On May 30, 2023, the First Department issued a decision in 301 E. 60th St. LLC v. Competitive Solutions LLC, 2023 NY Slip Op. 02842, holding that a fraudulent inducement defense failed because of the defendant’s lack of due diligence, explaining:
We find that defendant’s affirmative defense of fraud lacks merit. To state a claim for fraud in the inducement, there must be a knowing misrepresentation of material present fact, which is intended to deceive another party and induce that party to act on it, resulting in injury. Defendant advances no reasonable explanation as to why LaGratta, a sophisticated real estate professional, would rely solely on the representations of another party. Defendant can hardly claim with any credibility that he, a savvy businessman, entered into the resulting agreements lulled by faith or trust in the parties across the bargaining table, or that he unwittingly gave up some valued right in the bargain.
LaGratta concedes that he spent only a few hours discussing the market price with his lawyer and two brokers. Defendant made no further effort to narrow down the market price for IARs. While the evidence was admittedly difficult to obtain, it was neither impractical nor impossible. Defendant demonstrated neither reasonable reliance nor due diligence by allegedly relying on the uncorroborated representations of a broker who was not in his employ; he proceeded at his own peril.
(Internal quotations and citations omitted).