Fraudulent Inducement Claim Survives as Not Duplicative of Breach of Contract Claim

On May 4, 2020, Justice Cohen of the New York County Commercial Division issued a decision in SRS Capital Funds, Inc. v. Bujan, 2020 NY Slip Op. 31449(U), holding that a fraudulent inducement claim survived dismissal because it was not duplicative of the plaintiffs' breach of contract claim, explaining:

Plaintiffs' fraudulent inducement claim is not duplicative of their claim for breach of contract. Defendants' alleged pre-contract misrepresentations related to objective facts about Cardinal and its business in an attempt to lure Plaintiffs into the agreement and were not merely general promises to perform under the agreement in the future. Accordingly, that claim cannot be dismissed on grounds of duplication.

The fraudulent inducement claim is not, as Defendants suggest, precluded by the terms of the MPA. The general disclaimers in the MPA are not sufficiently specific to the particular type of fact misrepresented or undisclosed, and they concern facts peculiarly within the Defendants knowledge. Whether due diligence by Plaintiff would or should have uncovered the alleged fraud is a question of fact that cannot be resolved on a motion to dismiss.

(Internal citations omitted).

Commercial litigation frequently involves fraud-based claims. Such claims have special pleading requirements or rules, including the rule discussed here that a fraudulent inducement claim cannot duplicate a claim for breach of contract. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client think you have been defrauded, or if someone has accused you or a client of defrauding them.