On February 14, 2025, Justice Boddie of the Kings County Commercial Division issued a decision in Winrich v. Makes, 2025 NY Slip Op. 30541(U), holding that a fraud claim is insufficient to make an arbitration agreement unenforceable, unless the fraud relates to the arbitration agreement itself, explaining:
The issue of fraud in the inducement affects the validity of the arbitration clause only when the fraud relates to the arbitration provision itself, or was part of a grand scheme that permeated the entire contract. To demonstrate that fraud permeated the entire contract, it must be established that the agreement was not the result of an arm’s length negotiation, or the arbitration clause was inserted into the contract to accomplish a fraudulent scheme. Here, the arbitration clauses in the BK Made and WMP operating agreements are broad, covering any action, proceeding, or counterclaim arising under or relating to these agreements. Plaintiff has failed to establish that the arbitration clauses were inserted into the contract to accomplish a fraudulent scheme. Accordingly, the arbitration clauses remain valid, and plaintiffs claims-except for the eighth cause of action alleging breach of fiduciary duty as to 427 Troutman LLC and 444 Jefferson LLC-shall be compelled to AAA arbitration.
(Internal quotations and citations omitted).