On July 25, 2025, Justice Patel of the New York County Commercial Division issued a decision in Board of Mgrs. of 252 Condominium v. World-Wide Holdings Corp., 2025 NY Slip Op. 32885(U), dismissing a fraud claim because, among other reasons, of group pleading of scienter, explaining:
RAI argues that Plaintiff fails to sufficiently plead knowledge of the misrepresentation by RAI with any specificity. Where a cause of action or defense is based upon misrepresentation, fraud, mistake, willful default, breach of trust or undue influence, the circumstances constituting the wrong shall be stated in detail. CPLR 3016(b) requires factual allegations in support of each element of fraud. Although there is certainly no requirement of unassailable proof at the pleading stage, the complaint must allege the basic facts to establish the elements of the cause of action.
Typically, the issue of scienter is insufficient to dismiss a cause of action sounding in fraud or fraudulent inducement. The element of scienter, that is, the requirement that the defendant knew of the falsity of the representation being made to the plaintiff, is, of course, the element most likely to be within the sole knowledge of the defendant and least amenable to direct proof. However, a claim involving multiple defendants must make specific and separate allegations for each
defendant. The TAC alleges that RAI: (1) acted as the property manager at the Building; (2) was aware of certain defects in the building; and (3) assisted in preparing the budget included in the offering plan. However, regarding scienter, Plaintiff alleges vaguely that the Defendants knew the falsity of their statements. Hence, Plaintiff’s allegations fall short of meeting the specificity requirement of CPLR § 3016(b) because it constitutes impermissible group pleading.
(Internal quotations and citations omitted).