Fraudulent Inducement Claim Cannot Be Based on Alleged Lack of Intention to Perform a Contract

On August 19, 2020, the Second Department issued a decision in Cypress Med. Surgical Servs., LLC v Jodol Realty Corp., 2020 NY Slip Op. 04534, holding that a fraudulent inducement claim cannot be based on an alleged lack of intention to perform a contract, explaining:

We also agree with the Supreme Court's determination to grant that branch of the motion of the Jodol defendants which was for summary judgment dismissing the cause of action to recover damages for fraudulent misrepresentation against Jodol Realty Corp. A mere misrepresentation of an intent to perform under the contract is insufficient to sustain a cause of action to recover damages for fraud. Here, the allegations in support of the plaintiff's cause of action to recover damages for fraudulent misrepresentation amount to nothing more than allegations of a misrepresentation of an intention to perform under the contract.

(Internal citations omitted).

Commercial litigation frequently involves fraud-based claims. Such claims have special pleading requirements such as the rule discussed here that a fraud claim cannot be based on an alleged intention not to perform a contract. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding a fraud-based claim.