By: Jeffrey M. Haber When parties negotiate an agreement, the terms of which are clear and unambiguous, their writing will be enforced according to its terms. In the event of a dispute, evidence outside the four corners of the document as to what the parties really intended is generally inadmissible. 1 Among the reasons for this rule is to give “stability to commercial transactions ,” and other types of commercial interactions. 2 As the New York Court of Appeals observed, s

By: Jeffrey M. Haber To state a cause of action for fraud, a plaintiff must allege “a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages.” 1 The allegations must be stated with particularity to satisfy CPLR 3016(b). 2 Thus, the plaintiff must provide sufficient facts to support a “reasonable inference” that the allegations of fraud are true. 3 Conclusory allegations will not suffic

By: Jeffrey M. Haber In Nosegbe v. Charles , 2024 N.Y. Slip Op. 02406 (4th Dept. May 3, 2024) ( here ), the Appellate Division, Fourth Department affirmed the dismissal of a fraud claim because the plaintiff failed to identify the statement claimed to be false. The Court also reinstated a claim that the motion court dismissed on the grounds that, inter alia , the text message on which the lower court relied was not documentary evidence within the meaning of CPLR 3211(a)(1). W

By: Jeffrey M. Haber In Lane’s Floor Coverings & Interiors, Inc. v. DiLalla , 2024 N.Y. Slip Op. 02257 (1st Dept. Apr. 25, 2024) ( here ), the Appellate Division, First Department considered an alleged scheme to defraud plaintiff by using checks that were fake or missing endorsements. As discussed below, the Court modified the motion court’s order dismissing the action to deny defendants’ motion as to the fraud claims asserted against Defendant Anthony DiLalla, the branch man

By Jeffery Haber There are four primary levels of services provided by an accountant with respect to an entity’s financial statements: preparation, compilation, review, and audit. A preparation engagement is a basic one. In this level of service, the accountant assists management or the business owner in preparing financial statements for internal use. In a compilation engagement, the accountant assists management or the business owner in the presentation of the entity’s fi

By: Jeffrey M. Haber On many occasions, we have written about Ponzi schemes that have been the subject of enforcement actions brought by, and/or settlements with, the Securities and Exchange Commission (“SEC” or the “Commission”). E.g ., here , here , here , here , and here . We remain unsurprised by the frequency with which people operate a Ponzi scheme and do so by exploiting the trust and friendship that exist in groups of people who have something in common, such as a rel

By: Jeffrey M. Haber As we have often explained in the articles in which we have examined the duplication doctrine, fraud claims that are nothing more than contract claims dressed up in fraud clothing, are subject to dismissal. E.g. , here , here , here , and here . Thus, courts will apply the doctrine when a plaintiff alleges a breach of contract claim and a fraud claim that arise from the same facts and circumstances. When that happens, the fraud claim will be deemed du

By: Jeffrey M. Haber The common law doctrine of caveat emptor is a well-accepted rule of law in New York. Under the doctrine, the courts will not impose liability on a seller of property for failing to disclose information material to the transaction when the parties deal at arm’s length, [1] unless there is some conduct on the part of the seller which constitutes active concealment. [2] “If, however, some conduct ( i.e. , more than mere silence) on the part of the seller r

In commercial and business litigation, it is common for plaintiffs to assert claims against a business entity for wrongs committed by a corporate entity. Often, plaintiffs will try to “pierce the corporate veil,” or get behind the corporate form, to hold the entity’s officers or members liable for the alleged wrongdoing.

By: Jeffrey M. Haber In Rosenberg v. OSG, LLC , 2024 N.Y. Slip Op. 00691 (1st Dept. Feb. 8, 2024) ( here ), the Appellate Division, First Department underscored the insufficiency of pleading a fraud claim on information and belief. In affirming the dismissal of plaintiffs’ fraudulent inducement claim, the Court held that such pleading was “per se defective.” 1 Rosenberg is a class action arising out of plaintiffs’ participation in the Odyssey Study Group (“OSG”), which is ru

By: Jeffrey M. Haber In 245 E. 19 Realty LLC v. 245 E. 19th St. Parking LLC , 2024 N.Y. Slip Op. 00368 (1st Dept. Jan. 30, 2024) ( here ), the Appellate Division, First Department examined a couple of issues frequently discussed in this Blog: veil piercing/alter ego liability and fraudulent transfers. As to the issue of fraudulent transfers, 245 E. 19 Realty provides us with the opportunity to examine a case involving the new Debtor and Creditor Law (“DCL”), which became ef

By: Jeffrey M. Haber In many of the fraud cases that we examine, the plaintiff alleges that the defendant made an affirmative misrepresentation of fact upon which he/she relied. As we have often noted, fraud does not, however, always concern an affirmative statement. Sometimes a person can perpetrate a fraud through the omission of a material fact. Where fraud by omission is claimed, the plaintiff must allege that the defendant had a duty to disclose the omitted fact. A du

By: Jeffrey M. Haber In today’s article, we examine Eva Chen Fine Jewelry, Inc. v. Recovery Racing IX, LLC , 2023 N.Y. Slip Op. 06511 (2d Dept. Dec. 20, 2023) ( here ), a case involving common law fraud, New York’s lemon law and Section 349 of New York’s General Business Law (“GBL”). In May 2014, plaintiff purchased a 2014 Maserati Ghibli from Maserati of Bergen County, an authorized Maserati dealership owned at the time by defendant Recovery Racing IX, LLC. The subject vehic

By: Jeffrey M. Haber In Columbia Consultants, LLC v. Danucht Entertainment, LLC , 2023 N.Y. Slip Op. 06439 (1st Dept. Dec. 14, 2023) ( here ), the Appellate Division, First Department addressed the issues in the title of this article: fraudulent inducement claims in the context of settlement agreements, broad releases and no reliance clauses. As discussed below, the Court found that the release at issue was broad enough to cover the alleged fraud claim and that the no relianc

By: Jeffrey M. Haber It should come as no surprise that one of the goals of an investment fraud is the theft of customer funds for the scammer’s personal benefit. In legal parlance, this aspect of a fraudulent investment scheme is called misappropriation. Misappropriation occurs when a person uses another person’s money without authorization. Misappropriation of funds mirrors the crime of embezzlement, which is a crime committed by a person having a relationship of trust or

By: Jeffrey M. Haber In TD Bank, N.A. v. Keenan , 2023 N.Y. Slip Op. 06158 (2d Dept. Nov. 29, 2023) ( here ), the Appellate Division, Second Department examined the often “nettlesome” question of whether a plaintiff claiming fraud has satisfied the justifiable reliance element of the claim. As readers of this Blog know, we often write about fraud cases where the primary issue for the court to consider is the justifiable reliance element of the claim. We do so because of the i

By: Jeffrey M. Haber As we have often explained in the articles in which we have examined fraud claims, to withstand a motion to dismiss, the plaintiff must plead fraud with particularity as required under CPLR § 3106(b), cannot lump all the defendants together so that the plaintiff runs afoul of the group pleading prohibition, and cannot duplicate a breach of contract claim with the fraud claim. Lerman v. 2211 Third Ave. Mazal Holdings LLC , 2023 N.Y. Slip Op. 34092(U) (Sup.

By: Jeffrey M. Haber In July of this year, we wrote about a fraud action involving the EB-5 Immigrant Investor Program (“EB-5 Program” or “Program”) ( here ). Under the EB-5 Program, investors are eligible for permanent residency status in the U.S. if they make a qualifying investment in a new commercial enterprise in the U.S. that creates a certain number of permanent full-time jobs for qualified U.S. workers. As we often do in our articles, we examine the legal issues invo

By: Jeffrey M. Haber In Barlow v. Skroupa , 2023 N.Y. Slip Op. 05786 (1st Dept. Nov. 16, 2023) ( here ), the Appellate Division, First Department affirmed the dismissal of a fraud claim because the plaintiffs failed to plead fraud with particularity, as required under CPLR § 3016(b), and identify any specific misrepresentations of material fact. We examine Barlow below. Plaintiffs, who were employees and consultants of Inspire Summits LLC (“Inspire”), doing business as Skyt

By: Jeffrey M. Haber Affinity fraud is a type of investment fraud. In this form of fraud, the person committing the fraud preys upon members of an identifiable group, such as a religious or ethnic community, the elderly, or a professional group. The promoter of an affinity fraud frequently is – or pretends to be – a member or a good friend of the group. The fraudster often enlists respected members of the community or religious leaders from within the group to disseminate inf