On May 13, 2014, the First Department issued a decision in Forty Central Park South, Inc. v. Anza, 2014 NY Slip Op. 03453, holding that disclaimers in performance reports that induced the plaintiffs to make further investments did not immunize the defendant from a fraud claim.
In Forty Central Park South, the trial court granted the defendant’s motion to dismiss the fraud claim against it. The First Department reversed, explaining:
Plaintiffs allege that in the monthly reports, generated after the Operating Agreement was entered into, defendant misrepresented that the business venture had been profitable and that plaintiffs had been earning positive returns on their investment; that defendant in fact did not invest the funds as promised; and that they relied on the monthly reports in continuing their investment in the company. These allegations state a cause of action for fraud. The disclaimers set forth in each monthly report do not preclude a finding of justifiable reliance since the alleged misrepresentations in the reports concerned facts peculiarly within defendant’s knowledge.
(Internal quotations and citations omitted) (emphasis added).