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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: September 11, 2016

Fraud Claim Sufficient if Allegations Create a Reasonable Inference of Alleged Conduct

On August 29, 2016, Justice Singh of the New York County Commercial Division issued a decision in Ahrenberg v. Liotard-Vogt, 2016 NY Slip Op. 31651(U), upholding fraud allegations, explaining:

In any claim for fraud, New York law requires that the circumstances constituting the wrong shall be stated in detail. Under this heightened pleading standard, a claim of fraud must be supported by factual allegations that sufficiently detail the allegedly fraudulent conduct and give rise to a reasonable inference of the alleged fraud. . . . On a motion to dismiss a fraud claim, the First Department has previously held that specificity is not required. Accordingly, plaintiffs here need not, at this time, establish the truth of their allegations that defendant was aware of severe irregularities in financial statements resulting in misstatement of the corporation’s net worth. They need only allege specific facts from which it is possible to infer defendant’s knowledge of the falsity of its statements.

(Internal quotations and citations omitted) (emphasis added).

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