It’s a common story, albeit with some variations:
A promotes the “next best thing” to B, offering B the opportunity to invest and get in on the ground floor of a great investment vehicle. After getting B’s hard-earned money, A stops returning B’s calls.
Against that backdrop, many plaintiffs in B’s shoes try to recoup their investment, claiming that A breached his fiduciary duty, and defrauded him.
But is such a claim viable under New York law?
While there is a potentially valid cause of action for fraudulent inducement under New York law, in truth, it really isn’t that easy to prove.
Here’s why:
New York’s courts have set forth a 4-part requirement for a fraudulent inducement claim to succeed:
- The misrepresentation was false – or known to be false;
- The misrepresentation was made for the specific purpose of inducing the plaintiff to rely upon it;
-
The plaintiff was justified in relying on the defendant’s misrepresentation. [Parenthetically, this is often the hardest of the 4 elements to prove, as noted in the related article referenced to the right]; and,Related Article:
Why Some Fraudulent Inducement Claims in New York Are Doomed to Fail
- Plaintiff sustained an injury as a direct result of his reliance on the defendant’s misrepresentation
