On February 5, 2024, Justice Borrok of the New York County Commercial Division issued a decision in One Riv. Run Acquisition, LLC v. Milde, 2024 NY Slip Op. 30403(U), holding that a joint venturer’s agreement to seek funding does not create a special relationship, explaining:
A claim for negligent misrepresentation can only stand where (i) there is a special relationship of trust or confidence, which creates a duty for one party to impart correct information to another, the information given was false, and (ii) there was reasonable reliance upon the information given. Where the parties have entered into a contract, New York courts look to that agreement, and if the parties do not create their own relationship of higher trust, the courts should not ordinarily elevate them to a higher level of trust. Accordingly, a special relationship generally does not arise out of an ordinary arm’s length business transaction between two parties. However, fiduciary liability is not dependent solely upon contractual relation. A special relationship may be found where the pleadings allege that the parties created, outside of their contract, a relationship of higher trust than would arise from the agreement alone. One such case is in the broker-principal relationship (Solomon Capital, LLC v Lion Biotechnologies, Inc., 171 AD3d 467,469 [1st Dept 2019]).
The parties do not dispute that there is no fiduciary duty explicitly created by the contract. The plaintiffs argue that the defendants owe a higher duty because they were tasked with securing additional financing for the joint venture, which they argue leads to a higher duty. However, the plaintiffs have not pointed to any authority for this remarkable proposition whereby one joint venture partner who undertook to raise funds for the joint venture was found to have a broker-principal relationship with the other member of the joint venture.
(Internal citations omitted).