On September 29, 2022, Justice Boddie of the Kings County Commercial Division issued a decision in Harel Alternative Real Estate L.P. v. All Brooklyn Mgt. LLC, 2022 NY Slip Op. 50959(U), holding that a fraud claim cannot be based on misrepresentations that were not made to the plaintiff, explaining:
The elements of a cause of action sounding in fraud are a material misrepresentation of an existing fact, made with knowledge of the falsity, an intent to induce reliance thereon, justifiable reliance upon the misrepresentation, and damages. Where the alleged fraudulent misrepresentation is directed to a third-party, the plaintiff must allege that the third-party acted as a conduit to relay any false statements to the plaintiff, who then relied on the misrepresentations to its detriment.
Here, plaintiff’s fraud claim centers on defendants’ alleged misrepresentation to certain lenders on loan documents regarding their status as sole member of the LLC entities. This is insufficient to state a claim for fraud. Additionally, plaintiff’s claim that it was a victim of fraud because it relied on defendants to act properly and lawfully is wholly insufficient to state a claim for fraud. Thus, plaintiff’s cause of action for fraud against defendants must be dismissed.
(Internal quotations and citations omitted),