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PURSUANT TO THE SPECIAL FACTS DOCTRINE, THE PURCHASE AND SALE AGREEMENT FOR THIS “AS IS” SALE OF A BUILDING RELEASED THE SELLER FROM LIABILIITY FOR NEGLIGENCE AND NEGLIGENT MISREPRESENTATION, BUT NOT FOR FRAUD (FIRST DEPT). ​

The First Department, reversing (modifying) Supreme Court, determined Supreme Court properly found that the Purchase and Sale Agreement (PSA). pursuant to the special facts doctrine, did not release the seller of the building from a claim based on fraud (building was sold “as is”). But the PSA did release the seller from liability for negligence or negligent misrepresentation:

Plaintiff’s negligence and negligent misrepresentation claims against the seller are barred by the Purchase and Sale Agreement (PSA). In section 6.02 of the PSA, plaintiff agreed that it had not relied on any representations as to the condition of the building, and agreed to purchase the building “as is.” Although Supreme Court correctly found that under the special facts doctrine, section 6.02 does not serve to bar the causes of action based on fraud, the provision does, in fact, bar the causes of action based on negligence (compare TIAA Global Invs., LLC v One Astoria Sq., 127 AD3d 75, 87-88 [1st Dept 2015] [under special facts doctrine, which provides that a contractual disclaimer cannot preclude a fraud claim when the underlying facts are peculiarly within the defendant’s knowledge, “as is” and “no reliance” provisions in a real estate sales contract did not require dismissal of fraud claim under CPLR 3211]). Similarly, while the release in PSA section 19.15 exempts fraud claims from the scope of the release, plaintiff released the seller for claims relating to any defects in the building “whether the result of negligence or otherwise.” 470 4th Ave. Fee Owner, LLC v Adam Am. LLC, 2022 NY Slip Op 03204 First Dept 5-17-22

Practice Point: Here the building was sold “as is.” A provision in the Purchase and Sale Agreement (PSA) released the seller from liability for negligence or negligent misrepresentation. But, pursuant to the special facts doctrine, the PSA did not release the seller from a claim alleging fraud.

 

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