On April 10, 2026, Justice Masley of the New York County Commercial Division issued a decision in WH Nagog GP LLC v. Weiss, 2026 NY Slip Op. 31602(U), dismissing a fraud claim for failure to allege due diligence, holding:
The elements of a cause of action for fraud require a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages. Further, a claim rooted in fraud must be pleaded with the requisite particularity under CPLR 3016 (b).
. . .
Though, resolution of a reasonable reliance claim is generally left to a finder of fact, the court, here, finds that plaintiffs’ allegations are wholly insufficient. Plaintiffs conclusively allege that they justifiably relied upon defendants’ knowingly misrepresentations and fraudulent devices. However, as sophisticated investors, plaintiffs must allege that they took steps to verify the truth of defendants’ representations.
Plaintiffs’ allegations that numerous other sophisticated parties were deceived by defendants’ scheme and Langnas abused his position as an attorney to lend credibility, do not satisfy the due diligence requirement.
(Internal quotations and citations omitted).