Over the past several months, this Blog has examined cases in which plaintiffs brought contract claims and fraud claims in the same action ( here , here and here ). As discussed in those posts, the courts dismissed the cases because the plaintiffs failed to allege an independent basis upon which the claims could stand side-by-side. Similarly, this Blog has examined cases involving veil piercing and the Statute of Fraud. As to the former, the courts dismissed the actions bec

It is not uncommon for plaintiffs to assert breach of contract and fraud in the same action. It is also not uncommon for the fraud claim to be dismissed as duplicative of the contract claim. Indeed, the reporters are brimming with cases in which the fraud claim is dismissed because it is nothing more than a breach of contract claim dressed up in the language of fraud. The cases we examine today, East Coast Int’l Tire Group, Inc. v. New York Tire Factory, Inc. , 2020 N.Y. Slip

We have often written about the justifiable reliance element of a fraud claim ( e.g. , here , here , here , here , and here ). Though the outcome of the issue is typically fact dependent, dismissals nevertheless occur because the plaintiff cannot demonstrate that reliance was reasonable or justified. Such was the case (for the most part) in Carmen E. Maestro Family Trust v. 449 Washington LLC , 2020 N.Y. Slip Op. 32054(U) (Sup. Ct., Kings County June 22, 2020) ( here ), the s

It is well settled that a plaintiff may not “dress up a breach-of-contract claim as a fraud claim.” Cohen v. Koenig , 25 F.3d 1168, 1173 (2d Cir. 1994) (internal quotation marks omitted). In prior posts, we referred to this principle as the duplication of claims doctrine ( here , here and here ). In order for a tort claim to be actionable, there must be “a legal duty independent of the contract” that “has been violated.” Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co. , 70 N.Y

Just recently, we wrote about the importance of pleading fraud with particularity ( here ). As readers of this Blog know, when fraud is alleged, the plaintiff must plead the claim with particularity. Under CPLR § 3016 (b), the circumstances constituting fraud must be stated with sufficient detail “to permit a reasonable inference of the alleged conduct.” Pludeman v. Northern Leasing Sys., Inc. , 10 N.Y.3d 486, 491 (2008) (citation omitted). To satisfy the particularity requi

In today’s post we examine, SHIR Capital, LLC v. Fortress Credit Advisors LLC , 2020 N.Y. Slip Op. 31825(U) (Sup. Ct., N.Y. County June 11, 2020) ( here ), a case involving an alleged fraud, breach of fiduciary duty, and misappropriation of trade secrets. We chose to SHIR Capital because of its common theme – pleading with particularity. As discussed below, pleading fraud, breach of fiduciary duty and the misappropriation of trade secrets requires particularity or specifici

In prior posts, we examined Securities and Exchange Commission (“SEC” or “Commission”) enforcement actions brought against those who seek to personally benefit from the COVID-19 health crisis affecting the country ( here and here ). These actions had a common thread between them – they involved pump and dump schemes. In a “pump-and-dump” scheme, promoters “pump” up, or increase, the stock price of a company by spreading positive, but often false, rumors. These rumors caus

Pleading fraud with particularity is not easy. Sometimes the information needed to satisfy the requirement is peculiarly within the knowledge of the defendant. Other times, the information needed is found in lawsuits, publicly available information and media. Regardless of where the information can be found, the plaintiff must nevertheless provide sufficient facts to support a “reasonable inference” that the allegations of fraud are true. Eurycleia Partners, LP v. Seward & K

As readers of this Blog know, one of the elements of a fraud claim is reliance. In the typical case, the defendant makes a false or misleading statement directly to the plaintiff, which the plaintiff claims to rely on. In the less frequent case, the misrepresentation of fact is made to a third party that relied on the alleged fraudulent statement. The question is whether, in that circumstance, a plaintiff can state a fraud cause of action, despite the absence of direct relian

It has been a long time since this Blog examined a request for a pre-judgment order of attachment. ( See here .) Today, we take another look at this provisional remedy. What is Prejudgment Attachment? Prejudgment attachment is a provisional remedy that provides a plaintiff with a statutory mechanism by which he/she can secure a defendant’s assets during the pendency of a lawsuit. In effect, an order of attachment is a lien against the defendant’s property. As such, a prejudg

In prior posts ( e.g. , here and here ), we have discussed the importance of pleading loss causation in fraud and fraud-related actions. Where causation is an issue, the cases show that plaintiffs often have difficulty demonstrating the components necessary to withstand a motion to dismiss ( e.g. , here ). There are two components to the causation element: transaction causation and loss causation. “Transaction causation means that the violations in question caused the to en

Successfully pleading a fraud-in-the-inducement claim in the context of an employment at will relationship is difficult, if not impossible. The reason, as is often the case in non-employment cases, has to do with pleading justifiable reliance. Employees at will are generally unable to establish reasonable reliance on a prospective employer’s representations. Recently, Justice Peter P. Sweeney of the Supreme Court, Kings County reiterated this principle by granting summary jud

Pandemic-related fraud is in vogue these days. The unscrupulous continue to disseminate false information to the public in the hope of securing a personal benefit from the fear surrounding the virus. As we previously noted ( here ), since February of this year, the Securities and Exchange Commission (“SEC” or “Commission”) has released several investor warnings about the prevalence of fraud, illicit schemes and other misconduct related to the coronavirus health emergency (

In times of crisis, unscrupulous people often disseminate false information to the public in the hope of securing a personal benefit from the fear and concern surrounding the event. Such is the case with the COVID-19 pandemic. Since February of this year, the Securities and Exchange Commission (“SEC” or “Commission”) has released several warnings to investors to beware of fraud, illicit schemes and other misconduct during the coronavirus health emergency ( here ). In fact,

As baseball fans know, Major League Baseball (“MLB”) was rocked by the sign-stealing scandal involving the Houston Astros and, to a somewhat lesser extent, the Boston Red Sox. Not only did opposing players feel cheated by the Astros’ conduct – just ask any player on the Yankees how he feels about losing to the Astros in the playoffs, but so did the fans. Indeed, during spring training (before the league shutdown because of the COVID-19 pandemic), fans could be heard booing an

Regulators and enforcement authorities have often expressed concerns about the revenue recognition practices of corporate entities and those who implement them. Indeed, improper revenue recognition is one of the most common accounting errors pursued by the Securities and Exchange Commission (“SEC” or “Commission”). To properly recognize revenue, the revenue must be realized and earned. Under generally accepted accounting principles, revenue may be recognized when all the fol

In today’s Fraud Notes, we examine two cases decided by the Appellate Division, First Department: Knox, LLC v. Lakian , 2020 N.Y. Slip Op. 02255 (1st Dept. Apr. 9, 2020) ( here ), and WCapital Invs. LLC v CWCapital Cobalt VR Ltd. , 2020 N.Y. Slip Op. 02240 (1st Dept. Apr. 9, 2020) ( here ). Knox concerned the justifiable reliance element of a fraud claim and WCapital Invs. concerned the damages element of a fraud claim. Hints of Falsity New York law imposes an affirmative

Many cases involving an alleged fraud typically rise and fall on the reliance element of the cause of action. Sometimes, the issue before the court is the state of mind of the alleged fraudster. While at other times, the issue concerns whether the defendant made a misrepresentation of material fact. In today’s Fraud Notes, we examine Cohen Bros. Realty Corp. v. Mapes , 2020 N.Y. Slip Op. 01440 (1st Dept. Mar. 3, 2020) ( here ), a case involving the state of mind element of a

In very general terms, fraudulent conveyance statutes are designed to protect creditors from situations where a debtor transfers its assets or property to a creditor’s detriment. Sometimes such transfers are made with actual intent to defraud. Other times, transfers may be deemed to be constructively fraudulent regardless of the actual intent of the debtor/transferor. In Sarfati v. Palazzolo , 2020 N.Y. Slip Op. 30432(U) (Sup. Ct., N.Y. County Feb. 7, 2020) ( here ), Justic

In today’s Fraud Notes, we look at two fraud cases involving real estate: Lash v. Schleider , 2020 N.Y. Slip Op. 30406(U) (Sup. Ct., N.Y. County Feb. 11, 2020) ( here ); and Goff v. Parker , 2020 N.Y. Slip Op. 30396(U) (Sup. Ct., Suffolk County Feb. 10, 2020) ( here ). Lash v. Schleider Lash arose from a contract between plaintiffs, Lori Lash, Robert Lash, and Goldsholle, LLC (“Goldsholle”), and the moving defendants, Jeffrey Schleider (“Schleider”) and Miron Properties, LLC