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THE FRAUD CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED BECAUSE IT WAS NOT DUPLICATIVE OF THE BREACH OF CONTRACT CAUSE OF ACTION; CRITERIA EXPLAINED (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the fraud cause of action was not duplicative of the breach of contract cause of action and therefore should not have been dismissed:

The fraud claim is not duplicative of the contract claim … , this is not a case where “the only fraud alleged” was the defendant’s “unkept promise to perform certain of its preexisting obligations under the parties’ contract” … . Rather, plaintiff alleges, “Whenever ADP’s services for Plaintiff[] proved to be deficient, ADP would purport to deal with the problem and then misrepresent to Plaintiff[] that the problem had been fixed, when . . . it had not.” “Unlike a misrepresentation of future intent to perform, a misrepresentation of present facts is collateral to the contract and therefore involves a separate breach of duty” … .

Moreover, plaintiff seeks at least some damages on its fraud claim that it does not seek on its contract claim … . IS Chrystie Mgt. LLC v ADP, LLC, 2022 NY Slip Op 02950, First Dept 5-3-22

Practice Point: Fraud causes of action are often dismissed as duplicative of breach-of-contract causes of action. Here the fraud cause of action should not have been dismissed because the misrepresentations concerned present facts, not a future intent to perform. In addition, the complaint sought damages for fraud that were not sought for breach of contract.

 

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