On August 3, 2023, Justice Ruchelsman of the Kings County Commercial Division issued a decision in Lapin v. Verner, 2023 NY Slip Op. 32726(U), dismissing a fraud claim for failure specifically to allege misrepresentations by the defendant, explaining:
It is further well settled that to succeed upon a claim of fraud it must be demonstrated there was a material misrepresentation of fact, made with knowledge of the falsity, the intent to induce reliance, reliance upon the misrepresentation and damages. Further, to succeed upon a claim of fraudulent concealment it must be demonstrated that in addition to the above requirements there was a fiduciary or confidential relationship which would impose a duty upon the defendant to disclose material information. Moreover, even absent a fiduciary relationship a duty to disclose may arise under the special facts doctrine where one party maintains superior knowledge of essential facts as to render the entire transaction inherently unfair absent the disclosure. As with all fraud claim, these elements must each be supported by factual allegations containing details constituting the wrong alleged.
The complaint does not specifically allege any representations or omissions at all that could constitute fraud. First, the allegations of express fraud are contained in the assertions of the complaint noted above. However, promises of a conservative investment are considered mere puffery and not fraud. In In re Security Capital Assurance Ltd., Securities Litigation, 729 F. Supp 2d S69 [S.D.N.Y. 2010] the court observed that representations that investments are disciplined and ‘conserva·tive are classic examples of puffery, which are not actionable.
Furthermore, the misrepresentations are wholly conclusory. The allegations do not describe when such representations were made, who made them and the precise contents of such representations. Thus, pursuant to CPLR §3016(b) to plead fraud the complaint must sufficiently detail the alleged conduct and contain fact that are sufficient to permit a reasonable inference of the alleged conduct. The Complaint in this case does not contain any facts supporting allegations of fraud. The allegations merely contain conclusions that fraud was committed without explaining, with the detail required, how such fraud occurred. Thus, a complaint that alleges fraud absent specific and detailed allegations establishing a material misrepresentation of fact, knowledge of falsity or reckless disregard for the truth, scienter, justifiable reliance, and damages proximately caused thereby, is insufficient to state a cause of action for fraud.
Therefore; the allegations in this case that the investment was portrayed as conservative is not fraud. Consequently, that portion of the motion seeking to dismiss the fraud claim is granted.
Turning to allegations of fraudulent concealment, there are no allegations contained in the complaint which support such fraud. The complaint alleges that just prior to the time that Defendants were purchasing 51 Irving Place for $55 million dollars, Defendants had purchased a commercial property in Miami Beach, Florida for $21 million dollars. However, the failure to inform an investor of another investment is not fraud at all. Moreover, the allegations the defendants dedicated their energies to the
(Internal quotations and citations omitted).
Florida property at the expense of the investment property does not further buttress any claims for fraudulent concealment. Consequently, the motion seeking to dismiss the fraud claim is granted in its entirety.