On February 15, 2022, the First Department issued a decision in Rising Sun Constr. L.L.C. v. CabGram Dev. LLC, 2022 NY Slip Op. 00989, holding that a fraudulent inducement claim cannot be based on a party’s alleged intention not to perform a contract, explaining:
Supreme Court also properly rejected defendants’ counterclaim for fraudulent inducement. To state a cause of action for fraudulent inducement, the pleading party must allege that the defendant intentionally made a material misrepresentation of fact in order to defraud or mislead the plaintiff, and that plaintiff reasonably relied on the misrepresentation and suffered damages as a result. Defendants have failed to properly allege a counterclaim for fraudulent inducement in this straightforward breach of contract action. When a fraud cause of action is based upon a statement of future intention, it must allege facts sufficient to show that the party never intended to honor or act on that statement. At most, defendants’ counterclaims make general allegations that plaintiff entered into a contract lacking the intent to perform, and such allegations are insufficient to sustain a claim from fraudulent inducement. As defendants did not meet their pleading burden, the court properly dismissed the counterclaim.
(Internal quotations and citations omitted) (emphasis added).