NY Appeals Court: Don't Bother Bringing Business Fraud Claims Unless You Can Back It Up
In a June 15 decision in Callisto Pharm. Inc. v. Picker, New York's Appellate Division, First Department affirmed the trial court's ruling that dismissed the plaintiff's claims that its employee was secretly negotiating with their business partner, and therefore liable in breach of contract, fraud and breach of fiduciary duty. In addition, the plaintiff claimed that the defendant had wrongfully taken their property, and was therefore liable in conversion. Reading this decision, I can't say I'm surprised; simply put, the plaintiff had absolutely no proof to support its claims other than rank speculation. As the Appellate Court stated: "This argument has no support in the record, which indicates that Tapestry approached defendant about joining its company after plaintiff rejected the partnership proposal. There is no evidence, other than plaintiff's speculation, that defendant was negotiating during the two companies' ultimately fruitless discussions (see Abrahami v UPC Constr. Co., 224 AD2d 231, 233  [fraud must be proven by clear and convincing evidence; "loose, equivocal or contradictory" evidence will not suffice] ... "The court properly dismissed the claim alleging that defendant acted as a faithless employee because there is no evidence that defendant was negotiating for his new position with Tapestry during the pendency of the business discussions between Tapestry and plaintiff. Nor is there any support for plaintiff's contention that defendant was making use of confidential information while negotiating his employment with Tapestry." In fact, after reading this decision, and given how emphatic the appellate court's opinion is, I can't help but wonder: why did the plaintiff even bother appealing (or even bringing the claim in the first instance)?
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