After signing Release, Plaintiff cannot sue bank upon discovery of fraud by bank employee
Fifth Third Bank loaned almost $1.5 million dollars to the Plaintiff, Vertex Development, LLC, to enable the three officers of the corporation to buy four business properties. The officers personally guaranteed the loans and also gave a mortgage on one officers' home. Almost immediately, the Plaintiffs went under water when a bank employee's promise of operating loan funds was never processed. The parties engaged in a compromise of the Plaintiffs' debt and the Plaintiffs executed a release in favor of the bank.
Several years later, the extent of the bank employee's fraudulent activity was disclosed in a front page article in the Muskegon Chronicle. The Plaintiffs immediately filed this lawsuit in an attempt to recoup their losses. The Court held that their prior release was binding and that they could not bring a subsequent lawsuit against Fifth Third because they had waived all claims against the bank in the prior settlement. Even though the Plaintiff was not aware of the extent of the bank employee's fraudulent activity, the previous settlement was founded in part, on allegations of wrongdoing by the bank and the express terms of the release sacrificed any claim against the bank--based on known or unknown wrongful activity.