Fraudulent Inducement Claim Fails Where Alleged Misrepresentations Were Contradicted by Agreement’s Terms

On August 4, 2022, Justice Borrok of the New York County Commercial Division issued a decision in W Mgt. Servs. Ltd. v. Fanning, 2022 NY Slip Op. 32637(U), dismissing a fraudulent inducement defense on summary judgment where the alleged misrepresentation was contradicted by the terms of the parties’ agreement, explaining:

Mr. Fanning argues that, although the Loan Documents required the delivery of the capital shares in one free-of-payment delivery. Mr. Fanning alleges that Ms. Akbar told him that W Management would pay at the time of delivery, and therefore he was fraudulently induced to sign the Loan Documents. The problem with this theory is that Mr. Fanning could not have reasonably relied on Ms. Akbar’s statement because it is directly contradicted by the express terms of the Loan Documents. Mr. Fanning also cannot assert fraudulent inducement based on Ms. Akbar’s statement because the Loan Documents contain both a merger clause and an express disclaimer of any reliance on any representation not set forth in the Loan Documents, including specifically with respect to the capital shares.

(Internal citations omitted).

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