Court Dismisses Fraud Claims For M&A Where Buyer Offered No Evidence Of The Acquired Company’s Actual Value

Posted: September 28, 2026 / Written by: Channing J. Turner / Categories Fraud/Misrepresentation, Damages, Summary Judgment

Court Dismisses Fraud Claims For M&A Where Buyer Offered No Evidence Of The Acquired Company’s Actual Value

On August 28, 2026, in VXI Lux Holdco S.A R.L. v. SIC Holdings, LLC, Index No. 652064/2017, Justice Robert R. Reed of the New York County Commercial Division granted in part defendants’ motions for summary judgment, dismissing the buyer’s fraud claims for failure to raise a triable issue of monetary loss. VXI acquired all of the equity in Symbio S.A., a Luxembourg technology and software engineering company, under a November 2014 share purchase agreement. VXI alleged that the selling shareholders inflated Symbio’s earnings and concealed undisclosed liabilities, including shortfalls in social insurance and housing fund payments owed by Symbio’s Chinese subsidiary, and it sued for fraud and for breach of the agreement’s representations and warranties. On the fraud claims, VXI sought damages measured by diminution in value—the difference between the price it paid and what Symbio was actually worth. But VXI never obtained a contemporaneous appraisal, and its damages expert conceded that he had not performed an independent valuation but had instead built his analysis on VXI’s own EBITDA-multiple approach at the time of purchase. In granting summary judgment dismissing the fraud claims, the Court explained:

Nevertheless, Symbio Defendants are entitled to summary judgment dismissing Count III of the complaint for fraud based on diminution in value. Under New York’s out[-]of-pocket rule, a plaintiff alleging fraud may recover only “for the actual pecuniary loss sustained as the direct result of the wrong” (Lama Holding Co. v Smith Barney Inc., 88 NY2d 413, 421 [1996] [internal quotation marks and citations omitted]). “Damages are to be calculated to compensate plaintiffs for what they lost because of the fraud, not to compensate them for what they might have gained” (id.). In the merger and acquisition context, this requires the plaintiff to submit evidence of the company’s actual value as of the date the purchase price was set, and to show that the defendant’s misrepresentations directly caused it to pay more than that actual value (see Kumiva Group, LLC v Garda USA Inc., 146 AD3d 504, 506 [1st Dept 2017]). Here, VXI has failed to come forward with any evidence of Symbio’s actual value at the time of acquisition, which is fatal to its fraud claims.

The court also dismissed VXI’s declaratory judgment claim as duplicative of its breach of contract claim, and dismissed its contract damages claim to the extent it sought recovery for overpayment of the purchase price. VXI’s remaining claims for breach of the agreement’s representations and warranties survived.

The attorneys at Schlam Stone & Dolan LLP frequently litigate fraud and breach of contract claims arising out of mergers and acquisitions. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.