Crane v. WP Strategic Holdings, LLC

Opinion

Crane v WP Strategic Holdings, LLC

2026 NY Slip Op 04806

July 30, 2026

Appellate Division, Third Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This decision is uncorrected and subject to revision before publication in the Official Reports.

Douglas A. Crane et al., Appellants,

v

WP Strategic Holdings, LLC, et al., Respondents.

Decided and Entered:July 30, 2026

CV-25-1477

Calendar Date: May 29, 2026

Before: Clark, J.P., Aarons, Ceresia, Mcshan And Powers, JJ.

O'Connell and Aronowitz PC, Latham (Francis J. Smith of counsel), for appellants.

Wilson Elser Moskowitz Edelman & Dicker LLP, Albany (Peter A. Lauricella of counsel), for respondents.

[*1]

Powers, J.

Appeal from an order of the Supreme Court (Richard Platkin, J.), entered September 10, 2025 in Albany County, which granted defendants' motion to dismiss the complaint.

Crane & Co., Inc. was founded in 1801 as a paper manufacturer and has long operated in that capacity, although with multiple corporate changes occurring over the last decade. In 2015, the company's internal stationery business — Crane Special Papers North America, Inc. (hereinafter CSPNA) — became an entirely employee-held company. Then, in 2018, that entity was acquired by Mohawk Fine Papers, Inc. and the assets of Mohawk were subsequently sold to a foreign company, Fedrigoni Group, in 2024. Shortly thereafter, it was decided that Fedrigoni would seek to sell CSPNA. Plaintiffs — descendants of the founder of Crane & Co. who had remained employed by CSPNA through these structural changes — thus began negotiations with defendants ^FN1 for the joint purchase of CSPNA from Fedrigoni.

It is uncontested that the parties ultimately agreed they would purchase CSPNA for $3 million, with plaintiffs contributing $600,000 of the purchase price and defendants contributing the remaining $2.4 million, and these funds were then held in escrow until closing. However, plaintiffs agreed that defendant WP Strategic Holdings, LLC would singularly purchase CSPNA, with plaintiffs' ownership interests to be determined later. Therefore, WP then purchased CSPNA for $3 million. Following that purchase, the business relationship between the parties deteriorated and, in exchange for the return of the funds they had provided as well as an additional $60,000 for the "inconvenience," plaintiffs, with the advice of counsel, executed a release of liability in early June 2024. This release specified, among other things, that WP was permitted to sell CSPNA at any point in the future and, a month later, WP sold CSPNA to an outside company for $9.75 million — more than three times the value the parties had negotiated mere months before.

Plaintiffs brought the instant action in March 2025 for claims sounding in fraud and breach of fiduciary duty and seeking, among other things, to set aside the release. Additionally, plaintiffs each sought payment in the amount of $975,000 which, according to them, represented the value of their individual 10% alleged shares in CSPNA at the time of the subsequent sale. In lieu of filing an answer, defendants moved to dismiss the complaint on the basis that the release the parties had executed following the breakdown in negotiations barred the present action. Finding this to be the case, Supreme Court granted defendant's motion and dismissed the complaint. Plaintiffs appeal.

When presented with a motion to dismiss under CPLR 3211, "we accept the facts alleged in the complaint as true, accord the plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Cavosie v Hussain, 215 AD3d 1080, 1081 [3d [*2]Dept 2023] [internal quotation marks, brackets and citation omitted]). "A motion to dismiss on the ground that the action is barred by documentary evidence may be appropriately granted only where the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (CGreen, LLC v Quantum Impact Steel, LLC, 232 AD3d 974, 975 [3d Dept 2024] [internal quotation marks and citations omitted]; accord Matter of Manahata Med. Servs. P.C. v Kohli, 249 AD3d 1360, 1362 [3d Dept 2026]). Dismissal may also be warranted where the movant establishes that "the cause of action may not be maintained because of [a] . . . release" (CPLR 3211 [a] [5]). "Generally, a valid release constitutes a complete bar to an action on a claim which is the subject of the release" (Centro Empresarial Cempresa S.A. v AmÉrica MÓvil, S.A.B. de C.V., 17 NY3d 269, 276 [2011] [internal quotation marks and citation omitted]).

As background, on May 28, 2024, defendants advised plaintiffs that they did not wish to move forward in this joint venture and offered to return plaintiffs' capital investment with an additional $60,000 to account for any personal costs incurred. This arrangement was conditioned on the execution of an agreement and release that relinquished plaintiffs from all ownership of CSPNA and released all parties from any claims, both known and unknown. After negotiations regarding the terms of the release, during which versions thereof were exchanged between counsel for each party, the release was executed, and plaintiffs were paid $660,000. In relevant part, the executed release provided that each party released the other from "all claims, rights, causes of action, suits, debts, dues, units, shares, stock, interests, sums of money . . . and all liability . . . known or unknown." All affirmed that they "entered into th[e] [a]greement of their own free will and accord, have received independent legal counsel and review of th[e] [a]greement, and they have not been promised any additional future consideration with respect to the transactions contemplated by th[e] [a]greement." Plaintiffs also specifically acceded that "WP Strategic could sell the CSPNA [s]hares at any time in the future" and, nevertheless, "[d]espite this possibility, [plaintiffs] knowingly and voluntarily provide th[e] [r]elease . . . and voluntarily enter into th[e] [a]greement."

Initially, we find the release to be clear and unambiguous, and that, by its terms, plaintiffs knowingly and voluntarily released defendants of the instant claims — specifically, the claim that defendants fraudulently induced them into accepting payment and executing the release by the failure to disclose the existence of the impending third-party sale of CSPNA (see Silver Point Capital Fund, L.P. v Riviera Resources, Inc., 198 AD3d 432, 432-433 [1st Dept 2021]; Avnet, Inc. v Deloitte Consulting LLP, 187 AD3d 430, 431 [1st Dept 2020]; see also Treistman v Ulster County Socy[*3]. for Prevention of Cruelty to Animals, 235 AD3d 1144, 1145 [3d Dept 2025], lv denied 44 NY3d 1020 [2025]). As each plaintiff's signature on the clear and unambiguous release is a binding and jural act, defendants satisfied their prima facie burden of establishing that this release bars the claims and the burden shifted to plaintiffs to establish valid grounds for recission (see Booth v 3669 Delaware, 92 NY2d 934, 935 [1998]; Global Mins. & Metals Corp. v Holme, 35 AD3d 93, 98 [1st Dept 2006], lv denied 8 NY3d 804 [2007]; see also Stevens v Town of Chenango [Forks], 167 AD3d 1105, 1106 [3d Dept 2018]).

"[A] party that releases a fraud claim may later challenge that release as fraudulently induced only if it can identify a separate fraud from the subject of the release" (Centro Empresarial Cempresa S.A. v AmÉrica MÓvil, S.A.B. de C.V., 17 NY3d at 276; see Columbia Consultants, LLC v Danucht Entertainment, LLC, 222 AD3d 479, 480 [1st Dept 2023]; Avnet, Inc. v Deloitte Consulting LLP, 187 AD3d at 431). Thus, contrary to plaintiffs' argument, "a general release executed even without knowledge of a specific fraud effectively bars a claim or defense based on that fraud" (Centro Empresarial Cempresa S.A. v AmÉrica MÓvil, S.A.B. de C.V., 76 AD3d 310, 318 [1st Dept 2010] [internal quotation marks, brackets and citations omitted], affd 17 NY3d 269 [2011]). Here, plaintiffs do not raise a separate issue of fraud and, because of their failure to do so, have failed to set forth cognizable grounds to set aside the release.

As to their specific fraud claims, plaintiffs maintain that defendants owed them a duty of disclosure as a fiduciary by virtue of their status as shareholders. This claim is refuted by the language of the release itself. Therein, plaintiffs acknowledged that "WP Strategic purchased allof the Capital Stock of CSPNA," that their capital contribution would eventually entitle them to shares of CSPNA "on terms to be agreed upon" and that, at execution of the release, the parties had been "unable to reach agreement on the terms on which [plaintiffs] would hold a percentage of CSPNA Shares."^FN2 Similarly, the communications after WP had purchased CSPNA demonstrate that the parties were still negotiating the exact percentage of the company that plaintiffs would hold, along with several other key details of the business relationship. Thus, plaintiffs' capital contributions merely conferred upon them the eventual right to shares, not the shares themselves. As plaintiffs were not shareholders at the time of the execution of the release, defendants did not owe plaintiffs a fiduciary duty (compare Darwish Auto Group, LLC v TD Bank, N.A., 246 AD3d 1332, 1341 [3d Dept 2026]; see generally Amici v Mazza, 234 AD3d 1170, 1173 [3d Dept 2025], lv denied 44 NY3d 902 [2025]).

Plaintiffs' separate claim that they were fraudulently induced into entering the release also fails for lack of justifiable reliance (see generally Centro Empresarial Cempresa S.A. v AmÉrica [*4]MÓvil, S.A.B. de C.V., 17 NY3d at 276). The record demonstrates that plaintiffs executed the release on the advice of counsel, despite that counsel's stated belief that defendants were being untruthful and unresponsive. Additionally, in an email sent to plaintiffs and their counsel, defendant Todd Kletter expressed that he believed that CSPNA could trade at a substantially higher value than they had negotiated. The foregoing, as well as defendants' reluctance to issue plaintiffs their negotiated-for shares, the sudden change in defendants' willingness to do business with plaintiffs and the release specifically permitting defendants to sell CSPNA at any time were all indications that something was amiss. Yet, despite these indicators, plaintiffs failed "to make further inquiry or insert appropriate language in the agreement for [their] protection" and, as such, they "willingly assumed the business risk that the facts may not be as represented" (LLM Capital Partners, LLC v Mill Point Capital, LLC, 224 AD3d 504, 507-508 [1st Dept 2024] [internal quotation marks and citation omitted]; see Silver Point Capital Fund, L.P. v Riviera Resources, Inc., 198 AD3d at 433).^FN3

As the release executed by plaintiffs bars the instant action and plaintiffs have set forth no meritorious grounds to set aside that release, Supreme Court properly granted defendants' motion to dismiss the complaint.

Aarons, Ceresia and McShan, JJ., concur; Clark, J.P., not taking part.

ORDERED that the order is affirmed, with costs.

---

Footnotes

Footnote 1

Defendants are WP Strategic Holdings, LLC, as well as that entity's individual members: Todd Kletter, Todd Slingerland and Adam Neary.

Footnote 2

The consideration of the information contained in the recital clauses of the release is proper for this purpose inasmuch as, while not terms of the agreement, "recital paragraphs may be used to 'assist in determining the proper construction of [the]

contract' " and to indicate the purpose and intent of the parties (Potter v Padilla, 143 AD3d 1246, 1247 [4th Dept 2016], quoting Frenchman & Sweet v Philco Discount Corp., 21 AD2d 180, 182 [4th Dept 1964]; see generally 22 NY Jur 2d, Contracts § 248).

Footnote 3

These facts also demonstrate that plaintiffs failed to establish "that the information was not such that could have been discovered . . . through the exercise of ordinary intelligence" (Greenman-Pedersen, Inc. v Berryman & Henigar, Inc., 130 AD3d 514, 516 [1st Dept 2015], lv denied 29 NY3d 913 [2017]; see generally Chiarella v United States, 445 US 222, 228-229 [1980]). Accordingly, Supreme Court properly found plaintiffs' argument pursuant to the "special facts doctrine" to be similarly lacking in merit.