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DISCLAIMER IN SUBCONTRACT IS AMBIGUOUS, MOTION TO DISMISS FRAUD COUNTERCLAIM BASED UPON THE DISCLAIMER SHOULD NOT HAVE BEEN GRANTED.

The Fourth Department, reversing Supreme Court, determined there was a question of fact whether a disclaimer in a subcontract precluded the fraud counterclaim. The court further determined the fraud counterclaim was not duplicative of the breach of contract counterclaim and the fraud counterclaim was pled with sufficient specificity. Plaintiff, Pike, did concrete and steel construction work. Defendant subcontractor, Jersen, was hired to do masonry work:

The fraud counterclaim is the sole focus of this appeal. In that counterclaim, Jersen alleged that, before it began work on the project, Pike was informed by at least one of its other subcontractors that its substrate work was not “accurate, flat or level,” i.e., was deficient. Nevertheless, Pike represented to Jersen that the substrate work “had been erected in accordance with the contract requirements and was plumb, level, and true and that [Pike] had performed a professional survey of the structural steel to confirm the same.” Jersen alleged that Pike’s representations to Jersen “were false,” and that Pike “concealed and recklessly withheld from Jersen knowledge that the substrate was not dimensionally accurate, flat or level.” Additionally, Jersen alleged that Pike made those false representations “in order to deceive Jersen and induce Jersen to commence installation upon the substrate.” Jersen further alleged that it relied on Pike’s representations and would not have commenced installation of the masonry work had Pike not misrepresented to Jersen that the substrate had been installed in accordance with the contract requirements. According to Jersen, it suffered damages as a result of its reliance on Pike’s false representations. * * *

We conclude that the subcontract is ambiguous whether the disclaimer clause in section 1.8 precludes Jersen from relying on any opinions or representations concerning work performed by others after Jersen executed the subcontract, and thus that section 1.8 does not “conclusively establish[ ] a defense” to the counterclaim for fraud … . Pike Co., Inc. v Jersen Constr. Group, LLC, 2017 NY Slip Op 01116, 4th Dept 2-10-17

CONTRACT LAW (DISCLAIMER IN SUBCONTRACT IS AMBIGUOUS, MOTION TO DISMISS FRAUD COUNTERCLAIM BASED UPON THE DISCLAIMER SHOULD NOT HAVE BEEN GRANTED)/FRAUD (DISCLAIMER IN SUBCONTRACT IS AMBIGUOUS, MOTION TO DISMISS FRAUD COUNTERCLAIM BASED UPON THE DISCLAIMER SHOULD NOT HAVE BEEN GRANTED)/DISCLAIMER (CONTRACT LAW, FRAUD, DISCLAIMER IN SUBCONTRACT IS AMBIGUOUS, MOTION TO DISMISS FRAUD COUNTERCLAIM BASED UPON THE DISCLAIMER SHOULD NOT HAVE BEEN GRANTED)

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