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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: February 20, 2016

Plaintiff Fails to Prove Scienter; Defendant Had No Reason to Doubt Truth of its Representation

On February 9, 2016, the First Department issued a decision in Edward Tyler Nahem Fine Art, L.L.C. v. Barral, 2016 NY Slip Op. 00900, affirming the trial court’s dismissal after a non-jury trial of a fraud claim for failure to prove scienter, explaining:

Although defendant’s representations as to good title to the artwork all proved to be false, and the evidence supports a finding that plaintiff reasonably relied on them, to its detriment, in purchasing the artwork, the record does not sufficiently establish the requisite scienter. The evidence does not show that defendant had reason to doubt the veracity of its representation that the artwork was imported lawfully but failed to investigate before making it.

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

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