Fraud Claim Cannot Be Based on Misrepresentation of Intention to Enter Into or Perform an Agreement

On May 3, 2022, the First Department issued a decision in 644 E. 14th Realty LLC v. Mount Sinai Health Sys., Inc., 2022 NY Slip Op. 02938, holding that a fraud claim cannot be based on a misrepresentation of an intention to enter into or perform an agreement, explaining:

The promissory estoppel and fraud claims should have been dismissed. Where a term sheet or other preliminary agreement explicitly requires the execution of a further written agreement before any party is contractually bound, it is unreasonable as a matter of law for a party to rely upon the other party’s promises to proceed with the transaction in the absence of that further written agreement. Although the motion court credited plaintiff’s argument with respect to the fraud claim that the special-facts doctrine could impose a duty to disclose defendant’s negotiations with a third party based on defendant’s superior knowledge of those negotiations, here, as in King Penguin, plaintiff cannot establish justifiable reliance on defendant’s promises to proceed with the transaction even if there was such a duty, as the letter of intent expressly stated that it “shall not bind” either party.

(Internal quotations and citations omitted).

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