What is the difference between a release and a covenant not to sue or a covenant never to sue?
Kaye v. Wilson-Gaskins, 227 Md. App. 660, 135 A.3d 892, cert. denied, 449 Md. 420, 144 A.3d 710 (2016):
Kaye represents in wrongful termination suit. Obtains $1.4M verdict. Client disputes entitlement to attorney’s fees. Come to agreement and sign release. Client sues Kaye and others. Circuit Court grants motion to dismiss or for summary judgment on the basis that Client failed to allege a prima facie case (not on basis of release). Affirmed on appeal, but CSA also holds release was not unconscionable, was enforceable and barred suit. Kaye then sues Client for breach of the release.
What is the difference between a release and a covenant not to sue? A release discharged the right or obligation without regard to who benefitted. So, when release given, the release is performed; nothing else to do. No further performance or obligation applies. Therefore, there can be no breach of a release. The covenant not to sue addresses the relationship between the obligor and the obligee. Accordingly, the covenant not to sue had the practical effect of providing an obligor with immunity against those seeking to enforce the underlying obligation. Release of right do not possess: is actually a covenant not to sue. But better treated as a release. Holds: (1) prior ruling “law of the case” and (2)
In such an instance, the promise never to sue remains executory in nature. As soon as the obligee’s claim against the obligor becomes viable that claim is discharged automatically as a matter of law. Simultaneously, the obligee’s performance under the covenant never to sue is complete, and the obligee’s obligation is discharged. On the other hand, we will construe a promise never to sue as an ongoing executory promise that can be breached if we can clearly discern from the agreement’s text that the parties intended for the obligor to recover consequential damages resulting from the obligee’s failure to honor that discharge.