Opinion ID: 200721
Heading Depth: 2
Heading Rank: 3

Heading: Burden of Proving the Enforceability of the Release

Text: 45 The fact of a release is an affirmative defense, and the party seeking to have a release enforced usually bears the initial burden of pleading and proving the existence of that release. See Sharon v. City of Newton, 437 Mass. 99, 769 N.E.2d 738, 742-43 (2002). That was done here. 46 Once the burden of proving the existence of an executed release has been met, the burden of proving or disproving its enforceability may lie with either party, depending on the context in which the release was given. The defendants argue that the Release is a contract and cannot be nullified absent the plaintiff's proving fraud, misrepresentation, mutual mistake, breach of fiduciary duty, or undue influence or that at the time the release was given the corporation was insolvent or became insolvent as a result of the release. The last ground for nullification does not apply on the facts here. As to the other grounds for nullification, the burden of proof is generally on the plaintiff in non-fiduciary duty situations. See, e.g., Sharon, 769 N.E.2d at 743 n. 6. The defendants argue that the plaintiffs have the burden on the enforceability issue here. 47 The defendants' argument ignores the special fiduciary context of the Release: that the Release goes to a proven breach of fiduciary duty by a corporate officer/director and shareholders. At least where an underlying claim of breach of fiduciary duty has been proven, 17 we conclude that Massachusetts would place the burden of showing the enforceability of a release on the corporate fiduciary who relies on that release to extinguish any recovery for the underlying breach. Two doctrines converge to place this burden on the corporate fiduciary. First, Massachusetts adopts the rule that [a] release executed in favor of one standing in a fiduciary relation to the one executing the release will be subjected to the closest scrutiny by the court. Allen v. Moushegian, 320 Mass. 746, 71 N.E.2d 393, 400 (1947) (involving a release issued by a client to her attorney). Second, Massachusetts refers to the law of trusts in cases involving corporate fiduciaries, see, e.g., Demoulas, 677 N.E.2d at 171 (Trust law applies ... to the management of corporations.), and under trust law, a release of a trustee is subjected to the closest scrutiny, Akin v. Warner, 318 Mass. 669, 63 N.E.2d 566, 570 (1945); Restatement (Second) of Trusts § 217(2). 48