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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: September 29, 2014

No Claim for Fraudulent Concealment Where no Duty to Disclose

On September 23, 2014, the First Department issued a decision in SSA Holdings LLC v. Kaplan, 2014 NY Slip Op. 06257, affirming the dismissal of a claim for fraudulent concealment.

In SSA Holdings, the First Department held that the plaintiff failed to state a claim against the defendants for fraudulent concealment because:

[The] defendants had no duty to disclose the alleged material information. Defendants — nonmanaging minority members of plaintiff, a Delaware limited liability company — owed no fiduciary duties to plaintiff or its manager, Stanley S. Arkin, a nonparty to this action. Nor did the duty to disclose arise under the special facts doctrine, as the complaint does not allege that defendants had superior knowledge of essential facts. Indeed, defendants allegedly failed to disclose that they considered themselves to have stopped practicing law with Mr. Arkin on a full-time basis as his partners as of January 6, 2012. While there may have been concealment of opinions, there was no concealment of the facts upon which those opinions were based and defendants were not bound to volunteer their opinions. Moreover, there was no allegation of superior knowledge, as defendants’ belief that AKR had been dissolved as of January 6, 2012 was based on Mr. Arkin’s own email of that date.

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

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