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Haber Merger clauses and the duplication of claims doctrine often operate to limit the availability of clauses are intended to preclude reliance on extrinsic representations, while the duplication of claims doctrine However, these doctrines are subject to important limitations: a merger clause will bar a fraudulent In doing so, CSN Realty underscores a more nuanced and fact-sensitive application of these doctrines, CSN Realty represents, therefore, a more permissive application of the doctrine by making a distinction

(the “Doctrine”), an exception to the general rule that limitations periods begin to run from the date This BLOG has previously addressed the continuing wrong doctrine. See, e.g., “Continuing Wrong Doctrine Found Not Applicable to Toll the Limitations Period for Fraud and The Doctrine “is an exception to the general rule that the statute of limitations runs from the time The Doctrine is applied in contract actions “when the contract imposes a continuing duty on the breaching

June 5, 2026), illustrates the doctrine’s fact‑intensive nature. Day Realty, 308 A.D.2d at 152 (internal quotation marks omitted).

ordinary intelligence. 5 Both of the foregoing circumstances will negate application of the special facts doctrine “The issue on appeal,” said the Court, was “narrow — namely, application of the special facts doctrine Hardy.” 8 The Court held that Plaintiff met the “the threshold two-prong test for the special facts doctrine The special facts doctrine was, however, unavailable to Supply because it could not show that the transactions “The ‘special facts’ doctrine holds that ‘absent a fiduciary relationship between parties, there is nonetheless

who signs a written contract is presumed to know and have assented to the contents therein. 18 The Doctrine The Court held that the “claims sounding in unconscionability were properly dismissed, as the doctrine While the doctrine of unconscionability is recognized by article 2 of the UCC, which applies to transactions Christian , 42 N.Y.2d 63, 71 (1977) (internal quotation marks omitted). King , 7. (internal quotation marks omitted). KNK Enters. Inc. v.

Haber As we have often explained in the articles in which we have examined the duplication doctrine, Thus, courts will apply the doctrine when a plaintiff alleges a breach of contract claim and a fraud Mar. 19, 2024) (here), the Appellate Division, First Department considered the duplication doctrine when

limitations expired on all causes of action alleged by the plaintiff or whether the continuing wrong doctrine As discussed below, the Court held that the continuing wrong doctrine to did not apply to save the complaint The continuous wrong doctrine is an exception to the general rule that the statute of limitations runs from the date a cause of action accrues.[1] The doctrine “is usually employed where there is a series Note: this Blog has examined the continuing wrong doctrine on numerous occasions.

Haber Previously, this Blog examined the doctrines of frustration of purpose and impossibility of performance Because the Covid-19 pandemic and these doctrines continue to work their way through the courts, we do and Kyunghwa Park for, inter alia , the failure to pay rent during the pandemic.  “In order to invoke the doctrine of frustration of purpose, the frustrated purpose must be so completely The doctrine of impossibility of performance “excuses a party’s performance only when the destruction

By: Jeffrey M. Haber In ABN AMRO Capital USA LLC v. AMERRA Capital Mgt. , LLC, 2022 N.Y. Slip Op. 07178 (1st Dept. Dec. 20, 2022) ( here ), the Appellate Division, First Department considered two defenses that are often advanced to dismiss a claim for fraudulent inducement: the absence of justifiable reliance and duplication with a breach of contract claim. We examine those defenses in today’s article. ABN AMRO involved the extension of $360 million in loans to Transmar Commodity Group Ltd. (“Transmar”), an entity that was once engaged in cocoa trading. In September 2011, Transmar entered into a senior secured credit facility with the plaintiffs (“BNP Credit Agreement”), a group of financial institutions and senior secured lenders (“Lenders”). The loan was made against Transmar’s “borrowing base”, which was a contractual formula that assigned percentage weights to Transmar’s accounts receivable, inventory, and net unrealized forward gains and losses. The BNP Credit Agreement required that Transmar provide weekly certified reports calculating the borrowing base. Although defendant, a commodities investment manager that was Transmar’s trading partner and a holder of Transmar’s unsecured debt, it was not a lender under the BNP Credit Agreement. Nevertheless, it had access to the reports and other due diligence documents that Transmar provided to the Lenders. In August 2013, at the same time the parties amended the BNP Credit Agreement, the Lenders also executed a subordination agreement with defendant, Transmar, and other parties related to defendant (“2013 Subordination Agreement”). The 2013 Subordination Agreement “subordinated an existing $10 million unsecured loan from the 2013 Subordinated Funds to Transmar” (the “Subordinated Funds”). Transmar, defendant, and the 2013 Subordinated Funds represented that Transmar’s debt obligations to defendant and the 2013 Subordinated Funds was $10 million and “all such obligations would be memorialized in documents that included an express acknowledgment that the obligations were subordinated to the Lenders’ senior secured debt and not in any other form of documentation.” In 2016, following talks between the Lenders and Transmar to increase the Lenders’ loan in a new credit facility, the parties entered into the second secured lending facility (“ABN Credit Agreement”). The Lenders participating in the BNP Credit Agreement also participated in the ABN Credit Agreement.  The Lenders “required that Transmar, defendant, and any funds to which Transmar owed money execute a new version of the 2013 Subordination Agreement as a condition precedent to entering into the ABN Credit Agreement. On February 26, 2016, defendants, ABN, as agent for the Lenders, and Transmar entered into an amended Subordination Agreement (“Amended Subordination Agreement”). The Amended Subordination Agreement did not nullify the 2013 Subordination Agreement. The Lenders alleged that when the parties entered into the Amended Subordination Agreement, Transmar had a debt obligation of $25 million but only represented that no more than $10 million was owed. Like the 2013 Subordination Agreement, Transmar was not permitted to repay the subordinate debt back to defendant or any defendant funds until the Lenders were paid in full. One exception was that Transmar could make a one-time repayment of the entire principal, but there could be no Default or Event of Default under the ABN Credit Agreement. At the heart of the dispute was defendants’ alleged conspiracy with Transmar to commit a wide array of fraudulent activity over a period of years for the purpose of misrepresenting Transmar’s financial condition to induce plaintiffs to continue to extend credit to Transmar under the credit agreements. For example, the Lenders alleged that defendants created “false and misleading financial statements for Transmar that were intended to be, and were, given to the Lenders with the intention that the Lenders would reasonably rely upon them to their detriment.” The Lenders also alleged that defendants engaged in transactions with Transmar that were “designed to mislead the Lenders about Transmar’s true financial conditions, as well as transactions that were intended to evade the contractual limits on Transmar’s ability to borrow money from the Lenders.”  The Lenders also alleged that Transmar and defendants engaged in another fraudulent loan transaction at the end of 2015 in order to create the “impression that Transmar had much greater profitability and liquidity than it actually did,” by allowing Transmar to pay down its Borrowing Base at year-end. In addition, in August 2016, defendant was allegedly “a conduit for a transfer of approximately $8.4 million of collateral from Transmar to Euromar (the “August 2016 Transaction”) for no consideration.”  Plaintiffs filed suit, alleging, among other things, (1) aiding and abetting fraud; (2) conspiracy to commit fraud; (3) fraudulent inducement; (4) breach of the 2013 Subordination Agreement; (5) breach of the Amended Subordination Agreement; and (6) unjust enrichment. Defendants moved to dismiss the amended complaint, pursuant to CPLR §§ 3211(a)(1) and (7) and CPLR § 3016(b). We examine the motion with regard to the fraudulent inducement and breach of contract claims.  The motion court sustained the fraudulent inducement claim and the aiding and abetting claim and granted the motion as to, inter alia , plaintiffs’ request for consequential damages on the breach of contract claim. Regarding the fraudulent inducement claim, defendants argued that plaintiffs failed to identify any misrepresentation and plead justifiable reliance. Defendants also claimed that the fraudulent inducement claim was duplicative of plaintiffs’ breach of contract claim.  In particular, Defendants maintained that the Amended Subordination Agreement was not false because defendants were owed a debt from Transmar’s German affiliate, Euromar GmbH (“Euromar”), not Transmar. Therefore, said defendants, they were not required to disclose that debt. Moreover, defendants argued that plaintiffs knew Transmar was not a party to the transaction with Euromar, thus, plaintiffs could not have justifiably relied on the alleged misrepresentation. In response, the Lenders maintained that defendants represented that Transmar would not repay its indebtedness until after Transmar repaid the Lenders (with certain narrow exceptions) and that Transmar only owed $10 million, which “would be memorialized only in documents that expressly subordinated those obligations to the Lenders’ senior secured debt.” The Lenders alleged that defendants knew these representations were false when made. The Lenders claimed that they relied on the $10 million obligation limit representation because that provision was material to the eventual ABN Credit Agreement. The Lenders further contended that defendants made this representation to induce the signing of the ABN Credit Agreement as the Amended Subordination Agreement was a condition precedent to the ABN Credit Agreement. Finally, the Lenders maintained that their reliance was justified because they were unaware of the alleged fraudulent transactions taking place involving defendants, Transmar, and Euromar.  The motion court held that plaintiffs stated a claim for fraudulent inducement. The motion court also held that the claim was not duplicative of the breach of contract claim.  The motion court sustained the breach of contract claims. Although the motion court sustained the claims, it dismissed the request for consequential damages, holding that Section 18 of the Subordination Agreements explicitly barred consequential damages.  On appeal, the First Department modified the motion court’s order with regard to consequential damages to “clarify that recovery of unpaid loan amounts” was “barred as consequential damages”. 1 The Court noted that the motion court “appear to have held that plaintiffs were contractually barred from seeking consequential damages, without deciding whether the specific damages sought were consequential in nature”. 2 Addressing that issue, the Court found “that recovery from defendants of the outstanding balance of plaintiffs’ loans to Transmar … would constitute consequential damages.” 3 The Court explained that the “final sentence of § 18 of the relevant subordination agreements not create an exemption to the consequential damages bar for unpaid loan amounts, at least not when sought to be recovered from parties other than the ones contractually obligated to pay the loans ( i.e. , Transmar)”. 4 The Court also found that there was no evidence that “such damages were foreseeable and contemplated by the parties before or at the time of the agreement formation”. 5 The Court held that “ he fraudulent inducement claim was properly sustained”. 6 The Court found that “ laintiffs sufficiently alleged that § 4 of the 2016 subordination agreement was false because Transmar owed defendants more than $10 million as a result of the 2014 transaction loans.” 7 The Court explained that “ lthough defendants correct that § 4 makes representations only as to the debt of Transmar, plaintiffs sufficiently alleged that Transmar was the de facto obligor on the 2014 transaction loans.” 8 The Court also held that plaintiffs “sufficiently alleged reasonable reliance”. 9 The Court rejected defendants’ argument that the documents defendants relied on “conclusively establish that plaintiffs knew or should have known the relevant facts prior to execution of the 2016 subordination agreement”. 10 Finally, the Court held that the fraudulent inducement claim was not duplicative of the breach of contract claim, “as the damages sought no longer the same in view of our dismissal of the request for unpaid loan amounts above”. 11 Footnotes Slip Op. at *1. Id . Id. Id. Id. (citation omitted). Id. (citation omitted). Id. Id. Id. at *1-*2. Id. at *2. Id. (citation omitted). In the First Department, the Court has dismissed fraud claims in which the damages sought by the fraud claim are the same as those sought by the breach of contract claim. This is so even where the plaintiff successfully demonstrates that the alleged misrepresentation is collateral to the contract at issue.  E.g. ,  Salamone v. EIP Global Fund LLC , 193 A.D.3d 558, 559 (1st Dept. 2021) ( here ). This Blog wrote about this scenario  here ,  here , and  here . Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

A recurring question that courts and litigants often encounter is how to apply the continuing wrong doctrine This Blog has examined statutes of limitations and the continuing wrong doctrine on many occasions.  One doctrine that allows for tolling is the continuing wrong doctrine. “The continuous wrong doctrine is an exception to the general rule that the statute of limitations runs Where applicable, the doctrine “serves to toll the running of a period of limitations to the date of

A recurring question that courts and litigants often encounter is how to apply the continuing wrong doctrine One doctrine that allows for tolling is the continuing wrong doctrine. “The continuous wrong doctrine is an exception to the general rule that the statute of limitations runs from the time of the breach though no damage occurs until later.” 4 Where applicable, the doctrine Seng (Matter of Yin Shin) , 177 A.D.3d 463 (1st Dept. 2019), where the Court held that the doctrine did

Haber The doctrine of frustration of purpose is narrowly applied.¹ “In order to invoke the doctrine of parties understood, without it, the transaction would have made little sense.”² In other words, the doctrine prevented performance was foreseeable and provision could have been made for its occurrence”.⁴ The doctrine an unanticipated event that could not have been foreseen or guarded against in the contract.”⁶ The doctrines With respect to defendant’s reliance on the frustration of purpose doctrine, the motion court accepted