Readers of this Blog know that we like to write about fraud cases. After all, a fraud can be perpetrated in so many contexts. Indeed, the circumstances upon which one can deceive another are limited only by the imagination of the wrongdoer. Sometimes, there are too many reported decisions for us to examine in the depth to which our readers have become accustomed. For this reason, we have created the “Fraud Notes” post in which we will examine multiple decisions addressing fra

On January 23, 2020, the Appellate Division, First Department, unanimously affirmed the dismissal of fraud-based claims alleged in connection with the purchase of a promissory note that memorialized a $1.5 million loan.

An interesting question sometimes arises in the tort arena in which a third-party to a transaction claims to have been injured by one of the parties. Do the parties to the transaction owe a duty to the third party? The answer depends on whether the third party can show privity or near privity with the alleged tortfeasor. In this regard, the third party must demonstrate that the parties were aware that their report, agreement or transaction documentation would be used by the t

In November of 2018, this Blog wrote about Unique Goals International, Ltd. v. Finskiy ( here ), a case involving a fraud cause of action that was dismissed because the plaintiff failed to satisfy the justifiable reliance element of the claim. On December 26, 2019, the Appellate Division, First Department unanimously affirmed the dismissal of the fraud claim. Unique Goals Intl., Ltd. v. Finskiy , 2019 N.Y. Slip Op. 09381 (1st Dept. Dec. 26, 2019) ( here ). Background Plainti

In August of this year, this Blog wrote about Norddeutsche Landesbank Girozentrale v. Tilton , 2019 N.Y. Slip Op. 32470(U) (Sup. Ct., N.Y. County Aug. 20, 2019) ( here ), a case involving several elements of a fraud claim. ( Here .) As we noted at the time, Norddeutsche was a good example of why the courts refrain from dismissing fraud claims – there are issues of fact that are best left to the trier-of-fact to decide. Shortly after this decision, Defendants appealed the mot

Decision day in the Appellate Division, First Department involved several cases in which the Court addressed allegations of fraud or fraudulent inducement. Many of the cases focused on the elements of the claim, while others focused on the absence of particularity and the duplication of claims doctrine. We look at some of those cases in today’s post. Lerner v. Newmark & Co. Real Estate, Inc. In Lerner v. Newmark & Co. Real Estate, Inc. , 2019 N.Y. Slip Op. 08611 (1st Dept. D

Last week, two Appellate Division courts affirmed the dismissal of fraud claims because the parties asserting the claims failed to demonstrate justifiable reliance, and assert their claim within the statute of limitations. Atlas MF Mezzanine Borrower, LLC v. Macquarie Tex. Loan Holder LLC , 2019 N.Y. Slip Op. 08009 (1st Dept. Nov. 7, 2019) ( here ), and Beacon Estates, LLC v. Ingrassia , 2019 N.Y. Slip Op. 08042 (4 th Dept. Nov. 8, 2019) ( here ). In today’s post, this Blog l

To assert a fraud claim, a plaintiff must allege “a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury.” Mandarin Trading Ltd. v. Wildenstein , 16 N.Y.3d 173, 178 (2011) (internal quotation marks and citation omitted); Lama Holding Co. v Smith Barney , 88 N.Y.2d 413

Readers of this Blog know that, as a general matter, New York courts will not permit a tort claim to survive a motion to dismiss when the claim arises from a breach of contract. here).=">here</a>)."> Indeed, courts routinely dismiss a tort claim where “ he existence of a valid and enforceable written contract govern a particular subject matter” and the recovery sought arises out of the same facts and circumstances. Clark-Fitzpatrick v. Long Is. , 70 N.Y.2d 382 (1987). Howeve

In Pari Delicto, the Adverse Interest Exception and the Alleged Failure to Uncover Fraudulent Activity The doctrine of in pari delicto has been a part of the common law for at least two centuries. Kirschner v. KPMG LLP , 15 N.Y.3d 446 (2010), citing Woodworth v. Janes , 2 Johns Cas 417, 423 (N.Y. 1800) (parties in equal fault have no rights in equity); Sebring v. Rathbun , 1 Johns Cas 331, 332 (N.Y. 1800) (where both parties are equally culpable, courts will not “interpose

In New York, to plead (and prove) a fraud claim, a plaintiff must demonstrate the following: “a misrepresentation or a material omission of fact which was false and known to be false by the defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury.” Pasternack v. Laboratory Corp. of Am. Holdings , 27 N.Y.3d 817, 827 (2016) (internal citations and quotation mark

The elements of a common law fraud claim in New York are well known to readers of this Blog: “a misrepresentation or a material omission of fact which was false and known to be false by the defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury.” Pasternack v. Laboratory Corp. of Am. Holdings , 27 N.Y.3d 817, 827 (2016) (internal citations and quotation mark

On August 29, 2018, the Securities and Exchange Commission (”SEC”) announced ( here ) that it charged a Tallahassee-based investment advisory firm and its two former principals with defrauding investors, most of whom were retired NFL players who had joined the class-action lawsuit against the National Football League (“NFL”) claiming they suffered brain injuries as a result of concussions. The SEC charged Cambridge Capital Group Advisors, LLC (f/k/a Cambridge Capital Advisors

As readers of this Blog know, pleading and proving fraud is not easy. The law reporters (not to mention the pages of this Blog) are brimming with cases in which the courts have dismissed fraud actions due to pleading and proof deficiencies. Norddeutsche Landesbank Girozentrale v. Tilton , 2019 N.Y. Slip Op. 32470(U) (Sup. Ct., N.Y. County Aug. 20, 2019) ( here ), is a recent example of this phenomenon. In Norddeutsche , Plaintiffs contended that they were defrauded into inves

On July 15, 2019, New York Surrogate Nora Anderson denied, in part, a motion to dismiss the petition filed by Radio Drama Network, Inc. (“Radio Drama” or “Petitioner”), in which Radio Drama sought to invalidate testamentary instruments that deprived it of a $100 million bequest from Himan Brown (“Brown”), the creator of “Dick Tracy” and “Inner Sanctum Mysteries,” and founder of the Himan Brown Revocable Trust (the “Revocable Trust”). Radio Drama Network, Inc. v. Kay , File No

There is almost nothing more frustrating, or potentially costlier, to a business than a dispute over the meaning of a contract. Such disputes can take many forms. It may be that the language used is ambiguous; or the language is reasonably clear but is susceptible to different meanings; or although the language is clear, taken literally, it might not reflect the parties’ intent; or, as is often the case, an event has occurred that was not contemplated by the parties at the ti

On July 18, 2019, Justice Joel M. Cohen of the Supreme Court, New York County, Commercial Division, decided Shyer v. Shyer , 2019 N.Y. Slip Op. 32138(U) (Sup. Ct., N.Y. County July 18, 2019) ( here ), a third-party action involving allegations of fraudulent concealment relating to the failure to disclose material information about the deteriorating health of a company executive for the purpose of securing about $150,000 in annual benefits. The company, Zyloware Corp. (“Zylowa

Readers of this Blog know that, as a general matter, New York courts will not permit a fraudulent inducement claim to survive a motion to dismiss when the claim arises from a breach of contract. Indeed, courts routinely dismiss a fraudulent inducement claim where “ he existence of a valid and enforceable written contract govern a particular subject matter” and the recovery sought arises out of the same facts and circumstances. Clark-Fitzpatrick v. Long Is. , 70 N.Y.2d 382 (1

The disclosure of material information is the foundation of the Securities and Exchange Commission’s (“SEC”) mission. For this reason, the SEC considers itself to be “a disclosure agency.” See “The Importance of the SEC Disclosure Regime” by Daniel M. Gallagher, Commissioner, U.S. Securities and Exchange Commission (July 16, 2013) ( here ). One need only look at the SEC’s website to confirm this point: “ he laws and rules that govern the securities industry in the United Sta

On July 9, 2019, the Appellate Division, First Department, issued three decisions involving claims of fraud and/or fraudulent inducement that piqued this Blog’s interest. One case involved whether a fraudulent inducement claim duplicated a contract claim ( Man Advisors, Inc. v. Selkoe , 2019 N.Y. Slip Op. 05483 (1st Dept. July 9, 2019) ( here ), while the other two involved the justifiable reliance element of a fraud cause of action ( Mann v. Thomas-Senior , 2019 N.Y. Slip O