Proceeding, with experts on each side exchanging their reports. Our experts opined that the company was worth approximately $18 million, which valued the plaintiff’s share at nearly $6 million (after discounts) (although the realistic lowest value was probably closer to $8.5 million). The plaintiff’s valuation team set the worth at more than $58 million, resulting in a value for his shares of more than $22 million – $7 million more than our experts had valued the entire company! 

In a classic “bet the company” case, the court heard more than 25 witnesses and considered some 200 exhibits in this lengthy trial. In the end, the court ruled that the value of the plaintiff’s shares was $10.5 million – far closer to our expert team's value, and a far cry the plaintiff’s $22 million. Ordinarily, New York courts award 9% interest, and judges rarely vary from that. Through some innovative arguments and evidence the Albany team introduced at trial, including how the plaintiff kept these proceedings going for almost eight years, the court awarded interest at only 4.75%, resulting in a savings of more than $2 million for our client!