By: Jeffrey M. Haber 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 bursting with cases in which the courts have dismissed fraud actions due to pleading and proof deficiencies. Moskowitz v. Fischer , 2022 N.Y. Slip Op. 50385(U) (Sup. Ct., Suffolk County May 3, 2022) ( here ), is a recent example of this occurrence. To plead a viable cause of action for fraud, a plaintiff must allege that the

By: Jeffrey M. Haber As a general matter, a fraud claim is not duplicative of a contract claim where the plaintiff alleges misrepresentations of fact, as opposed to misrepresentations of a future intent to perform. In IS Chrystie Mgt. LLC v. ADP, LLC , 2022 N.Y. Slip Op. 02950 (1st Dept. May 3, 2022) ( here ), this general principle of law was one of the issues before the Court. In particular, the First Department was asked to determine whether post-contractual misrepresentat

By: Jeffrey M. Haber In Wilsey v. 7203 Rawson Rd., LLC , 2022 N.Y. Slip Op. 02905 (4th Dept. Apr. 29, 2022) ( here ), the Appellate Division, Fourth Department considered principles of law familiar to readers of this Blog; namely, breach of contract and fraudulent misrepresentation. As we have noted in prior articles ( e.g. , here ), “ he essential elements of a cause of action to recover damages for breach of contract are the existence of a contract, the plaintiff’s perfor

By: Jeffrey M. Haber New York courts favor the enforcement of forum selection clauses. They do so because they provide certainty and predictability in the resolution of disputes. here=">here</a>" and="and" >here.=">here</a>."> A forum selection clause is “prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching.” Because a forum selection clause is “prima

By: Jeffrey M. Haber Affinity fraud is a type of securities fraud in which the promoter of 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 promoter often enlists respected members of the community or religious leaders from within the group to disseminate information about the sch

By: Jeffrey M. Haber Generally, whether a claim is subject to arbitration is a decision for the court, not the arbitrator. However, the U.S. Supreme Court has held that “parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability.’” 1 As discussed below, such “delegation clauses” are enforceable where “there is ‘clea and unmistakabl ’ evidence” that the parties intended to arbitrate arbitrability issues. 2 “When deciding whether the parties agreed to arbitrate a c

By: Jeffrey M. Haber Under New York law, an action based upon fraud must be commenced within six years of the date the cause of action accrued, or within two years of the time the plaintiff discovered or could have discovered the fraud with reasonable diligence, whichever is greater. 1 The cause of action accrues when “every element of the claim, including injury, can truthfully be alleged”, 2 “even though the injured party may be ignorant of the existence of the wrong or i

By: Jeffrey M. Haber A recurring theme in fraud jurisprudence is the dismissal of fraud claims that duplicate breach of contract claims. As we have noted, a fraud claim will not survive a dismissal motion when there is “a valid and enforceable written contract govern a particular subject matter” and the recovery sought arises out of the same facts and circumstances. 1 There are exceptions to this rule, such as where “a legal duty independent of the contract itself has been

By: Jeffrey M. Haber A common theme in commercial litigation is the assertion of a breach of contract claim and a fraudulent inducement claim. As readers of this Blog know, where both claims are asserted, more times than not, the fraud claim is dismissed under the duplication of claims doctrine. Stated simply, the doctrine provides that a fraud claim cannot stand side-by-side with a breach of contract claim when there is “a valid and enforceable written contract govern a pa

By: Jeffrey M. Haber When someone speaks of a dispute resolution clause, lawyers most likely think the speaker is referring to an arbitration clause. But, as discussed in Innovative Concepts & Design, LLC v. AL Infinity, LLC , 2022 N.Y. Slip Op. 01122 (1st Dept. Feb. 22, 2022) ( here ), a dispute resolution clause can be something completely different. It can place dispute resolution in the hands of one of the parties to a contract. Such clauses are binding and enforced by th

By: Jeffrey M. Haber It is not uncommon for parties in commercial transactions to include in their contracts a provision that limits the types of damages recoverable in the event of a breach. Typically, these provisions include a limitation on the recovery of lost profits. An example of such a provision can be found in the agreement before the court in Rising Sun Constr. L.L.C. v. CabGram Dev. LLC , 2022 N.Y. Slip Op. 00989 (1st Dept. Feb. 15, 2022) ( here ). In New York, and

By: Jeffrey M. Haber Under New York law, an action based upon fraud must be commenced within six years of the date the cause of action accrued, or within two years of the time, the plaintiff discovered or could have discovered the fraud with reasonable diligence, whichever is greater. 1 The cause of action accrues when “every element of the claim, including injury, can truthfully be alleged”, 2 “even though the injured party may be ignorant of the existence of the wrong or

By: Jeffrey M. Haber On April 4, 2020, the New York Uniform Voidable Transactions Act (“NYUVTA”) became effective, replacing Article 10, Sections 270-281 of the Debtor and Creditor Law (“DCL”), the State’s almost century-old fraudulent conveyance law. This Blog previously examined the NYUVTA, the DCL and the changes the NYUVTA made to the DCL ( here ). Since the NYUVTA applies to cases filed on or after April 4, 2020, there remain many cases under the former DCL that are be

By: Jeffrey M. Haber To plead a cause of action for fraud or fraud in the inducement, a plaintiff must allege facts to support the claim that he or she justifiably relied on the alleged misrepresentation(s). As we have noted in prior articles, the justifiable reliance element of a fraud claim is often the most challenging one to satisfy. To demonstrate justifiable reliance, a plaintiff must allege (and prove) that he or she relied upon the misrepresentation to his or her detr

By: Jeffrey M. Haber As readers know, we write about cases involving fraud. The articles we write almost always concern the specific elements of the claim, such as scienter and justifiable reliance. Rarely have we examined defenses to a claim of fraud. Today, we do so – we examine the doctrines of ratification and estoppel. As a general matter, “ atification is the act of knowingly giving sanction or affirmance to an act that would otherwise be unauthorized and not binding.”

By: Jeffrey M. Haber Yesterday, the Appellate Division, First Department decided three cases involving claims for fraudulent inducement. We examine each of these cases below. Artemus USA LLC v. Leila Taghinia-Milani Inc. Artemus involved artwork that was consigned by Artemus USA LLC (“Artemus”) to defendants pursuant to a consignment agreement (“Agreement”). Plaintiffs alleged that the artwork was damaged while consigned to the Defendants. In their opposition to plaintiffs

By: Jeffrey M. Haber Last April, this Blog wrote about Sodhi v. IAC/InterActiveCorp , 2021 N.Y. Slip Op. 31220(U) (Sup. Ct., N.Y. County Apr. 8, 2021) ( here ), an action to recover money claimed to be improperly withheld by IAC/Interacticecorp (“IAC”). The primary issue in the Sodhi was whether the releases in a settlement letter covered the claims asserted in the action. The motion court held that the releases were broad and covered plaintiffs’ claim to the money alleged

By: Jeffrey M. Haber To allege a cause of action based on fraud, plaintiffs must assert “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. 1 To withstand a motion to dismiss, plaintiffs must satisfy each element of the claim. One of the most difficult elements

By: Jeffrey M. Haber 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 abs

By Jeffrey M. Haber As readers of this Blog know, to recover damages for fraud, 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.” [1] When a plaintiff contends that he or she was fraudulently induced to take some action, such as enter