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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: March 31, 2019

Fraud Claim Should Not Have Been Dismissed As Duplicative of Breach of Contract Claim

On March 19, 2019, the First Department issued a decision in Ohm NYC LLC v. Times Sq. Assoc. LLC, 2019 NY Slip Op. 02034, holding that a fraud claim should not have been dismissed as duplicative of a breach of contract claim, explaining;

The complaint alleges multiple instances of defendants misrepresenting to plaintiff that the Bridge, a portion of the ground floor of a building, would be included in the leased premises. These misrepresentations, which the complaint alleges were made to induce plaintiff into entering into the lease, were not promises of future performance, but misrepresentations of a then present fact. Thus, the complaint states a cause of action for fraudulent inducement that is not duplicative of the breach of contract claim.

Contrary to defendants’ contention, the disclaimer and merger provision of the subject lease does not provide a ground for dismissing the fraudulent inducement claim. There is nothing in the record to suggest that plaintiff knew or should have known that the Bridge would not be included in the leased premises, as was originally represented. Moreover, there is nothing in the record to suggest that plaintiff could have discovered the terms of the lease of the adjacent premises or any promises about the Bridge that defendants may have made to the tenants of the adjacent premises, which would be facts peculiarly within defendants’ knowledge.

(Internal citations omitted) (emphasis added).

Commercial litigation frequently involves fraud-based claims. Such claims have special pleading requirements such as the rule discussed here that a fraud claim cannot be based on a breach of contract. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding a fraud-based claim.

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