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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: December 13, 2018

Fraud Claim Survives Despite Failure to Differentiate Between Acts of Different Defendants

On December 4, 2018, the First Department issued a decision in 47-53 Chrystie Holdings LLC v. Thuan Tam Realty Corp., 2018 NY Slip Op. 08239, upholding a fraud claim despite the plaintiff’s failure to differentiate between the acts of different defendants, explaining:

The complaint states a cause of action for fraud against the individual defendants. Contrary to defendants’ contention, the fact that it refers to the seller shareholders as the “Individual Defendants” does not render the claim insufficiently particularized as to any of the individual defendants. The term “Individual Defendants” does not refer to a diverse group of defendants to whom entirely different acts giving rise to the action may be attributed; it refers to the eight shareholders of the single corporate defendant, each of whom is alleged to have made the same false representation, to wit, that no corporate documents existed. At this stage of the proceedings, it is reasonable to infer that the individual shareholders knew whether this closely held corporation maintained corporate documents and thus that they participated in the alleged wrongful conduct by representing that no documents existed.

(Internal citations omitted).

Commercial litigation frequently involves fraud-based claims. Such claims have special pleading requirements such as the particularity requirement at issue in this decision. 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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