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REAL ESTATE CONTRACT LIMITING REMEDIES CONSTITUTED DOCUMENTARY EVIDENCE SUFFICIENT TO WARRANT DISMISSAL OF CAUSES OF ACTION FOR SPECIFIC PERFORMANCE AND REFORMATION OF THE PURCHASE CONTRACT, PLEADING REQUIREMENTS FOR FRAUDULENT MISREPRESENTATION EXPLAINED (SECOND DEPT).

The Second Department, modifying Supreme Court, determined defendant's motion to dismiss causes of action for specific performance and reformation of a real estate purchase contract should have been granted. However the motion to dismiss the fraudulent misrepresentation cause of action was properly denied. The Second Department determined the limitation of remedies in the real estate contract constituted documentary evidence justifying dismissal pursuant to CPLR 3211(a)(1). The requirements for sufficiently pleading a cause of action for fraudulent misrepresentation were explained as well:

“To succeed on a motion to dismiss based upon documentary evidence pursuant to CPLR 3211(a)(1), the documentary evidence must utterly refute the plaintiff's factual allegations, conclusively establishing a defense as a matter of law” … . “An unambiguous contract provision may qualify as documentary evidence under CPLR 3211(a)(1)” … . Here, the parties' contract, which limited the plaintiff's remedies in the event that the defendants were unable to clear defects in title, established a complete defense as a matter of law to the first and third causes of action, seeking specific performance and reformation of the contract based upon mutual mistake, respectively … . …

Where a cause of action is based on a misrepresentation or fraud, “the circumstances constituting the wrong shall be stated in detail” (CPLR 3016[b]). Here, the complaint sufficiently stated a cause of action to recover damages for fraudulent misrepresentation by alleging that the defendants misrepresented that they owned 42-55 27th Street and had the right to convey it, that they made this representation despite knowing that it was false, and that the plaintiff reasonably relied upon the representation to his detriment. Hiu Ian Cheng v Salguero, 2018 NY Slip Op 05831, Second Dept 8-22-18

CIVIL PROCEDURE (MOTION TO DISMISS ON DOCUMENTARY EVIDENCE, REAL ESTATE CONTRACT LIMITING REMEDIES CONSTITUTED DOCUMENTARY EVIDENCE SUFFICIENT TO WARRANT DISMISSAL OF CAUSES OF ACTION FOR SPECIFIC PERFORMANCE AND REFORMATION OF A REAL ESTATE PURCHASE CONTRACT, PLEADING REQUIREMENTS FOR FRAUDULENT MISREPRESENTATION EXPLAINED (SECOND DEPT))/CPLR 3211 (MOTION TO DISMISS ON DOCUMENTARY EVIDENCE, REAL ESTATE CONTRACT LIMITING REMEDIES CONSTITUTED DOCUMENTARY EVIDENCE SUFFICIENT TO WARRANT DISMISSAL OF CAUSES OF ACTION FOR SPECIFIC PERFORMANCE AND REFORMATION OF A REAL ESTATE PURCHASE CONTRACT, PLEADING REQUIREMENTS FOR FRAUDULENT MISREPRESENTATION EXPLAINED (SECOND DEPT))/CONTRACT LAW (MOTION TO DISMISS ON DOCUMENTARY EVIDENCE, REAL ESTATE CONTRACT LIMITING REMEDIES CONSTITUTED DOCUMENTARY EVIDENCE SUFFICIENT TO WARRANT DISMISSAL OF CAUSES OF ACTION FOR SPECIFIC PERFORMANCE AND REFORMATION OF A REAL ESTATE PURCHASE CONTRACT, PLEADING REQUIREMENTS FOR FRAUDULENT MISREPRESENTATION EXPLAINED (SECOND DEPT))/REAL ESTATE (MOTION TO DISMISS ON DOCUMENTARY EVIDENCE, REAL ESTATE CONTRACT LIMITING REMEDIES CONSTITUTED DOCUMENTARY EVIDENCE SUFFICIENT TO WARRANT DISMISSAL OF CAUSES OF ACTION FOR SPECIFIC PERFORMANCE AND REFORMATION OF A REAL ESTATE PURCHASE CONTRACT, PLEADING REQUIREMENTS FOR FRAUDULENT MISREPRESENTATION EXPLAINED (SECOND DEPT))/FRAUD (MOTION TO DISMISS ON DOCUMENTARY EVIDENCE, REAL ESTATE CONTRACT LIMITING REMEDIES CONSTITUTED DOCUMENTARY EVIDENCE SUFFICIENT TO WARRANT DISMISSAL OF CAUSES OF ACTION FOR SPECIFIC PERFORMANCE AND REFORMATION OF A REAL ESTATE PURCHASE CONTRACT, PLEADING REQUIREMENTS FOR FRAUDULENT MISREPRESENTATION EXPLAINED (SECOND DEPT))

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ACTIONS AGAINST THE COUNTY STEMMING FROM PLAINTIFF’S EXPOSURE TO ASBESTOS WHILE WORKING ON COUNTY PROPERTY WERE TIME BARRED, INCLUDING AN ACTION ALLEGING FRAUDULENT CONCEALMENT OF THE PRESENCE OF ASBESTOS (SECOND DEPT).

The Second Department determined plaintiff's actions stemming from exposure to asbestos, including an action against the county alleging fraudulent concealment of the presence of asbestos where plaintiff worked, were time barred:

Generally, an action to recover damages for personal injuries caused by the latent effects of exposure to any substance or combination of substances must be commenced within three years of the date of discovery of the injury by the plaintiff or from the date when, through the exercise of reasonable diligence, such injury should have been discovered by the plaintiff, whichever is earlier (see CPLR 214-c[2] …). “For purposes of CPLR 214-c, discovery occurs when, based upon an objective level of awareness of the dangers and consequences of the particular substance, the injured party discovers the primary condition on which the claim is based'” … . Where, as here, a claim is asserted against a municipality, the statute of limitations as to the claim against the municipality is 1 year and 90 days and is measured from the date of discovery of the injury or from the date when, through the exercise of reasonable diligence, the injury should have been discovered, whichever is earlier … . O'Brien v County of Nassau, 2018 NY Slip Op 05774, Second Dept 8-15-18

TOXIC TORTS (ASBESTOS, ACTIONS AGAINST THE COUNTY STEMMING FROM PLAINTIFF'S EXPOSURE TO ASBESTOS WHILE WORKING ON COUNTY PROPERTY WERE TIME BARRED, INCLUDING AN ACTION ALLEGING FRAUDULENT CONCEALMENT OF THE PRESENCE OF ASBESTOS (SECOND DEPT))/ASBESTOS (ACTIONS AGAINST THE COUNTY STEMMING FROM PLAINTIFF'S EXPOSURE TO ASBESTOS WHILE WORKING ON COUNTY PROPERTY WERE TIME BARRED, INCLUDING AN ACTION ALLEGING FRAUDULENT CONCEALMENT OF THE PRESENCE OF ASBESTOS (SECOND DEPT))/MUNICIPAL LAW (TOXIC TORTS, ACTIONS AGAINST THE COUNTY STEMMING FROM PLAINTIFF'S EXPOSURE TO ASBESTOS WHILE WORKING ON COUNTY PROPERTY WERE TIME BARRED, INCLUDING AN ACTION ALLEGING FRAUDULENT CONCEALMENT OF THE PRESENCE OF ASBESTOS (SECOND DEPT))/CIVIL PROCEDURE (STATUTE OF LIMITATIONS, TOXIC TORTS, ACTIONS AGAINST THE COUNTY STEMMING FROM PLAINTIFF'S EXPOSURE TO ASBESTOS WHILE WORKING ON COUNTY PROPERTY WERE TIME BARRED, INCLUDING AN ACTION ALLEGING FRAUDULENT CONCEALMENT OF THE PRESENCE OF ASBESTOS (SECOND DEPT))/(STATUTE OF LIMITATIONS, TOXIC TORTS, ACTIONS AGAINST THE COUNTY STEMMING FROM PLAINTIFF'S EXPOSURE TO ASBESTOS WHILE WORKING ON COUNTY PROPERTY WERE TIME BARRED, INCLUDING AN ACTION ALLEGING FRAUDULENT CONCEALMENT OF THE PRESENCE OF ASBESTOS (SECOND DEPT))/FRAUD (ASBESTOS, ACTIONS AGAINST THE COUNTY STEMMING FROM PLAINTIFF'S EXPOSURE TO ASBESTOS WHILE WORKING ON COUNTY PROPERTY WERE TIME BARRED, INCLUDING AN ACTION ALLEGING FRAUDULENT CONCEALMENT OF THE PRESENCE OF ASBESTOS (SECOND DEPT))

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THERE ARE QUESTIONS OF FACT WHETHER THE BROKER REPRESENTED BOTH SELLERS AND BUYER WITHOUT DISCLOSING THE DUAL REPRESENTATION, A BREACH OF A FIDUCIARY DUTY, AND THERE ARE QUESTIONS OF FACT WHETHER THE SELLERS WERE FRAUDULENTLY INDUCED BY THE BROKER TO ENTER THE PURCHASE AGREEMENT, BROKER’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined there was a question of fact whether defendant real estate broker, JRMR, breached a fiduciary duty owed to the sellers of real property, and whether JRMR fraudulently induced the sellers to enter the purchase agreement. Although JRMR represented the sellers, emails between JRMR and the buyer raised a question of fact whether JRMR was acting on behalf of both the buyer and the sellers without disclosing the dual representation (a breach of a fiduciary duty):

It is well settled that, “because of a broker’s fiduciary duties, he [or she] has the affirmative duty not to act for a party whose interests are adverse to those of the principal, unless he [or she] has the consent of the principal given after full knowledge of the facts . . . Accordingly, he [or she] cannot act as agent for both seller and purchaser of property in a real estate transaction” … . “Where a broker’s interests or loyalties are divided due to . . . [the] representation of multiple parties, the broker must disclose to the principal . . . the material facts illuminating the broker’s divided loyalties”… . Indeed, “[a] failure to disclose any interest tending to influence the [broker] . . . constitutes a breach of [the broker’s] fiduciary obligation and precludes [the broker] from recovering for services rendered” … . * * *

… [The sellers’] evidence raised issues of fact whether [the broker] made misrepresentations to them concerning the value of their properties and the willingness of [the buyer] to purchase different property, and whether [the broker] knew of the falsity of those statements and made them with the intent to induce [the sellers’] reliance on them. [The sellers] also submitted evidence raising triable issues of fact whether they justifiably relied on [the broker’s] misrepresentations and suffered damages as a result. Northland E., LLC v J.R. Militello Realty, Inc., 2018 NY Slip Op 05078, Fourth Dept 7-6-18

​REAL ESTATE (THERE ARE QUESTIONS OF FACT WHETHER THE BROKER REPRESENTED BOTH SELLERS AND BUYER WITHOUT DISCLOSING THE DUAL REPRESENTATION, A BREACH OF A FIDUCIARY DUTY, AND THERE ARE QUESTIONS OF FACT WHETHER THE SELLERS WERE FRAUDULENTLY INDUCED BY THE BROKER TO ENTER THE PURCHASE AGREEMENT, BROKER’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FOURTH DEPT))/FRAUD (REAL ESTATE, THERE ARE QUESTIONS OF FACT WHETHER THE BROKER REPRESENTED BOTH SELLERS AND BUYER WITHOUT DISCLOSING THE DUAL REPRESENTATION, A BREACH OF A FIDUCIARY DUTY, AND THERE ARE QUESTIONS OF FACT WHETHER THE SELLERS WERE FRAUDULENTLY INDUCED BY THE BROKER TO ENTER THE PURCHASE AGREEMENT, BROKER’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FOURTH DEPT))/BROKERS (REAL ESTATE, THERE ARE QUESTIONS OF FACT WHETHER THE BROKER REPRESENTED BOTH SELLERS AND BUYER WITHOUT DISCLOSING THE DUAL REPRESENTATION, A BREACH OF A FIDUCIARY DUTY, AND THERE ARE QUESTIONS OF FACT WHETHER THE SELLERS WERE FRAUDULENTLY INDUCED BY THE BROKER TO ENTER THE PURCHASE AGREEMENT, BROKER’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FOURTH DEPT))/FIDUCIARY DUTY (REAL ESTATE, BROKERS, THERE ARE QUESTIONS OF FACT WHETHER THE BROKER REPRESENTED BOTH SELLERS AND BUYER WITHOUT DISCLOSING THE DUAL REPRESENTATION, A BREACH OF A FIDUCIARY DUTY, AND THERE ARE QUESTIONS OF FACT WHETHER THE SELLERS WERE FRAUDULENTLY INDUCED BY THE BROKER TO ENTER THE PURCHASE AGREEMENT, BROKER’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FOURTH DEPT))

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FRAUDULENT INDUCEMENT CAUSE OF ACTION MUST BE BASED UPON MATTERS COLLATERAL TO THE CONTRACT, NOT THE BREACH OF PROVISIONS OF THE CONTRACT ITSELF (FIRST DEPT).

The First Department noted that contract provisions cannot be the bases for a fraudulent inducement cause of action. Only matters collateral to the contract will support fraudulent inducement:

Plaintiffs alleged six different bases for the fraudulent inducement claim. The alleged misrepresentations regarding assistance operating the preschool, the working fire alarm, and use of the stroller area, area near the kitchen, and upstairs gym, are all ” directly related to a specific provision of the contract,'” not collateral to the lease, and cannot be used to sustain a fraudulent inducement claim … . Plaintiffs properly pled a fraudulent inducement claim with respect to defendants materially misrepresenting that a 2004 letter of no objection was all plaintiffs would need, failing to disclose to plaintiffs that defendant intended to remove oversight over homeless individuals on the property, and fraudulently misrepresenting that homeless individuals were living on the property legally, when they were doing so illegally … . Plaintiffs properly pled that, as a result of these statements, which plaintiffs allege were made with the intention to deceive them, they signed the lease and developed the property … . Iken v Bohemian Brethren Presbyt. Church, 2018 NY Slip Op 04830, First Dept 6-28-18

FRAUD (FRAUDULENT INDUCEMENT CAUSE OF ACTION MUST BE BASED UPON MATTERS COLLATERAL TO THE CONTRACT, NOT THE BREACH OF PROVISIONS OF THE CONTRACT ITSELF (FIRST DEPT))/CONTRACT LAW (FRAUDULENT INDUCEMENT CAUSE OF ACTION MUST BE BASED UPON MATTERS COLLATERAL TO THE CONTRACT, NOT THE BREACH OF PROVISIONS OF THE CONTRACT ITSELF (FIRST DEPT))/LANDLORD-TENANT (LEASE, CONTRACT LAW, FRAUDULENT INDUCEMENT CAUSE OF ACTION MUST BE BASED UPON MATTERS COLLATERAL TO THE CONTRACT, NOT THE BREACH OF PROVISIONS OF THE CONTRACT ITSELF (FIRST DEPT))

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IN THIS ACTION STEMMING FROM PLAINTIFF’S INSURING OF RESIDENTIAL MORTGAGE BACKED SECURITIES ISSUED BY DEFENDANT, PLAINTIFF WAS REQUIRED TO SHOW JUSTIFIABLE RELIANCE AND LOSS CAUSATION FOR ITS FRAUDULENT INDUCEMENT CAUSE OF ACTION, PLAINTIFF’S RECOVERY WAS LIMITED TO THAT DESCRIBED IN THE SOLE REMEDY PROVISION, AND PLAINTIFF WAS NOT ENTITLED TO ATTORNEY’S FEES (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Garcia, over a partial dissent, determined certain aspects of defendant Countrywide’s motion for summary judgment against plaintiff insurer, Ambac, stemming from residential mortgage backed securities issued by Countrywide, were properly granted. Ambac’s argument that it need not demonstrate justifiable reliance or loss causation in support of its fraudulent inducement cause of action was rejected, as was Ambac’s argument that it was entitled to relief over and above that specified in the sole remedy clause, as well as attorney’s fees:

Public policy reasons support the justifiable reliance requirement. Where a “sophisticated business person or entity . . . claims to have been taken in,” the justifiable reliance rule “serves to rid the court of cases in which the claim of reliance is likely to be hypocritical” … . Excusing a sophisticated party such as a monoline financial guaranty insurer from demonstrating justifiable reliance would not further the policy underlying this “venerable rule.”

Likewise, there is no merit to Ambac’s argument that it need not show loss causation. Loss causation is a well-established requirement of a common law fraudulent inducement claim for damages. * * *

Ambac’s complaint fails to include breach of contract allegations beyond those that fall under the sole remedy provision … , and accordingly Ambac is limited to the repurchase protocol as the potential remedy for those claims. * * *

In New York, “the prevailing litigant ordinarily cannot collect . . . attorneys’ fees from its unsuccessful opponents. . . . Attorneys’ fees are treated as incidents of litigation, rather than damages. . . . The exception is when an award is authorized by agreement between the parties or by statute or court rule” … . … [T]his Court [has] held that a court “should not infer a party’s intention to waive the benefit of the rule unless the intention to do so is unmistakably clear from the language of the promise … . Ambac Assur. Corp. v Countrywide Home Loans, Inc., 2018 NY Slip Op 04686, CtApp 6-27-18

​INSURANCE LAW (IN THIS ACTION STEMMING FROM PLAINTIFF’S INSURING OF RESIDENTIAL MORTGAGE BACKED SECURITIES ISSUED BY DEFENDANT, PLAINTIFF WAS REQUIRED TO SHOW JUSTIFIABLE RELIANCE AND LOSS CAUSATION FOR ITS FRAUDULENT INDUCEMENT CAUSE OF ACTION, PLAINTIFF’S RECOVERY WAS LIMITED TO THAT DESCRIBED IN THE SOLE REMEDY PROVISION, AND PLAINTIFF WAS NOT ENTITLED TO ATTORNEY’S FEES (CT APP))/FRAUD  (IN THIS ACTION STEMMING FROM PLAINTIFF’S INSURING OF RESIDENTIAL MORTGAGE BACKED SECURITIES ISSUED BY DEFENDANT, PLAINTIFF WAS REQUIRED TO SHOW JUSTIFIABLE RELIANCE AND LOSS CAUSATION FOR ITS FRAUDULENT INDUCEMENT CAUSE OF ACTION, PLAINTIFF’S RECOVERY WAS LIMITED TO THAT DESCRIBED IN THE SOLE REMEDY PROVISION, AND PLAINTIFF WAS NOT ENTITLED TO ATTORNEY’S FEES (CT APP))/CONTRACT LAW  (IN THIS ACTION STEMMING FROM PLAINTIFF’S INSURING OF RESIDENTIAL MORTGAGE BACKED SECURITIES ISSUED BY DEFENDANT, PLAINTIFF WAS REQUIRED TO SHOW JUSTIFIABLE RELIANCE AND LOSS CAUSATION FOR ITS FRAUDULENT INDUCEMENT CAUSE OF ACTION, PLAINTIFF’S RECOVERY WAS LIMITED TO THAT DESCRIBED IN THE SOLE REMEDY PROVISION, AND PLAINTIFF WAS NOT ENTITLED TO ATTORNEY’S FEES (CT APP))/SECURITIES  (IN THIS ACTION STEMMING FROM PLAINTIFF’S INSURING OF RESIDENTIAL MORTGAGE BACKED SECURITIES ISSUED BY DEFENDANT, PLAINTIFF WAS REQUIRED TO SHOW JUSTIFIABLE RELIANCE AND LOSS CAUSATION FOR ITS FRAUDULENT INDUCEMENT CAUSE OF ACTION, PLAINTIFF’S RECOVERY WAS LIMITED TO THAT DESCRIBED IN THE SOLE REMEDY PROVISION, AND PLAINTIFF WAS NOT ENTITLED TO ATTORNEY’S FEES (CT APP))/RESIDENTIAL MORTGAGE BACKED SECURITIES  (IN THIS ACTION STEMMING FROM PLAINTIFF’S INSURING OF RESIDENTIAL MORTGAGE BACKED SECURITIES ISSUED BY DEFENDANT, PLAINTIFF WAS REQUIRED TO SHOW JUSTIFIABLE RELIANCE AND LOSS CAUSATION FOR ITS FRAUDULENT INDUCEMENT CAUSE OF ACTION, PLAINTIFF’S RECOVERY WAS LIMITED TO THAT DESCRIBED IN THE SOLE REMEDY PROVISION, AND PLAINTIFF WAS NOT ENTITLED TO ATTORNEY’S FEES (CT APP))/ATTORNEY’S FEES (IN THIS ACTION STEMMING FROM PLAINTIFF’S INSURING OF RESIDENTIAL MORTGAGE BACKED SECURITIES ISSUED BY DEFENDANT, PLAINTIFF WAS REQUIRED TO SHOW JUSTIFIABLE RELIANCE AND LOSS CAUSATION FOR ITS FRAUDULENT INDUCEMENT CAUSE OF ACTION, PLAINTIFF’S RECOVERY WAS LIMITED TO THAT DESCRIBED IN THE SOLE REMEDY PROVISION, AND PLAINTIFF WAS NOT ENTITLED TO ATTORNEY’S FEES (CT APP))

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PLAINTIFFS’ CONCLUSORY ALLEGATION OF FRAUD DID NOT DEFEAT THE AGREEMENT TO ARBITRATE (SECOND DEPT).

The Second Department determined the arbitration clause of the contract between plaintiffs and defendant was enforceable, despite the plaintiffs’ allegation of fraud in connection with the contract:

A party may not be compelled to arbitrate a dispute unless there is evidence which affirmatively establishes that the parties clearly, explicitly, and unequivocally agreed to arbitrate the dispute… . Under both federal and New York law, unless it can be established that there was a grand scheme to defraud which permeated the entire agreement, including the arbitration provision, a broadly worded arbitration provision will be deemed separate from the substantive contractual provisions, and the agreement to arbitrate may be valid despite the underlying allegation of fraud … .

The broad arbitration clause in the 2014 agreement, together with the other provisions of the 2014 agreement, demonstrate that the plaintiffs explicitly and unequivocally agreed to arbitrate the matters that are the subject of this action. In addition, the plaintiffs’ bare conclusory assertions of fraud failed to establish that any alleged fraud was part of a grand scheme that permeated the entire agreement, including the arbitration clause … . Zafar v Fast Track Leasing, LLC, 2018 NY Slip Op 04774, Second Dept 6-27-18

ARBITRATION (CONTRACT LAW, FRAUD, PLAINTIFFS’ CONCLUSORY ALLEGATION OF FRAUD DID NOT DEFEAT THE AGREEMENT TO ARBITRATE (SECOND DEPT))/CONTRACT LAW (ARBITRATION, PLAINTIFFS’ CONCLUSORY ALLEGATION OF FRAUD DID NOT DEFEAT THE AGREEMENT TO ARBITRATE (SECOND DEPT))/FRAUD (ARBITRATION, CONTRACT LAW, PLAINTIFFS’ CONCLUSORY ALLEGATION OF FRAUD DID NOT DEFEAT THE AGREEMENT TO ARBITRATE (SECOND DEPT))

CIVIL ENFORCEMENT COMPLAINT BROUGHT BY THE ATTORNEY GENERAL STATED CAUSES OF ACTION AGAINST DEFENDANT INTERNET SERVICE PROVIDER ALLEGING FRAUDULENT AND DECEPTIVE PRACTICES CONCERNING THE ADVERTISING OF BROADBAND SPEEDS AND ACCESS TO ONLINE CONTENT (FIRST DEPT).

The First Department determined the civil enforcement complaint stated causes of action under the Executive Law and the General Business Law for fraudulent practices in advertising Internet speeds and reliable access to online content:

Defendants make official disclosures about broadband speeds (actual speeds measured according to a testing protocol on the modems of consumers deemed representative) in accordance with the federal rule [Transparency Rule, 47 CFR 8.3]. The complaint alleges that defendants’ use of their official disclosures in consumer advertisements is misleading, because other statements in the advertisements give consumers the false impression that the disclosed speeds represent speeds that consumers can expect to experience on their devices, including wireless devices, consistently … . The Transparency Rule does not preempt state laws “that prevent fraud, deception and false advertising” … .

The court correctly determined that the complaint’s allegations about the advertisements’ representations of speeds “up to” a certain level state a cause of action … . Issues of fact exist as to whether defendants delivered the advertised speed levels consistently.

The court correctly declined to dismiss claims based on allegations about network quality and reliability on the ground that some of the language in the advertisements is mere puffery, because other statements in the advertisements are not mere puffery and are actionable … . People v Charter Communications, Inc., 2018 NY Slip Op 04644, First Dept 6-21-18

​CONSUMER LAW (INTERNET, CIVIL ENFORCEMENT COMPLAINT BROUGHT BY THE ATTORNEY GENERAL STATED CAUSES OF ACTION AGAINST DEFENDANT INTERNET SERVICE PROVIDER ALLEGING FRAUDULENT AND DECEPTIVE PRACTICES CONCERNING THE ADVERTISING OF BROADBAND SPEEDS AND ACCESS TO ONLINE CONTENT (FIRST DEPT))/FRAUD  (INTERNET, CIVIL ENFORCEMENT COMPLAINT BROUGHT BY THE ATTORNEY GENERAL STATED CAUSES OF ACTION AGAINST DEFENDANT INTERNET SERVICE PROVIDER ALLEGING FRAUDULENT AND DECEPTIVE PRACTICES CONCERNING THE ADVERTISING OF BROADBAND SPEEDS AND ACCESS TO ONLINE CONTENT (FIRST DEPT))/ADVERTISING (CONSUMER LAW, INTERNET,  CIVIL ENFORCEMENT COMPLAINT BROUGHT BY THE ATTORNEY GENERAL STATED CAUSES OF ACTION AGAINST DEFENDANT INTERNET SERVICE PROVIDER ALLEGING FRAUDULENT AND DECEPTIVE PRACTICES CONCERNING THE ADVERTISING OF BROADBAND SPEEDS AND ACCESS TO ONLINE CONTENT (FIRST DEPT))/INTERNET (CONSUMER LAW, CIVIL ENFORCEMENT COMPLAINT BROUGHT BY THE ATTORNEY GENERAL STATED CAUSES OF ACTION AGAINST DEFENDANT INTERNET SERVICE PROVIDER ALLEGING FRAUDULENT AND DECEPTIVE PRACTICES CONCERNING THE ADVERTISING OF BROADBAND SPEEDS AND ACCESS TO ONLINE CONTENT (FIRST DEPT))/CIVIL ENFORCEMENT ACTION (INTERNET, CIVIL ENFORCEMENT COMPLAINT BROUGHT BY THE ATTORNEY GENERAL STATED CAUSES OF ACTION AGAINST DEFENDANT INTERNET SERVICE PROVIDER ALLEGING FRAUDULENT AND DECEPTIVE PRACTICES CONCERNING THE ADVERTISING OF BROADBAND SPEEDS AND ACCESS TO ONLINE CONTENT (FIRST DEPT))

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SIX YEAR STATUTE OF LIMITATIONS FOR FRAUD APPLIES TO A CONVERSION ACTION, ALTHOUGH THE FRAUD BEGAN IN 1998 PLAINTIFF COULD NOT HAVE BECOME AWARE OF IT UNTIL 2013, PLAINTIFF’S ACTION IS TIMELY (SECOND DEPT).

The Second Department determined plaintiff’s action for conversion and breach of a fiduciary duty was timely. Plaintiff was the beneficiary of a structured settlement with payments which were to begin in 1998 and continue for the rest of his life. Defendant, who was the custodian of the structured settlement while plaintiff was minor, did not inform the plaintiff of the settlement and used the funds for her own purposes. The Second Department held that conversion sounds in fraud. Therefore the six-year statute of limitations applied and the statute did not begin to run until plaintiff became aware of fraud in 2013:

Contrary to the defendant’s contentions, since the cause of action for conversion is based upon fraud, it is governed by the statute of limitations period for fraud set forth in CPLR 213(8) … . The limitations period for fraud under CPLR 213(8) also applies to the breach of fiduciary duty causes of action inasmuch as the allegations of fraud are essential to those claims … .

Pursuant to CPLR 213(8), “the time within which the action must be commenced shall be the greater of six years from the date the cause of action accrued or two years from the time the plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with reasonable diligence have discovered it.” “A cause of action based upon fraud accrues, for statute of limitations purposes, at the time the plaintiff possesses knowledge of facts from which the fraud could have been discovered with reasonable diligence'” … .

Here, the plaintiff established that he could not, with reasonable diligence, have discovered the fraud until 2013, when he learned for the first time that he was the beneficiary of a structured settlement from which he was entitled to receive millions of dollars in monthly and periodic lump-sum payments. Monteleone v Monteleone, 2018 NY Slip Op 04317, Second Dept 6-13-18

​FRAUD (STATUTE OF LIMITATIONS, SIX YEAR STATUTE OF LIMITATIONS FOR FRAUD APPLIES TO A CONVERSION ACTION, ALTHOUGH THE FRAUD BEGAN IN 1998 PLAINTIFF COULD NOT HAVE BECOME AWARE OF IT UNTIL 2013, PLAINTIFF’S ACTION IS TIMELY (SECOND DEPT))/CONVERSION  (STATUTE OF LIMITATIONS, SIX YEAR STATUTE OF LIMITATIONS FOR FRAUD APPLIES TO A CONVERSION ACTION, ALTHOUGH THE FRAUD BEGAN IN 1998 PLAINTIFF COULD NOT HAVE BECOME AWARE OF IT UNTIL 2013, PLAINTIFF’S ACTION IS TIMELY (SECOND DEPT))/CIVIL PROCEDURE (STATUTE OF LIMITATIONS, FRAUD, CONVERSION, SIX YEAR STATUTE OF LIMITATIONS FOR FRAUD APPLIES TO A CONVERSION ACTION, ALTHOUGH THE FRAUD BEGAN IN 1998 PLAINTIFF COULD NOT HAVE BECOME AWARE OF IT UNTIL 2013, PLAINTIFF’S ACTION IS TIMELY (SECOND DEPT))/STATUTE OF LIMITATIONS (FRAUD, CONVERSION, SIX YEAR STATUTE OF LIMITATIONS FOR FRAUD APPLIES TO A CONVERSION ACTION, ALTHOUGH THE FRAUD BEGAN IN 1998 PLAINTIFF COULD NOT HAVE BECOME AWARE OF IT UNTIL 2013, PLAINTIFF’S ACTION IS TIMELY (SECOND DEPT))/FRAUD (STATUTE OF LIMITATIONS, CONVERSION, SIX YEAR STATUTE OF LIMITATIONS FOR FRAUD APPLIES TO A CONVERSION ACTION, ALTHOUGH THE FRAUD BEGAN IN 1998 PLAINTIFF COULD NOT HAVE BECOME AWARE OF IT UNTIL 2013, PLAINTIFF’S ACTION IS TIMELY (SECOND DEPT))/CONVERSION (STATUTE OF LIMITATIONS, FRAUD,  SIX YEAR STATUTE OF LIMITATIONS FOR FRAUD APPLIES TO A CONVERSION ACTION, ALTHOUGH THE FRAUD BEGAN IN 1998 PLAINTIFF COULD NOT HAVE BECOME AWARE OF IT UNTIL 2013, PLAINTIFF’S ACTION IS TIMELY (SECOND DEPT))/CPLR 213 (STATUTE OF LIMITATIONS, FRAUD, CONVERSION, SIX YEAR STATUTE OF LIMITATIONS FOR FRAUD APPLIES TO A CONVERSION ACTION, ALTHOUGH THE FRAUD BEGAN IN 1998 PLAINTIFF COULD NOT HAVE BECOME AWARE OF IT UNTIL 2013, PLAINTIFF’S ACTION IS TIMELY (SECOND DEPT))

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THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge DiFiore, over an extensive two-judge concurring opinion and an extensive dissent, determined that some of the claims in this deceptive-practices/fraud action involving residential mortgage backed securities may not be time-barred. The Appellate Division had held both the General Business Law (Martin Act) and Executive Law claims were subject to the three-year statute of limitations for statutory violations and were therefore untimely. The Court of Appeals agreed the Martin Act claims were time-barred but ruled the Executive Law claims may not be time-barred if they are based entirely on the elements of common law fraud subject to a six-year statute of limitations:

… [T]he Martin Act imposes numerous obligations — or “liabilities” — that did not exist at common law, justifying the imposition of a three-year statute of limitations under CPLR 214(2). The broad definition of “fraudulent practices,” as repeatedly amended by the Legislature and interpreted by the courts, encompasses “wrongs” not cognizable under the common law and dispenses, among other things, with any requirement that the Attorney General prove scienter or justifiable reliance on the part of investors. * * *

… [W]hile the lower courts concluded that a six-year statute of limitations applied to defendants’ Executive Law § 63(12) claim — regardless of whether the specific elements of common law fraud had been made out — that holding was not correct. Rather, it is necessary to examine whether the conduct underlying the Executive Law § 63(12) claim amounts to a type of fraud recognized in the common law and, if so, the action will be governed by a six-year statute of limitations … . Although the parties raised various arguments with respect to this question, not all the issues were addressed or resolved by the lower courts. A remittal — which permits consideration of the question in the current procedural posture — is therefore appropriate. If it is determined that the prima facie elements of a common law cause of action were made out in this case, the Attorney General will be obliged to demonstrate each such element at the proof stage or the claim will be subject to dismissal as time-barred. People v Credit Suisse Sec. (USA) LLC, 2018 NY Slip Op 04272, Ct App 6-12-18

CIVIL PROCEDURE (THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP))/STATUTE OF LIMITATIONS (THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP))/SECURITIES  (THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP))/RESIDENTIAL MORTGAGE BACKED SECURITIES  (THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP))FRAUD (RESIDENTIAL MORTGAGE BACKED SECURITIES, STATUTE OF LIMITATIONS, THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP))/CPLR 213  (THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP))/CPLR 214 (THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP))/GENERAL BUSINESS LAW (MARTIN ACT, THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP))/EXECUTIVE LAW (THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP))/MARTIN ACT  (THE MARTIN ACT CLAIMS IN THIS DECEPTIVE PRACTICES ACTION INVOLVING RESIDENTIAL MORTGAGE BACKED SECURITIES ARE TIME-BARRED UNDER THE THREE-YEAR STATUTE OF LIMITATIONS FOR STATUTORY VIOLATIONS, BUT THE EXECUTIVE LAW CLAIMS MAY NOT BE TIME-BARRED IF THEY ARE BASED SOLELY ON THE ELEMENTS OF COMMON LAW FRAUD SUBJECT TO THE SIX-YEAR STATUTE OF LIMITATIONS (CT APP))

, ,

DEFENDANT’S ALLEGED FAILURE TO REPAY MONEY PAID BY PLAINTIFFS PURSUANT TO A CONTRACT WHICH HAD BEEN TERMINATED STATED A CAUSE OF ACTION FOR CONVERSION, FRAUD IN THE INDUCEMENT CAUSE OF ACTION PROPERLY DISMISSED BECAUSE IT WAS BASED UPON NON-ACTIONABLE FUTURE EVENTS AND NON-ACTIONABLE OPINION ON THE PART OF THE DEFENDANT (FIRST DEPT).

The First Department determined plaintiffs’ cause of action for conversion should not have been dismissed and the cause action for fraud in the inducement was based upon non-actionable future conduct or events and non-actionable opinion. Plaintiffs hired defendant for extensive renovation work. Plaintiffs terminated the contract based upon defendant’s allegedly fraudulent requests for payment which were not used for the claimed purposes. When plaintiffs terminated the contract they demanded the return of $400,000 of the $840,000 they had paid. Defendant returned only about $85,000 and did not provide an accounting:

When plaintiffs terminated the contract mid-construction and demanded a return of $400,000 of the $840,000 they had paid, defendant allegedly returned only $84,622.65, without providing an accounting, and allegedly diverted the balance of such monies to his personal use. These allegations sufficiently state a cause of action for conversion … .

Plaintiffs’ cause of action alleging fraud in the inducement was properly dismissed, as it is founded upon non-actionable promises of future conduct or events, rather than present fact … and non-actionable opinion of defendant as to his entity’s resources and capability of undertaking the luxury renovation work sought by plaintiffs … . Yablon v Stern, 2018 NY Slip Op 03650, First Dept 5-22-18

​CONTRACT LAW (DEFENDANT’S ALLEGED FAILURE TO REPAY MONEY PAID BY PLAINTIFFS PURSUANT TO A CONTRACT WHICH HAD BEEN TERMINATED STATED A CAUSE OF ACTION FOR CONVERSION, FRAUD IN THE INDUCEMENT CAUSE OF ACTION PROPERLY DISMISSED BECAUSE IT WAS BASED UPON NON-ACTIONABLE FUTURE EVENTS AND NON-ACTIONABLE OPINION ON THE PART OF THE DEFENDANT (FIRST DEPT))/CONVERSION (DEFENDANT’S ALLEGED FAILURE TO REPAY MONEY PAID BY PLAINTIFFS PURSUANT TO A CONTRACT WHICH HAD BEEN TERMINATED STATED A CAUSE OF ACTION FOR CONVERSION, FRAUD IN THE INDUCEMENT CAUSE OF ACTION PROPERLY DISMISSED BECAUSE IT WAS BASED UPON NON-ACTIONABLE FUTURE EVENTS AND NON-ACTIONABLE OPINION ON THE PART OF THE DEFENDANT (FIRST DEPT))/FRAUD IN THE INDUCEMENT (DEFENDANT’S ALLEGED FAILURE TO REPAY MONEY PAID BY PLAINTIFFS PURSUANT TO A CONTRACT WHICH HAD BEEN TERMINATED STATED A CAUSE OF ACTION FOR CONVERSION, FRAUD IN THE INDUCEMENT CAUSE OF ACTION PROPERLY DISMISSED BECAUSE IT WAS BASED UPON NON-ACTIONABLE FUTURE EVENTS AND NON-ACTIONABLE OPINION ON THE PART OF THE DEFENDANT (FIRST DEPT))

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