## Facts

- Hibjay Corporation, formed by Stephen Barker and Alfred Cheney, renovated low-income properties and financed projects with loans from Fulton County National Bank and Trust Company.
- Hibjay renovated a former temple building after bank personnel allegedly encouraged the project and represented the bank would help locate a purchaser.
- A buyer (Temple Associates) acquired the property and removed Hibjay from the premises.
- Hibjay filed a mechanic’s lien for about $616,000 for unpaid renovation work.
- Plaintiffs alleged bank officials pressured Barker and Cheney to assign the lien to the bank by threatening to call existing loans and refuse future lending.
- The bank foreclosed on the underlying mortgage and collected on the mechanic’s lien.
- The bank conditioned any distribution of lien proceeds on Barker and Cheney executing a release waiving claims against the bank; the release also discharged Hibjay, Barker, and Cheney from liability on notes and guaranties owed to the bank.
- Barker and Cheney signed the release; more than two years later, plaintiffs sued asserting civil RICO claims and related misconduct.
- The bank’s president, Charles Pratt, moved for summary judgment to dismiss claims against him; plaintiffs sought Rule 11 sanctions based on the motion.

## Issues

1. Whether the release barred claims by Hibjay, Barker, Cheney, and Kelly Lumber against Charles Pratt, or whether the release was voidable for economic duress.
2. Whether plaintiffs ratified the release by retaining its benefits and delaying repudiation.
3. Whether admissible evidence created a triable issue that Pratt personally participated in the alleged racketeering activity or wrongful acts.
4. Whether Pratt’s summary-judgment motion warranted Rule 11 sanctions.

## Decision

- The court granted summary judgment for Pratt, dismissing the claims against him by Hibjay, Barker, Cheney, and Kelly Lumber.
- The court held the release was enforceable and barred the claims, and plaintiffs’ duress theory failed and/or was defeated by ratification.
- The court found insufficient evidence linking Pratt personally to actionable conduct supporting individual liability.
- The court denied plaintiffs’ motion for Rule 11 sanctions.

## Legal Principles

- Under New York law, a clear and unambiguous release is generally enforced according to its terms absent proof of recognized avoidance grounds such as fraud or duress.
- Economic duress requires a wrongful or unlawful threat that overcomes free will and leaves no reasonable alternative; hard bargaining or threats to exercise contractual rights typically do not suffice.
- A party seeking to avoid an agreement for duress must repudiate promptly after the pressure ends; accepting benefits and delaying rescission can ratify the agreement and bar avoidance.
- Individual civil RICO liability requires evidence connecting the officer to the alleged misconduct (including participation sufficient to support liability), not merely corporate title.
- On summary judgment, the nonmovant must produce specific evidence creating a genuine dispute of material fact; conclusory allegations are insufficient.
- Rule 11 sanctions require objectively unreasonable filings or improper purpose; losing arguments or disputed legal positions are not enough.

## Conclusion

The court removed the bank president from the case on summary judgment because an executed release barred the plaintiffs’ claims and was not avoided by economic duress, and because plaintiffs’ acceptance of debt-relief benefits and delay in suing constituted ratification; the court also found no evidentiary basis for Pratt’s personal liability and denied requested Rule 11 sanctions.


Kovian v. Fulton Cnty. Nat’l Bank & Tr. Co., 857 F. Supp. 1032 (N.D.N.Y. 1994)