Court Denies Post-Summary Judgment Motion to Add Fraudulent Inducement Defense After Defendant Could Not Make A Prima Facie Showing

On November 27, 2023, Justice Joel M. Cohen denied a motion brought by the defendant to amend its pleadings to add a new fraudulent inducement defense before renewing its motion for summary judgment in light of that new defense. The decision in Thomas O’Connor et al. v. Society Pass Incorporated, Index No. 656938/2019, indicated openness to the general procedure for amendment and renewal but found that the defendant had not made the required prima facie showing that its defense met the heightened pleading standard for fraud. The Court explained:

The movant “need not establish the merit of its proposed new allegations” . . . as long as the proposed claims pass the threshold of basic legal sufficiency assuming the truth of the factual allegations. . . . In this case, Mr. O’Connor’s subjective belief or opinion that the Call Agreement is not enforceable was not a representation of fact and is therefore insufficient to serve as the basis of a fraudulent inducement defense. . . . At most, Society Pass alleges an omission on the part of Mr. O’Connor to volunteer his opinion that the Call Agreement was not enforceable. Defendant's unsupported argument that Mr. O’Connor intended not to comply with the Call Agreement, even if true, is insufficient as a matter of law to serve as the basis for a viable fraudulent inducement defense.

The attorneys at Schlam Stone & Dolan frequently litigate cases involving fraudulent inducement and other contractual defenses. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.