On June 29, 2023, Justice Chan of the New York County Commercial Division issued a decision in Emigrant Bus. Credit Corp. v. Hanratty, 2023 NY Slip Op. 32156(U), holding that a fraudulent inducement claim based on statements of present fact was not duplicative of a breach of contract claim, explaining:
To state a cause of action for fraudulent inducement, it is sufficient that the claim alleges a material representation, known to be false, made with the intention of inducing reliance, upon which the victim actually relies, consequentially sustaining a detriment. There are limits on when a fraud cause of action will be sustained if such allegations touch on a separate cause of action for breach of contract to the extent of impermissible duplication. Nevertheless, a fraud claim will be upheld when a plaintiff alleges that it was induced to enter into a transaction because a defendant misrepresented material facts, even though the same circumstances also give rise to the plaintiffs’ breach of contract claim. Unlike a misrepresentation of future intent to perform, a misrepresentation of present facts is collateral to the contract and therefore involves a separate breach of duty.
Defendants’ motion to dismiss the fraudulent inducement claim is denied.
Plaintiffs’ complaint sufficiently pleads the elements necessary to sustain the claim, even with the heightened pleading standard and even without regard to those certain allegations defendants argue are hearsay. That CPLR 3016(b) requires particularized pleading, and that plaintiff relies on selective and limited use of information and belief allegations, does not mandate dismissal here given the well·pled and detailed complaint. Nor are defendants correct that the fraudulent inducement count must be dismissed as duplicative of the breach of contract claim because, as plaintiff asserts and as described above, the fraud claim is supported by assertions of misrepresentations of then present fact that are collateral to the relevant contracts. In that defendants limit their argument here to the Validity Guaranties, the allegations of fraud still extend beyond Hanratty’s guaranty misrepresentations and, accordingly, are sustainable as being collateral to such agreements; in any event, to the extent certain allegations of fraud may also be contained in allegedly false representations, that is of no consequence.
(Internal quotations and citations omitted).