On June 30, 2025, Justice Chan of the New York County Commercial Division issued a decision in P.J. Rest. Inc. v. Dauber, 2025 NY Slip Op. 32569(U), dismissing a fraud claim for failure to plead facts with sufficient specificity, explaining:
The fraud claim must be dismissed. The elements of fraudulent misrepresentation or omission are: (1) a misrepresentation or a material omission of fact which was false and known to be false by the defendant, (2) made for the purpose of inducing the other party to rely upon it, (3) justifiable reliance of the other party on the misrepresentation or material omission, (4) and injury. The elements of fraudulent concealment are: (i) concealment of a material fact which (ii) defendant was duty-bound to disclose, (iii) scienter, (iv) justifiable reliance, and (v) injury. Fraud must be pleaded with particularity.
Plaintiff relies on the same allegations as the breach of fiduciary duty claim. This time, however, plaintiffs claim fails in its entirety for lack of particularity because there are no allegations of misrepresentation, omission, or justifiable reliance.
First, there are no allegations at all that Paul misrepresented or omitted any facts, let alone material ones. Plaintiff argues in its brief that the material misrepresentations or omissions that Paul Dauber knowingly made to plaintiff were that, although he purported to be acting in the interests of plaintiff, he was actually stealing money and otherwise acting for his own personal benefit. This vague and conclusory statement-made in the briefing, not the Complaint-does not explain the particular who, what, when, or where of any misrepresentations or omissions. This alone defeats plaintiffs claim.
Plaintiff also fails to plead justifiable reliance with particularity. The Complaint’s sole allegation about reliance is that plaintiff and its other shareholders reasonably and justifiably relied on Mr. Dauber’s misrepresentations and concealments. Even if plaintiff adequately pled a misrepresentation or omission, this conclusory allegation does not meet the particularity requirement.
Nothing in the Eisner Report addresses either issue. The Eisner Report discusses Eisner’s review of plaintiff’s financials, but does not speak to any misrepresentations, omissions, or reliance. In sum, plaintiff’s fraud claim is dismissed.
(Internal quotations and citations omitted).