October 20, 2026
Written by Joshua Wurtzel
What was the company worth? In a New York fraud case, answering this question properly is often the difference between defeating summary judgment and having your claim dismissed.
Justice Robert R. Reed’s recent decision in VXI Lux Holdco S.A R.L. v. SIC Holdings, LLC (on which we recently blogged) is the perfect example of this. 2026 WL 2661749 (Sup. Ct. N.Y. Cty. Aug. 28, 2026). There, the court granted summary judgment dismissing a buyer’s fraud claims because the buyer, VXI, failed to submit evidence showing the actual value of what it bought. Specifically, the court faulted the buyer for not getting an independent valuation of the company and for instead relying solely on its own valuation approach from the time of purchase.
What must a buyer prove to recover fraud damages?
A fraud plaintiff recovers only its actual loss—not its expectation damages. In an acquisition, this requires (i) evidence of the “company’s actual value as of the date the purchase price was set,” and (ii) proof that the misrepresentations “directly caused it to pay more than that actual value.” Id. at *8
Can a negotiated purchase price prove a buyer’s actual loss?
No.
In conducting his analysis, Justice Reed relied on the First Department’s decision in Kumiva Group, LLC v. Garda USA Inc. 146 AD3d 504, 506 (1st Dep’t 2017).
There, Garda agreed to pay $341.7 million for ATI and claimed that the seller’s misrepresentations inflated the price by $36 million to $81 million. But Garda never had ATI formally valued, and its expert conceded that using the price as a valuation was “not a formal valuation by any stretch of the imagination.” Kumiva, 146 AD3d at 507. Instead, Garda submitted expert testimony opining that the seller’s alleged misrepresentations inflated the purchase price, and that absent these alleged misrepresentations, Garda “would have lowered its offer by an amount in the range from $36,000,000 to $81,000,000.” Id. at 506, 508.
But the First Department rejected this theory, holding that a “showing that Garda would have made a lower offer if ATI had not made any misrepresentations does not suffice to demonstrate that Garda suffered any actual pecuniary loss.” Id. at 508. And the court further criticized Garda for not submitting evidence showing the value of ATI as of the date of the purchase, holding that the “negotiated price cannot substitute for evidence of ATI’s actual value on the relevant date.” Id. at 507.
Does a buyer’s own pre-closing valuation model prove fraud damages?
No.
VXI attempted to value Symbio based on its own valuation approach at the time of purchase, which was an amount determined by multiplying Symbio’s projected 2014 EBITDA by 12.8. VXI Lux Holdco S.A R.L., 2026 WL 2661749, at *8. According to VXI, the sellers’ misrepresentations artificially inflated the projected 2014 EBITDA, and so had these misrepresentations been known, VXI would have paid less for Symbio based on this valuation approach.
But VXI’s damages expert “did not put forward an independent, de novo valuation.” Id. And instead, his analysis was “based on VXI’s valuation approach at the time of purchase.” Id. This, according to Justice Reed, was insufficient to show damages, especially since the share purchase agreement did not prescribe a pricing methodology.
That left the argument Kumiva rejected, as Justice Reed held that a plaintiff’s assertion that it “would have negotiated differently with different information” is “not evidence of actual pecuniary loss.” Id. And so without an appraisal, VXI had “no reference point from which to measure a diminution in value.” Id.
How must a fraud plaintiff value stock it received as payment in an acquisition?
With expert testimony.
I was on the losing side of this issue several years ago—though for a more nuanced reason. In Danco Enterprises, LLC v. LiveXLive Media, Inc., we represented plaintiffs that invested $1.25 million in what was then Loton Corp., a live-streaming company that was trading on the pink sheets. 209 AD3d 428 (1st Dep’t 2022). Our claim was that the CEO’s alleged misrepresentations artificially inflated the value of Loton, and so our client overpaid when he sold his own ticketing company to a Loton subsidiary in exchange for Loton stock.
In attempting to prove damages, we had an expert value our client’s company—the amount paid. And to determine the value of the Loton stock received, we argued that we couldn’t use the trading price at the time of the transaction, because the shares were thinly traded on the pink sheets and, in any event, were restricted for several years. Thus, we instead submitted evidence showing the value of these Loton shares when they were sold into the public market several years later (after Loton was uplisted to the NASDAQ), discounted to then-present value as of the date they were received.
Justice Jennifer Schecter initially ruled in our favor, denying the seller’s motion for summary judgment. But the First Department reversed, rejecting our damages theory on the ground that we hadn’t submitted evidence of the value of the Loton stock received as of the date it was received—and holding that evidence of value several years later, even if discounted back, was insufficient to defeat summary judgment. Id. at 429. (This case ultimately went to trial on several other causes of action, on which we obtained a favorable jury verdict.)
How should you prove your damages, and resist the other side’s damages submission, in a fraud case?
If you represent a fraud plaintiff in an M&A transaction, retain a valuation expert early. Have the expert value the company or shares that your client bought. And have the expert also value the consideration your client paid, if anything other than cash. Adjusting the deal model is not a valuation. And don’t skip the appraisal because it might show a fair price. The First Department in Kumiva called that “a misguided concern.” 146 AD3d at 508.
If you represent a defendant, read the expert disclosures. An expert who starts from the deal price, the buyer’s model, or a later sale price renders his case vulnerable to dismissal on summary judgment.
Joshua Wurtzel is a partner at Schlam Stone & Dolan LLP who focuses his practice on complex commercial, real-estate, and commercial-lending litigation. He has been recognized on the Best Lawyers “Ones to Watch® in America” list in Commercial Litigation and the New York Metro Super Lawyers® "Rising Stars" list in Business Litigation.