Fraud – Page 13 – New York Appellate Digest

DISCLAIMER IN THE REAL ESTATE PURCHASE AND SALE CONTRACT PRECLUDED ACTIONS BASED IN FRAUD ALLEGING THE CONCEALMENT OF A RECURRING MOLD-CAUSING CONDITION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the causes of action alleging fraud in the concealment of a recurring mold-causing condition should have been dismissed. The real estate contract included a disclaimer which stated that plaintiffs relied upon their own inspection of the property and not any representations made by others:

“In an action to recover damages for fraud, the plaintiff must prove 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” … . In the context of real estate transactions, “New York adheres to the doctrine of caveat emptor and imposes no duty on the seller or the seller’s agent to disclose any information concerning the premises when the parties deal at arm’s length, unless there is some conduct on the part of the seller or the seller’s agent which constitutes active concealment” … . “If however, some conduct (i.e., more than mere silence) on the part of the seller rises to the level of active concealment, a seller may have a duty to disclose information concerning the property” … . “To maintain a cause of action to recover damages for active concealment, the plaintiff must show, in effect, that the seller or the seller’s agents thwarted the plaintiff’s efforts to fulfill his [or her] responsibilities fixed by the doctrine of caveat emptor” … .

The presence of disclaimers in a written agreement may preclude a claim of common-law fraud by rendering any resulting reliance unjustified … . Moreover, a specific disclaimer of reliance on representations as to the condition of real property will generally bar related fraud-based claims … . Here, the contract of sale for the subject premises set forth, a… lia, that the plaintiffs were “fully aware of the physical condition and state of repair of the Premises . . . based on [their] own inspection and investigation thereof,” and that they were “entering into this contract based solely upon such inspection and investigation and not upon any information . . . or representations . . . given or made by Seller or its representatives.” Comora v Franklin, 2019 NY Slip Op 02671, Second Dept 4-10-19

April 10, 2019

Contract Law, Fiduciary Duty, Fraud

DEFENDANT STATED VALID COUNTERCLAIMS FOR FRAUDULENT INDUCEMENT, BREACH OF FIDUCIARY DUTY AND NEGLIGENT MISREPRESENTATION IN THIS BREACH OF CONTRACT ACTION, SUPREME COURT REVERSED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant had stated counterclaims for fraudulent inducement, breach of a fiduciary duty, and negligent misrepresentation in this breach of contract action:

Sharbat’s [plaintiff’s] statements that he had “massive investors” who were prepared to invest in defendant and that he “had obtained high-value investors for [defendant] in Israel,” while partially hyperbolic, make concrete factual representations that go beyond mere puffery. Simply stated, Sharbat asserted that he had investors lined up and ready to go, when in fact he had none. Since plaintiffs were retained by defendant to bring investors in, these statements constitute misrepresentations of material facts for purposes of the fraudulent inducement counterclaim … . …

[The] allegations plead a broker-principal relationship sufficient to impose a fiduciary duty on plaintiffs vis-a-vis defendant … . Plaintiffs’ fiduciary role carried with it a duty to disclose material facts … . …

Defendant alleges that plaintiffs negligently misrepresented that they were able to represent it in obtaining investors and facilitating the issuance of securities to raise capital for it, that they were skilled in obtaining financing from “high-value investors,” that they “had qualified, high-value investors who were to invest in [defendant],” and that plaintiffs themselves were qualified to invest in defendant. … These allegations state a counterclaim for negligent misrepresentation … . Solomon Capital, LLC v Lion Biotechnologies, Inc., 2019 NY Slip Op 02621, First Dept 4-4-19

April 4, 2019

Fiduciary Duty, Fraud, Real Estate

PLAINTIFF ENTITLED TO SUMMARY JUDGMENT ON THE FRAUD AND BREACH OF FIDUCIARY DUTY CAUSES OF ACTION, DEFENDANT PURCHASED THE PROPERTY FOR HERSELF WHILE ACTING AS PLAINTIFF’S REAL ESTATE BROKER (SECOND DEPT).

The Second Department determined plaintiff was entitled to summary judgment on the fraud and breach of fiduciary duty causes of action against defendant (Maureen), a real estate broker. The complaint alleged that Maureen purchased the property herself while acting as plaintiff’s broker:

“[A] real estate broker is a fiduciary with a duty of loyalty and an obligation to act in the best interests of the principal”… . “[I]n dealing with the principal, a real estate broker must act honestly and candidly, and the broker must disclose all material information that it may possess or obtain concerning the transactions involved”… . Moreover, “[w]here a broker’s interests or loyalties are divided due to a personal stake in the transaction or representation of multiple parties, the broker must disclose to the principal the nature and extent of the broker’s interest in the transaction or the material facts illuminating the broker’s divided loyalties” … . “A breach of this duty of loyalty by a real estate broker may constitute a fraud for which the broker is answerable in damages” … . Edwards v Walsh, 2019 NY Slip Op 01197, Second Dept 2-20-19

February 20, 2019

Civil Procedure, Evidence, Fraud

ALLEGATIONS OF COMPENSABLE DAMAGES INSUFFICIENT, MOTION TO DISMISS FRAUD COMPLAINT SHOULD HAVE BEEN GRANTED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the motion to dismiss fraud causes of action should have been granted because the allegation of compensable damages was deficient. “Plaintiff, a debt buying company, commenced this action alleging … [defendants] fraudulently induced it to purchase additional debt portfolios pursuant to its agreements with a third party by misrepresenting the terms of the financing arrangement secured by defendants to facilitate the purchase of such portfolios;”

“To allege a cause of action based on fraud, plaintiff 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’ ” … . ” The true measure of damage is indemnity for the actual pecuniary loss sustained as the direct result of the wrong’ or what is known as the out-of-pocket’ rule” … . “Under this rule, the loss is computed by ascertaining the difference between the value of the bargain which . . . plaintiff was induced by fraud to make and the amount or value of the consideration exacted as the price of the bargain’ ” … .

Here, we conclude that, even as supplemented by the affidavit of plaintiff’s president … , “plaintiff’s pleading is fatally deficient because [it] did not assert compensable damages resulting from defendants’ alleged fraud” … . With respect to the purchase of the subject portfolios, plaintiff received an interest therein worth more than the amount of its alleged investment … . Further, contrary to plaintiff’s contention, the allegation that it lost the enhanced collections on the portfolios that defendants purportedly told it that it could receive under the terms of the financing arrangement is a “quintessential lost opportunity, which is not a recoverable out-of-pocket loss”… . “Damages are to be calculated to compensate plaintiff[] for what [was] lost because of the fraud, not to compensate . . . for what . . . might have [been] gained . . . [T]here can be no recovery of profits which would have been realized in the absence of fraud” … . Southwestern Invs. Group, LLC v JH Portfolio Debt Equities, LLC, 2019 NY Slip Op 01035, Fourth Dept 2-8-19

February 8, 2019

Fraud

COMPLAINT ALLEGING FRAUD AND RELATED CAUSES OF ACTION SHOULD NOT HAVE BEEN DISMISSED, CERTAIN CLAIMS WERE NOT TIME-BARRED AND PLAINTIFF’S RELIANCE UPON MISREPRESENTATIONS WAS SUFFICIENTLY ALLEGED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Singh, over a two-justice dissenting opinion, determined that the complaint alleging fraud and related causes of action should not have been dismissed. The lawsuit arose after a divorce. Wendy, the wife, was the executive director of Epiphany Community Nursery School, the plaintiff. The husband, defendant Hugh, an investment banker, handled certain financial transactions involving Epiphany:

There are two central issues on this appeal. The first involves the application of the statute of limitations. The second is whether plaintiff has pleaded the element of justifiable reliance to support its cause of action sounding in fraud pertaining to unauthorized bank transfers made by defendants between 2007 and 2013. We find the fraud claim relating to the bank transfers is not time-barred and that justifiable reliance has been sufficiently pleaded. Accordingly, we reinstate plaintiff’s fraud claims relating to the bank transfers. * * *

In determining whether justifiable reliance is sufficiently alleged, we consider two relevant circumstances: first, the existence of a relationship of trust or confidence and second, the superior knowledge or means of knowledge on the part of the person making the representation. …

… [T]he complaint alleges that Hugh went to great lengths to conceal the unauthorized transfers and therefore, Epiphany – and Wendy, in her capacity as Executive Director of Epiphany – could not have discovered the alleged fraud with reasonable due diligence … . In particular, Hugh “caused [Epiphany’s] bank statements to be diverted to the offices of Gruppo Levy and GLH” so that his fraudulent scheme would not be discovered. He also allegedly initiated these transfers at meetings with the employees of Gruppo Levy and GLH, not Epiphany. Additionally, he recorded the transfers as loans on the books and records, before offsetting them by services that were allegedly not provided so that Epiphany would not be alerted to the transfers. The complaint alleges that Hugh and Davie Kaplan’s actions prevented the public and government regulators from uncovering the fraud. Epiphany Community Nursery Sch. v Levey, 2019 NY Slip Op 00842, First Dept 2-5-19

February 5, 2019

Attorneys, Family Law, Fiduciary Duty, Fraud, Legal Malpractice, Negligence

BREACH OF FIDUCIARY DUTY, FRAUD AND JUDICIARY LAW 487 ALLEGATIONS STEMMING FROM DEFENDANT LAW FIRM’S REPRESENTATION OF PLAINTIFF IN DIVORCE PROCEEDINGS DUPLICATED THE LEGAL MALPRACTICE ALLEGATIONS, THE COMPLAINT SHOULD HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Singh, determined that plaintiff’s legal malpractice, breach of fiduciary duty, fraud and Judiciary Law 487 causes of action against the law firm which represented her in divorce proceedings should have been dismissed. The opinion is fact-specific. The legal issues mentioned include: the breach of fiduciary duty allegations were identical to the legal malpractice allegations and therefore required the “but for” element of legal malpractice (which was missing), and the fraud and Judiciary Law 487 claims were identical and duplicated the legal malpractice allegations, requiring dismissal. Knox v Aronson, Mayefsky & Sloan, LLP, 2018 NY Slip Op 09030, First Dept 12-27-18

December 27, 2018

Banking Law, Conversion, Fraud

COMPLAINT ALLEGED VALID CAUSES OF ACTION FOR AIDING AND ABETTING FRAUD AND AIDING AND ABETTING CONVERSION AGAINST A BANK WHICH PROVIDED A LETTER TO PLAINTIFF STATING DEFENDANT MAINTAINED ENOUGH IN HIS BANK ACCOUNTS TO COVER A POST-DATED CHECK FOR OVER $400,000 (FIRST DEPT).

The First Department, reversing Supreme Court, over a dissent, determined that plaintiff auction house stated causes of action for aiding and abetting fraud and aiding and abetting conversion against defendant bank HSBC. Defendant Stettner bid over $425,000 for antique jewelry and sought to pay with a post-dated check. At plaintiff’s request HSBC provided a letter attesting to Stettner’s good standing at the bank and stating that Stettner maintained a balance of between $1 and $20 million. Stettner’s check bounced. The dissent argued that the complaint did not allege the bank’s knowledge of the fraud and conversion:

“A plaintiff alleging an aiding-and-abetting fraud claim must allege the existence of the underlying fraud, actual knowledge, and substantial assistance” … . In turn, the elements of an underlying fraud are “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” … . …

Aiding and abetting conversion requires the existence of a conversion by the primary tortfeasor, actual knowledge, and substantial assistance… . “A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person’s right of possession” … . William Doyle Galleries, Inc. v Stettner, 2018 NY Slip Op 08743, First Dept 12-20-18

December 20, 2018

Consumer Law, Contract Law, Cooperatives, Fraud, Real Estate

THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT).

The First Department determined the misrepresentation of the dimensions of the cooperative apartment in the listing could not be deemed incorporated by reference into the purchase agreement. The complaint was therefore properly dismissed:

… [P]laintiffs allege that defendants prepared a floor plan, which accompanied the listing for the unit at issue, that stated that the unit was “~1,966” square feet, when it was, in fact, approximately 1,495 square feet. Plaintiffs contend that the floor plan was incorporated into the offering plan by reference, and the offering plan, in turn, was incorporated into the purchase agreement. …

The doctrine of incorporation by reference “is appropriate only where the document to be incorporated is referred to and described in the instrument as issued so as to identify the referenced document beyond all reasonable doubt'”… . Here, the listing is not identified in any of the relevant purchase documents … .

Moreover, any purported representation or warranty is refuted by the clear terms of the purchase agreement, which contains a merger clause, states that no representations are being made by the sponsor, that the unit was being purchased “as is” and that the onus was on the buyer to inspect “to determine the actual dimensions” prior to purchasing … . …

Reasonable reliance is an element of claims for fraud, aiding and abetting fraud and negligent misrepresentation… . Plaintiffs cannot as a matter of law establish reasonable reliance on a representation concerning the condition of the apartment since they had the means to ascertain the truth of the condition … . …

… [P]plaintiffs’ allegations based on purported representations made in the listing fail to set forth a viable claim under General Business Law §§ 349 or 350, as they do not fall within the type of deceptive acts, that, if permitted to continue, would have a broad impact on consumers at large … . Von Ancken v 7 E. 14 L.L.C., 2018 NY Slip Op 08097, First Dept 11-27-18

CONTRACT LAW (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/INCORPORATION BY REFERENCE (CONTRACT LAW, (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/FRAUD (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/CONSUMER LAW (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/PURCHASE AGREEMENTS (COOPERATIVES, THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/LISTING (REAL ESTATE, THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/REAL ESTATE (LISTING, (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/COOPERATIVES (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))

November 27, 2018

Employment Law, Fraud, Labor Law

LAID OFF AT-WILL EMPLOYEE’S WHISTLEBLOWER (LABOR LAW 740) AND FRAUDULENT INDUCEMENT CAUSES OF ACTION PROPERLY DISMISSED (SECOND DEPT).

The Second Department determined plaintiff’s whistleblower (Labor Law 740) and fraudulent inducement causes of action were properly dismissed. Plaintiff’s allegations did not meet the statutory criteria of Labor Law 740 and at-will employees who are laid off generally can not bring an action alleging fraudulent inducement:

[Labor Law 740] provides, in relevant part, that “[a]n employer shall not take any retaliatory personnel action against an employee because such employee . . . discloses, or threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer that is in violation of law, rule or regulation” that either “creates and presents a substantial and specific danger to the public health or safety, or . . . constitutes health care fraud” (Labor Law § 740[2][a]).

While the plaintiff in a whistleblower action must prove, at trial, that an actual violation of law, rule, or regulation occurred … , it is not necessary, for pleading purposes, that the plaintiff identify in the complaint the specific law, rule, or regulation that the defendant allegedly violated … .

Here, while the amended complaint sufficiently alleges a violation of law, rule, or regulation, it fails to allege any substantial and specific danger to the public health or safety resulting from such violation … . …

“New York law is clear that absent a constitutionally impermissible purpose, a statutory proscription, or an express limitation in the individual contract of employment, an employer’s right at any time to terminate an employment at will remains unimpaired,” and the Court of Appeals has “repeatedly refused to recognize exceptions to, or pathways around, these principles” … . Hence, as a general rule, at-will employees may not claim that they were induced to accept their position based on the belief that they would enjoy continued employment …, “even where the circumstances pertain to a plaintiff’s acceptance of an offer of a position rather than his or her termination” … . Since the plaintiff failed to allege any injury independent of termination of her employment, she cannot recover damages for what is, at most, an alleged breach of contract in the guise of a tort … . Coyle v College of Westchester, Inc., 2018 NY Slip Op 07699, Second Dept 11-14-18

EMPLOYMENT LAW (LAID OFF AT-WILL EMPLOYEE’S WHISTLEBLOWER (LABOR LAW 740) AND FRAUDULENT INDUCEMENT CAUSES OF ACTION PROPERLY DISMISSED (SECOND DEPT))/WHISTLEBLOWERS (LAID OFF AT-WILL EMPLOYEE’S WHISTLEBLOWER (LABOR LAW 740) AND FRAUDULENT INDUCEMENT CAUSES OF ACTION PROPERLY DISMISSED (SECOND DEPT))/LABOR LAW 740 (WHISTLEBLOWERS, LAID OFF AT-WILL EMPLOYEE’S WHISTLEBLOWER (LABOR LAW 740) AND FRAUDULENT INDUCEMENT CAUSES OF ACTION PROPERLY DISMISSED (SECOND DEPT))/FRAUDULENT INDUCEMENT (EMPLOYMENT LAW, AT-WILL EMPLOYEE, (LAID OFF AT-WILL EMPLOYEE’S WHISTLEBLOWER (LABOR LAW 740) AND FRAUDULENT INDUCEMENT CAUSES OF ACTION PROPERLY DISMISSED (SECOND DEPT))/AT-WILL EMPLOYEES (LAID OFF AT-WILL EMPLOYEE’S WHISTLEBLOWER (LABOR LAW 740) AND FRAUDULENT INDUCEMENT CAUSES OF ACTION PROPERLY DISMISSED (SECOND DEPT))

November 14, 2018

Appeals, Fraud

DAMAGES FOR FRAUD SHOULD HAVE BEEN BASED UPON OUT OF POCKET LOSS, NOT PROFITS THAT WOULD HAVE BEEN EARNED ABSENT THE FRAUD, EVEN THOUGH RESPONDENT WAS ENTITLED TO MORE DAMAGES UNDER THE OUT OF POCKET RULE, NO RELIEF CAN BE AFFORDED TO THE NONAPPEALING PARTY (SECOND DEPT).

The Second Department determined that the trial court used the wrong criteria for assessing damages for fraud, but further determined the damages should be reduced and, even though the respondent was entitled to a higher damages award, no relief could be afforded to a nonappealing party. Damages for fraud must be based on out-of-pocket losses, not profits that would have been earned absent the fraud:

“The true measure of damage is indemnity for the actual pecuniary loss sustained as the direct result of the wrong” … . Under this rule, the loss is computed by ascertaining the “difference between the value of the bargain which a plaintiff was induced by fraud to make and the amount or value of the consideration exacted as the price of the bargain”… . Damages are to be calculated to compensate plaintiffs for what they lost because of the fraud, not to compensate them for what they might have gained … . Under the out-of-pocket rule, there can be no recovery of profits which would have been realized in the absence of fraud … . Global Granite Sales Corp. v Sabovic, 2018 NY Slip Op 07414, Second Dept 11-7-18

FRAUD (DAMAGES FOR FRAUD SHOULD HAVE BEEN BASED UPON OUT OF POCKET LOSS, NOT PROFITS THAT WOULD HAVE BEEN EARNED ABSENT THE FRAUD, EVEN THOUGH RESPONDENT WAS ENTITLED TO MORE DAMAGES UNDER THE OUT OF POCKET RULE, NO RELIEF CAN BE AFFORDED TO THE NONAPPEALING PARTY (SECOND DEPT))/DAMAGES (FRAUD, DAMAGES FOR FRAUD SHOULD HAVE BEEN BASED UPON OUT OF POCKET LOSS, NOT PROFITS THAT WOULD HAVE BEEN EARNED ABSENT THE FRAUD, EVEN THOUGH RESPONDENT WAS ENTITLED TO MORE DAMAGES UNDER THE OUT OF POCKET RULE, NO RELIEF CAN BE AFFORDED TO THE NONAPPEALING PARTY (SECOND DEPT))/APPEALS (FRAUD, (DAMAGES FOR FRAUD SHOULD HAVE BEEN BASED UPON OUT OF POCKET LOSS, NOT PROFITS THAT WOULD HAVE BEEN EARNED ABSENT THE FRAUD, EVEN THOUGH RESPONDENT WAS ENTITLED TO MORE DAMAGES UNDER THE OUT OF POCKET RULE, NO RELIEF CAN BE AFFORDED TO THE NONAPPEALING PARTY (SECOND DEPT))/OUT OF POCKET LOSS (FRAUD, DAMAGES FOR FRAUD SHOULD HAVE BEEN BASED UPON OUT OF POCKET LOSS, NOT PROFITS THAT WOULD HAVE BEEN EARNED ABSENT THE FRAUD, EVEN THOUGH RESPONDENT WAS ENTITLED TO MORE DAMAGES UNDER THE OUT OF POCKET RULE, NO RELIEF CAN BE AFFORDED TO THE NONAPPEALING PARTY (SECOND DEPT))/PROFITS (FRAUD, DAMAGES FOR FRAUD SHOULD HAVE BEEN BASED UPON OUT OF POCKET LOSS, NOT PROFITS THAT WOULD HAVE BEEN EARNED ABSENT THE FRAUD, EVEN THOUGH RESPONDENT WAS ENTITLED TO MORE DAMAGES UNDER THE OUT OF POCKET RULE, NO RELIEF CAN BE AFFORDED TO THE NONAPPEALING PARTY (SECOND DEPT))

November 7, 2018