On February 21, 2024, the Second Department issued a decision in Franklin D. Nastasi Trust v. Bloomberg, L.P., 2024 NY Slip Op. 00892, dismissing a fraud claim for insufficient allegations of due diligence, explaining:
On a motion to dismiss pursuant to CPLR 3211(a)(7), the complaint must be afforded a liberal construction, the facts therein must be accepted as true, and the plaintiff must be accorded the benefit of every possible favorable inference. Dismissal of the complaint is warranted if the plaintiff fails to assert facts in support of an element of the claim, or if the factual allegations and inferences to be drawn from them do not allow for an enforceable right of recovery.
A plaintiff asserting a cause of action alleging fraud must plead all of the following elements: (1) a material misrepresentation or a material omission of fact which was false and which the defendant knew to be false, (2) made for the purpose of inducing the plaintiff to rely upon it, (3) the plaintiff’s justifiable reliance on the misrepresentation or material omission, and (4) injury. A party cannot claim reliance on a misrepresentation when he or she could have discovered the truth with due diligence. Here, the Supreme Court properly granted that branch of the Bloomberg defendants’ motion which was to dismiss the tenth cause of action, alleging fraud against Bloomberg and Francisco, as the plaintiffs failed to sufficiently allege reasonable reliance upon the alleged misrepresentations by Bloomberg and Francisco. Further, since a cause of action for aiding and abetting fraud cannot lie without the underlying fraud having been sufficiently pled, the court properly granted that branch of the Bloomberg defendants’ motion which was to dismiss the eleventh cause of action, alleging aiding and abetting fraud against Smith and Summerville.
(Internal quotations and citations omitted).